<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: November 26, 1996
(Date of earliest event reported)
AMERICA WEST AIRLINES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 333-14691 86-0418245
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
(Address of Principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (602) 693-0800
<PAGE> 2
Item 5. Other Events.
Reference is hereby made to the Registrant's Registration Statement on
Form S-3 (File No. 333-14691) filed with the Securities and Exchange Commission
(the "Commission") on October 23, 1996, as amended by Amendment No. 1 thereto
filed with the Commission on November 8, 1996, and as further amended by
Amendment No. 2 thereto filed with the Commission on November 20, 1996
(collectively, the "Registration Statement"), pursuant to which the Registrant
registered $230,000,000 aggregate principal amount of America West Airlines
1996-1 Pass Through Trusts Pass Through Certificates, Series 1996-1 (the
"Certificates") for sale in accordance with the provisions of the Securities Act
of 1933, as amended. Reference is also hereby made to the Prospectus dated
November 22, 1996 (the "Prospectus"), which has been filed with the Commission
pursuant to Rule 424(b)(5), with respect to the Certificates.
On November 26, 1996, $218,557 of the Certificates were issued by the
America West Airlines 1996-1 Pass Through Trusts and were acquired by Morgan
Stanley & Co. Incorporated, Citicorp Securities, Inc., Lehman Brothers., and
Salomon Brothers Inc (collectively, the "Underwriters") pursuant to the terms
of an Underwriting Agreement dated as of November 20, 1996 between the
Registrant, GPA Group plc, GPA Leasing USA I, Inc., GPA Leasing USA Sub I, Inc.,
and the Underwriters.
The Registrant is filing this Current Report on Form 8-K for purposes
of filing with the Commission forms of certain documents, as contemplated in the
Prospectus.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit
Number Description
- ------ -----------
4.1 Form of Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank, as
Trustee
4.2 Form of Trust Supplement No. 1996-1A, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank
4.3 Form of Trust Supplement No. 1996-1B, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank
4.4 Form of Trust Supplement No. 1996-1C, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank
4.5 Form of Trust Supplement No. 1996-1D, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank
4.6 Form of Trust Supplement No. 1996-1E, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank
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4.7 Form of Irrevocable Revolving Credit Agreement Class A Certificates,
dated as of November 26, 1996, between Fleet National Bank, as
Subordination Agent, as agent and trustee for the America West
Airlines Pass Through Trust 1996-1A, as Borrower, and Kredietbank
N.V., New York Branch, as Liquidity Provider
4.8 Form of Irrevocable Revolving Credit Agreement Class B Certificates,
dated as of November 26, 1996, between Fleet National Bank, as
Subordination Agent, as agent and trustee for the America West
Airlines Pass Through Trust 1996-1B, as Borrower, and Kredietbank
N.V., New York Branch, as Liquidity Provider
4.9 Form of Irrevocable Revolving Credit Agreement Class C Certificates,
dated as of November 26, 1996, between Fleet National Bank, as
Subordination Agent, as agent and trustee for the America West
Airlines Pass Through Trust 1996-1C, as Borrower, and Kredietbank
N.V., New York Branch, as Liquidity Provider
4.10 Form of Intercreditor Agreement, dated as of November 26, 1996, among
Fleet National Bank, as Trustee under the America West Airlines Pass
Through Trust 1996-1A, America West Airlines Pass Through Trust
1996-1B, America West Airlines Pass Through Trust 1996-1C, America
West Airlines Pass Through Trust 1996-1D, and America West Airlines
Pass Through Trust 1996-1E, Kredietbank N.V., New York Branch, as
Class A Liquidity Provider, Class B Liquidity Provider and Class C
Liquidity Provider, and Fleet National Bank, as Subordination Agent
4.11 Form of Refunding Agreement [GPA 1989 BN-5], dated as of November 26,
1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA
Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Pass Through Trustee under
each of the Pass Through Trust Agreements, the Owner Participant,
Fleet National Bank, as Subordination Agent, and The Chase Manhattan
Bank, as Indenture Trustee
4.12 Form of Refunding Agreement [GPA 1989 BN-6], dated as of November 26,
1996, among America West Airlines, Inc., as Lessee, GPA Leasing USA
Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Pass Through Trustee under
each of the Pass Through Trust Agreements, the Owner Participant,
Fleet National Bank, as Subordination Agent, and The Chase Manhattan
Bank, as Indenture Trustee
4.13 Form of Refunding Agreement [GPA 1989 BN-10], dated as of November
26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing
USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National
Bank, as Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, Fleet National Bank, as
Subordination Agent, and The Chase Manhattan Bank, as Indenture
Trustee
4.14 Form of Refunding Agreement [GPA 1989 BN-12], dated as of November
26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing
USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National
Bank, as Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, Fleet National Bank, as
Subordination Agent, and Fleet National Bank, as Indenture Trustee
4.15 Form of Refunding Agreement [GPA 1990 AWA-13], dated as of November
26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing
USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National
Bank, as Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, Fleet National Bank, as
Subordination Agent, and Fleet National Bank, as Indenture Trustee
4.16 Form of Refunding Agreement [GPA 1990 AWA-14], dated as of November
26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing
USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National
Bank, as Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, Fleet National Bank, as
Subordination Agent, and Fleet National Bank, as Indenture Trustee
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4.17 Form of Refunding Agreement [GPA 1989 AWA-15], dated as of November
26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing
USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National
Bank, as Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, Fleet National Bank, as
Subordination Agent, and Fleet National Bank, as Indenture Trustee
4.18 Form of Refunding Agreement [GPA 1990 AWA-16], dated as of November
26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing
USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National
Bank, as Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, Fleet National Bank, as
Subordination Agent, and Fleet National Bank, as Indenture Trustee
4.19 Form of Refunding Agreement [GPA 1991 AWA-E1], dated as of November
26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing
USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National
Bank, as Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, Fleet National Bank, as
Subordination Agent, and Fleet National Bank, as Indenture Trustee
4.20 Form of Refunding Agreement [GPA 1991 AWA-E2], dated as of November
26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing
USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National
Bank, as Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, Fleet National Bank, as
Subordination Agent, and Fleet National Bank, as Indenture Trustee
4.21 Form of Refunding Agreement [GPA 1991 AWA-E3], dated as of November
26, 1996, among America West Airlines, Inc., as Lessee, GPA Leasing
USA Sub I, Inc., as Original Head Lessee, GPA Group plc, as Parent
Guarantor, Wilmington Trust Company, as Owner Trustee, Fleet National
Bank, as Pass Through Trustee under each of the Pass Through Trust
Agreements, the Owner Participant, Fleet National Bank, as
Subordination Agent, and Fleet National Bank, as Indenture Trustee
4.22 Form of Second Amended and Restated Aircraft Lease Agreement [GPA
1989 BN-5], dated as of September 22, 1989, Amended and Restated as
of October 1, 1991, and Further Amended and Restated as of November
26, 1996, between Wilmington Trust Company and America West Airlines,
Inc.
4.23 Form of Second Amended and Restated Aircraft Lease Agreement [GPA
1989 BN-6], dated as of December 15, 1989, Amended and Restated as of
October 1, 1991, and Further Amended and Restated as of November 26,
1996, between Wilmington Trust Company and America West Airlines,
Inc.;
4.24 Form of Second Amended and Restated Aircraft Lease Agreement [GPA
1989 BN-10], dated as of December 19, 1989, Amended and Restated as
of October 1, 1991, and Further Amended and Restated as of November
26, 1996, between Wilmington Trust Company and America West Airlines,
Inc.
4.25 Form of Amended and Restated Aircraft Lease Agreement [GPA 1989
BN-12], dated as of December 19, 1989, Amended and Restated as of
November 26, 1996, between Wilmington Trust Company and America West
Airlines, Inc.
4.26 Form of Amended and Restated Aircraft Lease Agreement [GPA 1990
AWA-13], dated as of September 21, 1990, Amended and Restated as of
November 26, 1996, between Wilmington Trust Company and America West
Airlines, Inc.
4.27 Form of Amended and Restated Aircraft Lease Agreement [GPA 1990
AWA-14], dated as of September 21, 1990, Amended and Restated as of
November 26, 1996, between Wilmington Trust Company and America West
Airlines, Inc.
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4.28 Form of Amended and Restated Aircraft Lease Agreement [GPA 1990
AWA-15], dated as of September 21, 1990, Amended and Restated as of
November 26, 1996, between Wilmington Trust Company and America West
Airlines, Inc.
4.29 Form of Amended and Restated Aircraft Lease Agreement [GPA 1990
AWA-16], dated as of September 21, 1990, Amended and Restated as of
November 26, 1996, between Wilmington Trust Company and America West
Airlines, Inc.
4.30 Form of Amended and Restated Engine Lease Agreement [GPA 1991
AWA-E1], dated as of March 15, 1991, Amended and Restated as of
November 26, 1996, between Wilmington Trust Company and America West
Airlines, Inc.
4.31 Form of Amended and Restated Engine Lease Agreement [GPA 1991
AWA-E2], dated as of March 15, 1991, Amended and Restated as of
November 26, 1996, between Wilmington Trust Company and America West
Airlines, Inc.
4.32 Form of Amended and Restated Engine Lease Agreement [GPA 1991
AWA-E3], dated as of March 15, 1991, Amended and Restated as of
November 26, 1996, between Wilmington Trust Company and America West
Airlines, Inc.
4.33 Form of Second Amended and Restated Trust Indenture and Security
Agreement [GPA 1989 BN-5], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and The Chase Manhattan
Bank, as Indenture Trustee
4.34 Form of Second Amended and Restated Trust Indenture and Security
Agreement [GPA 1989 BN-6], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and The Chase Manhattan
Bank, as Indenture Trustee
4.35 Form of Second Amended and Restated Trust Indenture and Security
Agreement [GPA 1989 BN-10], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and The Chase Manhattan
Bank, as Indenture Trustee
4.36 Form of First Amended and Restated Trust Indenture and Security
Agreement [GPA 1989 BN-12], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and Fleet National Bank,
as Indenture Trustee
4.37 Form of First Amended and Restated Trust Indenture and Security
Agreement [GPA 1990 AWA-13], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and Fleet National Bank,
as Indenture Trustee
4.38 Form of First Amended and Restated Trust Indenture and Security
Agreement [GPA 1990 AWA-14], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and Fleet National Bank,
as Indenture Trustee
4.39 Form of First Amended and Restated Trust Indenture and Security
Agreement [GPA 1990 AWA-15], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and Fleet National Bank,
as Indenture Trustee
4.40 Form of First Amended and Restated Trust Indenture and Security
Agreement [GPA 1990 AWA-16], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and Fleet National Bank,
as Indenture Trustee
4.41 Form of First Amended and Restated Trust Indenture and Security
Agreement [GPA 1991 AWA-E1], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and Fleet National Bank,
as Indenture Trustee
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4.42 Form of Form of First Amended and Restated Trust Indenture and
Security Agreement [GPA 1991 AWA-E2], dated as of November 26, 1996
between Wilmington Trust Company, as Owner Trustee, and Fleet
National Bank, as Indenture Trustee
4.43 Form of First Amended and Restated Trust Indenture and Security
Agreement [GPA 1991 AWA-E3], dated as of November 26, 1996 between
Wilmington Trust Company, as Owner Trustee, and Fleet National Bank,
as Indenture Trustee
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICA WEST AIRLINES, INC.
December 11, 1996
By: /s/ Stephen L. Johnson
-------------------------------------
Stephen L. Johnson
-------------------------------------
Senior Vice President - Legal Affairs
-------------------------------------
<PAGE> 1
EXHIBIT 4.1
AMERICA WEST AIRLINES, INC.
and
FLEET NATIONAL BANK,
as Trustee
PASS THROUGH TRUST AGREEMENT
Dated as of November 26, 1996
<PAGE> 2
Reconciliation and tie between Pass Through Trust Agreement dated as of November
26, 1996 and the Trust Indenture Act of 1939. This reconciliation does not
constitute part of the Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
------------------- ------------------
310(a)(1) 7.07
(a)(2) 7.07
312(a) 3.09; 8.01; 8.02
313(a) 7.06; 8.03
314(a) 8.04(a) - (c)
(a)(4) 8.04(d)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.12; 11.01
(d)(2) 7.12; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.01
316(a)(last sentence) 1.04(d)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(d)
317(a)(1) 6.03
(b) 7.12
318(a) 12.08
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TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS....................................................... 2
Section 1.01. Definitions............................... 2
Section 1.02. Compliance Certificates and Opinions...... 12
Section 1.03. Form of Documents Delivered to Trustee.... 13
Section 1.04. Acts of Certificateholders................ 13
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF
EQUIPMENT NOTES................................................... 16
Section 2.01. Amount Unlimited; Issuable in Series...... 16
Section 2.02. Acquisition of Equipment Notes............ 18
Section 2.03. Acceptance by Trustee..................... 20
Section 2.04. Limitation of Powers...................... 20
ARTICLE III
THE CERTIFICATES.................................................. 21
Section 3.01. Form, Denomination and Execution of
Certificates.............................. 21
Section 3.02. Authentication of Certificates............ 22
Section 3.03. Temporary Certificates.................... 22
Section 3.04. Registration of Transfer and Exchange of
Certificates.............................. 22
Section 3.05. Mutilated, Destroyed, Lost or Stolen
Certificates.............................. 23
Section 3.06. Persons Deemed Owners..................... 24
Section 3.07. Cancellation.............................. 24
Section 3.08. Limitation of Liability for Payments...... 24
Section 3.09. Book-Entry and Definitive Certificates.... 24
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS................... 27
Section 4.01. Certificate Account and Special Payments
Account................................... 27
Section 4.02. Distributions from Certificate Account
and Special Payments Account.............. 27
Section 4.03. Statements to Certificateholders.......... 29
Section 4.04. Investment of Special Payment Moneys...... 30
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Page
----
ARTICLE V
THE COMPANY....................................................... 30
Section 5.01. Maintenance of Corporate Existence........ 30
Section 5.02. Consolidation, Merger, Etc................ 30
ARTICLE VI
DEFAULT........................................................... 32
Section 6.01. Events of Default......................... 32
Section 6.02. Incidents of Sale of Equipment Notes...... 33
Section 6.03. Judicial Proceedings Instituted by
Trustee; Trustee May Bring Suit........... 34
Section 6.04. Control by Certificateholders............. 34
Section 6.05. Waiver of Past Defaults................... 35
Section 6.06. Right of Certificateholders to Receive
Payments Not To Be Impaired............... 35
Section 6.07. Certificateholders May Not Bring Suit
Except Under Certain Conditions........... 36
Section 6.08. Remedies Cumulative....................... 36
Section 6.09. Undertaking for Costs..................... 37
ARTICLE VII
THE TRUSTEE....................................................... 37
Section 7.01. Notice of Defaults........................ 37
Section 7.02. Certain Rights of Trustee................. 37
Section 7.03. Not Responsible for Recitals or Issuance
of Certificates........................... 39
Section 7.04. May Hold Certificates..................... 39
Section 7.05. Money Held in Trust....................... 39
Section 7.06. Compensation and Reimbursement............ 39
Section 7.07. Corporate Trustee Required; Eligibility... 41
Section 7.08. Resignation and Removal; Appointment of
Successor................................. 42
Section 7.09. Acceptance of Appointment by Successor.... 44
Section 7.10. Merger, Conversion, Consolidation or
Succession to Business.................... 44
Section 7.11. Maintenance of Agencies................... 45
Section 7.12. Money for Certificate Payments to Be
Held in Trust............................. 46
Section 7.13. Registration of Equipment Notes in
Trustee's Name............................ 47
Section 7.14. Representations and Warranties of
Trustee................................... 47
Section 7.15. Withholding Taxes; Information
Reporting................................. 48
Section 7.16. Trustee's Liens........................... 48
Section 7.17. Preferential Collection of Claims......... 48
ii
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Page
----
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE.................. 49
Section 8.01. The Company to Furnish Trustee with
Names and Addresses of
Certificateholders........................ 49
Section 8.02. Preservation of Information;
Communications to Certificateholders...... 49
Section 8.03. Reports by Trustee........................ 49
Section 8.04. Reports by the Company.................... 49
ARTICLE IX
SUPPLEMENTAL AGREEMENTS........................................... 50
Section 9.01. Supplemental Agreements Without Consent
of Certificateholders..................... 50
Section 9.02. Supplemental Agreements with Consent of
Certificateholders........................ 52
Section 9.03. Documents Affecting Immunity or
Indemnity................................. 53
Section 9.04. Execution of Supplemental Agreements...... 53
Section 9.05. Effect of Supplemental Agreements......... 53
Section 9.06. Conformity with Trust Indenture Act....... 53
Section 9.07. Reference in Certificates to
Supplemental Agreements................... 53
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS........................ 54
Section 10.01. Amendments and Supplements to Indenture
and Other Note Documents................. 54
ARTICLE XI
TERMINATION OF TRUSTS............................................. 55
Section 11.01. Termination of the Trusts................ 55
ARTICLE XII
MISCELLANEOUS PROVISIONS.......................................... 56
Section 12.01. Limitation on Rights of
Certificateholders....................... 56
Section 12.02. Liabilities of Certificateholders........ 56
Section 12.03. Certificates Nonassessable and Fully
Paid..................................... 56
Section 12.04. Registration of Equipment Notes in Name
of Subordination Agent................... 57
iii
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Page
----
Section 12.05. Notices.................................. 57
Section 12.06. Governing Law............................ 58
Section 12.07. Severability of Provisions............... 58
Section 12.08. Trust Indenture Act Controls............. 58
Section 12.09. Effect of Headings and Table of
Contents................................. 58
Section 12.10. Successors and Assigns................... 59
Section 12.11. Benefits of Agreement.................... 59
Section 12.12. Legal Holidays........................... 59
Section 12.13. Counterparts............................. 59
Section 12.14. Communication by Certificateholders
with Other Certificateholders............ 59
Exhibit A Form of Certificate
iv
<PAGE> 7
This PASS THROUGH TRUST AGREEMENT, dated as of November 26,
1996, between America West Airlines, Inc., a Delaware corporation (the
"Company"), and Fleet National Bank, a national banking association, as Trustee,
is made with respect to the formation from time to time of separate America West
Airlines Pass Through Trusts, and the issuance from time to time of separate
series of Pass Through Certificates representing fractional undivided interests
in the respective Trusts.
W I T N E S S E T H:
WHEREAS, from time to time the Company and the Trustee may
enter into a Trust Supplement (this and certain other defined terms used herein
are defined in Section 1.01) pursuant to which the Trustee shall declare the
creation of a separate Trust for the benefit of the Holders of the series of
Certificates to be issued in respect of such Trust, and the initial Holders of
the Certificates of such series, as the grantors of such Trust, by their
respective acceptances of the Certificates of such series, shall join in the
creation of such Trust with the Trustee;
WHEREAS, all Certificates to be issued in respect of each
separate Trust will be issued as a separate series pursuant to this Agreement,
will evidence fractional undivided interests in such Trust and will have no
rights, benefits or interests in respect of any other separate Trust or the
property held therein, subject, however, to the provisions of any Intercreditor
Agreement to which one or more Trusts may be a party;
WHEREAS, from time to time, pursuant to the terms and
conditions of this Agreement with respect to each separate Trust formed
hereunder, the Trustee on behalf of such Trust shall purchase one or more issues
of Equipment Notes having the same interest rate as, and final maturity dates
not later than the final Regular Distribution Date of, the series of
Certificates issued in respect of such Trust and shall hold such Equipment Notes
in trust for the benefit of the Certificateholders of such Trust;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of each Trust created from
time to time pursuant to this Agreement, the Company as the "issuer", as such
term is defined in and solely for purposes of the Securities Act of 1933, as
amended (the "Securities Act"), of the Certificates to be issued in respect of
each Trust and as the "obligor", as such term is defined in and solely for
purposes of the Trust Indenture Act of 1939, as amended, has duly authorized the
execution and delivery of this Basic Agreement and each Trust Supplement with
respect to all such Certificates and is undertaking to perform certain
administrative and ministerial duties hereunder and is also undertaking to pay
the fees and expenses of the Trustee;
WHEREAS, this Basic Agreement, as supplemented from time to
time, is subject to the provisions of the Trust Indenture Act of 1939, as
amended, and shall to the extent applicable, be governed by such provisions;
<PAGE> 8
2
NOW THEREFORE, in consideration of the mutual agreements
herein contained, and of other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this
Basic Agreement, except as otherwise expressly provided herein or in a Trust
Supplement or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article
have the meanings assigned to them in this Article, and include the
plural as well as the singular,
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all references in this Basic Agreement to designated
"Articles", "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of this Basic Agreement;
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Basic Agreement as a whole and
not to any particular Article, Section or other subdivision;
(5) the term "this Agreement" (as distinguished from "this
Basic Agreement") refers, unless the context otherwise requires, to
this Basic Agreement as supplemented by the Trust Supplement creating a
particular Trust and establishing the series of Certificates issued or
to be issued in respect thereof, with reference to such Trust and such
series of Certificates, as this Basic Agreement as so supplemented may
be further supplemented with respect to such Trust and such series of
Certificates; and
(6) all references in this Agreement to a "series" of
Certificates shall be construed to mean a series of Certificates issued
under the related Trust Supplement; and all references in this Basic
Agreement or in any Trust Supplement, Intercreditor Agreement,
Liquidity Facility, Refunding Agreement, or Note Document to a "class"
of Certificates shall be construed to refer to any series of
Certificates that have been or will be issued concurrently with, or are
intended to be considered concurrently with, one or more other series
of Certificates, each established under separate Trust Supplements to
purchase related classes of Equipment Notes issued by one or more Owner
Trustees that are subject to the same Intercreditor Agreement.
<PAGE> 9
3
Act: With respect to any Certificateholder, has the meaning
specified in Section 1.04.
Affiliate: With respect to any specified Person, means any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For the purposes of this
definition, "control", when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Aircraft: Means one or more aircraft, including engines
therefor, owned by or leased to the Company and securing one or more Equipment
Notes.
Authorized Agent: With respect to the Certificates of any
series, means any Paying Agent or Registrar for the Certificates of such series.
Avoidable Tax: Has the meaning specified in Section 7.08(e).
Basic Agreement: Means this Pass Through Trust Agreement, as
the same may from time to time be supplemented, amended or modified, but does
not include any Trust Supplement.
Book-Entry Certificates: With respect to the Certificates of
any series, means Certificates of such series which are issued in book-entry
form, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 3.09.
Business Day: With respect to the Certificates of any series
and unless specified otherwise in any Trust Supplement, means any day other than
a Saturday, a Sunday or a day on which commercial banks are required or
authorized to close in New York, New York or Hartford, Connecticut.
Certificate: Means any one of the Certificates, substantially
in the form of Exhibit A hereto, and any such Certificates issued in exchange
therefor or replacement thereof pursuant to this Agreement.
Certificate Account: With respect to the Certificates of any
series, means the account or accounts created and maintained for such series
pursuant to Section 4.01(a) and the related Trust Supplement.
Certificateholder or Holder: With respect to the Certificates
of any series, means the Person in whose name a Certificate of such series is
registered in the Register for Certificates of such series.
<PAGE> 10
4
Certificate Owner: With respect to the Certificates of any
series, means, for purposes of Section 3.09, the Person who owns a Book-Entry
Certificate of such series.
Clearing Agency: Means an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
Clearing Agency Participant: Means a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects, directly or indirectly, book-entry transfers and
pledges of securities deposited with the Clearing Agency.
Company: Means America West Airlines, Inc., a Delaware
corporation, or its successor in interest pursuant to Section 5.02, or any other
obligor (within the meaning of the Trust Indenture Act) with respect to any
series of Certificates.
Controlling Party: Means the Person entitled to act as such
pursuant to the terms of any Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee, the
Subordination Agent or any Indenture Trustee, means the office of such trustee
in the city at which at any particular time its corporate trust business shall
be principally administered.
Cut-off Date: With respect to the Certificates of any series,
means the date designated as such in the Trust Supplement establishing such
series.
Definitive Certificates: With respect to the Certificate of
any series, has the meaning specified in Section 3.09.
Direction: Has the meaning specified in Section 1.04(c).
Distribution Date: Means any Regular Distribution Date or
Special Distribution Date as the context requires.
Equipment: Means the Aircraft and Spare Engines, collectively.
Equipment Note: With respect to the Certificates of any
series, means the equipment notes or other promissory notes, loan certificates
or other evidence of obligation issued under the related Indenture.
ERISA: Means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor federal statute.
<PAGE> 11
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Escrow Account: With respect to the Certificates of any
series, has the meaning specified in Section 2.02(b).
Escrowed Funds: With respect to any Trust, has the meaning
specified in Section 2.02(b).
Event of Default: Means, in respect of any Trust, the
occurrence of an Indenture Default under any Indenture pursuant to which
Equipment Notes held by such Trust were issued.
Final Legal Distribution Date: With respect to the
Certificates of any series, means the date designated as such in the Trust
Supplement establishing such series.
Fractional Undivided Interest: Means the fractional undivided
interest in a Trust that is evidenced by a Certificate relating to such Trust.
Indenture: With respect to any Trust, means each of the one or
more separate trust indentures and security agreements, loan agreements and
mortgages and/or other agreements relating to indebtedness and security
interests with respect thereto described in, or on a schedule attached to, this
Agreement which relates to an issue of Equipment Notes to be held in such Trust
and an indenture, loan agreement and mortgage or other agreement having
substantially the same terms and conditions as such trust indenture and security
agreement, loan agreement and mortgage or other agreement relating to
indebtedness and security interests with respect thereto and which relates to
Substitute Equipment; as each such agreement may be amended or supplemented in
accordance with its respective terms; and Indentures means all of such
agreements.
Indenture Default: With respect to any Indenture, means any
Indenture Event of Default (as such term is defined in such Indenture).
Indenture Trustee: With respect to any Equipment Note or the
Indenture applicable thereto, means the bank or trust company designated as loan
or indenture trustee under such Indenture; and any successor to such Indenture
Trustee as such trustee; and Indenture Trustees means all of the Indenture
Trustees under the Indentures.
Initial Regular Distribution Date: With respect to the
Certificates of any series, means the first Regular Distribution Date on which a
Scheduled Payment is to be made.
Intercreditor Agreement: Means any agreement by and among one
or more Trusts, one or more Liquidity Providers and a Subordination Agent
providing for the distribution of payments made in respect of Equipment Notes
held by such Trusts.
<PAGE> 12
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Issuance Date: With respect to the Certificates of any series,
means the date of the issuance of such Certificates.
Lease: Means any lease between an Owner Trustee, as the
lessor, and the Company, as the lessee, referred to in the related Indenture, as
each such lease may be amended or supplemented in accordance with its respective
terms; and Leases means all such Leases.
Liquidity Facility: With respect to the Certificates of any
Series, means any revolving credit agreement or similar facility relating to the
Certificates of such series between a Liquidity Provider and a Subordination
Agent, as amended, replaced, supplemented or otherwise modified from time to
time in accordance with its terms and the terms of any Intercreditor Agreement.
Liquidity Provider: With respect to the Certificates of any
Series, means a bank or other financial institution that agrees to provide a
Liquidity Facility for the benefit of the holders of Certificates of such
series.
Note Documents: With respect to any Equipment Note, means the
related Indenture, Refunding Agreement, guarantees of such Equipment Note, if
any and if the related Equipment is leased to the Company, the related Lease and
the related Owner Trustee's Purchase Agreement.
Officer's Certificate: Means a certificate signed, (a) in the
case of the Company, by (i) the Chairman or Vice Chairman of the Board of
Directors, the President or any Executive Vice President or Senior Vice
President of the Company, signing alone or (ii) any Vice President of the
Company signing together with the Secretary, the Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, or (b) in the case of the
Trustee or an Owner Trustee or an Indenture Trustee, a Responsible Officer of
the Trustee or such Owner Trustee or such Indenture Trustee, as the case may be.
Opinion of Counsel: Means a written opinion of legal counsel
who (a) in the case of counsel for the Company, may be (i) a senior attorney in
rank of the officers of the Company a principal duty of which is furnishing
advice as to legal matters, (ii) Andrews & Kurth L.L.P., (iii) Latham & Watkins,
or (iv) such other counsel designated by the Company and reasonably acceptable
to the Trustee and (b) in the case of any Owner Trustee or any Indenture
Trustee, may be such counsel as may be designated by any of them whether or not
such counsel is an employee of any of them, and who shall be reasonably
acceptable to the Trustee.
Other Agreements: Has the meaning specified in Section
6.01(b).
Outstanding: With respect to Certificates of any series,
means, as of the date of determination, all Certificates
<PAGE> 13
7
of such series theretofore authenticated and delivered under this Agreement,
except
(i) Certificates of such series theretofore
canceled by the Registrar or delivered to the Trustee or the
Registrar for cancellation;
(ii) All of the Certificates of such series if money in
the full amount required to make the final distribution with respect to
such series pursuant to Section 11.01 hereof has been theretofore
deposited with the Trustee in trust for the Holders of the Certificates
of such series as provided in Section 4.01 pending distribution of such
money to such Certificateholders pursuant to such final distribution
payment; and
(iii) Certificates of such series in exchange for or in
lieu of which other Certificates of such series have been authenticated
and delivered pursuant to this Agreement.
Owner Participant: With respect to any Equipment Note, means
the "Owner Participant", if any, as referred to in the Indenture pursuant to
which such Equipment Note is issued and any permitted successor or assign of
such Owner Participant; and Owner Participants at any time of determination
means all of the Owner Participants thus referred to in the Indentures.
Owner Trustee: With respect to any Equipment Note, means the
"Owner Trustee", if any, as referred to in the Indenture pursuant to which such
Equipment Note is issued, not in its individual capacity but solely as trustee;
and Owner Trustees means all of the Owner Trustees party to any of the
respective Indentures.
Owner Trustee's Purchase Agreement: With respect to the
Certificates of any series, if the related Equipment is leased to the Company,
has the meaning specified for the term Purchase Agreement in the related Lease.
Paying Agent: With respect to the Certificates of any series,
means the paying agent maintained and appointed for the Certificates of such
series pursuant to Section 7.11.
Permitted Investments: Means obligations of the United States
of America or agencies or instrumentalities thereof for the payment of which the
full faith and credit of the United States of America is pledged, maturing in
not more than 60 days or such lesser time as is necessary for payment of any
Special Payments on a Special Distribution Date.
Person: Means any person, including any individual
corporation, partnership, joint venture, association, joint stock company,
trust, unincorporated organization, or government or any agency or political
subdivision thereof.
<PAGE> 14
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Pool Balance: Means, with respect to the Certificates of any
series, as of any date, (i) the original aggregate face amount of the
Certificates of such series less (ii) the aggregate amount of all payments made
in respect of such Certificates other than payments made in respect of interest
or premium thereon or reimbursement of any costs or expenses incurred in
connection therewith. The Pool Balance of any series of Certificates as of any
Distribution Date shall be computed after giving effect to the payment of
principal, if any, on the Equipment Notes or other Trust Property held in the
related Trust and the distribution thereof to be made on such Distribution Date.
Pool Factor: Means, with respect to any series of Certificates
as of any date, the quotient (rounded to the seventh decimal place) computed by
dividing (i) the Pool Balance of such series as at such date by (ii) the
original aggregate face amount of the Certificates of such series. The Pool
Factor as of any Distribution Date shall be computed after giving effect to the
payment of principal, if any, on the Equipment Notes or other Trust Property and
the distribution thereof to be made on such Distribution Date.
Postponed Notes: With respect to any Trust or the related
series of Certificates, means the Equipment Notes to be held in such Trust as to
which a Postponement Notice shall have been delivered pursuant to Section
2.02(b).
Postponement Notice: With respect to any Trust or the related
series of Certificates, means an Officer's Certificate of the Company signed by
an officer of the Company (1) requesting that the Trustee temporarily postpone
purchase of the related Equipment Notes to a date later than the Issuance Date
of such series of Certificates, (2) identifying the amount of the purchase price
of each such Equipment Note and the aggregate purchase price for all such
Equipment Notes, (3) setting forth the reasons for such postponement and (4)
with respect to each such Equipment Note, either (a) setting or resetting a new
Transfer Date (which shall be on or prior to the applicable Cutoff Date) for
payment by the Trustee of such purchase price and issuance of the related
Equipment Note, or (b) indicating that such new Transfer Date (which shall be on
or prior to the applicable Cut-off Date) will be set by subsequent written
notice not less than one Business Day prior to such new Transfer Date.
PTC Event of Default: With respect to the Certificates of any
series, has the meaning specified in the Trust Supplement establishing each
series.
Record Date: With respect to any Trust or the related series
of Certificates, means (i) for Scheduled Payments to be distributed on any
Regular Distribution Date, other than the final distribution, with respect to
such series, the 15th day (whether or not a Business Day) preceding such Regular
Distribution Date, and (ii) for Special Payments to be distributed on any
Special Distribution Date, other than the
<PAGE> 15
9
final distribution, with respect to such series, the 15th day (whether or not a
Business Day) preceding such Special Distribution Date.
Refunding Agreement: With respect to the Certificates of any
series, means any note purchase, refunding, participation or similar agreement
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the relevant Trust, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms; and Refunding Agreements means all such agreements.
Register and Registrar: With respect to the Certificates of
any series, mean the register maintained and the registrar appointed for such
series pursuant to Sections 3.04 and 7.11.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of any series of Certificates, means each date
designated as such in this Agreement, until payment of all the Scheduled
Payments to be made under the Equipment Notes held in such Trust has been made.
Request: Means a request by the Company setting forth the
subject matter of the request accompanied by an Officer's Certificate and an
Opinion of Counsel as provided in Section 1.02 of this Basic Agreement.
Responsible Officer: With respect to any Trustee, any
Indenture Trustee and any Owner Trustee, means any officer in the corporate
trust division or department of the Trustee, Indenture Trustee or Owner Trustee
or any other officer customarily performing functions similar to those performed
by the persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of his knowledge of and
familiarity with a particular subject.
Scheduled Payment: With respect to any Equipment Note, means
any payment of principal and interest on such Equipment Note or any payment of
interest on the Certificates of any series with funds drawn under the Liquidity
Facility for such series (other than any such payment which is not in fact
received by the Trustee or any Subordination Agent within five days of the date
on which such payment is scheduled to be made) due from the obligor thereon
which payment represents the installment of principal at the stated maturity of
such installment of principal on such Equipment Note, the payment of regularly
scheduled interest accrued on the unpaid principal amount of such Equipment
Note, or both; provided that any payment of principal, premium, if any, or
interest resulting from the redemption or purchase of any Equipment Note shall
not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as from
time to time constituted or created under the Securities Exchange Act of 1934,
or, if at any time after the execution of
<PAGE> 16
10
this instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties on such date.
Spare Engine: Means one or more spare engines, owned by or
leased to the Company and securing one or more Equipment Notes.
Special Distribution Date: With respect to the Certificates of
any series, means the date specified as such in the related Trust Supplement.
Special Payment: Means (i) any payment (other than a Scheduled
Payment) in respect of, or any proceeds of, any Equipment Note or Trust
Indenture Estate (as defined in each Indenture) or (ii) the amounts required to
be distributed pursuant to the last paragraph of Section 2.02(b) or (iii) the
amounts required to be distributed pursuant to the penultimate paragraph of
Section 2.02(b).
Special Payments Account: With respect to the Certificates of
any series, means the account or accounts created and maintained for such series
pursuant to Section 4.01(b) and the related Trust Supplement.
Specified Investments: With respect to any Trust, means,
unless otherwise specified in the related Trust Supplement, (i) direct
obligations of the United States or any agency thereof the obligations of which
bear the full faith and credit of the United States, (ii) obligations fully
guaranteed by the United States, or (iii) certificates of deposit issued by any
commercial bank incorporated under the laws of the United States or one of the
States thereof (but not exceeding $10,000,000 in principal amount or deposits at
any given time for any one bank) having a combined capital surplus and undivided
income of at least $750,000,000; (iv) repurchase agreements (but not exceeding
$10,000,000 in principal amount or deposits at any given time for any one bank)
with any financial institution having combined capital surplus and undivided
income of at least $750,000,000 and fully collateralized by an obligation of the
type described in clauses (i) through (iii) as collateral pursuant to which an
entity referred to in clause (iii) above or another financial institution having
a net worth of at least $750,000,000 and having a rating of "B" or better from
Thomson BankWatch, Inc. is obligated to repurchase any such obligation not later
than ninety (90) days after the purchase of any such obligation and (v) money
market funds which invest solely in obligations described in clause (i) or (ii);
provided further that if all of the above investments are unavailable, the
entire amounts to be invested may be used to purchase Federal Funds from an
entity described in clause (iii) above; and provided further that no investment
shall be eligible as a "Specified Investment" unless the final maturity or date
of return of such investment is on or before the Special Distribution Date next
following the Cut-off Date, if any, for such Trust by more than 20 days.
<PAGE> 17
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Subordination Agent: Shall have the meaning specified therefor
in any Intercreditor Agreement.
Substitute Equipment: With respect to any Trust, (i) means any
Aircraft of a type specified in this Agreement and, at the election of the
Company, substituted prior to the applicable Cut-off Date, if any, pursuant to
the terms of this Agreement and (ii) means any Spare Engine of a type specified
in this Agreement and, at the election of the Company, substituted prior to the
applicable Cut-off Date, if any, pursuant to the terms of this Agreement.
Transfer Date: Has the meaning assigned to that term in a
related Refunding Agreement or any of the terms "Delivery Date", "Funding Date"
or "Closing Date" in a related Refunding Agreement.
Triggering Event: Shall have the meaning specified therefor in
any Intercreditor Agreement.
Trust: With respect to the Certificates of any series, means
the trust created pursuant to the Basic Agreement and the related Trust
Supplement for the benefit of the Holders of the Certificates of such series.
Trust Indenture Act: Except as otherwise provided in Section
9.06, means the Trust Indenture Act of 1939 as in force at the date as of which
this Basic Agreement was executed.
Trust Property: With respect to any Trust means (i) the
Equipment Notes held as the property of such Trust, all monies at any time paid
thereon and all monies due and to become due thereunder, (ii) the rights of such
Trust under any Intercreditor Agreement, including all monies receivable in
respect of such rights, (iii) all monies receivable under any Liquidity Facility
for such Trust and (iv) funds from time to time deposited in the related Escrow
Account, the related Certificate Account and the related Special Payments
Account and any proceeds from the sale by the Trustee pursuant to Article VI
hereof of any such Equipment Note.
Trust Supplement: Means an agreement supplemental hereto
pursuant to which (i) a separate Trust is created for the benefit of the Holders
of the Certificates of a series, (ii) the issuance of the Certificates of such
series representing fractional undivided interests in such Trust is authorized
and (iii) the terms of the Certificates of such series are established.
Trustee: Means the institution executing this Basic Agreement
as Trustee, or its successor in interest, and any successor trustee appointed as
provided herein.
Trustee's Lien: Has the meaning specified in Section 7.16.
<PAGE> 18
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Underwriter: With respect to the Certificates of any series,
has the meaning specified as such in the Trust Supplement establishing such
series.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Indenture
Trustee to the Trustee to take any action under any provision of this Basic
Agreement or, in respect of the Certificates of any series, this Agreement, the
Company, such Owner Trustee or such Indenture Trustee, as the case may be, shall
furnish to the Trustee an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this Basic
Agreement or this Agreement relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, except that in the
case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Basic Agreement or
this Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or,opinion with respect to compliance with a
condition or covenant provided for in this Basic Agreement or, in respect of the
Certificates of any series, this Agreement (other than a certificate provided
pursuant to Section 8.04(d)) or any Trust Supplement shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions in
this Basic Agreement or this Agreement relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and
<PAGE> 19
13
one or more other such Persons as to other matters and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any Opinion of Counsel stated to be based on the opinion of
other counsel shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Basic Agreement or, in respect of the Certificates
of any series, this Agreement, they may, but need not, be consolidated and form
one instrument.
Section 1.04. Acts of Certificateholders. (a) Any direction,
consent, waiver or other action provided by this Agreement in respect of the
Certificates of any series to be given or taken by Certificateholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by an agent or proxy duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required pursuant to this
Agreement, to the Company or any Indenture Trustee. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Certificateholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of such
Trust Supplement and conclusive in favor of the Trustee, the Company and the
related Indenture Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the certificate of any notary public
or other officer of any jurisdiction authorized to take acknowledgments of deeds
or administer oaths that the Person executing such instrument acknowledged to
him the execution thereof or by an affidavit of a witness to such execution
sworn to before any such notary or such other officer and where such execution
is by an officer of a corporation or association or a member of a partnership,
on behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the
requisite Fractional Undivided Interests of Certificates of any series
Outstanding have given any direction, consent or waiver (a "Direction"), under
this Agreement, Certificates owned
<PAGE> 20
14
by the Company, any related Owner Trustee, any related Owner Participant or any
Affiliate of any such Person shall be disregarded and deemed not to be
Outstanding for purposes of any such determination. In determining whether the
Trustee shall be protected in relying upon any such Direction, only Certificates
which a Responsible Officer of the Trustee knows to be so owned shall be so
disregarded. Notwithstanding the foregoing, (i) if any, such Person owns 100% of
the Certificates of any series Outstanding, such Certificates shall not be so
disregarded as aforesaid, and (ii) if any amount of Certificates of such series
so owned by any such Person have been pledged in good faith, such Certificates
shall not be disregarded as aforesaid if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Company, any related Owner Trustee,
any related Owner Participant or any Affiliate of any such Person.
(d) The Company may at its option by delivery of an Officer's
Certificate to the Trustee set a record date to determine the Certificateholders
in respect of the Certificates of any series, entitled to give any consent,
request, demand, authorization, direction, notice, waiver or other Act.
Notwithstanding Section 316(c) of the Trust Indenture Act, such record date
shall be the record date specified in such Officer's Certificate which shall be
a date not more than 30 days prior to the first solicitation of
Certificateholders in connection therewith. If such a record date is fixed, such
consent, request, demand, authorization, direction, notice, waiver or other Act
may be given before or after such record date, but only the Certificateholders
of record of the applicable series at the close of business on such record date
shall be deemed to be Certificateholders for the purposes of determining whether
Certificateholders of the requisite proportion of Outstanding Certificates of
such series have authorized or agreed or consented to such consent, request,
demand, authorization, direction, notice, waiver or other Act, and for that
purpose the Outstanding Certificates of such series shall be computed as of such
record date; provided that no such consent, request, demand, authorization,
direction, notice, waiver or other Act by the Certificateholders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Basic Agreement not later than one year after the record
date.
(e) Any direction, consent, waiver or other action by the
Certificateholder of any Certificate shall bind the Certificateholder of every
Certificate issued upon the transfer thereof or in exchange therefor or in lieu
thereof, whether or not notation of such action is made upon such Certificate.
(f) Except as otherwise provided in Section 1.04(c),
Certificates of any series owned by or pledged to any Person shall have an equal
and proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates of such
series.
<PAGE> 21
15
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Amount Unlimited; Issuable in Series.
(a) The aggregate principal amount of Certificates of each
series which may be authenticated and delivered under this Basic Agreement is
limited to an amount equal to the aggregate principal amount of the Equipment
Notes held in the related Trust. The Certificates may be issued from time to
time in one or more series and shall be designated generally as the "Pass
Through Certificates", with such further designations added or incorporated in
such title for the Certificates of each series as specified in the related Trust
Supplement. Each Certificate shall bear upon its face the designation so
selected for the series to which it belongs. All Certificates of the same series
shall be substantially identical except that the Certificates of a series may
differ as to denomination and as may otherwise be provided in the Trust
Supplement establishing the Certificates of such series. Each series of
Certificates issued pursuant to this Agreement will evidence fractional
undivided interests in the related Trust and, except as may be contained in any
Intercreditor Agreement, will have no rights, benefits or interests in respect
of any other Trust or the Trust Property held therein. All Certificates of the
same series shall be in all respects equally and ratably entitled to the
benefits of this Agreement without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Agreement.
(b) The following matters shall be established with respect to
the Certificates of each series issued hereunder by a Trust Supplement executed
and delivered by and among the Company and the Trustee:
(1) the formation of the Trust as to which the Certificates of
such series represent fractional undivided interests and its
designation (which designation shall distinguish such Trust from each
other Trust created under this Basic Agreement and a Trust Supplement);
(2) the specific title of the Certificates of such series
(which title shall distinguish the Certificates of such series from
each other series of Certificates created under this Basic Agreement
and a Trust Supplement);
(3) any limit upon the aggregate principal amount of the
Certificates of such series which may be authenticated and delivered
(which limit shall not pertain to Certificates authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of other Certificates of the series pursuant to Sections 3.03,
3.04 and 3.05;
<PAGE> 22
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(4) the Cut-off Date with respect to the Certificates of such
series;
(5) the Regular Distribution Dates applicable to the
Certificates of such series;
(6) the Final Legal Distribution Date with respect to the
Certificates of such series;
(7) the Special Distribution Dates applicable to the
Certificates of such series;
(8) if other than as provided in Section 7.11(b), the
Registrar or the Paying Agent for the Certificates of such series,
including any Co-Registrar or additional Paying Agent;
(9) if other than as provided in Section 3.01, the
denominations in which the Certificates of such series shall be
issuable;
(10) if other than United States dollars, the currency or
currencies (including currency units) in which the Certificates of such
series shall be denominated;
(11) the specific form of the Certificates of such series
(including the interest rate applicable thereto (or, in the case of any
Certificates denominated in a currency other than United States dollars
and if other than as provided in Section 3.09, whether and the
circumstances under which beneficial owners of interests in such
Certificates in permanent global form may exchange such interests for
Certificates of such series and of like tenor of any authorized form
and denomination);
(12) a description of the Equipment Notes to be acquired and
held in the related Trust and of the related Equipment and Note
Documents;
(13) provisions with respect to the terms for which the
definitions set forth in Article I hereof or the terms of Section 11.01
hereof permit or require further specification in the related Trust
Supplement;
(14) any restrictions (including legends) in respect of ERISA;
(15) whether such series will be subject to an Intercreditor
Agreement and, if so, the specific designation of such Intercreditor
Agreement and whether such series may be purchased in accordance with
Section 6.01(b) hereof; and
(16) any other terms of the Certificates of such series (which
terms shall not be inconsistent with the provisions of the Trust
Indenture Act), including any terms which may
<PAGE> 23
17
be required or advisable under United States laws or regulations or
advisable in connection with the marketing of Certificates of the
series.
(c) At any time and from time to time after the execution and
delivery of this Basic Agreement and a Trust Supplement forming a Trust and
establishing the terms of Certificates of a series, Certificates of such series
shall be executed, authenticated and delivered by the Trustee to the Person or
Persons specified by the Company upon request of the Company and upon
satisfaction of any conditions precedent set forth in such Trust Supplement or
in any other document to which a Trustee is a party relating to the issuance of
the Certificates of such series.
Section 2.02. Acquisition of Equipment Notes.
(a) Unless otherwise specified in the related Trust
Supplement, on or prior to the Issuance Date of the Certificates of a series,
the Trustee shall execute and deliver the related Refunding Agreements in the
form delivered to the Trustee by the Company. The Trustee shall issue and sell
such Certificates, in authorized denominations and in such Fractional Undivided
Interests, so as to result in the receipt of consideration in an amount equal to
the aggregate purchase price of such Equipment Notes and, concurrently
therewith, the Trustee shall purchase, pursuant to the terms and conditions of
the Refunding Agreements, the Equipment Notes at a purchase price equal to the
amount of such consideration so received. Except as provided in Sections 3.03,
3.04 and 3.05 hereof, the Trustee shall not execute, authenticate or deliver
Certificates of such series in excess of the aggregate amount specified in this
paragraph. The provisions of this Subsection (a) are subject to the provisions
of Subsection (b) below.
(b) If on or prior to the Issuance Date with respect to a
series of Certificates the Company shall deliver to the Trustee a Postponement
Notice relating to one or more Postponed Notes, the Trustee shall postpone the
purchase of such Postponed Notes and shall deposit into an escrow account (as to
such Trust, the "Escrow Account") to be maintained as a part of the related
Trust an amount equal to the purchase price of such Postponed Notes (the
"Escrowed Funds"). The Escrowed Funds so deposited shall be invested by the
Trustee at the written direction and risk of, and for the benefit of, the
Company in Specified Investments (i) maturing no later than any scheduled
Transfer Date relating to such series of Certificates or (ii) if no such
Transfer Date has been scheduled, maturing on the next Business Day, or (iii) if
the Company has given notice to the Trustee that any Postponed Notes will not be
issued, with respect to the portion of the Escrowed Funds relating to such
Postponed Notes, maturing on the next applicable Special Distribution Date, if
such investments are reasonably available for purchase. The Trustee shall make
withdrawals from the Escrow Account only as provided in this Agreement. Upon
request of the Company on one
<PAGE> 24
18
or more occasions and the satisfaction of the closing conditions specified in
the applicable Refunding Agreements on or prior to the related Cut-off Date, the
Trustee shall purchase the applicable Postponed Notes with the Escrowed Funds
withdrawn from the Escrow Account. The purchase price shall equal the principal
amount of such Postponed Notes.
The Trustee shall hold all Specified Investments until the
maturity thereof and will not sell or otherwise transfer Specified Investments.
If Specified Investments held in an Escrow Account mature prior to any
applicable Transfer Date, any proceeds received on the maturity of such
Specified Investments (other than any earnings thereon) shall be reinvested by
the Trustee at the written direction and risk of, and for the benefit of, the
Company in Specified Investments maturing as provided in the preceding
paragraph.
Any earnings on Specified Investments received from time to
time by the Trustee shall be promptly distributed to the Company. The Company
shall pay to the Trustee for deposit to the relevant Escrow Account an amount
equal to any losses on such Specified Investments as incurred. On the Initial
Regular Distribution Date in respect of the Certificates of any series, the
Company will pay (in immediately available funds) to the Trustee an amount equal
to the interest that would have accrued on any Postponed Notes, if any,
purchased after the Issuance Date if such Postponed Notes had been purchased on
the Issuance Date, from the Issuance Date to, but not including, the date of the
purchase of such Postponed Notes by the Trustee.
If, in respect of the Certificates of any series, the Company
notifies the Trustee prior to the Cut-off Date that any Postponed Notes will not
be issued on or prior to the Cut-off Date for any reason, on the next Special
Distribution Date for such Certificates occurring more than 20 days following
the date of such notice (i) the Company shall pay to the Trustee for deposit in
the related Special Payments Account, in immediately available funds, an amount
equal to the interest that would have accrued on the Postponed Notes designated
in such notice at a rate equal to the interest rate applicable to such
Certificates from the Issuance Date to, but not including, such Special
Distribution Date and (ii) the Trustee shall transfer an amount equal to that
amount of Escrowed Funds that would have been used to purchase the Postponed
Notes designated in such notice and the amount paid by the Company pursuant to
the immediately preceding clause (i) to the related Special Payments Account for
distribution as a Special Payment in accordance with the provisions hereof.
If, on such Cut-off Date, an amount equal to less than all of
the Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) has been used to purchase Postponed Notes, on the next such
Special Distribution Date occurring more than 20 days following such Cut-off
Date (i) the Company shall pay to the Trustee for deposit in such Special
<PAGE> 25
19
Payments Account, in immediately available funds, an amount equal to the
interest that would have accrued on such Postponed Notes contemplated to be
purchased with such unused Escrowed Funds (other than Escrowed Funds referred to
in the immediately preceding paragraph) but not so purchased at a rate equal to
the interest rate applicable to such Certificates from the Issuance Date to, but
not including, such Special Distribution Date and (ii) the Trustee shall
transfer such unused Escrowed Funds and the amount paid by the Company pursuant
to the immediately preceding clause (i) to such Special Payments Account for
distribution as a Special Payment in accordance with the provisions hereof.
Section 2.03. Acceptance by Trustee. The Trustee, upon the
execution and delivery of a Trust Supplement creating a Trust and establishing a
series of Certificates, shall acknowledge its acceptance of all right, title,
and interest in and to the Equipment Notes to be acquired pursuant to Section
2.02 hereof and the related Refunding Agreements and shall declare that the
Trustee holds and will hold such right, title, and interest, together with all
other property constituting the Trust Property of such Trust, for the benefit of
all then present and future Certificateholders of such series, upon the trusts
herein and in such Trust Supplement set forth. By its payment for and acceptance
of each Certificate of such series issued to it under this Agreement, each
initial Certificateholder of such series as grantor of such Trust shall thereby
join in the creation and declaration of such Trust.
Section 2.04. Limitation of Powers. Each Trust shall be
constituted solely for the purpose of making the investment in the Equipment
Notes provided for in the related Trust Supplement, and, except as set forth
herein or in this Agreement, the Trustee shall not be authorized or empowered to
acquire any other investments or engage in any other activities and, in
particular, the Trustee shall not be authorized or empowered to do anything that
would cause such Trust to fail to qualify as a "grantor trust" for federal
income tax purposes (including as subject to this restriction, acquiring the
Aircraft or Spare Engine (as defined in the respective related Indentures) by
bidding such Equipment Notes or otherwise, or taking any action with respect to
any such Aircraft or Spare Engine once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Form, Denomination and Execution of
Certificates. The Certificates of each series shall be issued in fully
registered form without coupons and shall be substantially in the form attached
hereto as Exhibit A, with such omissions, variations and insertions as are
permitted by this Agreement, and may have such letters, numbers or other marks
of identification and such legends or endorsements printed, lithographed or
engraved thereon, as may be required to comply with the rules of
<PAGE> 26
20
any securities exchange on which such Certificates may be listed or to conform
to any usage in respect thereof, or as may, consistently herewith, be prescribed
by the Trustee or by the officer executing such Certificates, such determination
by said officer to be evidenced by his signing the Certificates. Any portion of
the text of any Certificate may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Certificate.
Except as provided in Section 3.09, the definitive
Certificates of such series shall be printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the
Certificates may be listed, all as determined by the officer executing such
Certificates, as evidenced by his execution of such Certificates.
Except as otherwise provided in the related Trust Supplement,
the Certificates of each series shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Certificate of each series may be
issued in a different denomination.
The Certificates of such series shall be executed on behalf of
the Trustee by manual or facsimile signature of a Responsible Officer of the
Trustee. Certificates of any series bearing the manual or facsimile signature of
an individual who was, at the time when such signature was affixed, authorized
to sign on behalf of the Trustee shall be valid and binding obligations of the
Trustee, notwithstanding that such individual has ceased to be so authorized
prior to the authentication and delivery of such Certificates or did not hold
such office at the date of such Certificates. No Certificate of any series shall
be entitled to any benefit under this Agreement, or be valid for any purpose
unless there appears on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A hereto executed by the Trustee
by manual signature, and such certificate of authentication upon any Certificate
shall be conclusive evidence, and the only evidence, that such Certificate has
been duly authenticated and delivered hereunder. All Certificates of any series
shall be dated on the date of their authentication.
Section 3.02. Authentication of Certificates. The Trustee
shall duly authenticate and deliver Certificates of each series in authorized
denominations equalling in the aggregate the aggregate principal amount of the
Equipment Notes to be purchased by the Trustee pursuant to the related Refunding
Agreements, and evidencing the entire ownership of the related Trust.
Section 3.03. Temporary Certificates. Pending the preparation
of definitive Certificates of any series, the Trustee may execute, authenticate
and deliver temporary Certificates of such series which are printed,
lithographed, typewritten, or otherwise produced, in any denomination,
containing substantially
<PAGE> 27
21
the same terms and provisions as set forth in Exhibit A hereto, except for such
appropriate insertions, omissions, substitutions and other variations relating
to their temporary nature as the officer executing such temporary Certificates
may determine, as evidenced by its execution of such temporary Certificates.
If temporary Certificates of any series are issued, the
Company will cause definitive Certificates of such series to be prepared without
unreasonable delay. After the preparation of definitive Certificates of such
series, the temporary Certificates shall be exchangeable for definitive
Certificates upon surrender of such temporary Certificates at the Corporate
Trust Office of the Trustee, or at the office or agency of the Trustee
maintained in accordance with Section 7.11, without charge to the holder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall execute, authenticate and deliver in exchange therefor definitive
Certificates of like series, in authorized denominations and of a like aggregate
Fractional Undivided Interest. Until so exchanged, such temporary Certificates
shall in all respects be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.04. Registration of Transfer and Exchange of
Certificates. The Trustee shall cause to be kept at the office or agency to be
maintained by it in accordance with the provisions of Section 7.11 a register
(the "Register") for each series of Certificates in which, subject to such
reasonable regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates of such series and of transfers and exchanges of
such Certificates as herein provided. The Trustee shall initially be the
registrar (the "Registrar") for the purpose of registering Certificates of each
series and transfers and exchanges of such Certificates as herein provided.
If a Person other than the Trustee is appointed by the Company
as the Registrar, the Company will give the Trustee prompt written notice of the
appointment of such Registrar and of the location, and any change in the
location, of the Register, and the Trustee shall have the right to inspect the
Register at all reasonable times and to obtain copies thereof, and the Trustee
shall have the right to conclusively rely upon an officers' certificate executed
on behalf of the Registrar as to the names and addresses of the
Certificateholders and the principal amounts and numbers of such Certificates.
Upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office or such other office or agency, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of like series, in authorized
denominations of a like aggregate Fractional Undivided Interest.
At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of like series, in authorized
<PAGE> 28
22
denominations and of a like aggregate Fractional Undivided Interest, upon
surrender of the Certificates to be exchanged at any such office or agency.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, authenticate and deliver the Certificates that the Certificateholder
making the exchange is entitled to receive. All Certificates issued upon any
registration of transfer or exchange of Certificates shall be valid obligations
of the Trust, evidencing the same interest therein, and entitled to the same
benefits under this Agreement, as the Certificates surrendered upon such
registration of transfer or exchange. Every Certificate presented or surrendered
for registration of transfer or exchange shall be duly endorsed or accompanied
by a written instrument of transfer in form satisfactory to the Trustee and the
Registrar duly executed by the Certificateholder thereof or its attorney duly
authorized in writing.
No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Trustee shall
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates. All
Certificates surrendered for registration of transfer and exchange shall be
canceled and subsequently destroyed by the Trustee.
Section 3.05. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Registrar,
or the Registrar receives evidence to its satisfaction of the destruction, loss
or theft of any Certificate, and (b) there is delivered to the Registrar and the
Trustee such security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the Registrar or the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates of like series, in authorized denominations and of like Fractional
Undivided Interest. In connection with the issuance of any new Certificate under
this Section 3.05, the Trustee shall require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section 3.05 shall constitute conclusive evidence of the
appropriate Fractional Undivided Interest in the related Trust, as if originally
issued, whether or not the lost stolen or destroyed Certificate shall be found
at any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation
of a Certificate for registration of transfer, the Trustee, the Registrar, and
any Paying Agent of the Trustee may treat the person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.02 and for all other purposes
<PAGE> 29
23
whatsoever, and neither the Trustee, the Registrar, nor any Paying Agent of the
Trustee shall be affected by any notice to the contrary.
Section 3.07. Cancellation. All Certificates surrendered for
payment or transfer or exchange shall, if surrendered to any Person party hereto
other than the Registrar, be delivered to the Registrar for cancellation. No
Certificates shall be authenticated in lieu of or in exchange for any
Certificates canceled as provided in this Section, except as expressly permitted
by this Agreement. All canceled Certificates held by the Registrar shall be
destroyed and a certification of their destruction delivered to the Trustee.
Section 3.08. Limitation of Liability for Payments. All
payments or distributions made to Certificateholders of any series under the
related Trust Supplement shall be made only from the Trust Property of the
related Trust and only to the extent that the Trustee shall have sufficient
income or proceeds from such Trust Property to make such payments in accordance
with the terms of Article IV of this Agreement. Each Certificateholder, by its
acceptance of a Certificate, agrees that it will look solely to the income and
proceeds from the Trust Property of the related Trust to the extent available
for distribution to such Certificateholder as provided in this Agreement.
Section 3.09. Book-Entry and Definitive Certificates.
(a) The Certificates of any series may be issued in the form
of one or more typewritten Certificates representing the Book-Entry Certificates
of such series, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Company. In such case, the
Certificates of such series delivered to The Depository Trust Company shall
initially be registered on the Register in the name of CEDE & Co., the nominee
of the initial Clearing Agency, and no Certificate Owner will receive a
definitive certificate representing such Certificate Owner's interest in the
Certificates of such series, except as provided above and in Subsection (c)
below. As to the Certificates of any series, unless and until definitive, fully
registered Certificates (the "Definitive Certificates") have been issued
pursuant to Subsection (c) below:
(i) the provisions of this Section 3.09 shall be in
full force and effect;
(ii) the Company, the Paying Agent, the Registrar
and the Trustee may deal with the Clearing Agency and the Clearing
Agency Participants for all purposes (including the making of
distributions on the Certificates and the distribution of statements
pursuant to Section 4.03) as the authorized representatives of the
Certificate Owners;
(iii) to the extent that the provisions of this
Section 3.09 conflict with any other provisions of this
<PAGE> 30
24
Agreement (other than the provisions of any Trust Supplement amending
this Section 3.09 as permitted by this Basic Agreement), the provisions
of this Section 3.09 shall control;
(iv) the rights of Certificate Owners shall be
exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Certificate Owners
and the Clearing Agency Participants; and until Definitive Certificates
are issued pursuant to Subsection (c) below, the Clearing Agency will
make book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and interest and
premium, if any, on the Certificates to such Clearing Agency
Participants; and
(v) whenever this Agreement requires or permits
actions to be taken based upon instructions or directions of
Certificateholders of such series holding Certificates of such series
evidencing a specified percentage of the Fractional Undivided Interests
in the related Trust, the Clearing Agency shall be deemed to represent
such percentage only to the extent that it has received instructions to
such effect from Certificate Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in Certificates of such series and has delivered
such instructions to the Trustee. The Trustee shall have no obligation
to determine whether the Clearing Agency has in fact received any such
instructions.
(b) Whenever notice or other communication to the
Certificateholders of such series is required under this Agreement, unless and
until Definitive Certificates shall have been issued pursuant to Subsection (c)
below, the Trustee shall give all such notices and communications specified
herein to be given to Certificateholders of such series to the Clearing Agency.
(c) If with respect to the Certificates of any series (i) the
Company advises the Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities and the Trustee or
the Company is unable to locate a qualified successor, (ii) the Company at its
option, advises the Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default with respect to the related Trust, Certificate Owners of
Book-Entry Certificates of such series evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the related Trust, by Act of
said Certificate Owners delivered to the Company and the Trustee, advise the
Company, the Trustee and the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a book-entry system through the
Clearing Agency Participants is no longer in the best interests of the
Certificate Owners of
<PAGE> 31
25
such series, then the Trustee shall notify all Certificate Owners of such
series, through the Clearing Agency, of the occurrence of any such event and of
the availability of Definitive Certificates. Upon surrender to the Trustee of
all the Certificates of such series held by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency Participants for registration
of Definitive Certificates in the names of Certificate Owners of such series,
the Trustee shall issue and deliver the Definitive Certificates of such series
in accordance with the instructions of the Clearing Agency. Neither the Company,
the Registrar, the Paying Agent nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such registration instructions. Upon the issuance of
Definitive Certificates of such series, the Trustee shall recognize the Person
in whose name the Definitive Certificates are registered in the Register as
Certificateholders hereunder. Neither the Company nor the Trustee shall be
liable if the Trustee or the Company is unable to locate a qualified successor
Clearing Agency.
(d) The provisions of this Section 3.09 may be made
inapplicable to any series or may be amended with respect to any series in the
related Trust Supplement.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments
Account.
(a) The Trustee shall establish and maintain on behalf of the
Certificateholders of each series a Certificate Account as one or more
non-interest-bearing accounts. The Trustee shall hold the Certificate Account in
trust for the benefit of the Certificateholders of such series, and shall make
or permit withdrawals therefrom only as provided in this Agreement. On each day
when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt
thereof, shall immediately deposit the aggregate amount of such Scheduled
Payment into the Certificate Account.
(b) The Trustee shall establish and maintain on behalf of the
Certificateholders of each series a Special Payments Account as one or more
accounts, which shall be non-interest bearing except as provided in Section
4.04. The Trustee shall hold the Special Payments Account in trust for the
benefit of the Certificateholders of such series, and shall make or permit
withdrawals therefrom only as provided in this Agreement. On each day when one
or more Special Payments are made to the Trustee, the Trustee, upon receipt
thereof, shall immediately deposit the aggregate amount of such Special Payments
into the Special Payments Account.
<PAGE> 32
26
(c) The Trustee shall present to the Indenture Trustee to
which an Equipment Note relates such Equipment Note on the date of its stated
final maturity or, in the case of any Equipment Note which is to be redeemed in
whole pursuant to the relevant Indenture, on the applicable redemption date
under such Indenture.
Section 4.02. Distributions from Certificate Account
and Special Payments Account.
(a) On each Regular Distribution Date with respect to a series
of Certificates or as soon thereafter as the Trustee has confirmed receipt of
the payment of the Scheduled Payments due on the Equipment Notes held in the
related Trust on such date, the Trustee shall distribute out of the applicable
Certificate Account the entire amount deposited therein pursuant to Section
4.01(a). There shall be so distributed to each Certificateholder of record of
such series on the Record Date with respect to such Regular Distribution Date
(other than as provided in Section 11.01 concerning the final distribution), by
check mailed to such Certificateholder at the address appearing in the Register,
such Certificateholder's pro rata share (based on the aggregate Fractional
Undivided Interest in the related Trust held by such Certificateholder) of the
aggregate amount in the applicable Certificate Account.
(b) On each Special Distribution Date with respect to any
Special Payment with respect to a series of Certificates or as soon thereafter
as the Trustee has confirmed receipt of the Special Payments due on the
Equipment Notes held in the related Trust or realized upon the sale of such
Equipment Notes, the Trustee shall distribute out of the applicable Special
Payments Account the entire amount of such Special Payment deposited therein
pursuant to Section 4.01(b). There shall be so distributed to each
Certificateholder of record of such series on the Record Date with respect to
such Special Distribution Date (other than as provided in Section 11.01
concerning the final distribution), by check mailed to such Certificateholder at
the address appearing in the Register, such Certificateholder's pro rata share
(based on the aggregate Fractional Undivided Interest in the related Trust held
by such Certificateholder) of the aggregate amount in the applicable Special
Payments Account on account of such Special Payment.
(c) The Trustee shall at the expense of the Company, cause
notice of each Special Payment with respect to a series of Certificates to be
mailed to each Certificateholder of such series at his address as it appears in
the Register. In the event of redemption or purchase of Equipment Notes held in
the related Trust, such notice shall be mailed not less than 20 days prior to
the date any such Special Payment is scheduled to be distributed. In the case of
any other Special Payments, such notice shall be mailed as soon as practicable
after the Trustee has confirmed that it has received funds for such Special
Payment. Notices mailed by the Trustee shall set forth:
<PAGE> 33
27
(i) the scheduled Special Distribution Date and the Record
Date therefor (except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face
amount Certificate (taking into account any payment to be made by the
Company pursuant to Section 2.02(b)) and the amount thereof
constituting principal premium, if any, and interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a
Regular Distribution Date for the Certificates of such series, the
total amount to be received on such date for each $1,000 face amount
Certificate.
If the amount of premium, if any, payable upon the redemption
or purchase of an Equipment Note has not been calculated at the date that the
Trustee mails notice of a Special Payment, it shall be sufficient if the notice
sets forth the other amounts to be distributed and states that any premium
received will also be distributed.
If any redemption of the Equipment Notes held in any Trust is
canceled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder of the related series at
its address as it appears on the Register.
Section 4.03. Statements to Certificateholders.
(a) On each Regular Distribution Date and Special Distribution
Date with respect to a series of Certificates, the Trustee will include with
each distribution to Certificateholders of the related series a statement,
giving effect to such distribution to be made on such Regular Distribution Date
or Special Distribution Date, as the case may be, setting forth the following
information (per $1,000 face amount Certificate as to (i) and (ii) below):
(i) The amount of such distribution allocable to principal
and the amount allocable to premium, if any;
(ii) The amount of such distribution allocable to interest;
and
(iii) The Pool Balance and the Pool Factor of the related
Trust.
With respect to the Certificates registered in the name of the
Clearing Agency, on the Record Date prior to each Distribution Date, the Trustee
will request from the Clearing Agency a securities position listing setting
forth the names of all the Clearing Agency Participants reflected on the
Clearing
<PAGE> 34
28
Agency's books as holding interests in the Certificates on such Record Date. On
each Distribution Date, the applicable Trustee will mail to each such Clearing
Agency Participant the statement described above and will make available
additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Certificates. On each Distribution
Date, the applicable Trustee will mail to each Underwriter the statement
described above.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Trustee
shall furnish to each Person who at any time during such calendar year was a
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i) and (a)(ii) with respect to the related
Trust for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar year, for the
applicable portion of such year, and such other items as are readily available
to the Trustee and which a Certificateholder shall reasonably request as
necessary for the purpose of such Certificateholder's preparation of its Federal
income tax returns. With respect to Certificates registered in the name of the
Clearing Agency, such report and such other items shall be prepared on the basis
of information supplied to the Trustees by the Clearing Agency Participants and
shall be delivered by the Trustee to such Clearing Agency Participants to be
available for forwarding by such Clearing Agency Participants to holders of
interests in Certificates.
Section 4.04. Investment of Special Payment Moneys. Any money
received by the Trustee pursuant to Section 4.01(b) representing a Special
Payment which is not to be promptly distributed shall, to the extent
practicable, be invested in Permitted Investments by the Trustee as directed in
writing by the Company pending distribution of such Special Payment pursuant to
Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such
Permitted Investments having maturities not later than the date that such moneys
are required to be used to make the payment required under Section 4.02 on the
applicable Special Distribution Date and the Trustee shall hold any such
Permitted Investments until maturity. The Trustee shall have no liability with
respect to any investment made pursuant to this Section 4.04, other than by
reason of the willful misconduct or negligence of the Trustee. All income and
earnings from such investments shall be distributed on such Special Distribution
Date as part of such Special Payment.
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The Company,
at its own cost and expense, will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights and
franchises, except as
<PAGE> 35
29
otherwise specifically permitted in Section 5.02; provided, however, that the
Company shall not be required to preserve any right or franchise if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company.
Section 5.02. Consolidation, Merger, Etc. The Company shall
not consolidate with or merge into any other corporation or convey, transfer or
lease substantially all of its assets as an entirety to any Person unless:
(a) the corporation formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of the Company as an
entirety shall be a "citizen of the United States" (as defined in
Section 40102(a)(15) of Title 49 of the United States Code) holding a
carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49, United States Code, for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo and with respect to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the regulations
under the sections of Title 49, United States Code, relating to
aviation;
(b) the corporation formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of the Company as an
entirety shall execute and deliver to the Trustee applicable to the
Certificates of each series a duly authorized, valid, binding and
enforceable agreement in form and substance reasonably satisfactory to
the Trustee containing an assumption by such successor corporation or
Person of the due and punctual performance and observance of each
covenant and condition of the Note Documents to which the Company is a
party and of this Agreement applicable to the Certificates of each
series to be performed or observed by the Company;
(c) immediately after giving effect to such transaction, no
Event of Default applicable to the Certificates of each series or event
which is, or after notice or passage of time, or both, would be, such
an Event of Default shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an
Officers' Certificate of the Company and an Opinion of Counsel of the
Company (which may be the Company's General Counsel) reasonably
satisfactory to the Trustee, each stating that such consolidation,
merger, conveyance, transfer or lease and the assumption agreement
mentioned in clause (b) above comply with this Section 5.02 and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
<PAGE> 36
30
Upon any consolidation or merger, or any conveyance, transfer
or lease of substantially all of the assets of the Company as an entirety in
accordance with this Section 5.02, the successor corporation or Person formed by
such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Agreement
applicable to the Certificates of each series with the same effect as if such
successor corporation or Person had been named as the Company herein. No such
conveyance, transfer or lease of substantially all of the assets of the Company
as an entirety shall have the effect of releasing the Company or any successor
corporation or Person which shall theretofore have become such in the manner
prescribed in this Section 5.02 from its liability in respect of any Note
Document and of this Agreement applicable to the Certificates of such series to
which it is a party.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of Remedies:
Upon the occurrence and during the continuation of any Indenture Default under
any Indenture, the Trustee may, to the extent it is the Controlling Party at
such time, direct the exercise of remedies as provided in any Intercreditor
Agreement.
(b) Purchase Rights of Certificateholders: By acceptance of
its Certificate, each Certificateholder agrees that at any time after the
occurrence and during the continuation of a Triggering Event, each
Certificateholder of Certificates of a series will have certain rights, the
exercise of which will be specified in the applicable Trust Supplement, to
purchase the class of Certificates with immediate seniority to the Certificates
held by the purchasing Certificateholder. The purchase price with respect to the
Certificates of any series shall be equal to the Pool Balance of the
Certificates of such series, together with accrued and unpaid interest thereon
to the date of such purchase, without premium, but including any other amounts
then due and payable to the Certificateholders under this Agreement, any
Intercreditor Agreement or any other Note Document or on or in respect of the
Certificates of such series; provided, however, that no such purchase of
Certificates of such series shall be effective unless the purchaser shall
certify to the Trustee that contemporaneously with such purchase, such purchaser
is purchasing, pursuant to the terms of this Agreement and the other Agreements,
if any, relating to Certificates of multiple series that are subject to the same
Intercreditor Agreement (such other Agreements as defined in the Trust
Supplements establishing such series, the "Other Agreements"), the Certificates
of each such series that is senior to the Certificates held by such purchaser.
Each payment of the purchase price of the Certificates of any series shall be
made to an account or accounts designated by the Trustee and each such purchase
shall
<PAGE> 37
31
be subject to the terms of this Section. Each Certificateholder of any series
agrees by its acceptance of Certificates of such series that it will, upon
payment from any such Certificateholders of Certificates with a lower seniority
of the purchase price specified herein, forthwith sell, assign, transfer and
convey to the purchaser thereof (without recourse, representation or warranty of
any kind except for its own acts), all of the right, title, interest and
obligation of such Certificateholder in this Agreement, any Intercreditor
Agreement, the Liquidity Facility, the Note Documents and all Certificates of
such series held by such Certificateholder (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 as respects any action
or inaction or state of affairs occurring prior to such sale) and the purchaser
shall assume all of such Certificateholder's obligations under this Agreement,
any Intercreditor Agreement, the Liquidity Facility and the Note Documents. The
Certificates of such series will be deemed to be purchased on the date payment
of the purchase price is made notwithstanding the failure of the
Certificateholders to deliver any Certificates of such series and, upon such a
purchase, (i) the only rights of the Certificateholders will be to deliver the
Certificates to the purchaser and receive the purchase price for such
Certificates of such series and (ii) if the purchaser shall so request, such
Certificateholder will comply with all of the provisions of Section 3.04 hereof
to enable new Certificates of such series to be issued to the purchaser in such
denominations as it shall request. All charges and expenses in connection with
the issuance of any such new Certificates shall be borne by the purchaser
thereof.
(c) No Action Contrary to the Company's Rights under a Related
Lease. Notwithstanding any of the provisions of this Agreement to the contrary,
each Trustee agrees and each Certificateholder of any series agrees by its
acceptance of such Certificate for the benefit of the Company that it will not
take any action contrary to the Company's rights under any related Lease,
including the right of the Company to possession and use the quiet enjoyment of
the Equipment subject to such related Lease, except in accordance with the
provisions of the related Lease.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any
sale of all or any part of the Equipment Notes made either under the power of
sale given under this Agreement or otherwise for the enforcement of this
Agreement, the following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment
Notes. Any Certificateholder, the Trustee in its individual or any
other capacity or any other Person may bid for and purchase any of the
Equipment Notes, and upon compliance with the terms of sale, may hold,
retain, possess
<PAGE> 38
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and dispose of such Equipment Notes in their own absolute right without
further accountability.
(2) Receipt of Trustee Shall Discharge Purchaser. The receipt
of the Trustee or of the officer making such sale shall be a sufficient
discharge to any purchaser for his purchase money, and, after paying
such purchase money and receiving such receipt, such purchaser or its
personal representative or assigns shall not be obliged to see to the
application of such purchase money, or be in any way answerable for any
loss, misapplication or non-application thereof.
(3) Application of Moneys Received upon Sale. Any moneys
collected by the Trustee upon any sale made either under the power of
sale given by this Agreement or otherwise for the enforcement of this
Agreement shall, after payment of fees and expenses of the Trustee as
provided in Section 7.06, be applied as provided in Section 4.02.
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit. If there shall be a failure to make payment when due and
payable of the principal of, premium, if any, or interest on any Equipment Note,
or if there shall be any failure to pay any other amount under any Indenture
when due and payable, then the Trustee, in its own name, and as trustee of an
express trust, as holder of such Equipment Notes, to the extent permitted by and
in accordance with the terms of any Intercreditor Agreement and any Note
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure in accordance with the applicable
Indenture), shall be entitled and empowered to institute any suits, actions or
proceedings at law, in equity or otherwise, for the collection of the sums so
due and unpaid on such Equipment Notes or under such Indenture and may prosecute
any such claim or proceeding to judgment or final decree with respect to the
whole amount of any such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject to
Section 6.03 and any Intercreditor Agreement, the Certificateholders holding
Certificates of a series evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the related Trust shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to such Trust or pursuant to the terms of
any Intercreditor Agreement, or exercising any trust or power conferred on the
Trustee under this Agreement or any Intercreditor Agreement, including any right
of the Trustee as Controlling Party under any Intercreditor Agreement or as
holder of the Equipment Notes, provided that
(1) such Direction shall not in the opinion of the Trustee be
in conflict with any rule of law or with this Agreement and would not
involve the Trustee in personal liability or expense,
<PAGE> 39
33
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Certificateholders of
such series not taking part in such Direction, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such Direction.
Section 6.05. Waiver of Past Defaults. Subject to any
Intercreditor Agreement, the Certificateholders holding Certificates of a series
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust (i) may on behalf of all of the Certificateholders
waive any past Event of Default hereunder and its consequences or (ii) if the
Trustee is the Controlling Party, may direct the Trustee to instruct the
applicable Indenture Trustee to waive, any past Indenture Default under any
Indenture and its consequences, and thereby annul any Direction given by such
Certificateholders or the Trustee to such Indenture Trustee with respect
thereto, except a default:
(1) in the deposit of any Scheduled Payment or Special Payment
under Section 4.01 or in the distribution of any payment under Section
4.02 on the Certificates of a series, or
(2) in the payment of the principal of (premium, if any) or
interest on the Equipment Notes, or
(3) in respect of a covenant or provision hereof which under
Article IX hereof cannot be modified or amended without the consent of
each Certificateholder holding an Outstanding Certificate of a series
affected thereby.
Upon any such waiver, such default shall cease to exist with
respect to Certificates of such series and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose and any direction
given by the Trustee on behalf of the Certificateholders of such series to the
relevant Indenture Trustee shall be annulled with respect thereto; but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon. Upon any such waiver, the Trustee shall
vote the Equipment Notes issued under the relevant Indenture to waive the
corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments
Not To Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including without limitation Section 6.07 hereof, but subject to any
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
applicable Certificates when due, or to institute suit for the enforcement of
any such payment on or after the applicable
<PAGE> 40
34
Regular Distribution Date or Special Distribution Date, shall not be impaired or
affected without the consent of such Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions. A Certificateholder of any series shall not have the
right to institute any suit, action or proceeding at law or in equity or
otherwise with respect to this Agreement, for the appointment of a receiver or
for the enforcement of any other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given written
notice to the Trustee of a continuing Event of Default;
(2) the Certificateholders holding Certificates of such series
evidencing Fractional Undivided Interests aggregating not less than 25%
of the related Trust shall have requested the Trustee in writing to
institute such action, suit or proceeding and shall have offered to the
Trustee indemnity as provided in Section 7.02(e);
(3) the Trustee shall have refused or neglected to institute
any such action, suit or proceeding for 60 days after receipt of such
notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the
Certificateholders holding Certificates of such series evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the related Trust.
It is understood and intended that no one or more of the
Certificateholders of any series shall have any right in any manner whatever
hereunder or under the related Trust Supplement or under the Certificates of
such series to (i) surrender, impair, waive, affect, disturb or prejudice any
property in the Trust Property of the related Trust or the lien of any related
Indenture on any property subject thereto, or the rights of the
Certificateholders of such series or the holders of the related Equipment Notes,
(ii) obtain or seek to obtain priority over or preference to any other such
Certificateholder of such series or (iii) enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all the Certificateholders of such series subject to the
provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given
hereunder to the Trustee or to any of the Certificateholders of any series shall
not be exclusive of any other remedy or remedies, and every such remedy shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter given by statute, law, equity or otherwise.
<PAGE> 41
35
Section 6.09. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Agreement, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, a court
may require any party litigant in such suit to file an undertaking to pay the
costs of such suit, and may assess costs against any such party litigant, in the
manner and to the extent provided in the Trust Indenture Act; provided that
neither this Section nor the Trust Indenture Act shall be deemed to authorize
any court to require such an undertaking or to make such an assessment in any
suit instituted by the Company.
ARTICLE VII
THE TRUSTEE
Section 7.01. Notice of Defaults. As promptly as practicable
after, and in any event within 90 days after the occurrence of any default (as
such term is defined below) hereunder known to the Trustee, the Trustee shall
transmit by mail to the Company, any related Owner Trustees, the related
Indenture Trustees and the Certificateholders holding Certificates of the
related series in accordance with Section 313(c) of the Trust Indenture Act,
notice of such default hereunder known to the Trustee, unless such default shall
have been cured or waived; provided, however, that, except in the case of a
default in the payment of the principal of (premium, if any) or interest on any
Equipment Note, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee or a trust committee
of directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interests of the
Certificateholders of the related series. For the purpose of this Section in
respect of any Trust, the term "default" means any event that is, or after
notice or lapse of time or both would become, an Event of Default in respect of
that Trust.
Section 7.02. Certain Rights of Trustee. Subject to
the provisions of Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Request;
(c) whenever in the administration of this Agreement or any
Intercreditor Agreement the Trustee shall deem it desirable that a
matter be proved or established prior to
<PAGE> 42
36
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence
of bad faith on its part, rely upon an Officers' Certificate of the
Company, any related Owner Trustee or any related Indenture Trustee;
(d) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement or any
Intercreditor Agreement at the request or direction of any of the
Certificateholders pursuant to this Agreement or any Intercreditor
Agreement unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the cost, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, or report, notice, request, direction,
consent, order, bond, debenture or other paper or document;
(g) the Trustee may execute any of the trusts or powers under
this Agreement or any Intercreditor Agreement or perform any duties
under this Agreement or any Intercreditor Agreement either directly or
by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it under this Agreement or any
Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates of any series
evidencing Fractional Undivided Interests aggregating not less than a
majority in interest in the related Trust relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement or any Intercreditor Agreement;
(i) the Trustee shall not be required to expend or risk its
own funds in the performance of any of its duties under this Agreement,
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 is not reasonably assured to it;
and
<PAGE> 43
37
(j) except during the continuance of an Event of Default, the
Trustee undertakes and shall be responsible to perform only such duties
as are specifically set forth herein and no implied covenants or
obligations shall be read into this Agreement or be enforceable against
Trustee.
Section 7.03. Not Responsible for Recitals or Issuance of
Cerificates. The recitals contained herein and in the Certificates of each
series, except the certificates of authentication, shall not be taken as the
statements of the Trustee, and the Trustee assumes no responsibility for their
correctness. Subject to Section 7.14, the Trustee makes no representations as
to the validity or sufficiency of this Basic Agreement or any Trust Supplement,
any Note Documents, any Refunding Agreement or any Intercreditor Agreement, any
Equipment Notes or the Certificates of any series, except that the Trustee
hereby represents and warrants that this Basic Agreement has been, and each
Trust Supplement, each Certificate and each Intercreditor Agreement of, or
relating to, each series will be, executed and delivered by one of its
officers who is duly authorized to execute and deliver such document on
its behalf.
Section 7.04. May Hold Certificates. The Trustee, any Paying
Agent, Registrar or any of their Affiliates or any other agent, in their
respective individual or any other capacity, may become the owner or pledgee of
Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act
may otherwise deal with the Company, any Owner Trustees or the Indenture
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.05. Money Held in Trust. Money held by the Trustee
or the Paying Agent in trust hereunder or under any Trust Supplement need not be
segregated from other funds except to the extent required herein or by law and
neither the Trustee nor the Paying Agent shall have any liability for interest
upon any such moneys except as provided for herein.
Section 7.06. Compensation and Reimbursement. The Company
agrees:
(1) to pay, or cause to be paid, to the Trustee from time to
time reasonable compensation for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided in any Trust
Supplement, to reimburse, or cause to be reimbursed, the Trustee upon
its request for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Basic Agreement, any Trust Supplement or any
Intercreditor Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel),
<PAGE> 44
38
except any such expense, disbursement or advance as may be attributable
to its negligence, willful misconduct or bad faith or as may be
incurred due to the Trustee's breach of its representations and
warranties set forth in Section 7.14;
(3) to indemnify, or cause to be indemnified, the Trustee for,
and to hold it harmless against, any loss, liability or expense (other
than for or with respect to any tax) incurred without negligence,
willful misconduct or bad faith, on its part, arising out of or in
connection with the acceptance or administration of this Trust,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except for any such loss, liability or
expense incurred by reason of the Trustee's breach of its
representations and warranties set forth in Section 7.14. The Trustee
shall notify the Company promptly of any claim for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel with
the consent of the Company and the Company will pay the reasonable fees
and expenses of such counsel. The Company need not pay for any
settlement made without its consent; and
(4) to indemnify, or cause to be indemnified, the Trustee,
solely in its individual capacity, for, and to hold it harmless
against, any tax (except to the extent the Trustee is reimbursed
therefor pursuant to the next paragraph, provided that no
indemnification shall be available with respect to any tax attributable
to the Trustee's compensation for serving as such) incurred without
negligence, willful misconduct or bad faith, on its part, arising out
of or in connection with the acceptance or administration of this
Trust, including any costs and expenses incurred in contesting the
imposition of any such tax. The Trustee, in its individual capacity,
shall notify the Company promptly of any claim for any tax for which it
may seek indemnity. The Trustee shall permit the Company to contest the
imposition of such tax and the Trustee, in its individual capacity,
shall, at the Company's expense, cooperate in the defense. The Trustee,
in its individual capacity, may have separate counsel with the consent
of the Company and the Company will pay the reasonable fees and
expenses of such counsel. The Company need not pay for any taxes paid,
in settlement or otherwise, without its consent.
The Trustee shall be entitled to reimbursement from, and shall
have a lien prior to the Certificates of each series upon, all property and
funds held or collected by the Trustee in its capacity as Trustee with respect
to such series or the related Trust for any tax incurred without negligence, bad
faith or willful misconduct, on its part, arising out of or in connection with
the acceptance or administration of such Trust
<PAGE> 45
39
(other than any tax attributable to the Trustee's compensation for serving as
such), including any costs and expenses incurred in contesting the imposition of
any such tax. The Trustee shall notify the Company of any claim for any tax for
which it may seek reimbursement. The Trustee shall cooperate in the contest by
the Company of any such claim. If the Trustee reimburses itself from the Trust
Property of such Trust for any such tax it will within 30 days mail a brief
report setting forth the amount of such tax and the circumstances thereof to all
Certificateholders of such series as their names and addresses appear in the
Register.
As security for the performance of the obligations of the
Company under this Section 7.06 with respect to each Trust the Trustee shall
have a lien prior to the Certificates of the related series upon all property
and funds held or collected by the Trustee in its capacity as Trustee with
respect to such Certificates and the related Trust.
Section 7.07. Corporate Trustee Required; Eligibility. Each
Trust shall at all times have a Trustee which shall be eligible to act as a
trustee under Section 310(a) of the Trust Indenture Act and shall have a
combined capital and surplus of at least $100,000,000 (or a combined capital and
surplus in excess of $5,000,000 and the obligations of which, whether now in
existence or hereafter incurred, are fully and unconditionally guaranteed by a
corporation organized and doing business under the laws of the United States,
any State or Territory thereof or of the District of Columbia that has a
combined capital and surplus of at least $100,000,000). If such corporation
publishes reports of conditions at least annually, pursuant to law or to the
requirements of Federal, State, Territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section 7.07, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions so
published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.07 to act as Trustee of any
Trust, the Trustee shall resign immediately as Trustee of such Trust in the
manner and with the effect specified in Section 7.08.
Section 7.08. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee of any Trust pursuant to this Article shall
become effective until the acceptance of appointment by the successor Trustee
under Section 7.09.
(b) The Trustee may resign at any time as trustee of any or
all Trusts by giving written notice thereof to the Company, the Authorized
Agents, the related Owner Trustees and the related Indenture Trustees. If an
instrument of acceptance
<PAGE> 46
40
by a successor Trustee shall not have been delivered to the Company, the related
Owner Trustees and the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time as trustee of any
Trust by Act of the Certificateholders of the related series holding
Certificates of such series evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in such Trust delivered to the
Trustee and to the Company, the related Owner Trustees and the related Indenture
Trustees.
(d) If at any time in respect of any Trust:
(1) the Trustee shall fail to comply with Section 310 of the
Trust Indenture Act after written request therefor by the Company or by
any Certificateholder of the related series who has been a bona fide
certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.07
and shall fail to resign after written request therefor by the Company
or by any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder of the related series who has been a bona fide
Certificateholder for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee of such Trust.
(e) If a Responsible Officer of the Trustee shall obtain
actual knowledge of an Avoidable Tax (as hereinafter defined) in respect of any
Trust which has been or is likely to be asserted, the Trustee shall promptly
notify the Company and shall, within 30 days of such notification, resign as
Trustee of such Trust hereunder unless within such 30-day period the Trustee
shall have received notice that the Company has agreed to pay such tax. The
Company shall promptly appoint a successor Trustee of such Trust in a
jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable
Tax" in respect of such Trust means a state or local tax (i) upon (w) such
Trust, (x) such Trust Property, (y) Certificateholders of such Trust or (z) the
Trustee for which the Trustee is entitled to seek reimbursement from the Trust
Property of such Trust, and (ii) which would be avoided if the Trustee were
located in
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41
another state, or jurisdiction within a state, within the United States. A tax
shall not be an Avoidable Tax in respect of any Trust if the Company or any
Owner Trustee shall agree to pay, and shall pay, such tax.
(f) If the Trustee shall resign, be removed or become
incapable of acting as trustee of any Trust, or if a vacancy shall occur in the
office of the Trustee of any Trust for any cause, the Company shall promptly
appoint a successor Trustee of such Trust. If, within one year after such
resignation, removal or incapability, or other occurrence of such vacancy, a
successor Trustee of such Trust shall be appointed by Act of the
Certificateholders of the related series holding Certificates of such series
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in such Trust delivered to the Company, the related Owner Trustees,
the related Indenture Trustee and the retiring Trustee, the successor Trustee so
appointed shall, with the approval of the Company, which approval shall not be
unreasonably withheld, forthwith upon its acceptance of such appointment, become
the successor Trustee of such Trust and supersede the successor Trustee of such
Trust appointed as provided above. If no successor Trustee shall have been so
appointed as provided above and accepted appointment in the manner hereinafter
provided, the resigning Trustee or any Certificateholder who has been a bona
fide Certificateholder of the related series for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee of such Trust.
(g) The successor Trustee of a Trust shall give notice of the
resignation and removal of the Trustee and appointment of the successor Trustee
by mailing written notice of such event by first-class mail, postage prepaid, to
the Certificateholders of the related series as their names and addresses appear
in the Register. Each notice shall include the name of such successor Trustee
and the address of its Corporate Trust Office.
Section 7.09. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the Company and to the retiring Trustee with respect to any or all Trusts an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee with respect to such Trusts shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee, such retiring
Trustee shall execute and deliver an instrument transferring to such successor
Trustee all such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee in respect of such Trusts hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.06. Upon request of
any such successor Trustee, the Company, the
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retiring Trustee and such successor Trustee shall execute and deliver any and
all instruments containing such provisions as shall be necessary or desirable to
transfer and confirm to, and for more fully and certainly vesting in, such
successor Trustee all such rights, powers and trusts.
If a successor Trustee is appointed with respect to one or
more (but not all) Trusts, the Company, the predecessor Trustee and each
successor Trustee with respect to any Trust shall execute and deliver a
supplemental agreement hereto which shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights, powers, trusts and
duties of the predecessor Trustee with respect to the Trusts as to which the
predecessor Trustee is not retiring shall continue to be vested in the
predecessor Trustee, and shall add to or change any of the provisions of this
Basic Agreement and the applicable Trust Supplements as shall be necessary to
provide for or facilitate the administration of the Trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental agreement shall constitute such Trustees co-Trustees of the same
Trust and that each such Trustee shall be Trustee of separate Trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article VII.
Section 7.10. Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the 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 Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
Section 7.11. Maintenance of Agencies.
(a) With respect to each series of Certificates, there shall
at all times be maintained in the Borough of Manhattan, The City of New York, an
office or agency where Certificates of such series may be presented or
surrendered for registration of transfer or for exchange, and for payment
thereof and where notices and demands to or upon the Trustee in respect of such
Certificates or of the related Trust Supplement may be served.
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Such office or agency shall be initially Fleet National Bank c/o Shawmut Trust
Company, 14 Wall Street, New York, New York 10005. Written notice of the
location of each such other office or agency and of any change of location
thereof shall be given by the Trustee to the Company, any Owner Trustees, the
Indenture Trustees and the Certificateholders of such series. In the event that
no such office or agency shall be maintained or no such notice of location or of
change of location shall be given, presentations and demands may be made and
notices may be served at the Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying Agent
hereunder with respect to the Certificates of each series. Each such Authorized
Agent shall be a bank or trust company, shall be a corporation organized and
doing business under the laws of the United States or any state, with a combined
capital and surplus of at least $75,000,000, or a corporation having a combined
capital and surplus in excess of $5,000,000 the obligations of which are
guaranteed by a corporation organized and doing business under the laws of the
United States or any state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise corporate trust
powers, subject to supervision by Federal or state authorities. The Trustee
shall initially be the Paying Agent and, as provided in Section 3.04, Registrar
hereunder with respect to the Certificates of each series. Each Registrar shall
furnish to the Trustee, at stated intervals of not more than six months, and at
such other times as the Trustee may request in writing, a copy of the Register
maintained by such Registrar.
(c) Any corporation into which any Authorized Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any Authorized
Agent shall be a party, or any corporation succeeding to the corporate trust
business of any Authorized Agent, shall be the successor of such Authorized
Agent hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or such Authorized Agent or such successor
corporation.
(d) Any Authorized Agent may at any time resign by giving
written notice of resignation to the Trustee, the Company, any related Owner
Trustees and the related Indenture Trustees. The Company may, and at the request
of the Trustee shall, at any time terminate the agency of any Authorized Agent
by giving written notice of termination to such Authorized Agent and to the
Trustee. Upon the resignation or termination of an Authorized Agent or in case
at any time any such Authorized Agent shall cease to be eligible under this
Section (when in either case, no other Authorized Agent performing the functions
of such Authorized Agent shall have been appointed), the Company shall promptly
appoint one or more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the Authorized Agent
which has resigned or whose
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agency has been terminated or who shall have ceased to be eligible under this
Section. The Company shall give written notice of any such appointment made by
it to the Trustee, any related Owner Trustees and the related Indenture
Trustees; and in each case the Trustee shall mail notice of such appointment to
all Certificateholders of the related series as their names and addresses appear
on the Register for such series.
(e) The Company agrees to pay, or cause to be paid, from time
to time to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.12. Money for Certificate Payments to Be Held in
Trust. All moneys deposited with any Paying Agent for the purpose of any payment
on Certificates shall be deposited and held in trust for the benefit of the
Certificateholders entitled to such payment, subject to the provisions of this
Section. Moneys so deposited and held in trust shall constitute a separate trust
fund for the benefit of the Certificateholders with respect to which such money
was deposited.
The Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Section 7.13. Registration of Equipment Notes in Trustee's
Name. Subject to Section 12.04, the Trustee agrees that all Equipment Notes, and
Permitted Investments, if any, shall be issued in the name of the Trustee as
trustee for the applicable Trust or its nominee and held by the Trustee, or, if
not so held, the Trustee or its nominee shall be reflected as the owner of such
Equipment Notes or Permitted Investments as the case may be, in the register of
the issuer of such Equipment Notes or Permitted Investments.
Section 7.14. Representations and Warranties of
Trustee. The Trustee hereby represents and warrants that:
(a) the Trustee is a national banking association organized
and validly existing and in good standing under the laws of the United
States of America;
(b) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Agreement, any Intercreditor
Agreement and the Refunding Agreements and has taken all necessary
action to authorize the execution, delivery, and performance by it of
this Agreement, any Intercreditor Agreement and the Refunding
Agreements;
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(c) the execution, delivery and performance by the Trustee of
this Agreement, any Intercreditor Agreement and the Refunding
Agreements (i) will not violate any provision of any United States
federal law or the law of the State of Connecticut, in each case,
governing the banking and trust powers of the Trustee or any order,
writ, judgment, or decree of any court, arbitrator, or governmental
authority applicable to the Trustee or any of its assets, (ii) will not
violate any provision of the articles of association or by-laws of the
Trustee, and (iii) will not violate any provision of, or constitute,
with or without notice or lapse of time, a default under, or result in
the creation or imposition of any lien on any properties included in
the Trust Property pursuant to the provisions of any mortgage,
indenture, contract, agreement or other undertaking to which it is a
party, which violation, default or lien could reasonably be expected to
have an adverse effect on the Trustee's performance or ability to
perform its duties hereunder or thereunder or on the transactions
contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of
this Agreement, any Intercreditor Agreement and the Refunding
Agreements will not require the authorization, consent or approval of,
the giving of notice to, the filing or registration with, or the taking
of any other action in respect of, any governmental authority or agency
of the United States or the State of Connecticut regulating the banking
and corporate trust activities of the Trustee; and
(e) this Agreement, any Intercreditor Agreement and the
Refunding Agreements have been duly executed and delivered by the
Trustee and constitute the legal, valid, and binding agreements of the
Trustee, enforceable against it in accordance with their respective
terms, provided that enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and (ii) general principles
of equity.
Section 7.15. Withholding Taxes; Information Reporting. As to
the Certificates of any series, the Trustee, as trustee of the related grantor
trust created by this Agreement, shall exclude and withhold from each
distribution of principal, premium, if any, and interest and other amounts due
under this Agreement or under the Certificates of such series any and all
withholding taxes applicable thereto as required by law. The Trustee agrees to
act as such withholding agent and, in connection therewith, whenever any taxes
or similar charges are required to be withheld with respect to any amounts paid
by or on behalf of the Trustee in respect of the Certificates of such series, to
withhold such amounts and timely pay the same to the authority in the name of
and on behalf of the Certificateholders of such series, that it will file any
necessary withholding tax returns or statements when due, and that, as promptly
as possible
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after the payment thereof, it will deliver to each such Certificateholder
necessary documentation showing the payment thereof together with such
additional documentary evidence as such Certificateholders of such series may
reasonably request from time to time. The Trustee agrees to file any other
information reports as it may be required to file under United States law.
Section 7.16. Trustee's Liens. The Trustee in its individual
capacity agrees that it will in respect of each Trust created by this Agreement
at its own cost and expense promptly take any action as may be necessary to duly
discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance,
security interest or claim ("Trustee's Liens") on or with respect to the Trust
Property of such Trust which is attributable to the Trustee either (i) in its
individual capacity and which is unrelated to the transactions contemplated by
this Agreement, the related Refunding Agreements or the related Note Documents,
or (ii) as Trustee hereunder or in its individual capacity and which arises out
of acts or omissions by the Trustee which are in breach of this Agreement.
Section 7.17. Preferential Collection of Claims. The Trustee
shall comply with Section 311(a) of the Trust Indenture Act, excluding any
creditor relationship listed in Section 311(b) of the Trust Indenture Act. If
the Trustee shall resign or be removed as Trustee, it shall be subject to
Section 311(a) of the Trust Indenture Act to the extent provided therein.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders. The Company will furnish to the Trustee within
15 days after each Record Date with respect to a Scheduled Payment, and at such
other times as the Trustee may request in writing, within 30 days after receipt
by the Company of any such request, a list, in such form as the Trustee may
reasonably require, of all information in the possession or control of the
Company as to the names and addresses of the Certificateholders of such series,
in each case as of a date not more than 15 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the sole Registrar
for such series, no such list need be furnished; and provided, further, however,
that no such list need be furnished for so long as a copy of the Register is
being furnished to the Trustee pursuant to Section 7.11.
Section 8.02. Preservation of Information; Communications to
Certificateholders. The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders of each
series contained in the most recent list furnished to the Trustee as provided in
Section 7.11 or Section 8.01, as the case may be, and
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the names and addresses of Certificateholders of each series received by the
Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any
list furnished to it as provided in Section 7.11 or Section 8.01, as the case
may be, upon receipt of a new list so furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15
of each year commencing with the first full year following the issuance of any
series of Certificates, the Trustee shall transmit to the Certificateholders of
each series, as provided in Section 313(c) of the Trust Indenture Act, a brief
report dated as of such May 15, if required by Section 313(a) of the Trust
Indenture Act.
Section 8.04. Reports by the Company. The Company
shall:
(a) file with the Trustee, within 30 days after the Company is
required to file the same with the SEC, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may from time to time by
rules and regulations prescribe) which the Company is required to file
with the SEC pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934, as amended; or, if the Company is not required to
file information, documents or reports pursuant to either of such
sections, then to file with the Trustee and the SEC, in accordance with
rules and regulations prescribed by the SEC, such of the supplementary
and periodic information, documents and reports which may be required
pursuant to section 13 of the Securities Exchange Act of 1934, as
amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations;
(b) file with the Trustee and the SEC, in accordance with the
rules and regulations prescribed by the SEC, such additional
information, documents and reports with respect to compliance by the
Company with the conditions and covenants of the Company provided for
in this Agreement, as may be required by such rules and regulations,
including, in the case of annual reports, if required by such rules and
regulations, certificates or opinions of independent public
accountants, conforming to the requirements of Section 1.02;
(c) transmit to all Certificateholders, in the manner and to
the extent provided in Section 313(c) of the Trust Indenture Act such
summaries of any information, documents and reports required to be
filed by the Company pursuant to Subsections (a) and (b) of this
Section 8.04 as may be required by rules and regulations prescribed by
the SEC;
(d) furnish to the Trustee, not less often than annually, a
brief certificate from the principal executive officer, principal
financial officer or principal accounting
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officer as to his or her knowledge of the Company's compliance with all
conditions and covenants under this Agreement (it being understood that
for purposes of this paragraph (d), such compliance shall be determined
without regard to any period of grace or requirement of notice provided
under this Agreement); and
(e) make available to any Certificateholder upon request, the
annual audited and quarterly unaudited financial statements of the
Company which are provided to the Trustee.
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders. Without the consent of the Certificateholders, the Company
may, and the Trustee (subject to Section 9.03) shall, at any time and from time
to time, enter into one or more agreements supplemental hereto or, if
applicable, to any Intercreditor Agreement, any Refunding Agreement or any
Liquidity Facility in form satisfactory to the Trustee, for any of the following
purposes:
(1) to provide for the formation of a Trust, the issuance of a
series of certificates and the other matters contemplated by Section
2.01(b); or
(2) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of
the Company herein contained; or
(3) to add to the covenants of the Company for the benefit of
the Certificateholders of any series, or to surrender any right or
power in this Agreement conferred upon the Company; or
(4) to correct or supplement any provision in this Agreement,
any Intercreditor Agreement, any Refunding Agreement, any Liquidity
Facility or any Indenture which may be defective or inconsistent with
any other provision herein or in any Trust Supplement or to cure any
ambiguity, correct any mistake or to modify any other provisions with
respect to matters or questions arising under this Agreement, any
Intercreditor Agreement, any Refunding Agreement, any Liquidity
Facility or any Indenture, provided that any such action shall not
adversely affect the interests of the Certificateholders of any series;
or
(5) to modify, eliminate or add to the provisions of this
Agreement to such extent as shall be necessary to continue the
qualification of this Agreement (including any supplemental agreement)
under the Trust Indenture Act, or under any similar Federal statute
hereafter enacted, and to
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add to this Agreement such other provisions as may be expressly
permitted by the Trust Indenture Act, excluding, however, the
provisions referred to in Section 316(a)(2) of the Trust Indenture Act
as in effect at the date as of which this instrument was executed or
any corresponding provision in any similar Federal statute hereafter
enacted; or
(6) to evidence and provide for the acceptance of appointment
under this Agreement by a successor Trustee with respect to one or more
Trusts and to add to or change any of the provisions of this Agreement
as shall be necessary to provide for or facilitate the administration
of the Trusts hereunder and thereunder by more than one Trustee,
pursuant to the requirements of Section 7.09; or
(7) to make any other amendments or modifications hereto,
provided such amendments or modifications shall only apply to
Certificates of one or more series to be thereafter issued;
provided, however, that no such supplemental agreement shall adversely affect
the status of any Trust as a grantor trust under Subpart E, Part I of Subchapter
J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended,
for U.S. federal income tax purposes. The Trustee shall be entitled to rely upon
an Opinion of Counsel to such effect.
Section 9.02. Supplemental Agreements with Consent of
Certificateholders. With respect to each separate Trust and the series of
Certificates relating thereto, with the consent of the Certificateholders
holding Certificates of any series evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in such Trust, by Act of said
Certificate-holders delivered to the Company and the Trustee, the Company may
(with the consent of the Owner Trustee, if any, relating to such certificates,
which consent shall not be unreasonably withheld), and the Trustee (subject to
Section 9.03) shall enter into an agreement or agreements supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, any Intercreditor
Agreement, any Liquidity Facility or any Refunding Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement; provided,
however, that no such supplemental agreement shall, without the consent of the
Certificateholder of each Outstanding Certificate affected thereby:
(1) reduce in any manner the amount of, or delay the timing
of, any receipt by the Trustee of payments on the Equipment Notes held
in such Trust or distributions that are required to be made herein on
any Certificate of such series, or change any date of payment of any
Certificate of such series, or change the place of payment where, or
the coin or currency in which, any Certificate of such series is
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payable, or impair the right to institute suit for the enforcement of
any such payment or distribution on or after the Regular Distribution
Date or Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note in the Trust
Property of such Trust except as permitted by this Agreement or
otherwise deprive such Certificateholder of the benefit of the
ownership of the Equipment Notes in such Trust; or
(3) alter the priority of distributions specified in any
Intercreditor Agreement; or
(4) reduce the specified percentage of the aggregate
Fractional Undivided Interests of such Trust which is required for any
such supplemental agreement, or reduce such specified percentage
required for any waiver (of compliance with certain provisions of this
Agreement or certain defaults hereunder and their consequences)
provided for in this Agreement;
(5) modify any of the provisions of this Section or Section
6.05, except to increase any such percentage or to provide that certain
other provisions of this Agreement cannot be modified or waived without
the consent of the Certificateholder of each Certificate or such series
affected thereby; or
(6) adversely affect the status of any Trust as a grantor
trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle
A of the Internal Revenue Code of 1986, as amended, for U.S. federal
income tax purposes.
It shall not be necessary for any Act of such
Certificateholders under this Section to approve the particular form of any
proposed supplemental agreement but it shall be sufficient if such Act shall
approve the substance thereof.
Section 9.03. Documents Affecting Immunity or Indemnity. If in
the opinion of the Trustee any document required to be executed by it pursuant
to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity
or indemnity in favor of the Trustee under this Basic Agreement or any Trust
Supplement, the Trustee may in its discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In
executing, or accepting the additional trusts created by, any supplemental
agreement permitted by this Article or the modifications thereby of the trusts
created by this Agreement, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental agreement is authorized or permitted by this
Agreement.
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Section 9.05. Effect of Supplemental Agreements. Upon the
execution of any supplemental agreement under this Article, this Basic Agreement
shall be modified in accordance therewith, and such supplemental agreement shall
form a part of this Basic Agreement for all purposes; and every
Certificateholder of each series theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby to the extent applicable to such
series.
Section 9.06. Conformity with Trust Indenture Act. Every
supplemental agreement executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
Section 9.07. Reference in Certificates to Supplemental
Agreements. Certificates of each series authenticated and delivered after the
execution of any supplemental agreement applicable to such series pursuant to
this Article may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental agreement; and, in such case, suitable
notation may be made upon Outstanding Certificates of such series after proper
presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
Section 10.01. Amendments and Supplements to Indenture and
Other Note Documents. In the event that the Trustee, as holder of any Equipment
Notes in trust for the benefit of the Certificateholders of any series or as
Controlling Party, receives a request for a consent to any amendment,
modification, waiver or supplement under any Indenture or other Note Document
the Trustee shall forthwith send a notice of such proposed amendment,
modification, waiver or supplement to each Certificateholder of such series
registered on the Register as of the date of such notice. The Trustee shall
request from Certificateholders of such series a Direction as to (a) whether or
not to take or refrain from taking any action which a holder of such Equipment
Note has the option to direct, (b) whether or not to give or execute any
waivers, consents, amendments, modifications or supplements as a holder of such
Equipment Note and (c) how to vote any Equipment Note if a vote has been called
for with respect thereto. Provided such a request for Certificateholder
Direction shall have been made, in directing any action or casting any vote or
giving any consent as the holder of any Equipment Note, the Trustee shall vote
for or give consent to any such action with respect to such Equipment Note in
the same proportion as that of (i) the aggregate face amounts of all
Certificates of such series actually voted in favor of or for giving consent to
such action by Acts of Certificateholders to (ii) the aggregate face amount of
all Outstanding Certificates. For purposes of the immediately preceding
sentence, a Certificate shall have been "actually voted" if the Holder of such
Certificate has delivered to the Trustee an instrument evidencing
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such Holder's consent to such Direction on or prior to the Business Day before
the Trustee directs such action or casts such vote or gives such consent.
Notwithstanding the foregoing, but subject to Section 6.04 and any Intercreditor
Agreement, the Trustee may, in its own discretion and at its own direction
consent and notify the relevant Indenture Trustee of such consent to any
amendment, modification, waiver or supplement under the relevant Indenture or
any Note Document, if an Event of Default hereunder shall have occurred and be
continuing, or if such amendment modification or waiver will not adversely
affect the interests of the Certificateholders.
ARTICLE XI
TERMINATION OF TRUSTS
Section 11.01. Termination of the Trusts. In respect of each
Trust created by the Basic Agreement as supplemented by a related Trust
Supplement, the respective obligations and responsibilities of the Company and
the Trustee created under this Agreement with respect to the Trust created
hereby and such Trust shall terminate upon the distribution to all Holders of
the Certificates of the series of such Trust and the Trustee of all amounts
required to be distributed to them pursuant to this Agreement and the
disposition of all property held as part of the Trust Property of the related
series of such Trust; provided, however, that in no event shall such Trust
continue beyond one hundred ten (110) years following the date of the earliest
execution of this Agreement.
Notice of any termination of a Trust, specifying the
applicable Regular Distribution Date (or applicable Special Distribution Date,
as the case may be) upon which the Certificateholders of any series may
surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be mailed promptly by the Trustee to
Certificateholders of such series not earlier than the minimum number of days
and not more than the maximum number of days specified therefor in the related
Trust Supplement preceding such final distribution specifying (A) the Regular
Distribution Date (or Special Distribution Date, as the case may be) upon which
the proposed final payment of the Certificates of such series will be made upon
presentation and surrender of Certificates of such series at the office or
agency of the Trustee therein specified, (B) the amount of any such proposed
final payment, and (C) that the Record Date otherwise applicable to such Regular
Distribution Date (or Special Distribution Date, as the case may be) is not
applicable, payments being made only upon presentation and surrender of the
Certificates of such series at the office or agency of the Trustee therein
specified. The Trustee shall give such notice to the Registrar at the time such
notice is given to Certificateholders of such series. Upon presentation and
surrender of the Certificates of such series in accordance with such notice, the
Trustee shall cause to be distributed to Certificateholders of such series
amounts distributable on such
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Regular Distribution Date (or Special Distribution Date, as the case may be)
pursuant to Section 4.02.
In the event that all of the Certificateholders of such series
shall not surrender their Certificates for cancellation within six months after
the date specified in the above-mentioned written notice, the Trustee shall give
a second written notice to the remaining Certificateholders of such series to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. No additional interest shall accrue on the Certificates
after the Regular Distribution Date (or Special Distribution Date, as the case
may be) specified in the first written notice. In the event that any money held
by the Trustee for the payment of distributions on the Certificates of such
series shall remain unclaimed for two years (or such lesser time as the Trustee
shall be satisfied, after sixty days' notice from the Company, is one month
prior to the escheat period provided under applicable law) after the final
distribution date with respect thereto, the Trustee shall pay to each Indenture
Trustee the appropriate amount of money relating to such Indenture Trustee and
shall give written notice thereof to the related Owner Trustees and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The
death or incapacity of any Certificateholder of any series shall not operate to
terminate this Agreement, or the related Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations, and
liabilities of the parties hereto or any of them.
Section 12.02. Liabilities of Certificateholders. Neither the
existence of the Trust nor any provision in this Agreement is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Certificates Nonassessable and Fully Paid.
Certificateholders of each series shall not be personally liable for obligations
of the related Trust, the Fractional Undivided Interests represented by the
Certificates of such series shall be nonassessable for any losses or expenses of
such Trust or for any reason whatsoever, and Certificates of such series upon
authentication thereof by the Trustee pursuant to Section 3.02 are and shall be
deemed fully paid. No Certificateholder of such series shall have any right
(except as expressly provided herein) to vote or in any manner otherwise
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control the operation and management of the related Trust Property, the related
Trust, or the obligations of the parties hereto, nor shall anything set forth
herein, or contained in the terms of the Certificates of such series, be
construed so as to constitute the Certificateholders of such series from time to
time as partners or members of an association.
Section 12.04. Registration of Equipment Notes in Name of
Subordination Agent. If a Trust is party to an Intercreditor Agreement, the
Trustee agrees that all Equipment Notes to be purchased by such Trust shall be
issued in the name of the Subordination Agent under such Intercreditor Agreement
or its nominee and held by such Subordination Agent in trust for the benefit of
the Certificateholders, or, if not so held, such Subordination Agent or its
nominee shall be reflected as the owner of such Equipment Notes in the register
of the issuer of such Equipment Notes.
Section 12.05. Notices.
(a) Unless otherwise specifically provided herein or in the
applicable Trust Supplement with respect to any Trust, all notices required
under the terms and provisions of this Basic Agreement or such Trust Supplement
with respect to such Trust shall be in English and in writing and any such
notice may be given by United States mail, courier service, telegram, telex,
telemessage, telecopy, telefax, cable or facsimile (confirmed by telephone or in
writing in the case of notice by telegram, telex, telemessage, telecopy,
telefax, cable or facsimile) or any other customary means of communication,
if to the Company, to:
Mail: America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85043
Attention: Senior Vice President-Legal Affairs
Facsimile: (602) 693-5904
if to the Trustee, to:
Mail: Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Administration -
Responsible Officer - America West
Airlines Pass Through Trusts under
the Pass Through Trust Agreement
dated November 26, 1996
Facsimile: (860) 986-7920
<PAGE> 61
55
Telephone: (860) 986-4545
Any such notice shall be effective when received.
(b) The Company or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to Certificateholders of any
series shall be mailed by first-class mail to the addresses for
Certificateholders of such series shown on the Register kept by the Registrar
and to addresses filed with the Trustee for Certificate Owners of such series.
Failure so to mail a notice or communication or any defect in such notice or
communication shall not affect its sufficiency with respect to other
Certificateholders or Certificate Owners of such series.
(d) If the Company mails a notice or communication to the
Certificateholders of such series, it shall mail a copy to the Trustee and to
each Paying Agent for such series at the same time.
(e) Notwithstanding the foregoing, all communications or
notices to the Trustee shall be deemed to be given only when received by a
Responsible Officer of the Trustee.
(f) The Trustee shall promptly furnish the Company with a copy
of any demand, notice or written communication received by the Trustee hereunder
from any Certificateholder, Owner Trustee or Indenture Trustee.
Section 12.06. Governing Law. THIS BASIC AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND, TOGETHER WITH ALL TRUST SUPPLEMENTS AND
CERTIFICATES, SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.07. Severability of Provisions. If any one or more
of the covenants, agreements, provisions, or terms of this Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or any
Trust or of the Certificates of any series or the rights of the
Certificateholders thereof.
Section 12.08. Trust Indenture Act Controls. This Agreement is
subject to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions.
Section 12.09. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table
<PAGE> 62
56
of Contents are for convenience only and shall not affect the construction
hereof.
Section 12.10. Successors and Assigns. All covenants,
agreements, representations and warranties in this Agreement by the Trustee and
the Company shall bind and, to the extent permitted hereby, shall inure to the
benefit of and be enforceable by their respective successors and permitted
assigns, whether so expressed or not.
Section 12.11. Benefits of Agreement. Nothing in this
Agreement or in the Certificates of any series, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder, and
the Certificateholders of each series, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 12.12. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate of
any series shall not be a Business Day with respect to such series, then
(notwithstanding any other provision of this Agreement) payment need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such Regular Distribution Date or Special
Distribution Date, and no interest shall accrue during the intervening period.
Section 12.13. Counterparts. For the purpose of facilitating
the execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original and all of which counterparts
shall constitute but one and the same instrument.
Section 12.14. Communication by Certificateholders with Other
Certificateholders. Certificateholders of any series may communicate with other
Certificateholders of such series with respect to their rights under this Basic
Agreement, the related Trust Supplement or the Certificates of such series
pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the Trustee
and any and all other persons benefitted by this Agreement shall have the
protection afforded by Section 312(c) of the Trust Indenture Act.
Section 12.15. Intention of Parties. The parties hereto intend
that any Trust created hereunder be classified for U.S. federal income tax
purposes as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1
of Subtitle A of the Internal Revenue Code of 1986, as amended, and not as a
trust or association taxable as a corporation or as a partnership. The powers
granted and obligations undertaken pursuant to this Agreement shall be so
construed so as to further such intent.
<PAGE> 63
57
IN WITNESS WHEREOF, the Company and the Trustee have caused
this Basic Agreement to be duly executed by their respective officers, all as of
the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:___________________________
Name:_________________________
Title:________________________
FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
<PAGE> 64
EXHIBIT A
FORM OF CERTIFICATE
(1)[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
AMERICA WEST AIRLINES PASS THROUGH TRUST _________________
Pass Through Certificate, Series___________
Issuance Date: _____________ __, ____
Final Distribution Date: ______________, ____
evidencing a fractional undivided interest in a trust, the
property of which includes certain equipment notes each
secured by one or more Aircraft or Spare Engines owned by or
leased to America West Airlines, Inc.
Certificate
No.__________ $__________ Fractional Undivided
Interest representing ________% of the
Trust per $1,000 of Reference Principal
Amount
THIS CERTIFIES THAT ___________________, for value received,
is the registered owner of a Fractional Undivided Interest in the amount of
$________________ (_________________ dollars) (the "Reference Principal Amount")
in the America West Airlines Pass Through Trust _____________ (the "Trust")
created by Fleet National Bank, as trustee (the "Trustee"), pursuant to a Pass
Through Trust Agreement dated as of November __, 1996 (the "Basic Agreement")
between the Trustee and America West Airlines, Inc., a Delaware corporation (the
"Company"), as supplemented by Trust Supplement No.________ thereto dated
____________, ____ (collectively, the "Agreement"), between the Trustee and the
Company, a summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "America West
- ----------
(1) This legend to appear on Book-Entry Certificates to be deposited with
The Depository Trust Company. One Certificate may be issued in
definitive form which shall not have this legend.
<PAGE> 65
2
Airlines Pass Through Certificates, Series _________" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions, and conditions of the Agreement and any Intercreditor Agreement, to
which agreements the Certificateholder of this Certificate by virtue of the
acceptance hereof assents and by which such Certificateholder is bound. The
property of the Trust includes certain Equipment Notes and all rights of the
Trust to receive any payments under any Intercreditor Agreement or Liquidity
Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by
a security interest in aircraft or spare engines leased to or owned by the
Company.
The Certificates represent fractional undivided interests in
the Trust and the Trust Property, and have no rights, benefits or interest in
respect of any other separate trust established pursuant to the terms of the
Basic Agreement for any other series of certificates issued pursuant thereto.
The undivided percentage interest in the Trust represented by each of this
Certificate (as specified above) and the other America West Airlines Pass
Through Certificates, Series [____] was determined on the basis of (x) the
aggregate of the Reference Principal Amount of this Certificate (as specified
above) and of the other America West Airlines Pass Through Certificates, Series
[____] and (y) the aggregate original principal amounts of the Equipment Notes
constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement
and any Intercreditor Agreement, from funds then available to the Trustee, there
will be distributed on each ________and _____________ (a "Regular Distribution
Date"), commencing on ______________, ____, to the Person in whose name this
Certificate is registered at the close of business on the 15th day preceding the
Regular Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate is registered at the close of business on the 15th
day preceding the Special Distribution Date, an amount in respect of such
Special Payments on the Equipment Notes, the receipt of which has been confirmed
by the Trustee, equal to the product of the percentage interest in the Trust
evidenced by this Certificate and an amount equal to the sum of such Special
Payments so received. If a Regular Distribution Date or Special Distribution
Date is not a Business Day, distribution shall be made on the immediately
following Business Day with the same force and effect as if made on such Regular
Distribution Date or Special Distribution Date and no interest shall accrue
during the intervening period. The Trustee
<PAGE> 66
3
shall mail notice of each Special Payment and the Special Distribution Date
therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee
by check mailed to the Person entitled thereto, without the presentation or
surrender of this Certificate or the making of any notation hereon. Except as
otherwise provided in the Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after notice mailed by the Trustee
of the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency of the Trustee specified in such
notice.
The Certificates do not represent a direct obligation of, or
an obligation guaranteed by, or an interest in, the Company or the Trustee or
any affiliate thereof. The Certificates are limited in right or payment, all as
more specifically set forth on the face hereof and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each Certificateholder
of this Certificate, by its acceptance hereof, agrees that it will look solely
to the income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Agreement at any time by the Company and the Trustee with the consent of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust. Any
such consent by the Certificateholder of this Certificate shall be conclusive
and binding on such Certificateholder and upon all future Certificateholders of
this Certificate and of any Certificate issued upon transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Certificateholders of
any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate
<PAGE> 67
4
for registration of transfer at the offices or agencies maintained by the
Trustee in its capacity as Registrar, or by any successor Registrar, duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Registrar, duly executed by the Certificateholder hereof
or such Certificateholder's attorney duly authorized in writing, and thereupon
one or more new Certificates of authorized denominations evidencing the same
aggregate Fractional Undivided Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 Fractional Undivided Interest and
integral multiples thereof, provided that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee shall require payment of a sum sufficient
to cover any tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or
the Registrar may treat the person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Trustee, the Registrar,
nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts to be distributed to them pursuant to the
Agreement and the disposition of all property held as part of the Trust
Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE> 68
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
AMERICA WEST AIRLINES PASS THROUGH TRUST
By: FLEET NATIONAL BANK,
as Trustee
By______________________________
Name:___________________________
Title:__________________________
Dated:_______________
<PAGE> 69
6
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the
within-mentioned Agreement.
FLEET NATIONAL BANK,
as Trustee
By:_________________________________
Name:_______________________________
Title:______________________________
<PAGE> 1
EXHIBIT 4.2
This Trust Supplement No. 1996-1A, dated as of November 26, 1996
(herein called the "Trust Supplement"), between America West Airlines, Inc., a
Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"),
to the Pass Through Trust Agreement, dated as of November 26, 1996, between the
Company and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified
heretofore in the Basic Agreement) which may be issued thereunder, has
heretofore been executed and delivered:
WHEREAS, each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue, on a non-recourse basis, Equipment Notes, among other
things, to refinance the outstanding debt portion of the purchase price of the
aircraft and spare engines purchased by such Owner Trustee and leased to the
Company pursuant to the related Lease;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee having the same
interest rate as, and final maturity dates not later than the final Regular
Distribution Date of, the Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Certificateholders;
WHEREAS, the Trustee hereby declares the creation of the America West
Airlines Pass Through Trust 1996-1A (the "1996-1A Trust") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1996-1A Trust, by their respective acceptances of the Certificates, join in the
creation of this 1996-1A Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all respects
duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
Series 1996-1A Trust Supplement
<PAGE> 2
2
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"America West Airlines Pass Through Certificates, Series 1996-1A" (hereinafter
defined as the "Series 1996-1A Certificates"). Each Series 1996-1A Certificate
represents a Fractional Undivided Interest in the 1996-1A Trust created hereby.
The terms and conditions applicable to the Series 1996-1A Certificates
are as follows:
(a) The aggregate principal amount of the Series 1996-1A
Certificates that shall be authenticated under the Agreement (which
limit shall not pertain to Series 1996-1A Certificates authenticated
and delivered upon registration of transfer of, or in exchange for, or
in lieu of other Series 1996-1A Certificates pursuant to Sections 3.03,
3.04 and 3.05 of the Basic Agreement) upon their initial issuance is
$99,522,000. The parties hereto acknowledge that the provisions of
Section 2.02(b) of the Basic Agreement are of no force or effect with
respect to the Series 1996-1A Certificates.
(b) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means each January 2 and July 2 commencing
January 2, 1997, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(c) The Final Legal Distribution Date is January 2,
2011.
(d) The Special Distribution Date with respect to a Special
Payment shall be the date specified as such in the notice which the
Trustee must give with respect to such Special Payment pursuant to
Section 4.02(c) of the Basic Agreement, which date shall be the date
specified as the Special Distribution Date (as defined in the
Intercreditor Agreement) with respect to the related Special Payment
(as defined in the Intercreditor Agreement) in the applicable written
notice given to the Trustee pursuant to Section 2.4(a) of the
Intercreditor Agreement.
(e) (i) The Series 1996-1A Certificates shall be substantially
in the form attached hereto as Exhibit A.
(ii) The Series 1996-1A Certificates shall be Book-
Entry Certificates.
Series 1996-1A Trust Supplement
<PAGE> 3
3
(f) The Scheduled Payments of principal shall be as
set forth in Exhibit B.
(g) The proceeds of the Series 1996-1A Certificates shall be
used to purchase the Series A Equipment Notes in the principal amount
specified below:
<TABLE>
<CAPTION>
Equipment Note Principal Amount Maturity
-------------- ---------------- --------
<S> <C> <C>
N624AW-A $11,936,661 July 2, 2005
N626AW-A 11,936,662 January 2, 2006
N631AW-A 11,936,662 January 2, 2006
N633AW-A 12,089,958 January 2, 2009
N634AW-A 11,897,518 January 2, 2009
N635AW-A 11,897,518 January 2, 2009
N636AW-A 11,897,518 January 2, 2009
N637AW-A 11,897,518 January 2, 2009
V0025-A 1,343,995 July 2, 2009
V0049-A 1,343,995 July 2, 2009
V0019-A 1,343,995 July 2, 2009
</TABLE>
(h) Each Owner Trustee, acting on behalf of its respective
Owner Participant, will issue on a non-recourse basis, the Equipment
Notes, the proceeds of which shall be used, among other things, to
refinance the outstanding debt portion of the purchase price to such
Owner Trustee of the following Equipment:
U.S. Registration
Number/Manufacturer's
Equipment Serial Number
--------- ---------------------
Airbus A320-231 N624AW/55
Airbus A320-231 N626AW/65
Airbus A320-231 N631AW/77
Airbus A320-231 N633AW/82
Airbus A320-231 N634AW/091
Airbus A320-231 N635AW/092
Airbus A320-231 N636AW/098
Airbus A320-231 N637AW/099
IAE V2500 NA/V0025
IAE V2500 NA/V0049
IAE V2500 NA/V0019
Series 1996-1A Trust Supplement
<PAGE> 4
4
(i) The related Note Documents are listed on
Exhibit C.
(j) (i) The Trustee and the Other Trustees are parties to the
Intercreditor Agreement which sets forth certain terms of subordination
and other matters. The Series 1996-1A Certificates are senior in right
of payment to the America West Airlines Pass Through Certificates,
Series 1996-1B, the America West Airlines Pass Through Certificates,
Series 1996-1C, the America West Airlines Pass Through Certificates,
Series 1996-1D and the America West Airlines Pass Through Certificates,
Series 1996-1E.
(ii) The Series 1996-1A Certificates may be purchased
by the holders of certain series of Certificates with a lower seniority
as provided in Article III hereof and as further set forth in Section
6.01(b) of the Basic Agreement.
(k) Notice of any termination of the 1996-1A Trust shall be
mailed promptly by the Trustee to Certificateholders not earlier than
the 60th day and not later than the 20th day next preceding such final
distribution.
ARTICLE II
DEFINITIONS
Section 2.01. Definitions. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized term has the
following meaning:
Intercreditor Agreement: Means the Intercreditor Agreement dated as of
the date hereof among the Trustee, the Other Trustees, the Liquidity Providers
named therein and Fleet National Bank, as Subordination Agent, as amended,
supplemented or otherwise modified from time to time in accordance its terms.
Liquidity Facility: Means, initially, the Irrevocable Revolving Credit
Agreement dated as of November 26, 1996, between Fleet National Bank, as
Subordination Agent, as agent and trustee for the 1996-1A Trust, and Kredietbank
N.V., acting through its New York branch, and, from and after the replacement of
such Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if
any, in each case as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Other Agreements: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 1996-1B dated the date
Series 1996-1A Trust Supplement
<PAGE> 5
5
hereof relating to America West Airlines 1996-1B Pass Through Trust, (ii) the
Basic Agreement as supplemented by Trust Supplement No. 1996-1C dated the date
hereof relating to America West Airlines 1996-1C Pass Through Trust, (iii) the
Basic Agreement as supplemented by Trust Supplement No.1996-1D dated the date
hereof relating to America West Airlines 1996-1D Pass Through Trust and (iv) the
Basic Agreement as supplemented by Trust Supplement No. 1996-E dated the date
hereof relating to America West Airlines 1996-1E Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and any
successor or other trustee appointed as provided therein.
PTC Event of Default: Means the failure to pay within 10 Business Days
of the due date thereof: (i) the outstanding Pool Balance of the Series 1996-1A
Certificates on the Final Legal Distribution Date for such Certificates or (ii)
interest due on such Certificates on any Distribution Date (unless the
Subordination Agent shall have made an Interest Drawing (as defined in the
Intercreditor Agreement) with respect thereto in an amount sufficient to pay
such interest and shall have distributed such amount to the holders of the
Certificates entitled thereto).
Special Payment: Means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as
defined in each Indenture), including Overdue Scheduled Payments (as defined in
the Intercreditor Agreement), payments in respect of the redemption or
repurchase of any Equipment Note and payments in respect of the sale, of any
Equipment Note to the related Owner Trustee, Owner Participant or any other
Person.
Trust Property: Means (i) the Equipment Notes held as the property of
the Trust and all monies at any time paid thereon and all monies due and to
become due thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account, and (iii) all rights of the Trust and
the Trustee, on behalf of the Trust, under the Intercreditor Agreement and the
Liquidity Facility, including, without limitation, all rights to receive certain
payments thereunder, and all monies paid to the Trustee on behalf of the Trust
pursuant to the Intercreditor Agreement or the Liquidity Facility.
Underwriter: Means Morgan Stanley & Co. Incorporated, Citicorp
Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc.
Series 1996-1A Trust Supplement
<PAGE> 6
6
ARTICLE III
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Section 3.01. By acceptance of its Certificate, each Certificateholder
agrees that at any time after the occurrence and during the continuation of a
Triggering Event,
(i) each Class B Certificateholder shall have the right to
purchase all, but not less than all, of the Series 1996-1A Certificates
upon ten days' written notice to the Trustee and each other Class B
Certificateholder, provided that (A) if prior to the end of such
ten-day period any other Class B Certificateholder notifies such
purchasing Class B Certificateholder that such other Class B
Certificateholder wants to participate in such purchase, then such
other Class B Certificateholder may join with the purchasing Class B
Certificateholder to purchase all, but not less than all, of the Series
1996-1A Certificates pro rata based on the Fractional Undivided
Interest in the Class B Trust held by each such Class B
Certificateholder and (B) if prior to the end of such ten day period
any other Class B Certificateholder fails to notify the purchasing
Class B Certificateholder of such other Class B Certificateholder's
desire to participate in such a purchase, then such other Class B
Certificateholder shall lose its right to purchase the Series 1996-1A
Certificates pursuant to this Section and Section 6.01(b) of the Basic
Agreement; and
(ii) each Class C Certificateholder shall have the right
(which shall not expire upon any purchase of the Series 1996-1A
Certificates pursuant to clause (i) above) to purchase all, but not
less than all, of the Series 1996-1A Certificates and the Class B
Certificates upon ten days' written notice to the Trustee, the Class B
Trustee and each other Class C Certificateholder, provided that (A) if
prior to the end of such ten-day period any other Class C
Certificateholder notifies such purchasing Class C Certificateholder
that such other Class C Certificateholder wants to participate in such
purchase, then such other Class C Certificateholder may join with the
purchasing Class C Certificateholder to purchase all, but not less than
all, of the Series 1996-1A Certificates and the Class B Certificates
pro rata based on the Fractional Undivided Interest in the Class C
Trust held by each such Class C Certificateholder and (B) if prior to
the end of such ten day period any other Class C Certificateholder
fails to notify the purchasing Class C Certificateholder of such other
Class C Certificateholder's desire to participate in such a purchase,
then such other Class C Certificateholder
Series 1996-1A Trust Supplement
<PAGE> 7
7
shall lose its right to purchase the Series 1996-1A Certificates and
the Class B Certificates pursuant to this Section and Section 6.01(b)
of the Basic Agreement; and
(iii) each Class D Certificateholder shall have the right
(which shall not expire upon any purchase of the Series 1996-1A
Certificates pursuant to clause (i) above or the purchase of the Series
1996-1A Certificates and the Class B Certificates pursuant to clause
(ii) above) to purchase all, but not less than all, of the Series
1996-1A Certificates, the Class B Certificates and the Class C
Certificates upon ten days' written notice to the Trustee, the Class B
Trustee, the Class C Trustee and each other Class D Certificateholder,
provided that (A) if prior to the end of such ten-day period any other
Class D Certificateholder notifies such purchasing Class D
Certificateholder that such other Class D Certificateholder wants to
participate in such purchase, then such other Class D Certificateholder
may join with the purchasing Certificateholder to purchase all, but not
less than all, of the Series 1996-1A Certificates, the Class B
Certificates and the Class C Certificates pro rata based on the
Fractional Undivided Interest in the Class D Trust held by each such
Class D Certificateholder and (B) if prior to the end of such ten day
period any other Class D Certificateholder fails to notify the
purchasing Class D Certificateholder of such other Class D
Certificateholder's desire to participate in such a purchase, then such
other Class D Certificateholder shall lose its right to purchase the
Series 1996-1A Certificates, the Class B Certificates, and the Class C
Certificates pursuant to this Section and Section 6.01(b) of the Basic
Agreement; and
(iv) each Class E Certificateholder shall have the right
(which shall not expire upon any purchase of the Series 1996-1A
Certificates pursuant to clause (i) above, the purchase of the Series
1996-1A Certificates and the Class B Certificates pursuant to clause
(ii) above or the purchase of the Series 1996-1A Certificates, the
Class B Certificates and Class C Certificates pursuant to clause (iii)
above) to purchase all, but not less than all, of the Series 1996-1A
Certificates, the Class B Certificates, the Class C Certificates and
the Class D Certificates upon ten days' written notice to the Trustee,
the Class B Trustee, the Class C Trustee, the Class D Trustee and each
other Class E Certificateholder, provided that (A) if prior to the end
of such ten-day period any other Class E Certificateholder notifies
such purchasing Class E Certificateholder that such other Class E
Certificateholder wants to participate in such purchase, then such
other Class E Certificateholder may join with the
Series 1996-1A Trust Supplement
<PAGE> 8
8
purchasing Certificateholder to purchase all, but not less than all, of
the Series 1996-1A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates pro rata based on the
Fractional Undivided Interest in the Class E Trust held by each such
Class E Certificateholder and (B) if prior to the end of such ten day
period any other Class E Certificateholder fails to notify the
purchasing Class E Certificateholder of such other Class E
Certificateholder's desire to participate in such a purchase, then such
other Class E Certificateholder shall lose its right to purchase the
Series 1996-1A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates pursuant to this Section and
Section 6.01(b) of the Basic Agreement.
As used in this Article III, the terms "Class B Certificate", "Class B
Certificateholder", "Class B Trust", "Class B Trustee", "Class C Certificate",
"Class C Certificateholder", "Class C Trust", "Class C Trustee", "Class D
Certificate", "Class D Certificateholder", "Class D Trust", "Class D Trustee",
"Class E Certificateholder" and "Class E Trust" shall have the respective
meanings assigned to such terms in the Intercreditor Agreement.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to
execute and deliver the Intercreditor Agreement on or prior to the Issuance Date
in the form delivered to the Trustee by the Company. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the Company,
or for or in respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
Except as herein otherwise provided, no duties,
responsibilities or liabilities are assumed, or shall be construed to be assumed
by the Trustee by reason of this Trust Supplement other than as set forth in the
Basic Agreement, and this Trust Supplement is executed and accepted on behalf of
the Trustee, subject to all the terms and conditions set forth in the Basic
Agreement, upon the effectiveness thereof, as fully to all intents as if the
same were herein set forth at length.
The Trustee represents and warrants that the Intercreditor
Agreement will be duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such document on its behalf.
Series 1996-1A Trust Supplement
<PAGE> 9
9
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE
SERIES 1996-1A CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 5.03. Execution in Counterparts. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Series 1996-1A Trust Supplement
<PAGE> 10
10
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective officers thereto duly
authorized, as of the day and year first written above.
AMERICA WEST AIRLINES, INC.
By:__________________________
Name:________________________
Title:_______________________
FLEET NATIONAL BANK,
as Trustee
By:__________________________
Name:________________________
Title:_______________________
Series 1996-1A Trust Supplement
<PAGE> 11
EXHIBIT A
FORM OF CERTIFICATE
[Include on each Certificate that is a Global Certificate: UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.](1)
AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1A
Pass Through Certificate,
Series 1996-1A
Issuance Date: November 26, 1996
Final Legal Distribution Date: January 2, 2011
Evidencing A Fractional Undivided Interest In the 1996-1A Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft or Spare Engine Leased To America West Airlines, Inc.
Certificate No.___ $_____________ Fractional Undivided Interest
representing 0._ % of the Trust per $1,000 of
Reference Principal Amount
CUSIP No. 023654-AA4
THIS CERTIFIES THAT _________________________, for value received,
is the registered owner of a Fractional Undivided Interest in the amount of
$____________________(the "Reference Principal Amount") in the America West
Airlines Pass Through Trust 1996-1A (the "Trust") created by Fleet National
Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement,
dated as of November 26, 1996 (the "Basic Agreement"), between the Trustee and
America West Airlines, Inc., a Delaware corporation (the "Company"), as
supplemented by Trust Supplement No. 1996-1A thereto, dated as of November 26,
1996 (collectively, the "Agreement"), between the Trustee and the Company, a
summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "America West Airlines Pass Through
- --------
(1) Not necessarily applicable in respect of one Certificate in
definitive form.
Series 1996-1A Trust Supplement
<PAGE> 12
2
Certificates, Series 1996-1A" (herein called the "Certificates"). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement and the Intercreditor Agreement, to which agreements
the Certificateholder of this Certificate by virtue of the acceptance hereof
assents and by which such Certificateholder is bound. The property of the Trust
includes certain Equipment Notes and all rights of the Trust to receive payments
under the Intercreditor Agreement and the Liquidity Facility (the "Trust
Property"). Each issue of the Equipment Notes is secured by a security interest
in the Equipment leased to the Company.
Each of the Certificates represents a Fractional Undivided
Interest in the Trust and the Trust Property and has no rights, benefits or
interest in respect of any other separate trust established pursuant to the
terms of the Basic Agreement for any other series of certificates issued
pursuant thereto. The undivided percentage interest in the Trust represented by
each of this Certificate (as specified above) and the other America West
Airlines Pass Through Certificates, Series 1996-1A, was determined on the basis
of (x) the aggregate of the Reference Principal Amount of this Certificate (as
specified above) and of the other America West Airlines Pass Through
Certificates, Series 1996-1A and (y) the aggregate original principal amounts of
the Equipment Notes constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement
and the Intercreditor Agreement, from funds then available to the Trustee, there
will be distributed on each January 2 and July 2 (a "Regular Distribution Date")
commencing January 2, 1997 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate is registered at the close of business on the 15th
day preceding the Special Distribution Date, an amount in respect of such
Special Payments on the Equipment Notes, the receipt of which has been confirmed
by the Trustee, equal to the product of the percentage interest in the Trust
evidenced by this Certificate and an amount equal to the sum of such Special
Payments so received. If a Regular Distribution Date or Special Distribution
Date is not a Business Day, distribution shall be made on the immediately
following Business Day with the same
Series 1996-1A Trust Supplement
<PAGE> 13
3
force and effect as if made on such Regular Distribution Date or Special
Distribution Date and no interest shall accrue during the intervening period.
The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee
by check mailed to the Person entitled thereto, without the presentation or
surrender of this Certificate or the making of any notation hereon. Except as
otherwise provided in the Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after notice mailed by the Trustee
of the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency of the Trustee specified in such
notice.
The Certificates do not represent an obligation of, or an
obligation guaranteed by, or an interest in, the Company or the Trustee or any
affiliate thereof. The Certificates are limited in right of payment, all as more
specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Agreement at any time by the Company and the Trustee with the consent of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust. Any
such consent by the Certificateholder of this Certificate shall be conclusive
and binding on such Certificateholder and upon all future Certificateholders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment
Series 1996-1A Trust Supplement
<PAGE> 14
4
thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Register upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee in its capacity as
Registrar, or by any successor Registrar, duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Registrar, duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing, and thereupon one or
more new Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 Fractional Undivided Interests and
integral multiples thereof, provided that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee shall require payment of a sum sufficient
to cover any tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or
the Registrar may treat the person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Trustee, the Registrar,
nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
Series 1996-1A Trust Supplement
<PAGE> 15
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
AMERICA WEST AIRLINES
PASS THROUGH TRUST 1996-1A
By: FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Dated: _____________
Series 1996-1A Trust Supplement
<PAGE> 16
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the within-mentioned Agreement.
FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Series 1996-1A Trust Supplement
<PAGE> 17
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
<S> <C>
January 2, 1997 $ 0
July 2, 1997 957,998
January 2, 1998 0
July 2, 1998 1,929,223
January 2, 1999 600,275
July 2, 1999 1,901,888
January 2, 2000 0
July 2, 2000 1,771,423
January 2, 2001 478,258
July 2, 2001 1,771,420
January 2, 2002 817,344
July 2, 2002 3,062,904
January 2, 2003 4,212,911
July 2, 2003 5,412,429
January 2, 2004 4,590,437
July 2, 2004 5,873,809
January 2, 2005 5,170,154
July 2, 2005 5,883,786
January 2, 2006 8,345,111
July 2, 2006 9,115,653
January 2, 2007 9,427,862
July 2, 2007 8,908,893
January 2, 2008 7,676,294
July 2, 2008 6,347,996
January 2, 2009 4,342,646
July 2, 2009 923,286
</TABLE>
Series 1996-1A Trust Supplement
<PAGE> 18
EXHIBIT C
Related Note Documents
Series 1996-1A Trust Supplement
<PAGE> 1
EXHIBIT 4.3
This Trust Supplement No. 1996-1B, dated as of November 26, 1996
(herein called the "Trust Supplement"), between America West Airlines, Inc., a
Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"),
to the Pass Through Trust Agreement, dated as of November 26, 1996, between the
Company and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified
heretofore in the Basic Agreement) which may be issued thereunder, has
heretofore been executed and delivered:
WHEREAS, each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue, on a non-recourse basis, Equipment Notes, among other
things, to refinance the outstanding debt portion of the purchase price of the
aircraft and spare engines purchased by such Owner Trustee and leased to the
Company pursuant to the related Lease;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee having the same
interest rate as, and final maturity dates not later than the final Regular
Distribution Date of, the Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Certificateholders;
WHEREAS, the Trustee hereby declares the creation of the America West
Airlines Pass Through Trust 1996-1B (the "1996-1B Trust") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1996-1B Trust, by their respective acceptances of the Certificates, join in the
creation of this 1996-1B Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all respects
duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
Series 1996-1B Trust Supplement
<PAGE> 2
2
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"America West Airlines Pass Through Certificates, Series 1996-1B" (hereinafter
defined as the "Series 1996-1B Certificates"). Each Series 1996-1B Certificate
represents a Fractional Undivided Interest in the 1996-1B Trust created hereby.
The terms and conditions applicable to the Series 1996-1B Certificates
are as follows:
(a) The aggregate principal amount of the Series 1996-1B
Certificates that shall be authenticated under the Agreement (which
limit shall not pertain to Series 1996-1B Certificates authenticated
and delivered upon registration of transfer of, or in exchange for, or
in lieu of other Series 1996-1B Certificates pursuant to Sections 3.03,
3.04 and 3.05 of the Basic Agreement) upon their initial issuance is
$37,129,000. The parties hereto acknowledge that the provisions of
Section 2.02(b) of the Basic Agreement are of no force or effect with
respect to the Series 1996-1B Certificates.
(b) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means each January 2 and July 2 commencing
January 2, 1997, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(c) The Final Legal Distribution Date is July 2, 2009.
(d) The Special Distribution Date with respect to a Special
Payment shall be the date specified as such in the notice the Trustee
must give with respect to such Special Payment pursuant to Section
4.02(c) of the Basic Agreement, which date shall be the date specified
as the Special Distribution Date (as defined in the Intercreditor
Agreement) with respect to the related Special Payment (as defined in
the Intercreditor Agreement) in the applicable written notice given to
the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement.
(e) (i) The Series 1996-1B Certificates shall be substantially
in the form attached hereto as Exhibit A. Each purchaser of Series
1996-1B Certificates will be deemed to represent that either (A) the
assets of an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or of a
Series 1996-1B Trust Supplement
<PAGE> 3
3
plan subject to Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), have not been used to purchase Series 1996-1B
Certificates or (B) the purchase and holding of Series 1996-1B
Certificates is exempt from the prohibited transaction restrictions of
ERISA and the Code pursuant to Prohibited Transaction Class Exemption
95-60 (promulgated under ERISA and the Code).
(ii) The Series 1996-1B Certificates shall be Book-
Entry Certificates.
(f) The Scheduled Payments of principal shall be as
set forth in Exhibit B.
(g) The proceeds of the Series 1996-1B Certificates shall be
used to purchase the Series B Equipment Notes in the principal amount
specified below:
<TABLE>
<CAPTION>
Equipment Note Principal Amount Maturity
-------------- ---------------- --------
<S> <C> <C>
N624AW-B 4,476,247 January 2, 2002
N626AW-B 4,476,246 July 2, 2002
N631AW-B 4,476,246 July 2, 2002
N633AW-B 4,533,177 January 2, 2008
N634AW-B 4,413,774 July 2, 2005
N635AW-B 4,413,774 July 2, 2005
N636AW-B 4,413,774 July 2, 2005
N637AW-B 4,413,774 July 2, 2005
V0025-B 503,996 January 2, 2006
V0049-B 503,996 January 2, 2006
V0019-B 503,996 January 2, 2006
</TABLE>
(h) Each Owner Trustee, acting on behalf of its respective
Owner Participant, will issue on a non-recourse basis, the Equipment
Notes, the proceeds of which shall be used,among other things, to
refinance the outstanding debt portion of the purchase price to such
Owner Trustee of the following Equipment:
Series 1996-1B Trust Supplement
<PAGE> 4
4
<TABLE>
<CAPTION>
U.S. Registration
Number/Manufacturer's
Equipment Serial Number
--------- ---------------------
<S> <C>
Airbus A320-231 N624AW/55
Airbus A320-231 N626AW/65
Airbus A320-231 N631AW/77
Airbus A320-231 N633AW/82
Airbus A320-231 N634AW/091
Airbus A320-231 N635AW/092
Airbus A320-231 N636AW/098
Airbus A320-231 N637AW/099
IAE V2500 NA/V0025
IAE V2500 NA/V0049
IAE V2500 NA/V0019
</TABLE>
(i) The related Note Documents are listed on
Exhibit C.
(j) (i) The Trustee and the Other Trustees are parties to the
Intercreditor Agreement which sets forth certain terms of subordination
and other matters. The Series 1996-1B are junior in right of payment to
the America West Airlines Pass Through Certificates, Series 1996-1A and
senior in right of payment to the America West Airlines Pass Through
Certificates, Series 1996-1C, the America West Airlines Pass Through
Certificates, Series 1996-1D and the America West Airlines Pass Through
Certificates, Series 1996-1E.
(ii) The holders of Series 1996-1B Certificates may
purchase America West Airlines Pass Through Certificates, Series
1996-1A and the Series 1996-1B Certificates may be purchased by the
holders of certain series of Certificates with a lower seniority as
provided in Article III hereof and as further set forth in Section
6.01(b) of the Basic Agreement.
(k) Notice of the termination of the Series 1996-1B Trust
shall be mailed promptly by the Trustee to Certificateholders not
earlier than the 60th day and not later than the 20th day next
preceding such final distribution.
Series 1996-1B Trust Supplement
<PAGE> 5
5
ARTICLE II
DEFINITIONS
Section 2.01. Definitions. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized term has the
following meaning:
Intercreditor Agreement: Means the Intercreditor Agreement dated as of
the date hereof among the Trustee, the Other Trustees, the Liquidity Providers
named therein and Fleet National Bank, as Subordination Agent, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
Liquidity Facility: Means, initially, the Irrevocable Revolving Credit
Agreement dated as of November 26, 1996, between Fleet National Bank, as
Subordination Agent, as agent and trustee for the 1996-1B Trust, and Kredietbank
N.V., acting through its New York branch, and, from and after the replacement of
such Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if
any, in each case as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Other Agreements: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 1996-1A dated the date hereof relating to America West
Airlines 1996-1A Pass Through Trust, (ii) the Basic Agreement as supplemented by
Trust Supplement No. 1996-1C dated the date hereof relating to America West
Airlines 1996-1C Pass Through Trust, (iii) the Basic Agreement as supplemented
by Trust Supplement No.1996-1D dated the date hereof relating to America West
Airlines 1996-1D Pass Through Trust and (iv) the Basic Agreement as supplemented
by Trust Supplement No. 1996-1E dated the date hereof relating to America West
Airlines 1996-1E Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and any
successor or other trustee appointed as provided therein.
Plan Transferee: Means any Plan or other entity that is using the
assets of any Plan to purchase or hold its interest in a Series 1996-1B
Certificate. For purposes of this definition, a "Plan" means any employee
benefit plan subject to ERISA as well as any plan that is not subject to ERISA
but which is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended.
PTC Event of Default: Means the failure to pay within 10 Business Days
of the due date thereof: (i) the outstanding Pool Balance of the Series 1996-1B
Certificates on the Final Legal
Series 1996-1B Trust Supplement
<PAGE> 6
6
Distribution Date for such Certificates or (ii) interest due on such
Certificates on any Distribution Date (unless the Subordination Agent shall have
made an Interest Drawing (as defined in the Intercreditor Agreement) with
respect thereto in an amount sufficient to pay such interest and shall have
distributed such amount to the holders of the Certificates entitled thereto).
Special Payment: Means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as
defined in each Indenture), including Overdue Scheduled Payments (as defined in
the Intercreditor Agreement), payments in respect of the redemption or
repurchase of any Equipment Note and payments in respect of the sale, of any
Equipment Note to the related Owner Trustee, Owner Participant or any other
Person.
Trust Property: Means (i) the Equipment Notes held as the property of
the Trust and all monies at any time paid thereon and all monies due and to
become due thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account, and (iii) all rights of the Trust and
the Trustee, on behalf of the Trust, under the Intercreditor Agreement and the
Liquidity Facility, including, without limitation, all rights to receive certain
payments thereunder, and all monies paid to the Trustee on behalf of the Trust
pursuant to the Intercreditor Agreement or the Liquidity Facility.
Underwriter: Means Morgan Stanley & Co. Incorporated,
Citicorp Securities, Inc., Lehman Brothers Inc. and Salomon
Brothers Inc.
ARTICLE III
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Section 3.01. (i) At any time after the occurrence and during the
continuation of a Triggering Event, each Certificateholder shall have the right
to purchase all, but not less than all, of the Class A Certificates upon ten
days' written notice to the Class A Trustee and each other Certificateholder,
provided that (A) if prior to the end of such ten day period any other
Certificateholder notifies such purchasing Certificateholder that such other
Certificateholder wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder to purchase
all, but not less than all, of the Class A Certificates pro rata based on the
outstanding principal amount of the Certificates held by each such
Certificateholder and (B) if prior to the end of such ten-day period any other
Certificateholder fails to notify the
Series 1996-1B Trust Supplement
<PAGE> 7
7
purchasing Certificateholder of such other Certificateholder's desire to
participate in such a purchase, then such other Certificateholder shall lose its
right to purchase the Class A Certificates pursuant to this Section and Section
6.01(b) of the Basic Agreement.
(ii) By acceptance of its Certificate, each Certificateholder agrees that at
any time after the occurrence and during the continuation of a Triggering Event,
(1) each Class C Certificateholder shall have the right (which
shall not expire upon any purchase of the Class A Certificates pursuant
to paragraph (i) above) to purchase all, but not less than all, of the
Class A Certificates and the Series 1996-1B Certificates upon ten days'
written notice to the Class A Trustee, the Trustee and each other Class
C Certificateholder, provided that (A) if prior to the end of such
ten-day period any other Class C Certificateholder notifies such
purchasing Class C Certificateholder that such other Class C
Certificateholder wants to participate in such purchase, then such
other Class C Certificateholder may join with the purchasing Class C
Certificateholder to purchase all, but not less than all, of the Class
A Certificates and the Series 1996-1B Certificates pro rata based on
the Fractional Undivided Interest in the Class C Trust held by each
such Class C Certificateholder and (B) if prior to the end of such ten
day period any other Class C Certificateholder fails to notify the
purchasing Class C Certificateholder of such other Class C
Certificateholder's desire to participate in such a purchase, then such
other Class C Certificateholder shall lose its right to purchase the
Class A Certificates and Series 1996-1B Certificates pursuant to this
Section and Section 6.01(b) of the Basic Agreement; and
(2) each Class D Certificateholder shall have the right (which
shall not expire upon any purchase of the Class A Certificates pursuant
to paragraph (i) above or the purchase of the Class A Certificates and
the Series 1996-1B Certificates pursuant to clause (ii)(1) above) to
purchase all, but not less than all, of the Class A Certificates, the
Series 1996-1B Certificates and the Class C Certificates upon ten days'
written notice to the Class A Trustee, the Trustee, the Class C Trustee
and each other Class D Certificateholder, provided that (A) if prior to
the end of such ten-day period any other Class D Certificateholder
notifies such purchasing Class D Certificateholder that such other
Class D Certificateholder wants to participate in such purchase, then
such other Class D Certificateholder may join with the purchasing
Certificateholder to purchase all, but not less than all, of the Class
A Certificates, the Series
Series 1996-1B Trust Supplement
<PAGE> 8
8
1996-1B Certificates and the Class C Certificates pro rata based on the
Fractional Undivided Interest in the Class D Trust held by each such
Class D Certificateholder and (B) if prior to the end of such ten day
period any other Class D Certificateholder fails to notify the
purchasing Class D Certificateholder of such other Class D
Certificateholder's desire to participate in such a purchase, then such
other Class D Certificateholder shall lose its right to purchase the
Class A Certificates, the Series 1996-1B Certificates, and the Class C
Certificates pursuant to this Section and Section 6.01(b) of the Basic
Agreement; and
(3) each Class E Certificateholder shall have the right (which
shall not expire upon any purchase of the Class A Certificates pursuant
to paragraph (i) above, the purchase of the Class A Certificates and
the Series 1996-1B Certificates pursuant to clause (ii)(1) above or the
purchase of the Class A Certificates, the Series 1996-1B Certificates
and the Class C Certificates pursuant to clause (ii)(2) above) to
purchase all, but not less than all, of the Class A Certificates, the
Series 1996-1B Certificates, the Class C Certificates and the Class D
Certificates upon ten days' written notice to the Class A Trustee, the
Trustee, the Class C Trustee, the Class D Trustee and each other Class
E Certificateholder, provided that (A) if prior to the end of such
ten-day period any other Class E Certificateholder notifies such
purchasing Class E Certificateholder that such other Class E
Certificateholder wants to participate in such purchase, then such
other Class E Certificateholder may join with the purchasing
Certificateholder to purchase all, but not less than all, of the Class
A Certificates, the Series 1996-1B Certificates, the Class C
Certificates and the Class D Certificates pro rata based on the
Fractional Undivided Interest in the Class E Trust held by each such
Class E Certificateholder and (B) if prior to the end of such ten day
period any other Class E Certificateholder fails to notify the
purchasing Class E Certificateholder of such other Class E
Certificateholder's desire to participate in such a purchase, then such
other Class E Certificateholder shall lose its right to purchase the
Class A Certificates, the Series 1996-1B Certificates, the Class C
Certificates and the Class D Certificates pursuant to this Section and
Section 6.01(b) of the Basic Agreement.
As used in this Article III, the terms "Class A Certificate", "Class A
Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust",
"Class C Trustee", "Class D Certificate", "Class D Certificateholder", "Class D
Trust", "Class D Trustee", "Class E Certificateholder" and "Class E
Series 1996-1B Trust Supplement
<PAGE> 9
9
Trust" shall have the respective meanings assigned to such terms in the
Intercreditor Agreement.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to
execute and deliver the Intercreditor Agreement on or prior to the Issuance Date
in the form delivered to the Trustee by the Company. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the Company,
or for or in respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
Except as herein otherwise provided, no duties,
responsibilities or liabilities are assumed, or shall be construed to be assumed
by the Trustee by reason of this Trust Supplement other than as set forth in the
Basic Agreement, and this Trust Supplement is executed and accepted on behalf of
the Trustee, subject to all the terms and conditions set forth in the Basic
Agreement, upon the effectiveness thereof, as fully to all intents as if the
same were herein set forth at length.
The Trustee represents and warrants that the Intercreditor
Agreement will be duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such document on its behalf.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1996-1B CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
Section 5.03. Execution in Counterparts. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Series 1996-1B Trust Supplement
<PAGE> 10
10
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective officers thereto duly
authorized, as of the day and year first written above.
AMERICA WEST AIRLINES, INC.
By:__________________________
Name:________________________
Title:_______________________
FLEET NATIONAL BANK,
as Trustee
By:__________________________
Name:________________________
Title:_______________________
Series 1996-1B Trust Supplement
<PAGE> 11
EXHIBIT A
FORM OF CERTIFICATE
[Include on each Certificate that is a Global Certificate: UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.](1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY
USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE
CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S.
DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION
WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST AGREEMENT CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1B
Pass Through Certificate,
Series 1996-1B
Issuance Date: November 26, 1996
Final Legal Distribution Date: July 2, 2009
Evidencing A Fractional Undivided Interest In the 1996-1B Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft or Spare Engine Leased To America West Airlines, Inc.
Certificate No.___ $_____________ Fractional Undivided Interest
representing 0._ % of the Trust per $1,000 of
Reference Principal Amount
CUSIP No. 023654-AB2
THIS CERTIFIES THAT _________________________, for value
received, is the registered owner of a Fractional Undivided Interest in the
amount of $ ____________________(the "Reference Principal Amount") in the
America West Airlines Pass Through Trust 1996-1B (the "Trust") created by Fleet
National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement, dated as of November 26, 1996 (the "Basic Agreement"),
- --------
(1) Not necessarily applicable in respect of one Certificate in
definitive form.
<PAGE> 12
2
between the Trustee and America West Airlines, Inc., a Delaware corporation (the
"Company"), as supplemented by Trust Supplement No. 1996-1B thereto, dated as of
November 26, 1996 (collectively, the "Agreement"), between the Trustee and the
Company, a summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "America West Airlines
Pass Through Certificates, Series 1996-1B" (herein called the "Certificates").
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement and the Intercreditor Agreement, to which agreements
the Certificateholder of this Certificate by virtue of the acceptance hereof
assents and by which such Certificateholder is bound. The property of the Trust
includes certain Equipment Notes and all rights of the Trust to receive payments
under the Intercreditor Agreement and the Liquidity Facility (the "Trust
Property"). Each issue of the Equipment Notes is secured by a security interest
in the Equipment leased to the Company.
Each of the Certificates represents a Fractional Undivided Interest in
the Trust and the Trust Property and has no rights, benefits or interest in
respect of any other separate trust established pursuant to the terms of the
Basic Agreement for any other series of certificates issued pursuant thereto.
The undivided percentage interest in the Trust represented by each of this
Certificate (as specified above) and the other America West Airlines Pass
Through Certificates, Series 1996-1B, was determined on the basis of (x) the
aggregate of the Reference Principal Amount of this Certificate (as specified
above) and of the other America West Airlines Pass Through Certificates, Series
1996-1B and (y) the aggregate original principal amounts of the Equipment Notes
constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each January 2 and July 2 (a "Regular Distribution Date")
commencing January 2, 1997 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate
Series 1996-1B Trust Supplement
<PAGE> 13
3
is registered at the close of business on the 15th day preceding the Special
Distribution Date, an amount in respect of such Special Payments on the
Equipment Notes, the receipt of which has been confirmed by the Trustee, equal
to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so received.
If a Regular Distribution Date or Special Distribution Date is not a Business
Day, distribution shall be made on the immediately following Business Day with
the same force and effect as if made on such Regular Distribution Date or
Special Distribution Date and no interest shall accrue during the intervening
period. The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any affiliate
thereof. The Certificates are limited in right of payment, all as more
specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company
Series 1996-1B Trust Supplement
<PAGE> 14
4
and the Trustee with the consent of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust. Any such consent by the Certificateholder of this
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 Fractional Undivided Interests and integral
multiples thereof, provided, that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be
Series 1996-1B Trust Supplement
<PAGE> 15
5
distributed to them pursuant to the Agreement and the disposition of all
property held as part of the Trust Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
AMERICA WEST AIRLINES
PASS THROUGH TRUST 1996-1B
By: FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Dated: ______________
Series 1996-1B Trust Supplement
<PAGE> 16
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the within-mentioned Agreement.
FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Series 1996-1B Trust Supplement
<PAGE> 17
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
<S> <C>
January 2, 1997 $ 0
July 2, 1997 359,249
January 2, 1998 909,397
July 2, 1998 1,980,551
January 2, 1999 3,692,711
July 2, 1999 2,735,705
January 2, 2000 2,208,190
July 2, 2000 395,705
January 2, 2001 0
July 2, 2001 395,708
January 2, 2002 1,341,070
July 2, 2002 6,310,591
January 2, 2003 0
July 2, 2003 31,497
January 2, 2004 0
July 2, 2004 3,446,800
January 2, 2005 8,090,478
July 2, 2005 3,190,972
January 2, 2006 568,506
July 2, 2006 0
January 2, 2007 0
July 2, 2007 0
January 2, 2008 1,471,870
</TABLE>
Series 1996-1B Trust Supplement
<PAGE> 18
EXHIBIT C
Related Note Documents
Series 1996-1B Trust Supplement
<PAGE> 1
EXHIBIT 4.4
This Trust Supplement No. 1996-1C, dated as of November 26, 1996
(herein called the "Trust Supplement"), between America West Airlines, Inc., a
Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"),
to the Pass Through Trust Agreement, dated as of November 26, 1996, between the
Company and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified
heretofore in the Basic Agreement) which may be issued thereunder, has
heretofore been executed and delivered:
WHEREAS, each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue, on a non-recourse basis, Equipment Notes, among other
things, to refinance the outstanding debt portion of the purchase price of the
aircraft and spare engines purchased by such Owner Trustee and leased to the
Company pursuant to the related Lease;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee having the same
interest rate as, and final maturity dates not later than the final Regular
Distribution Date of, the Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Certificateholders;
WHEREAS, the Trustee hereby declares the creation of the America West
Airlines Pass Through Trust 1996-1C (the "1996-1C Trust") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1996-1C Trust, by their respective acceptances of the Certificates, join in the
creation of this 1996-1C Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all respects
duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
Series 1996-1C Trust Supplement
<PAGE> 2
2
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"America West Airlines Pass Through Certificates, Series 1996-1C" (hereinafter
defined as the "Series 1996-1C Certificates"). Each Series 1996-1C Certificate
represents a Fractional Undivided Interest in the 1996-1C Trust created hereby.
The terms and conditions applicable to the Series 1996-1C Certificates
are as follows:
(a) The aggregate principal amount of the Series 1996-1C
Certificates that shall be authenticated under the Agreement (which
limit shall not pertain to Series 1996-1C Certificates authenticated
and delivered upon registration of transfer for, or in lieu of, other
Series 1996-1C Certificates pursuant to Sections 3.03, 3.04 and 3.05 of
the Basic Agreement) upon their initial issuance is $37,747,000. The
parties hereto acknowledge that the provisions of Section 2.02(b) of
the Basic Agreement are of no force or effect with respect to the
Series 1996-1C Certificates.
(b) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means each January 2 and July 2 commencing
January 2, 1997, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(c) The Final Legal Distribution Date is January 2, 2006.
(d) The Special Distribution Date with respect to a Special
Payment shall be the date specified as such in the notice the Trustee
must give with respect to such Special Payment pursuant to Section
4.02(c) of the Basic Agreement, which date shall be the date specified
as the Special Distribution Date (as defined in the Intercreditor
Agreement) with respect to the related Special Payment (as defined in
the Intercreditor Agreement) in the applicable written notice given to
the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement.
(e) (i) The Series 1996-1C Certificates shall be substantially
in the form attached hereto as Exhibit A. Each purchaser of Series
1996-1C Certificates will be deemed to represent that either (A) the
assets of an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or of a
Series 1996-1C Trust Supplement
<PAGE> 3
3
plan subject to Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), have not been used to purchase Series 1996-1C
Certificates or (B) the purchase and holding of Series 1996-1C
Certificates is exempt from the prohibited transaction restrictions of
ERISA and the Code pursuant to Prohibited Transaction Class Exemption
95-60 (promulgated under ERISA and the Code).
(ii) The Series 1996-1C Certificates shall be Book-Entry
Certificates.
(f) The Scheduled Payments of principal shall be as set forth
in Exhibit B.
(g) The proceeds of the Series 1996-1C Certificates shall be
used to purchase the Series C Equipment Notes in the principal amount
specified below:
<TABLE>
<CAPTION>
Equipment Note Principal Amount Maturity
-------------- ---------------- --------
<S> <C> <C>
N624AW-C $ 4,476,247 January 2, 2002
N626AW-C 4,476,247 January 2, 2002
N631AW-C 4,476,247 January 2, 2002
N633AW-C 4,532,787 July 2, 2004
N634AW-C 4,552,621 January 2, 2002
N635AW-C 4,552,621 January 2, 2002
N636AW-C 4,552,621 January 2, 2002
N637AW-C 4,552,621 January 2, 2002
V0025-C 524,996 January 2, 2004
V0049-C 524,996 January 2, 2004
V0019-C 524,996 January 2, 2004
</TABLE>
(h) Each Owner Trustee, acting on behalf of its respective
Owner Participant, will issue on a non-recourse basis, the Equipment
Notes, the proceeds of which shall be used, among other things, to
refinance the outstanding debt portion of the purchase price to such
Owner Trustee of the following Equipment:
Series 1996-1C Trust Supplement
<PAGE> 4
4
<TABLE>
<CAPTION>
U.S. Registration
Number/Manufacturer's
Equipment Serial Number
--------- -------------
<S> <C>
Airbus A320-231 N624AW/55
Airbus A320-231 N626AW/65
Airbus A320-231 N631AW/77
Airbus A320-231 N633AW/82
Airbus A320-231 N634AW/091
Airbus A320-231 N635AW/092
Airbus A320-231 N636AW/098
Airbus A320-231 N637AW/099
IAE V2500 NA/V0025
IAE V2500 NA/V0049
IAE V2500 NA/V0019
</TABLE>
(i) The related Note Documents are listed on Exhibit C.
(j) (i) The Trustee and the Other Trustees are parties to the
Intercreditor Agreement which sets forth certain terms of subordination
and other matters. The Series 1996-1C are junior in right of payment to
the America West Airlines Pass Through Certificates, Series 1996-1A and
the America West Airlines Pass Through Certificates, Series 1996-1B and
senior in right of payment to the America West Airlines Pass Through
Certificates, Series 1996-1D and the America West Airlines Pass Through
Certificates, Series 1996-1E.
(ii) The holders of Series 1996-1C Certificates may
purchase America West Airlines Pass Through Certificates, Series
1996-1A and America West Airlines Pass Through Certificates, Series
1996-1B and the Series 1996-1C Certificates may be purchased by the
holders of certain series of Certificates with a lower seniority as
provided in Article III hereof and as further set forth in Section
6.01(b) of the Basic Agreement.
(k) Notice of the termination of the Series 1996-1C Trust
shall be mailed promptly by the Trustee to Certificateholders not
earlier than the 60th day and not later than the 20th day next
preceding such final distribution.
Series 1996-1C Trust Supplement
<PAGE> 5
5
ARTICLE II
DEFINITIONS
Section 2.01. Definitions. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized term has the
following meaning:
Intercreditor Agreement: Means the Intercreditor Agreement dated as of
the date hereof among the Trustee, the Other Trustees, the Liquidity Providers
named therein and Fleet National Bank, as Subordination Agent, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
Liquidity Facility: Means, initially, the Irrevocable Revolving Credit
Agreement dated as of November 26, 1996, between Fleet National Bank, as
Subordination Agent, as agent and trustee for the 1996-1C Trust, and Kredietbank
N.V., acting through its New York branch, and, from and after the replacement of
such Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if
any, in each case as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Other Agreements: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 1996-1A dated the date hereof relating to America West
Airlines 1996-1A Pass Through Trust, (ii) the Basic Agreement as supplemented by
Trust Supplement No. 1996-1B dated the date hereof relating to America West
Airlines 1996-1B Pass Through Trust, (iii) the Basic Agreement as supplemented
by Trust Supplement No.1996-1D dated the date hereof relating to America West
Airlines 1996-1D Pass Through Trust and (iv) the Basic Agreement as supplemented
by Trust Supplement No. 1996-1E dated the date hereof relating to America West
Airlines 1996-1E Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and any
successor or other trustee appointed as provided therein.
Plan Transferee: Means any Plan or other entity that is using the
assets of any Plan to purchase or hold its interest in a Series 1996-1C
Certificate. For purposes of this definition, a "Plan" means any employee
benefit plan subject to ERISA as well as any plan that is not subject to ERISA
but which is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended.
PTC Event of Default: Means the failure to pay within 10 Business Days
of the due date thereof: (i) the outstanding Pool Balance of the Series 1996-1C
Certificates on the Final Legal
Series 1996-1C Trust Supplement
<PAGE> 6
6
Distribution Date for such Certificates or (ii) interest due on such
Certificates on any Distribution Date (unless the Subordination Agent shall have
made an Interest Drawing (as defined in the Intercreditor Agreement) with
respect thereto in an amount sufficient to pay such interest and shall have
distributed such amount to the holders of the Certificates entitled thereto).
Special Payment: Means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as
defined in each Indenture), including Overdue Scheduled Payments (as defined in
the Intercreditor Agreement), payments in respect of the redemption or
repurchase of any Equipment Note and payments in respect of the sale, of any
Equipment Note to the related Owner Trustee, Owner Participant or any other
Person.
Trust Property: Means (i) the Equipment Notes held as the property of
the Trust and all monies at any time paid thereon and all monies due and to
become due thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account, and (iii) all rights of the Trust and
the Trustee, on behalf of the Trust, under the Intercreditor Agreement and the
Liquidity Facility, including, without limitation, all rights to receive certain
payments thereunder, and all monies paid to the Trustee on behalf of the Trust
pursuant to the Intercreditor Agreement or the Liquidity Facility.
Underwriter: Means Morgan Stanley & Co. Incorporated, Citicorp
Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc.
ARTICLE III
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Section 3.01. (i) At any time after the occurrence and during the
continuation of a Triggering Event, each Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A Certificates pursuant
to the Class B Trust Agreement) to purchase all, but not less than all, of the
Class A Certificates and the Class B Certificates upon ten days' written notice
to the Class A Trustee, the Class B Trustee and each other Certificateholder,
provided that (A) if prior to the end of such ten day period any other
Certificateholder notifies such purchasing Certificateholder that such other
Certificateholder wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder to purchase
all, but not less than all, of the
Series 1996-1C Trust Supplement
<PAGE> 7
7
Class A Certificates and the Class B Certificates pro rata based on the
outstanding principal amount of the Certificates held by each such
Certificateholder and (B) if prior to the end of such ten-day period any other
Certificateholder fails to notify the purchasing Certificateholder of such other
Certificateholder's desire to participate in such a purchase, then such other
Certificateholder shall lose its right to purchase the Class A Certificates and
Class B Certificates pursuant to this Section and Section 6.01(b) of the Basic
Agreement.
(ii) By acceptance of its Certificate, each Certificateholder agrees that at
any time after the occurrence and during the continuation of a Triggering Event,
(1) each Class D Certificateholder shall have the right (which
shall not expire upon any purchase of the Class A Certificates pursuant
to the Class B Trust Agreement or the purchase of the Class A
Certificates and the Class B Certificates pursuant to paragraph (i)
above) to purchase all, but not less than all, of the Class A
Certificates, the Class B Certificates and the Series 1996-1C
Certificates upon ten days' written notice to the Class A Trustee, the
Class B Trustee, the Trustee and each other Class D Certificateholder,
provided that (A) if prior to the end of such ten-day period any other
Class D Certificateholder notifies such purchasing Class D
Certificateholder that such other Class D Certificateholder wants to
participate in such purchase, then such other Class D Certificateholder
may join with the purchasing Certificateholder to purchase all, but not
less than all, of the Class A Certificates, the Class B Certificates
and the Series 1996-1C Certificates pro rata based on the Fractional
Undivided Interest in the Class D Trust held by each such Class D
Certificateholder and (B) if prior to the end of such ten day period
any other Class D Certificateholder fails to notify the purchasing
Class D Certificateholder of such other Class D Certificateholder's
desire to participate in such a purchase, then such other Class D
Certificateholder shall lose its right to purchase the Class A
Certificates, the Class B Certificates, and the Series 1996-1C
Certificates pursuant to this Section and Section 6.01(b) of the Basic
Agreement; and
(2) each Class E Certificateholder shall have the right (which
shall not expire upon any purchase of the Class A Certificates pursuant
to the Class B Trust Agreement, the purchase of the Class A
Certificates and the Class B Certificates pursuant to paragraph (i)
above or the purchase of the Class A Certificates, the Class B
Certificates and the Class C Certificates pursuant to clause (ii)(1)
above) to purchase all, but not less than all, of the Class A
Certificates, the Class B Certificates,
Series 1996-1C Trust Supplement
<PAGE> 8
8
the Series 1996-1C Certificates and the Class D Certificates upon ten
days' written notice to the Class A Trustee, the Class B Trustee, the
Trustee, the Class D Trustee and each other Class E Certificateholder,
provided that (A) if prior to the end of such ten-day period any other
Class E Certificateholder notifies such purchasing Class E
Certificateholder that such other Class E Certificateholder wants to
participate in such purchase, then such other Class E Certificateholder
may join with the purchasing Certificateholder to purchase all, but not
less than all, of the Class A Certificates, the Class B Certificates,
the Series 1996-1C Certificates and the Class D Certificates pro rata
based on the Fractional Undivided Interest in the Class E Trust held by
each such Class E Certificateholder and (B) if prior to the end of such
ten day period any other Class E Certificateholder fails to notify the
purchasing Class E Certificateholder of such other Class E
Certificateholder's desire to participate in such a purchase, then such
other Class E Certificateholder shall lose its right to purchase the
Class A Certificates, the Class B Certificates, the Series 1996-1C
Certificates and the Class D Certificates pursuant to this Section and
Section 6.01(b) of the Basic Agreement.
As used in this Article III, the terms "Class A Certificate", "Class A
Trustee", ""Class B Certificate", "Class B Trust Agreement", "Class B Trustee",
"Class D Certificate", "Class D Certificateholder", "Class D Trust", "Class D
Trustee", "Class E Certificateholder" and "Class E Trust" shall have the
respective meanings assigned to such terms in the Intercreditor Agreement.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to
execute and deliver the Intercreditor Agreement on or prior to the Issuance Date
in the form delivered to the Trustee by the Company. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the Company,
or for or in respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
Except as herein otherwise provided, no duties,
responsibilities or liabilities are assumed, or shall be construed to be assumed
by the Trustee by reason of this Trust Supplement other than as set forth in the
Basic Agreement, and this Trust Supplement is executed and accepted on behalf of
the
Series 1996-1C Trust Supplement
<PAGE> 9
9
Trustee, subject to all the terms and conditions set forth in the Basic
Agreement, upon the effectiveness thereof, as fully to all intents as if the
same were herein set forth at length.
The Trustee represents and warrants that the Intercreditor
Agreement will be duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such document on its behalf.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE
SERIES 1996-1C CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 5.03. Execution in Counterparts. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Series 1996-1C Trust Supplement
<PAGE> 10
10
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective officers thereto duly
authorized, as of the day and year first written above.
AMERICA WEST AIRLINES, INC.
By:___________________________
Name:_________________________
Title:________________________
FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Series 1996-1C Trust Supplement
<PAGE> 11
EXHIBIT A
FORM OF CERTIFICATE
[Include on each Certificate that is a Global Certificate: UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.](1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY
USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE
CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S.
DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION
WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST AGREEMENT CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1C
Pass Through
Certificate, Series 1996-1C
Issuance Date: November 26, 1996
Final Legal Distribution Date: January 2, 2006
Evidencing A Fractional Undivided Interest In the 1996-1C Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft or Spare Engine Leased To America West Airlines, Inc.
Certificate No.__________ $_____________ Fractional Undivided Interest
representing 0._ % of the Trust per $1,000 of
Reference Principal Amount
CUSIP No. 023654-AC0
THIS CERTIFIES THAT _________________________, for value
received, is the registered owner of a Fractional Undivided Interest in the
amount of $ ____________________(the "Reference Principal Amount") in the
America West Airlines 1996-1C Pass Through Trust 1996-1C (the "Trust") created
by Fleet National Bank, as trustee (the "Trustee"), pursuant to a Pass Through
Trust Agreement, dated as of November 26, 1996 (the "Basic
- --------
(1) Not necessarily applicable in respect of one
Certificate in definitive form.
<PAGE> 12
2
Agreement"), between the Trustee and America West Airlines, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No. 1996-1C
thereto, dated as of November 26, 1996 (collectively, the "Agreement"), between
the Trustee and the Company, a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "America West Airlines Pass Through Certificates, Series 1996-1C"
(herein called the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement and the
Intercreditor Agreement, to which agreements the Certificateholder of this
Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. The property of the Trust includes certain Equipment
Notes and all rights of the Trust to receive payments under the Intercreditor
Agreement and the Liquidity Facility (the "Trust Property"). Each issue of the
Equipment Notes is secured by a security interest in the Equipment leased to the
Company.
Each of the Certificates represents a Fractional Undivided Interest in
the Trust and the Trust Property and has no rights, benefits or interest in
respect of any other separate trust established pursuant to the terms of the
Basic Agreement for any other series of certificates issued pursuant thereto.
The undivided percentage interest in the Trust represented by each of this
Certificate (as specified above) and the other America West Airlines Pass
Through Certificates, Series 1996-1C, was determined on the basis of (x) the
aggregate of the Reference Principal Amount of this Certificate (as specified
above) and of the other America West Airlines Pass Through Certificates, Series
1996-1C and (y) the aggregate original principal amounts of the Equipment Notes
constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each January 2 and July 2 (a "Regular Distribution Date")
commencing January 2, 1997 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate
Series 1996-1C Trust Supplement
<PAGE> 13
3
is registered at the close of business on the 15th day preceding the Special
Distribution Date, an amount in respect of such Special Payments on the
Equipment Notes, the receipt of which has been confirmed by the Trustee, equal
to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so received.
If a Regular Distribution Date or Special Distribution Date is not a Business
Day, distribution shall be made on the immediately following Business Day with
the same force and effect as if made on such Regular Distribution Date or
Special Distribution Date and no interest shall accrue during the intervening
period. The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any affiliate
thereof. The Certificates are limited in right of payment, all as more
specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company
Series 1996-1C Trust Supplement
<PAGE> 14
4
and the Trustee with the consent of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust. Any such consent by the Certificateholder of this
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 Fractional Undivided Interests and integral
multiples thereof, provided, that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be
Series 1996-1C Trust Supplement
<PAGE> 15
5
distributed to them pursuant to the Agreement and the disposition of all
property held as part of the Trust Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
AMERICA WEST AIRLINES PASS
THROUGH TRUST 1996-1C
By: FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Dated: _______________
Series 1996-1C Trust Supplement
<PAGE> 16
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the within-mentioned Agreement.
FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Series 1996-1C Trust Supplement
<PAGE> 17
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
<S> <C>
January 2, 1997 $ 0
July 2, 1997 754,954
January 2, 1998 0
July 2, 1998 754,957
January 2, 1999 0
July 2, 1999 1,650,545
January 2, 2000 4,311,287
July 2, 2000 7,926,045
January 2, 2001 9,248,501
July 2, 2001 7,342,101
January 2, 2002 3,530,080
July 2, 2002 23,766
January 2, 2003 657,567
July 2, 2003 630,129
January 2, 2004 98,301
July 2, 2004 818,767
</TABLE>
Series 1996-1C Trust Supplement
<PAGE> 18
EXHIBIT C
Related Note Documents
Series 1996-1C Trust Supplement
<PAGE> 1
EXHIBIT 4.5
This Trust Supplement No. 1996-1D, dated as of November 26, 1996
(herein called the "Trust Supplement"), between America West Airlines, Inc., a
Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"),
to the Pass Through Trust Agreement, dated as of November 26, 1996, between the
Company and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified
heretofore in the Basic Agreement) which may be issued thereunder, has
heretofore been executed and delivered:
WHEREAS, each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue, on a non-recourse basis, Equipment Notes, among other
things, to refinance the outstanding debt portion of the purchase price of the
aircraft and spare engines purchased by such Owner Trustee and leased to the
Company pursuant to the related Lease;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee having the same
interest rate as, and final maturity dates not later than the final Regular
Distribution Date of, the Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Certificateholders;
WHEREAS, the Trustee hereby declares the creation of the America West
Airlines Pass Through Trust 1996-1D (the "1996-1D Trust") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1996-1D Trust, by their respective acceptances of the Certificates, join in the
creation of this 1996-1D Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all respects
duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
Series 1996-1D Trust Supplement
<PAGE> 2
2
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"America West Airlines Pass Through Certificates, Series 1996-1D" (hereinafter
defined as the "Series 1996-1D Certificates"). Each Series 1996-1D Certificate
represents a Fractional Undivided Interest in the 1996-1D Trust created hereby.
The terms and conditions applicable to the Series 1996-1D Certificates
are as follows:
(a) The aggregate principal amount of the Series 1996-1D
Certificates that shall be authenticated under the Agreement (which
limit shall not pertain to Series 1996-1D Certificates authenticated
and delivered upon registration of transfer for, or in lieu of, other
Series 1996-1D Certificates pursuant to Sections 3.03, 3.04 and 3.05 of
the Basic Agreement) upon their initial issuance is $29,618,000. The
parties hereto acknowledge that the provisions of Section 2.02(b) of
the Basic Agreement are of no force or effect with respect to the
Series 1996-1D Certificates.
(b) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means each January 2 and July 2 commencing
January 2, 1997, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(c) The Final Legal Distribution Date is July 2, 2002.
(d) The Special Distribution Date with respect to a Special
Payment shall be the date specified as such in the notice the Trustee
must give with respect to such Special Payment pursuant to Section
4.02(c) of the Basic Agreement, which date shall be the date specified
as the Special Distribution Date (as defined in the Intercreditor
Agreement) with respect to the related Special Payment (as defined in
the Intercreditor Agreement) in the applicable written notice given to
the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement.
(e) (i) The Series 1996-1D Certificates shall be substantially
in the form attached hereto as Exhibit A. Each purchaser of Series
1996-1D Certificates will be deemed to represent that either (A) the
assets of an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or of a
Series 1996-1D Trust Supplement
<PAGE> 3
3
plan subject to Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), have not been used to purchase Series 1996-1D
Certificates or (B) the purchase and holding of Series 1996-1D
Certificates is exempt from the prohibited transaction restrictions of
ERISA and the Code pursuant to Prohibited Transaction Class Exemption
95-60 (promulgated under ERISA and the Code).
(ii) The Series 1996-1D Certificates shall be Book-Entry
Certificates.
(f) The Scheduled Payments of principal shall be as
set forth in Exhibit B.
(g) The proceeds of the Series 1996-1D Certificates shall be
used to purchase the Series D Equipment Notes in the principal amount
specified below:
<TABLE>
<CAPTION>
Equipment Note Principal Amount Maturity
-------------- ---------------- --------
<S> <C> <C>
N624AW-D $ 2,288,832 January 2, 1998
N626AW-D 3,575,831 July 2, 1998
N631AW-D 3,575,831 July 2, 1998
N633AW-D 1,711,069 January 2, 1998
N634AW-D 4,249,113 January 2, 2002
N635AW-D 4,249,113 January 2, 2002
N636AW-D 4,249,113 January 2, 2002
N637AW-D 4,249,113 January 2, 2002
V0025-D 489,995 July 2, 2002
V0049-D 489,995 July 2, 2002
V0019-D 489,995 July 2, 2002
</TABLE>
(h) Each Owner Trustee, acting on behalf of its respective
Owner Participant, will issue on a non-recourse basis, the Equipment
Notes, the proceeds of which shall be used, among other things, to
refinance the outstanding debt portion of the purchase price to such
Owner Trustee of the following Equipment:
Series 1996-1D Trust Supplement
<PAGE> 4
4
<TABLE>
<CAPTION>
U.S. Registration
Number/Manufacturer's
Equipment Serial Number
--------- -------------
<S> <C>
Airbus A320-231 N624AW/55
Airbus A320-231 N626AW/65
Airbus A320-231 N631AW/77
Airbus A320-231 N633AW/82
Airbus A320-231 N634AW/091
Airbus A320-231 N635AW/092
Airbus A320-231 N636AW/098
Airbus A320-231 N637AW/099
IAE V2500 NA/V0025
IAE V2500 NA/V0049
IAE V2500 NA/V0019
</TABLE>
(i) The related Note Documents are listed on Exhibit C.
(j) (i) The Trustee and the Other Trustees are parties to the
Intercreditor Agreement which sets forth certain terms of subordination
and other matters. The Series 1996-1D are junior in right of payment to
the America West Airlines Pass Through Certificates, Series 1996-1A,
the America West Airlines Pass Through Certificates, Series 1996-1B and
the America West Pass Through Certificates, Series 1996-1C and senior
in right of payment to the America West Airlines Pass Through
Certificates, Series 1996-1E.
(ii) The holders of Series 1996-1D Certificates may
purchase America West Airlines Pass Through Certificates, Series
1996-1A, America West Airlines Pass Through Certificates, Series
1996-1B and America West Pass Through Certificates, Series 1996-1C and
the Series 1996-1D Certificates may be purchased by the holders of
America West Pass Through Certificates, Series 1996-1E as provided in
Article III hereof and as further set forth in Section 6.01(b) of the
Basic Agreement.
(k) Notice of the termination of the Series 1996-1D Trust
shall be mailed promptly by the Trustee to Certificateholders not
earlier than the 60th day and not later than the 20th day next
preceding such final distribution.
Series 1996-1D Trust Supplement
<PAGE> 5
5
ARTICLE II
DEFINITIONS
Section 2.01. Definitions. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized term has the
following meaning:
Intercreditor Agreement: Means the Intercreditor Agreement dated as of
the date hereof among the Trustee, the Other Trustees, the Liquidity Providers
named therein and Fleet National Bank, as Subordination Agent, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
Other Agreements: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 1996-1A dated the date hereof relating to America West
Airlines 1996-1A Pass Through Trust, (ii) the Basic Agreement as supplemented by
Trust Supplement No. 1996-1B dated the date hereof relating to America West
Airlines 1996-1B Pass Through Trust, (iii) the Basic Agreement as supplemented
by Trust Supplement No.1996-1C dated the date hereof relating to America West
Airlines 1996-1C Pass Through Trust and (iv) the Basic Agreement as supplemented
by Trust Supplement No. 1996-1E dated the date hereof relating to America West
Airlines 1996-1E Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and any
successor or other trustee appointed as provided therein.
Plan Transferee: Means any Plan or other entity that is using the
assets of any Plan to purchase or hold its interest in a Series 1996-1D
Certificate. For purposes of this definition, a "Plan" means any employee
benefit plan subject to ERISA as well as any plan that is not subject to ERISA
but which is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended.
PTC Event of Default: Means any failure to pay within 10 Business Days
of the due date thereof: (i) the outstanding Pool Balance ont the Final Legal
Distribution Date for such series specified in the related Trust Supplement or
(ii) interest due on such Certificates on any Distribution Date.
Special Payment: Means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as
defined in each Indenture), including Overdue Scheduled Payments (as defined in
the Intercreditor Agreement), payments in respect of the redemption or
repurchase of any Equipment Note and payments in respect of the sale, of any
Series 1996-1D Trust Supplement
<PAGE> 6
6
Equipment Note to the related Owner Trustee, Owner Participant or any other
Person.
Trust Property: Means (i) the Equipment Notes held as the property of
the Trust and all monies at any time paid thereon and all monies due and to
become due thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account, and (iii) all rights of the Trust and
the Trustee, on behalf of the Trust and under the Intercreditor Agreement,
including, without limitation, all rights to receive certain payments
thereunder, and all monies paid to the Trustee on behalf of the Trust pursuant
to the Intercreditor Agreement.
Underwriter: Means Morgan Stanley & Co. Incorporated, Citicorp
Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc.
ARTICLE III
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Section 3.01. (i) At any time after the occurrence and during the
continuation of a Triggering Event, each Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A Certificates pursuant
to the Class B Trust Agreement or the purchase of the Class A Certificates and
the Class B Certificates pursuant to the Class C Trust Agreement) to purchase
all, but not less than all, of the Class A Certificates, the Class B
Certificates and the Class C Certificates upon ten days' written notice to the
Class A Trustee, the Class B Trustee, the Class C Trustee and each other
Certificateholder, provided that (A) if prior to the end of such ten day period
any other Certificateholder notifies such purchasing Certificateholder that such
other Certificateholder wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder to purchase
all, but not less than all, of the Class A Certificates, the Class B
Certificates and the Class C Certificates pro rata based on the outstanding
principal amount of the Certificates held by each such Certificateholder and (B)
if prior to the end of such ten-day period any other Certificateholder fails to
notify the purchasing Certificateholder of such other Certificateholder's desire
to participate in such a purchase, then such other Certificateholder shall lose
its right to purchase the Class A Certificates, Class B Certificates and the
Class C Certificates pursuant to this Section and Section 6.01(b) of the Basic
Agreement.
(ii) By acceptance of its Certificate, each Certificateholder agrees
that at any time after the occurrence
Series 1996-1D Trust Supplement
<PAGE> 7
7
and during the continuation of a Triggering Event, each Class E
Certificateholder shall have the right (which shall not expire upon any purchase
of the Class A Certificates pursuant to the Class B Trust Agreement, the
purchase of the Class A Certificates and the Class B Certificates pursuant to
the Class C Trust Agreement or the purchase of the Class A Certificates, the
Class B Certificates and the Class C Certificates pursuant to paragraph (i)
above) to purchase all, but not less than all, of the Class A Certificates, the
Class B Certificates, the Class C Certificates and the Series 1996-1D
Certificates upon ten days' written notice to the Class A Trustee, the Class B
Trustee, the Class C Trustee, the Trustee and each other Class E
Certificateholder, provided that (A) if prior to the end of such ten-day period
any other Class E Certificateholder notifies such purchasing Class E
Certificateholder that such other Class E Certificateholder wants to participate
in such purchase, then such other Class E Certificateholder may join with the
purchasing Certificateholder to purchase all, but not less than all, of the
Class A Certificates, the Class B Certificates, the Class C Certificates and the
Series 1996-1D Certificates pro rata based on the Fractional Undivided Interest
in the Class E Trust held by each such Class E Certificateholder and (B) if
prior to the end of such ten day period any other Class E Certificateholder
fails to notify the purchasing Class E Certificateholder of such other Class E
Certificateholder's desire to participate in such a purchase, then such other
Class E Certificateholder shall lose its right to purchase the Class A
Certificates, the Class B Certificates, the Class C Certificates and the Series
1996-1D Certificates pursuant to this Section and Section 6.01(b) of the Basic
Agreement.
As used in this Article III, the terms "Class A Certificate", "Class A
Trustee", ""Class B Certificate", "Class B Trust Agreement", "Class B Trustee",
"Class C Certificate", "Class C Trust Agreement", "Class C Trustee", "Class E
Certificateholder", and "Class E Trust" shall have the respective meanings
assigned to such terms in the Intercreditor Agreement.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to
execute and deliver the Intercreditor Agreement on or prior to the Issuance Date
in the form delivered to the Trustee by the Company. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the Company,
or for or in respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
Series 1996-1D Trust Supplement
<PAGE> 8
8
Except as herein otherwise provided, no duties,
responsibilities or liabilities are assumed, or shall be construed to be assumed
by the Trustee by reason of this Trust Supplement other than as set forth in the
Basic Agreement, and this Trust Supplement is executed and accepted on behalf of
the Trustee, subject to all the terms and conditions set forth in the Basic
Agreement, upon the effectiveness thereof, as fully to all intents as if the
same were herein set forth at length.
The Trustee represents and warrants that the Intercreditor
Agreement will be duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such document on its behalf.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1996-1D CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
Section 5.03. Execution in Counterparts. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Series 1996-1D Trust Supplement
<PAGE> 9
9
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective officers thereto duly
authorized, as of the day and year first written above.
AMERICA WEST AIRLINES, INC.
By:___________________________
Name:_________________________
Title:________________________
FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Series 1996-1D Trust Supplement
<PAGE> 10
EXHIBIT A
FORM OF CERTIFICATE
[Include on each Certificate that is a Global Certificate: UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN].(1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY
USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE
CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S.
DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION
WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST AGREEMENT CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1D
Pass Through
Certificate, Series 1996-1D
Issuance Date: November 26, 1996
Final Legal Distribution Date: July 2, 2002
Evidencing A Fractional Undivided Interest In the 1996-1D Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft or Spare Engine Leased To America West Airlines, Inc.
Certificate No.__________ $_____________ Fractional Undivided Interest
representing 0._ % of the Trust per $1,000 of
Reference Principal Amount
CUSIP No. 023654-AD8
THIS CERTIFIES THAT _________________________, for value
received, is the registered owner of a Fractional Undivided Interest in the
amount of $ ____________________(the "Reference Principal Amount") in the
America West Airlines Pass Through Trust 1996-1D (the "Trust") created by Fleet
National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement, dated as of November 26, 1996 (the "Basic Agreement"),
- ----------
(1) Not necessarily applicable in respect of one
Certificate in definitive form.
<PAGE> 11
2
between the Trustee and America West Airlines, Inc., a Delaware corporation (the
"Company"), as supplemented by Trust Supplement No. 1996-1D thereto, dated as of
November 26, 1996 (collectively, the "Agreement"), between the Trustee and the
Company, a summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "America West Airlines
Pass Through Certificates, Series 1996-1D" (herein called the "Certificates").
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement and the Intercreditor Agreement, to which agreements
the Certificateholder of this Certificate by virtue of the acceptance hereof
assents and by which such Certificateholder is bound. The property of the Trust
includes certain Equipment Notes and all rights of the Trust to receive payments
under the Intercreditor Agreement (the "Trust Property"). Each issue of the
Equipment Notes is secured by a security interest in the Equipment leased to the
Company.
Each of the Certificates represents a Fractional Undivided Interest in
the Trust and the Trust Property and has no rights, benefits or interest in
respect of any other separate trust established pursuant to the terms of the
Basic Agreement for any other series of certificates issued pursuant thereto.
The undivided percentage interest in the Trust represented by each of this
Certificate (as specified above) and the other America West Airlines Pass
Through Certificates, Series 1996-1D, was determined on the basis of (x) the
aggregate of the Reference Principal Amount of this Certificate (as specified
above) and of the other America West Airlines Pass Through Certificates, Series
1996-1D and (y) the aggregate original principal amounts of the Equipment Notes
constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each January 2 and July 2 (a "Regular Distribution Date")
commencing January 2, 1997 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate is registered at the close of business on the 15th
day preceding
Series 1996-1D Trust Supplement
<PAGE> 12
3
the Special Distribution Date, an amount in respect of such Special Payments on
the Equipment Notes, the receipt of which has been confirmed by the Trustee,
equal to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so received.
If a Regular Distribution Date or Special Distribution Date is not a Business
Day, distribution shall be made on the immediately following Business Day with
the same force and effect as if made on such Regular Distribution Date or
Special Distribution Date and no interest shall accrue during the intervening
period. The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any affiliate
thereof. The Certificates are limited in right of payment, all as more
specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
Series 1996-1D Trust Supplement
<PAGE> 13
4
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 Fractional Undivided Interests and integral
multiples thereof, provided, that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
Series 1996-1D Trust Supplement
<PAGE> 14
5
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
AMERICA WEST AIRLINES PASS
THROUGH TRUST 1996-1D
By: FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Dated: _______________
Series 1996-1D Trust Supplement
<PAGE> 15
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the within-mentioned Agreement.
FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Series 1996-1D Trust Supplement
<PAGE> 16
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
<S> <C>
January 2, 1997 $ 4,891,774
July 2, 1997 2,533,536
January 2, 1998 5,056,624
July 2, 1998 3,995,139
January 2, 1999 4,627,316
July 2, 1999 3,145,864
January 2, 2000 3,076,780
July 2, 2000 29,397
January 2, 2001 0
July 2, 2001 141,585
January 2, 2002 1,566,800
July 2, 2002 553,185
</TABLE>
Series 1996-1D Trust Supplement
<PAGE> 17
EXHIBIT C
Related Note Documents
Series 1996-1D Trust Supplement
<PAGE> 1
EXHIBIT 4.6
This Trust Supplement No. 1996-1E, dated as of November 26, 1996
(herein called the "Trust Supplement"), between America West Airlines, Inc., a
Delaware corporation (the "Company"), and Fleet National Bank (the "Trustee"),
to the Pass Through Trust Agreement, dated as of November 26, 1996, between the
Company and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified
heretofore in the Basic Agreement) which may be issued thereunder, has
heretofore been executed and delivered:
WHEREAS, each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue, on a non-recourse basis, Equipment Notes, among other
things, to refinance the outstanding debt portion of the purchase price of the
aircraft and spare engines purchased by such Owner Trustee and leased to the
Company pursuant to the related Lease;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee having the same
interest rate as, and final maturity dates not later than the final Regular
Distribution Date of, the Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Certificateholders;
WHEREAS, the Trustee hereby declares the creation of the America West
Airlines Pass Through Trust, Series 1996-1E (the "1996-1E Trust") for the
benefit of the Certificateholders, and the initial Certificateholders as the
grantors of the 1996-1E Trust, by their respective acceptances of the
Certificates, join in the creation of this 1996-1E Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all respects
duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
Series 1996-1E Trust Supplement
<PAGE> 2
2
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"America West Airlines Pass Through Certificates, Series 1996-1E" (hereinafter
defined as the "Series 1996-1E Certificates"). Each Series 1996-1E Certificate
represents a Fractional Undivided Interest in the 1996-1E Trust created hereby.
The terms and conditions applicable to the Series 1996-1E Certificate
are as follows:
(a) The aggregate principal amount of the Series 1996-1E
Certificates that shall be authenticated under the Agreement (which
limit shall not pertain to Series 1996-1E Certificates authenticated
and delivered upon registration of transfer for, or in lieu of, other
Series 1996-1E Certificates pursuant to Sections 3.03, 3.04 and 3.05 of
the Basic Agreement) upon their initial issuance is $14,541,000.
(b) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means each January 2 and July 2 commencing
January 2, 1997, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(c) The Final Legal Distribution Date is January 2, 2004.
(d) The Special Distribution Date with respect to a Special
Payment shall be the date specified as such in the notice the Trustee
must give with respect to such Special Payment pursuant to Section
4.02(c) of the Basic Agreement, which date shall be the date specified
as the Special Distribution Date (as defined in the Intercreditor
Agreement) with respect to the related Special Payment (as defined in
the Intercreditor Agreement) in the applicable written notice given to
the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement.
(e) (i) The Series 1996-1E Certificates shall be substantially
in the form attached hereto as Exhibit A. Each purchaser of Series
1996-1E Certificates will be deemed to represent that either (A) the
assets of an employee benefit plan subject to Title I of the Employee
Retirement
Series 1996-1E Trust Supplement
<PAGE> 3
3
Income Security Act of 1974, as amended ("ERISA"), or of a plan subject
to Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), have not been used to purchase Series 1996-1E Certificates or
(B) the purchase and holding of Series 1996-1E Certificates is exempt
from the prohibited transaction restrictions of ERISA and the Code
pursuant to Prohibited Transaction Class Exemption 95-60 (promulgated
under ERISA and the Code).
(ii) The Series 1996-1E Certificates shall be Book-
Entry Certificates.
(f) The Scheduled Payments of principal shall be as set forth
in Exhibit B.
(g) A portion of the proceeds of the Series 1996-1E
Certificates shall be used to purchase the Series E Equipment Notes in
the principal amount specified below:
<TABLE>
<CAPTION>
Equipment Note Principal Amount Maturity
-------------- ---------------- --------
<S> <C> <C> <C>
N634AW-E $ 2,541,597 July 2, 2002
N635AW-E $ 2,541,597 July 2, 2002
N636AW-E $ 2,541,597 July 2, 2002
N637AW-E $ 2,541,597 July 2, 2002
V0025-E 1,458,204 January 2, 2004
V0049-E 1,458,204 January 2, 2004
V0019-E 1,458,204 January 2, 2004
</TABLE>
(h) Each Owner Trustee, acting on behalf of its respective
Owner Participant, will issue on a non-recourse basis, the Equipment
Notes, the proceeds of which shall be used, among other things, to
refinance the outstanding debt portion of the purchase price to such
Owner Trustee of the following Equipment:
<TABLE>
<CAPTION>
U.S. Registration
Number/Manufacturer's
Equipment Serial Number
--------- -------------
<S> <C>
Airbus A320-231 N634AW/091
Airbus A320-231 N635AW/092
Airbus A320-231 N636AW/098
Airbus A320-231 N637AW/099
IAE V2500 NA/V0025
IAE V2500 NA/V0049
IAE V2500 NA/V0019
</TABLE>
Series 1996-1E Trust Supplement
<PAGE> 4
4
(i) The related Note Documents are listed on Exhibit C.
(j) (i) The Trustee and the Other Trustees are parties to the
Intercreditor Agreement which sets forth certain terms of subordination
and other matters. The Series 1996-1E are junior in right of payment to
the America West Airlines Pass Through Certificates, Series 1996-1A,
the America West Airlines Pass Through Certificates, Series 1996-1B,
the America West Pass Through Certificates, Series 1996-1C and the
America West Airlines Pass Through Certificates, Series 1996-1D.
(ii) The holders of Series 1996-1E Certificates may
purchase America West Airlines Pass Through Certificates, Series
1996-1A, America West Airlines Pass Through Certificates, Series
1996-1B, America West Pass Through Certificates, Series 1996-1C and the
America West Airlines Pass Through Certificates, Series 1996-1D. as
provided in Article III hereof and as further set forth in Section
6.01(b) of the Basic Agreement.
(k) Notice of the termination of the Series 1996-1E Trust
shall be mailed promptly by the Trustee to Certificateholders not
earlier than the 60th day and not later than the 20th day next
preceding such final distribution.
ARTICLE II
DEFINITIONS
Section 2.01. Definitions. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized term has the
following meaning:
Intercreditor Agreement: Means the Intercreditor Agreement dated as of
the date hereof among the Trustee, the Other Trustees, the Liquidity Providers
named therein and Fleet National Bank, as Subordination Agent, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
Other Agreements: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 1996-1A dated the date hereof relating to America West
Airlines 1996-1A Pass Through Trust, (ii) the Basic Agreement as supplemented by
Trust Supplement No. 1996-1B dated the date hereof relating to America West
Airlines 1996-1B Pass Through Trust, (iii) the Basic Agreement as supplemented
by Trust Supplement No.1996-1C dated the date hereof relating to America West
Airlines 1996-1C Pass
Series 1996-1E Trust Supplement
<PAGE> 5
5
Through Trust and (iv) the Basic Agreement as supplemented by Trust Supplement
No. 1996-1D dated the date hereof relating to America West Airlines 1996-1D Pass
Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and any
successor or other trustee appointed as provided therein.
Plan Transferee: Means any Plan or other entity that is using the
assets of any Plan to purchase or hold its interest in a Series 1996-1E
Certificate. For purposes of this definition, a "Plan" means any employee
benefit plan subject to ERISA as well as any plan that is not subject to ERISA
but which is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended.
PTC Event of Default: Means any failure to pay within 10 Business Days
of the due date hereof: (i) the outstanding Pool Balance on the Final Legal
Distribution Date for such series specified in the related Trust Supplement or
(ii) interest due on such Certificates on any Distribution Date.
Special Payment: Means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as
defined in each Indenture), including Overdue Scheduled Payments (as defined in
the Intercreditor Agreement), payments in respect of the redemption or
repurchase of any Equipment Note and payments in respect of the sale, of any
Equipment Note to the related Owner Trustee, Owner Participant or any other
Person.
Trust Property: Means (i) the Equipment Notes held as the property of
the Trust and all monies at any time paid thereon and all monies due and to
become due thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account, and (iii) all rights of the Trust and
the Trustee, on behalf of the Trust, under the Intercreditor Agreement,
including, without limitation, all rights to receive certain payments
thereunder, and all monies paid to the Trustee on behalf of the Trust pursuant
to the Intercreditor Agreement.
Underwriter: Means Morgan Stanley & Co. Incorporated, Citicorp
Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc.
ARTICLE III
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Section 3.01. (i) At any time after the occurrence and during the
continuation of a Triggering Event, each
Series 1996-1E Trust Supplement
<PAGE> 6
6
Certificateholder shall have the right (which shall not expire upon any purchase
of the Class A Certificates pursuant to the Class B Trust Agreement, the
purchase of the Class A Certificates and the Class B Certificates pursuant to
the Class C Trust Agreement or the purchase of the Class A Certificates, the
Class B Certificates and the Class C Certificates pursuant to the Class D Trust
Agreement) to purchase all, but not less than all, of the Class A Certificates,
the Class B Certificates, the Class C Certificates and the Class D Certificates
upon ten days' written notice to the Class A Trustee, the Class B Trustee, the
Class C Trustee, the Class D Trustee and each other Certificateholder, provided
that (A) if prior to the end of such ten day period any other Certificateholder
notifies such purchasing Certificateholder that such other Certificateholder
wants to participate in such purchase, then such other Certificateholder may
join with the purchasing Certificateholder to purchase all, but not less than
all, of the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates pro rata based on the outstanding
principal amount of the Certificates held by each such Certificateholder and (B)
if prior to the end of such ten-day period any other Certificateholder fails to
notify the purchasing Certificateholder of such other Certificateholder's desire
to participate in such a purchase, then such other Certificateholder shall lose
its right to purchase the Class A Certificates, the Class B Certificates, the
Class C Certificates and the Class D Certificates pursuant to this Section and
Section 6.01(b) of the Basic Agreement.
As used in this Article III, the terms "Class A Certificate", "Class A
Trustee", "Class B Certificate", "Class B Trust Agreement", "Class B Trustee",
"Class C Certificate", "Class C Trust Agreement", "Class C Trustee", "Class D
Certificate", "Class D Trust Agreement" and "Class D Trustee" shall have the
respective meanings assigned to such terms in the Intercreditor Agreement.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to
execute and deliver the Intercreditor Agreement on or prior to the Issuance Date
in the form delivered to the Trustee by the Company. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the Company,
or for or in respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
Series 1996-1E Trust Supplement
<PAGE> 7
7
Except as herein otherwise provided, no duties,
responsibilities or liabilities are assumed, or shall be construed to be assumed
by the Trustee by reason of this Trust Supplement other than as set forth in the
Basic Agreement, and this Trust Supplement is executed and accepted on behalf of
the Trustee, subject to all the terms and conditions set forth in the Basic
Agreement, upon the effectiveness thereof, as fully to all intents as if the
same were herein set forth at length.
The Trustee represents and warrants that the Intercreditor
Agreement will be duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such document on its behalf.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1996-1E CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
Section 5.03. Execution in Counterparts. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Series 1996-1E Trust Supplement
<PAGE> 8
8
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective officers thereto duly
authorized, as of the day and year first written above.
AMERICA WEST AIRLINES, INC.
By:___________________________
Name:_________________________
Title:________________________
FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Series 1996-1E Trust Supplement
<PAGE> 9
EXHIBIT A
FORM OF CERTIFICATE
[Include on each Certificate that is a Global Certificate: UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.](1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY
USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE
CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S.
DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN CONNECTION
WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST AGREEMENT CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
AMERICA WEST AIRLINES PASS THROUGH TRUST 1996-1E
Pass Through
Certificate, Series 1996-1E
Issuance Date: November 26, 1996
Final Distribution Date: January 2, 2004
Evidencing A Fractional Undivided Interest In the 1996-1E Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft or Spare Engine Leased To America West Airlines, Inc.
Certificate No._________ $_____________ Fractional Undivided Interest
representing 0._ % of the Trust per $1,000 of
Reference Principal Amount
CUSIP No. 023654-AE6
THIS CERTIFIES THAT _________________________, for value
received, is the registered owner of a Fractional Undivided Interest in the
amount of $ ____________________(the "Reference Principal Amount") in the
America West Airlines Pass Through Trust 1996-1E (the "Trust") created by Fleet
National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement, dated as of November 26, 1996 (the "Basic Agreement"),
- ----------
(1) Not necessarily applicable in respect of one
Certificate in definitive form.
<PAGE> 10
2
between the Trustee and America West Airlines, Inc., a Delaware corporation (the
"Company"), as supplemented by Trust Supplement No. 1996-1E thereto, dated as of
November 26, 1996 (collectively, the "Agreement"), between the Trustee and the
Company, a summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "America West Airlines
Pass Through Certificates, Series 1996-1E" (herein called the "Certificates").
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement and the Intercreditor Agreement, to which agreements
the Certificateholder of this Certificate by virtue of the acceptance hereof
assents and by which such Certificateholder is bound. The property of the Trust
includes certain Equipment Notes and all rights of the Trust to receive payments
under the Intercreditor Agreement (the "Trust Property"). Each issue of the
Equipment Notes is secured by a security interest in the Equipment leased to the
Company.
Each of the Certificates represents a Fractional Undivided Interest in
the Trust and the Trust Property and has no rights, benefits or interest in
respect of any other separate trust established pursuant to the terms of the
Basic Agreement for any other series of certificates issued pursuant thereto.
The undivided percentage interest in the Trust represented by each of this
Certificate (as specified above) and the other America West Airlines Pass
Through Certificates, Series 1996-1E, was determined on the basis of (x) the
aggregate of the Reference Principal Amount of this Certificate (as specified
above) and of the other America West Airlines Pass Through Certificates, Series
1996-1E and (y) the aggregate original principal amounts of the Equipment Notes
constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each January 2 and July 2 (a "Regular Distribution Date")
commencing January 2, 1997 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate is registered at the close of business on the 15th
day preceding
Series 1996-1E Trust Supplement
<PAGE> 11
3
the Special Distribution Date, an amount in respect of such Special Payments on
the Equipment Notes, the receipt of which has been confirmed by the Trustee,
equal to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so received.
If a Regular Distribution Date or Special Distribution Date is not a Business
Day, distribution shall be made on the immediately following Business Day with
the same force and effect as if made on such Regular Distribution Date or
Special Distribution Date and no interest shall accrue during the intervening
period. The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any affiliate
thereof. The Certificates are limited in right of payment, all as more
specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
Series 1996-1E Trust Supplement
<PAGE> 12
4
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 Fractional Undivided Interests and integral
multiples thereof, provided, that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
Series 1996-1E Trust Supplement
<PAGE> 13
5
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
AMERICA WEST AIRLINES PASS
THROUGH TRUST 1996-1E
By: FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Dated: _______________
Series 1996-1E Trust Supplement
<PAGE> 14
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the within-mentioned Agreement.
FLEET NATIONAL BANK,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
Series 1996-1E Trust Supplement
<PAGE> 15
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
<S> <C>
January 2, 1997 $ 883,389
July 2, 1997 3,716,529
January 2, 1998 2,725,405
July 2, 1998 412,962
January 2, 1999 497,820
July 2, 1999 347,556
January 2, 2000 548,451
July 2, 2000 400,845
January 2, 2001 604,539
July 2, 2001 347,691
January 2, 2002 3,042,940
July 2, 2002 766,984
January 2, 2003 62,238
July 2, 2003 0
January 2, 2004 183,651
</TABLE>
Series 1996-1E Trust Supplement
<PAGE> 16
EXHIBIT C
Related Note Documents
Series 1996-1E Trust Supplement
<PAGE> 1
EXHIBIT 4.7
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
Dated as of November 26, 1996
between
FLEET NATIONAL BANK,
as Subordination Agent,
as agent and trustee for the
America West Airlines Pass Through Trust 1996-1A,
as Borrower
and
KREDIETBANK N.V.,
NEW YORK BRANCH,
as Liquidity Provider
Relating to
America West Airlines Pass Through Trust 1996-1A
6.85% America West Airlines Pass Through Certificates,
Series 1996-1A
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I........................................... 1
DEFINITIONS.......................................... 1
Section 1.1 Certain Defined Terms......................................... 1
ARTICLE II.......................................... 5
AMOUNT AND TERMS OF THE COMMITMENT............................... 5
Section 2.1 The Advances.................................................. 5
Section 2.2 Making the Advances........................................... 6
Section 2.3 Fees.......................................................... 7
Section 2.4 Reduction or Termination of the
Commitment............................................................ 8
Section 2.5 Repayments of Interest Advances or the
Final Advance......................................................... 8
Section 2.6 Repayments of Downgrade Advances.............................. 8
Section 2.7 Payments to the Liquidity Provider Under
the Intercreditor Agreement........................................... 9
Section 2.8 Book Entries.................................................. 9
Section 2.9 Payments from Available Funds Only............................ 9
ARTICLE III
OBLIGATIONS OF THE BORROWER.................................. 10
Section 3.1 Increased Costs............................................... 10
Section 3.2 Capital Adequacy.............................................. 11
Section 3.3 Payments Free of Deductions................................... 11
Section 3.4 Payments...................................................... 12
Section 3.5 Computations.................................................. 13
Section 3.6 Payment on Non-Business Days.................................. 13
Section 3.7 Interest...................................................... 13
Section 3.8 Replacement of Borrower....................................... 14
Section 3.9 Funding Loss Indemnification.................................. 14
Section 3.10 Illegality................................................... 15
ARTICLE IV
CONDITIONS PRECEDENT...................................... 15
Section 4.1 Conditions Precedent to Effectiveness of
Section 2.1........................................................... 15
Section 4.2 Conditions Precedent to Borrowing............................. 17
ARTICLE V
COVENANTS........................................... 18
Section 5.1 Affirmative Covenants of the Borrower......................... 18
Section 5.2 Negative Covenants of the Borrower............................ 18
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI
FINAL ADVANCE
............................................................................ 19
Section 6.1 Final Advance........................................... 19
ARTICLE VII
MISCELLANEOUS
............................................................................ 19
Section 7.1 Amendments, Etc......................................... 19
Section 7.2 Notices, Etc............................................ 19
Section 7.3 No Waiver; Remedies..................................... 20
Section 7.4 Further Assurances...................................... 20
Section 7.5 Indemnification; Survival of Certain
Provisions...................................................... 20
Section 7.6 Liability of the Liquidity Provider..................... 21
Section 7.7 Costs, Expenses and Taxes............................... 21
Section 7.8 Binding Effect; Participations.......................... 22
Section 7.9 Severability............................................ 24
Section 7.10 GOVERNING LAW.......................................... 24
Section 7.11 Submission to Jurisdiction; Waiver of
Jury Trial...................................................... 24
Section 7.12 Execution in Counterparts.............................. 25
Section 7.13 Entirety............................................... 25
Section 7.14 Headings; Section References........................... 25
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES........................................................ 25
Annex I - Interest Advance Notice of Borrowing
Annex II - Downgrade Advance Notice of Borrowing
Annex III - Notice of Replacement Borrower
Annex IV - Notice of Automatic Reduction of Commitment
</TABLE>
11
<PAGE> 4
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS A CERTIFICATES
dated as of November 26, 1996 between FLEET NATIONAL BANK, a national banking
association, not in its individual capacity but solely as Subordination Agent
under the Intercreditor Agreement (each as defined below), as agent and trustee
for the Class A Trust (as defined below) (the "Borrower"), and KREDIETBANK N.V.,
acting through its New York Branch (the "Liquidity Provider").
W I T N E S S E T H
WHEREAS, pursuant to the Class A Trust Agreement (such term
and all other capitalized terms used in these recitals having the meanings set
forth or referred to in Section 1.1), the Class A Trust is issuing the Class A
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment
of a portion of the interest on the Class A Certificates in accordance with
their terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. (a) Definitions. As used in
this Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Advance" means an Interest Advance, a Final Advance or a
Downgrade Advance, as the case may be.
"Applicable Liquidity Rate" means the rates of interest
specified in Section 3.7 with respect to any Advance.
"Applicable Margin" means (x) with respect to any Downgrade
Advance (other than an Applied Downgrade Advance) .40% (40 basis points) per
annum and (y) with respect to any other Advance including an Applied Downgrade
Advance 1.5% (150 basis points) per annum.
"Applied Downgrade Advance" means any amount in respect of a
Downgrade Advance withdrawn from the Class A Cash Collateral Account for the
purpose of paying interest on the Class A Certi-
<PAGE> 5
ficates in accordance with Section 3.6(f) of the Intercreditor Agreement.
"Available Commitment" means, at any time of determination,
an amount equal to (i) the Commitment at such time less (ii) subject to the
proviso contained in the third sentence of Section 2.2(a), the aggregate amount
of each Advance outstanding at such time; provided that following a Downgrade
Advance or a Final Advance, the Available Commitment shall be zero.
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the higher of (i) the base commercial lending rate announced from time to time
by the Liquidity Provider, or (ii) the rate quoted by the Liquidity Provider, at
approximately 11:00 A.M., New York City time, to dealers in the New York Federal
funds market for overnight offering of dollars by the Liquidity Provider, for
deposit plus .50 of 1 percent (.50%).
"Base Rate Advance" means an Advance that bears interest at a
rate based upon the Base Rate.
"Borrower" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery
of a Notice of Borrowing or pursuant to Section 6.1.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close in New
York, New York or Hartford, Connecticut, and, if the applicable Business Day
relates to any Advance or other amount bearing interest based on the LIBOR Rate,
on which dealings are carried on in the London interbank market.
"Commitment" means, initially, $10,225,885.50 as the same may
be reduced from time to time in accordance with Section 2.4(a).
"Downgrade Advance" means an Advance made pursuant to Section
2.2(b).
"Effective Date" has the meaning specified in Section 4.1. The
delivery of the certificate of the Liquidity Provider contemplated by Section
4.1(d) shall be conclusive evidence that the Effective Date has occurred.
"Expenses" means liabilities, obligations, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
2
<PAGE> 6
"Expiry Date" means January 17, 2011.
"Final Advance" means an Advance made pursuant to Sections
2.2(c) and 6.1.
"Intercreditor Agreement" means the Intercreditor Agreement
dated the date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider under each Liquidity Facility (other than this Agreement) and the
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Interest Advance" means an Advance made pursuant to Section
2.2(a).
"Interest Period" means, with respect to any LIBOR Advance,
each of the following periods:
(i) the period beginning on the date such LIBOR Advance
is made (or is converted from a Base Rate Advance) and ending on the
next Regular Distribution Date; and
(ii) each subsequent period commencing on the last day
of the immediately preceding Interest Period and ending on the next
Regular Distribution Date.
"Lending Office" means the lending office of the Liquidity
Provider, presently located at 125 West 55th Street, New York, NY 10019, or such
other lending office as the Liquidity Provider from time to time shall notify
the Borrower at its lending office hereunder.
"LIBOR Advance" means an Advance bearing interest at a rate
based upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, the
rate per annum at which deposits in U.S. Dollars are offered for the relevant
Interest Period by the Liquidity Provider to prime banks in the London interbank
market at approximately 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in the principal amount of the Advance to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period, as quoted by the Liquidity Provider to the Subordination
Agent.
"Liquidity Event of Default" means the occurrence of the
following: all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final maturity.
A Liquidity Event of Default shall not occur upon an automatic acceleration of
the Equipment Notes as a result of an America West Bankruptcy Event.
3
<PAGE> 7
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii)
each affiliate of the Liquidity Provider, (iii) the respective directors,
officers, employees, agents and servants of the Liquidity Provider and its
affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in
the recital of parties to this Agreement.
"Non-Excluded Tax" has the meaning specified in Section
3.3.
"Notice of Borrowing" has the meaning specified in Section
2.2(d).
"Notice of Replacement Borrower" has the meaning specified in
Section 3.8.
"Participant" has the meaning assigned to such term in Section
7.8(b).
"Prospectus" means the prospectus included in the registration
statement on Form S-3 (File No. 333-14691) filed by America West relating to
certain pass through certificates, as such Prospectus may be amended or
supplemented.
"Related Indemnitee" means, with respect to any Liquidity
Indemnitee, its director, officer, employee, agent, affiliate or employer.
"Replenishment Amount" has the meaning assigned to such term
in Section 2.6(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class A Certificates, that would be payable on the Class A
Certificates on each of the three successive semiannual Regular Distribution
Dates immediately following such day or, if such day is a Regular Distribution
Date, on such day and the succeeding two semiannual Regular Distribution Dates,
in each case calculated on the basis of the Pool Balance of the Class A
Certificates on such day and without regard to expected future payments of
principal on the Class A Certificates.
"Termination Date" means the earliest to occur of the
following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to
the Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class A Certificates have been paid in full
(or provision has been made for such payment in accordance with the
Intercreditor
4
<PAGE> 8
Agreement and the Trust Agreements) or are otherwise no longer entitled to the
benefits of this Agreement; (iii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that a Replacement Liquidity Facility has been substituted
for this Agreement in full pursuant to Section 3.6(e) of the Intercreditor
Agreement; (iv) the date on which the Liquidity Provider makes the Final
Advance; and (v) the date on which no Advance is or may (including by reason of
reinstatement as herein provided) become available for a Borrowing hereunder.
"Unpaid Advance" has the meaning assigned to such term
in Section 2.5.
(b) Terms Defined in the Intercreditor Agreement. For all
purposes of this Agreement, the following terms shall have the respective
meanings assigned to such terms in the Intercreditor Agreement:
"America West", "America West Bankruptcy Event", "Certificates", "Class
A Certificates", "Class A Certificateholders", "Class A Cash Collateral
Account", "Class A Trust", "Class A Trust Agreement", "Class A
Trustee", "Class B Certificates", "Class C Certificates", "Class D
Certificates", "Class E Certificates", "Closing Date", "Controlling
Party", "Corporate Trust Office", "Distribution Date", "$", "Equipment
Notes", "Indenture", "Investment Earnings", "Liquidity Facility",
"Moody's", "Operative Agreements", "Performing Equipment Note",
"Performing Note Deficiency", "Person", "Pool Balance", "Rating
Agency", "Refunding Agreement", "Regular Distribution Date",
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Standard & Poor's", "Stated Interest
Rate", "Subordination Agent", "Taxes", "Threshold Rating", "Triggering
Event", "Trust", "Trust Agreements", "Trustee", "Underwriters",
"Underwriting Agreement", and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby
irrevocably agrees, on the terms and conditions hereinafter set forth, to make
Advances to the Borrower from time to time on any Business Day during the period
from the Effective Date until 12:00 Noon (New York City time) on the Expiry Date
(unless the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.4(b)) in an aggregate amount at any time
outstanding not to exceed the Commitment.
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Section 2.2 Making the Advances. (a) Interest Advances shall
be made in one or more Borrowings by delivery to the Liquidity Provider of one
or more written and completed Notices of Borrowing in substantially the form of
Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an
amount not exceeding the Available Commitment at such time and shall be used
solely for the payment when due of interest on the Class A Certificates at the
Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the Available Commitment and the amount available to be
borrowed hereunder by subsequent Advances by the amount of such Interest Advance
(subject to reinstatement as provided in the next sentence). Upon repayment to
the Liquidity Provider in full of the amount of any Interest Advance made
pursuant to this Section 2.2(a), together with accrued interest thereon (as
provided herein), the Available Commitment shall be reinstated by the amount of
such repaid Interest Advance; provided, however, that the Available Commitment
shall not be so reinstated at any time if (x) both (i) a Triggering Event shall
have occurred and be continuing and (ii) a Performing Note Deficiency exists or
(y) a Liquidity Event of Default shall have occurred and be continuing.
(b) A Downgrade Advance shall be made in a single Borrowing
upon a downgrading of the rating of the Liquidity Provider resulting in the
Liquidity Provider's ratings not meeting the Threshold Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility shall have been delivered to the Borrower in accordance with said
Section 3.6(c), by delivery to the Liquidity Provider of a written and completed
Notice of Borrowing in substantially the form of Annex II attached hereto,
signed by a Responsible Officer of the Borrower, in an amount not exceeding the
Available Commitment at such time, and shall be used to fund the Class A Cash
Collateral Account in accordance with said Section 3.6(c). The Liquidity
Provider shall promptly notify the Borrower of any downgrade of its unsecured
debt rating by Moody's or Standard & Poor's below the applicable Threshold
Rating.
(c) A Final Advance shall be made by the Liquidity Provider
without the necessity for a Notice of Borrowing at the option of the Liquidity
Provider on the occurrence of an event described in Section 6.1(a) or 6.1(b) in
an amount equal to the Available Commitment at such time, and shall be used to
fund the Class A Cash Collateral Account.
(d) Each Borrowing (other than under Section 2.2(c)) shall be
made on notice in writing (a "Notice of Borrowing") in substantially the form
required by Section 2.2(a) or 2.2(b), as the case may be, given not later than
12:00 Noon (New York City time) on the Business Day prior to the day of the
proposed Borrowing by the Borrower to the Liquidity Provider. Upon
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satisfaction of the conditions precedent set forth in Section 4.2 with respect
to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New
York City time) on the date of such Borrowing or on such later Business Day
specified by the Borrower in such Notice of Borrowing, make available to the
Borrower, in U.S. dollars and in immediately available funds, the amount of such
Borrowing to be paid to the Borrower in accordance with its payment
instructions. If a Notice of Borrowing is delivered by the Borrower in respect
of any Borrowing after 12:00 Noon (New York City time) on a Business Day, the
Liquidity Provider shall, before 12:00 Noon (New York City time) on the second
Business Day next following the day of receipt of such Notice of Borrowing or on
such later Business Day specified by the Borrower in such Notice of Borrowing,
make available to the Borrower, in U.S. dollars and in immediately available
funds, the amount of such Borrowing to be paid to the Borrower in accordance
with its payment instructions. Payments of proceeds of a Borrowing shall be made
by wire transfer of immediately available funds to the Borrower in accordance
with such wire transfer instructions as the Borrower shall furnish from time to
time to the Liquidity Provider for such purpose. Each Notice of Borrowing shall
be irrevocable and binding on the Borrower.
(e) Upon the making of any Advance requested pursuant to a
Notice of Borrowing, in accordance with the Borrower's payment instructions, the
Liquidity Provider shall be fully discharged of its obligation hereunder with
respect to such Notice of Borrowing, and the Liquidity Provider shall not
thereafter be obligated to make any further Advances hereunder in respect of
such Notice of Borrowing to the Borrower or to any other person (including the
holder of any Class A Certificate or the Class A Trustee) who makes to the Class
A Trustee or the Borrower a demand for payment with respect to any Class A
Certificate. By paying to the Borrower proceeds of Advances requested by the
Borrower in accordance with the provisions of this Agreement, the Liquidity
Provider makes no representation as to, and assumes no responsibility for, the
correctness or sufficiency for any purpose of the amount of the Advances so made
and requested.
Section 2.3 Fees. (a) The Borrower agrees to pay to the
Liquidity Provider a fee equal to 0.25% of the Commitment (as in effect on the
Effective Date). Such fee shall be payable on the Effective Date.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.40% per annum on the average Available
Commitment from the Effective Date to the earlier of the date on which a
Downgrade Advance is made and the Termination Date. Such fee shall be payable in
arrears on each Regular Distribution Date. Nothing contained in this Section 2.3
shall require the Borrower to pay any amount under this Section
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2.3 other than to the extent the Borrower shall have funds available therefor.
Section 2.4 Reduction or Termination of the Commitment. (a)
Automatic Reductions. Promptly following each date on which the Required Amount
is reduced as a result of a reduction in the Pool Balance of the Class A
Certificates or otherwise, the Commitment shall automatically be reduced to an
amount equal to such reduced Required Amount (as calculated by the Borrower).
The Borrower shall give notice of any such automatic reduction of the Commitment
(substantially in the form of Annex IV hereto) to the Liquidity Provider (with a
copy to America West) within two Business Days thereof. The failure by the
Borrower to furnish any such notice shall not affect such automatic reduction of
the Commitment.
(b) Termination. Upon the making of any Downgrade Advance or
Final Advance hereunder or the occurrence of the Termination Date, the
obligation of the Liquidity Provider to make further Advances hereunder shall
automatically and irrevocably terminate, and the Borrower shall not be entitled
to request any further Borrowing hereunder.
Section 2.5 Repayments of Interest Advances or the Final
Advance. Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay, or
to cause to be paid, to the Liquidity Provider on each date on which the
Liquidity Provider shall make an Interest Advance or the Final Advance, an
amount equal to (a) the amount of such Interest Advance or the Final Advance
(any such Interest Advance or the Final Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
Unpaid Advance as provided in Section 3.7. Subject to Sections 2.6, 2.7 and 2.9,
unless otherwise waived by the Liquidity Provider, the Borrower shall be
obligated, without notice of an Advance or demand for repayment from the
Liquidity Provider (which notice and demand are hereby waived by the Borrower),
to repay the Liquidity Provider for all Interest Advances and Final Advances on
the same day as made and all Applied Downgrade Advances on the same day they
became Applied Downgrade Advances. The Borrower and the Liquidity Provider agree
that the repayment in full of each Interest Advance and the Final Advance on the
date such Interest Advance or the Final Advance is made and each Applied
Downgrade Advance on the date it becomes an Applied Downgrade Advance is
intended to be a contemporaneous exchange for new value given to the Borrower by
the Liquidity Provider.
Section 2.6 Repayments of Downgrade Advances. (a) Amounts
advanced hereunder in respect of a Downgrade Advance shall be deposited in the
Class A Cash Collateral Account, and invested and withdrawn from the Class A
Cash Collateral Account, as set forth in Sections 3.6(c), (e) and (f) of the
Intercreditor
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Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Downgrade Advance, interest on the principal amount of any such
Downgrade Advance as provided in Section 3.7. Immediately upon the withdrawal of
any amounts from the Class A Cash Collateral Account on account of a reduction
in the Required Amount, the Borrower shall repay the Downgrade Advance in a
principal amount equal to the amount of such reduction, plus interest on the
principal amount repaid as provided in Section 3.7.
(b) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, and prior to the effectiveness of any Replacement
Liquidity Facility, the Borrower agrees that all amounts owing to the Liquidity
Provider shall be repaid in full, whether from advances made by the Replacement
Liquidity Provider, from amounts remaining on deposit in the Class A Cash
Collateral Account after giving effect to any application of funds therefrom to
any payment of interest on the Class A Certificates on the date of such
replacement, or otherwise.
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider in the order of
priority required by the applicable provisions of Articles II and III of the
Intercreditor Agreement.
Section 2.8 Book Entries. The Liquidity Provider shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower resulting from Advances made from time to time
and the amounts of principal and interest payable hereunder and paid from time
to time in respect thereof; provided, however, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
Section 2.9 Payments from Available Funds Only. All payments
to be made by the Borrower under this Agreement shall be made only from amounts
received by it that constitute Scheduled Payments or Special Payments and only
to the extent that the Borrower shall have sufficient income or proceeds
therefrom to enable the Borrower to make payments in accordance with the terms
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hereof after giving effect to the priority of payments provisions set forth in
the Intercreditor Agreement. The Liquidity Provider agrees that it will look
solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided
in this Agreement, the Intercreditor Agreement or any Refunding Agreement.
Amounts on deposit in the Class A Cash Collateral Account shall be available to
make payments only to the extent and for the purposes expressly contemplated in
Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs. If the Liquidity Provider shall
determine that (a) any change in any law or regulation or in the interpretation
thereof by any court or administrative or governmental authority charged with
the administration thereof or in the compliance by the Liquidity Provider (or
its head office) with any applicable direction, request or requirement (whether
or not having the force of law) of any central bank or competent governmental or
other authority shall either (i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans made by, the Liquidity Provider, or (ii) impose on
the Liquidity Provider any other condition regarding this Agreement or any
Advance, or (iii) change the basis of taxation of any amounts payable to the
Liquidity Provider (other than Taxes imposed on the overall net or gross income
of the Liquidity Provider) and (b) the result of any event referred to in the
preceding clause (i), (ii) or (iii) shall be to increase the cost to the
Liquidity Provider of issuing or maintaining its commitment or funding or
maintaining Advances (which increase in cost shall be determined by the
Liquidity Provider's reasonable allocations of the aggregate of such cost
increases resulting from such event), then, no later than 30 days after demand
by the Liquidity Provider, the Borrower shall pay, or cause to be paid, to the
Liquidity Provider, from time to time as specified by the Liquidity Provider,
additional amounts which shall be sufficient to compensate the Liquidity
Provider for such increased cost. A certificate as to such increased cost
incurred by the Liquidity Provider as a result of any event mentioned in clause
(i), (ii) or (iii) above, prepared in reasonable detail and submitted by the
Liquidity Provider to the Borrower, shall be conclusive, absent manifest error,
as to the amount thereof.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory
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restrictions) to change the jurisdiction of its Lending Office if making such
change would avoid the need for, or reduce the amount of, any amount payable
under this Section 3.1 that may thereafter accrue and would not, in the
reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in
any material respect to the Liquidity Provider.
Section 3.2 Capital Adequacy. If the Liquidity Provider shall
determine that the adoption after the date hereof of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change
after the date hereof in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance after the date hereof by
the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, is generally applicable to all
banks domiciled in Belgium with branches in the United States and not related to
the financial condition of the Liquidity Provider and has the effect of reducing
the rate of return on the Liquidity Provider's capital as a consequence of
issuing or maintaining its commitment hereunder or its funding or maintaining
Advances to a level below that which the Liquidity Provider could have achieved
but for such adoption, change or compliance (taking into consideration the
Liquidity Provider's policies with respect to capital adequacy) by an amount
deemed by the Liquidity Provider to be material, then, no later than 30 days
after demand by the Liquidity Provider, the Borrower shall pay to the Liquidity
Provider, from time to time as specified by the Liquidity Provider, additional
amounts which shall be sufficient to compensate the Liquidity Provider for such
reduction in respect of issuing or maintaining its commitment hereunder or its
funding or maintaining Advances. A certificate as to such additional amount
describing the event which has the effect of reducing the rate of return on the
Liquidity Provider's capital, prepared in reasonable detail and submitted by the
Liquidity Provider to the Borrower, shall be conclusive, absent manifest error,
as to the amount thereof.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section 3.2
that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider. The Liquidity Provider further agrees that no amounts shall
be payable under this Section 3.2 unless the Liquidity Provider is charging its
other borrowers with whom it has agreements similar to this agreement the
amounts that are payable to the Liquidity Provider under this Section 3.2.
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Section 3.3 Payments Free of Deductions. All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding any Taxes imposed on the overall net
income of the Liquidity Provider and excluding United States federal income tax
withholding to the extent such withholding is, or would be, actually imposed
upon payments to the Liquidity Provider as of the date of this Agreement (such
non-excluded taxes being referred to herein, collectively, as "Non-Excluded
Taxes" and, individually, as a "Non-Excluded Tax"). If any Non- Excluded Taxes
are required to be withheld from any amounts payable to the Liquidity Provider
under this Agreement, the amounts so payable to the Liquidity Provider shall be
increased to the extent necessary to yield to the Liquidity Provider (after
payment of all Non-Excluded Taxes and taxes imposed on the receipt of such
increase) interest or any other such amounts payable under this Agreement at the
rates or in the amounts specified in this Agreement. Whenever any Non-Excluded
Tax is payable by the Borrower, promptly thereafter the Borrower shall send the
Liquidity Provider certified copies of tax receipts evidencing such payment by
the Borrower. The Liquidity Provider agrees to provide to the Borrower on or
prior to the Effective Date, and from time to time thereafter prior to the
expiration of the effectiveness of and promptly upon the occurrence of any event
requiring a change in the most recent form previously delivered by it (and prior
to the immediately following due date of any payment by the Borrower hereunder),
to the extent that the Liquidity Provider is legally entitled to do so, two
original Internal Revenue Service Form 1001 or 4224, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that the Liquidity Provider is completely exempt from United States withholding
tax on payments pursuant to this Agreement.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section 3.3
that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
Section 3.4 Payments. The Borrower shall make or cause to be
made each payment to the Liquidity Provider under this Agreement so as to cause
the same to be received by the Liquidity Provider not later than 1:00 P.M. (New
York City time) on the day when due. The Borrower shall make all such payments
in lawful money of the United States of America, to the Liquidity
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Provider in immediately available funds, by wire transfer to The Bank of New
York, One Wall Street, New York, NY 10286, ABA No. 021-000-018, for the account
of Kredietbank New York, Account No. 802-3015618 (referencing America West
Airlines Liquidity Facility).
Section 3.5 Computations. All computations of interest based
on the Base Rate shall be made on the basis of a year of 365 or 366 days, as the
case may be, and all computations of (x) interest based on the LIBOR Rate and
(y) fees payable to the Liquidity Provider, shall be made on the basis of a year
of 360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest is
payable.
Section 3.6 Payment on Non-Business Days. Whenever any payment
to be made hereunder (other than a payment on LIBOR Advances) becomes due and
payable on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a LIBOR Advance becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.
Section 3.7 Interest. (a) The Borrower shall pay, or shall
cause to be paid, interest on (i) the unpaid principal amount of each Advance
from and including the date of such Advance to but excluding the date such
principal amount shall be paid in full and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate for such Advance
for such day, but in no event at a rate per annum greater than the maximum rate
permitted by applicable law; provided, however, that, if at any time the
otherwise applicable interest rate as set forth in this Section 3.7 shall exceed
the maximum rate permitted by applicable law, then any subsequent reduction in
such interest rate will not reduce the rate of interest payable pursuant to this
Section 3.7 below the maximum rate permitted by applicable law until the total
amount of interest accrued equals the amount of interest that would have accrued
if such otherwise applicable interest rate as set forth in this Section 3.7 had
at all times been in effect. Nothing contained in this Section 3.7 shall require
the Borrower to pay any amount
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under this Section 3.7 other than to the extent the Borrower shall have funds
available therefor.
(b) Each Advance will be either a Base Rate Advance or a LIBOR
Advance as provided in this Section. Each such Advance will be a Base Rate
Advance for the period from the date of its borrowing to (but excluding) the
third Business Day following the Liquidity Provider's receipt of the Notice of
Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR Advance;
provided that the Final Advance shall, until repaid in full, be a Base Rate
Advance and the Borrower may not convert the Final Advance into a LIBOR Advance.
(c) Each LIBOR Advance shall bear interest during each
Interest Period at a per annum rate equal to the LIBOR Rate for such Interest
Period plus the Applicable Margin for such LIBOR Advance, payable in arrears on
the last day of such Interest Period and, in the event of the payment of
principal of such LIBOR Advance on a day other than such last day, on the date
of such payment (to the extent of interest accrued on the amount of principal
repaid).
(d) Each Base Rate Advance shall bear interest at a per annum
rate equal to the Base Rate plus the Applicable Margin for such Base Rate
Advance, payable in arrears on each Regular Distribution Date and, in the event
of the payment of principal of such Base Rate Advance on a day other than a
Regular Distribution Date, on the date of such payment (to the extent of
interest accrued on the amount of principal repaid).
(e) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances) shall bear interest at the Base Rate.
(f) Each change in the Base Rate shall become effective
immediately.
Section 3.8 Replacement of Borrower. Subject to Section
5.2(b), from time to time, upon the effective date and time specified in a
written and completed Notice of Replacement Borrower in substantially the form
of Annex III attached hereto (a "Notice of Replacement Borrower") delivered to
the Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.
Section 3.9 Funding Loss Indemnification. The Borrower shall
pay to the Liquidity Provider, upon the request of the Liquidity Provider, such
amount or amounts as shall be sufficient (in the reasonable opinion of the
Liquidity Provider)
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to compensate it for any loss, cost, or expense incurred as a result of:
(a) Any payment or prepayment of a LIBOR Advance on a
date other than the last day of the Interest Period for such
Advance; or
(b) Any failure by the Borrower to borrow a LIBOR Advance on
the date for borrowing specified in the relevant notice under Section
2.2 or 3.7.
Section 3.10 Illegality. Notwithstanding any other provision
in this Agreement, if any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request. In the event any change of the nature described in the preceding
sentence shall make it unlawful or impossible for the Liquidity Provider (or its
Lending Office) to maintain or fund its Base Rate Advances, the Liquidity
Provider shall have the right to cause a Replacement Liquidity Facility to be
substituted for this Agreement, subject to (i) the satisfaction of the
conditions precedent to the effectiveness of, and the other provisions
regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the
Intercreditor Agreement and (ii) such Replacement Liquidity Facility and
Replacement Liquidity Provider being reasonably acceptable to America West.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section
2.1. Section 2.1 of this Agreement shall become effective on and as of the first
date (the "Effective Date") on which the following conditions precedent have
been satisfied or waived:
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(a) The Liquidity Provider shall have received on or before
the Closing Date each of the following, each dated such date (except
for those documents delivered pursuant to paragraphs (v) and (vii) of
this Section 4.1(a)), and each in form and substance satisfactory to
the Liquidity Provider:
(i) This Agreement duly executed on behalf of the
Borrower;
(ii) The Intercreditor Agreement duly executed on
behalf of each of the parties thereto;
(iii) Counterparts (or certified copies thereof) of
each of the Operative Agreements (other than this Agreement
and the Intercreditor Agreement) which, when taken together,
bear the signatures of all of the respective parties thereto
and which are in full force and effect in accordance with
their respective terms;
(iv) A copy of the Prospectus and specimen copies of
the Class A Certificates;
(v) Evidence that, on the Effective Date, the Class A
Certificates, the Class B Certificates, the Class C
Certificates, the Class D Certificates and the Class E
Certificates will receive long-term credit ratings from
Moody's of not lower than A2, Baa2, Ba1, Ba3 and B1,
respectively, and from Standard & Poor's of not lower than
AA-, A-, BBB-, BB and B+, respectively;
(vi) An executed or certified copy of each document,
instrument, certificate and opinion delivered pursuant to the
Class A Trust Agreement, the Intercreditor Agreement, the
Refunding Agreements and the other Operative Agreements
(together with, in the case of each such opinion (unless such
opinion is addressed to the Liquidity Provider), other than
the opinion of counsel for the Underwriters, a letter from the
counsel rendering such opinion to the effect that the
Liquidity Provider is entitled to rely on such opinion as if
it were addressed to the Liquidity Provider);
(vii) Evidence that there shall have been made and
shall be in full force and effect, all filings, recordings
and/or registrations, and there shall have been given or taken
any notice or other similar action as may be reasonably
necessary or, to the extent reasonably requested by the
Liquidity Provider, reasonably advisable, in order to
establish, perfect, protect and preserve the right, title and
interest,
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remedies, powers, privileges, liens and security
interests of, or for the benefit of, the Trustees and the
Liquidity Provider created by the Operative Agreements;
(viii) Copies of the appraisals included in the
Prospectus;
(ix) A letter from America West agreeing to provide
to the Liquidity Provider the periodic financial reports
referred to in Section 8.04(a) of the Trust Agreements; and
(x) Such other documents, instruments, opinions and
approvals (and, if requested by the Liquidity Provider,
certified duplicates or executed copies thereof) as the
Liquidity Provider shall have reasonably requested.
(b) The following statements shall be true and shall be deemed
to have been represented by each party (other than clause (ii) below,
which shall be deemed to have been represented only by America West) to
the Refunding Agreements as being true on and as of the Effective Date:
(i) The representations and warranties of such Person
contained in each Refunding Agreement are true and correct on
and as of the Effective Date as though made on and as of the
Effective Date; and
(ii) No event has occurred and is continuing, or
would result from the entering into of this Agreement or the
making of any Advance, which constitutes a Liquidity Event of
Default.
The Liquidity Provider shall have received payment in full of
all fees and other sums required to be paid to or for the account of
the Liquidity Provider on or prior to the Effective Date.
(c) All conditions precedent to the issuance of the
Certificates under the Trust Agreements shall have been satisfied, all
conditions precedent to the effectiveness of the other Liquidity
Facilities shall have been satisfied, and all conditions precedent to
the purchase of the Certificates by the Underwriters under the
Underwriting Agreement shall have been satisfied (except for any of
such conditions precedent under the Underwriting Agreement that shall
have been waived by the Underwriters).
(d) The Borrower shall have received a certificate,
dated the date hereof, signed by a duly authorized
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<PAGE> 21
representative of the Liquidity Provider, certifying that all
conditions precedent to the effectiveness of Section 2.1 have been
satisfied or waived (other than this Section 4.1(d)).
Section 4.2 Conditions Precedent to Borrowing. The obligation
of the Liquidity Provider to make an Advance on the occasion of each Borrowing
shall be subject to the conditions precedent that the Effective Date shall have
occurred and, except in the case of a Final Advance, prior to the date of such
Borrowing, the Borrower shall have delivered a Notice of Borrowing which
conforms to the terms and conditions of this Agreement and has been completed as
may be required by the relevant form of the Notice of Borrowing for the type of
Advance requested.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower. So long as
any Advance shall remain unpaid or the Liquidity Provider shall have any
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay
or cause to be paid all amounts payable by it under this Agreement and
the other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider
with reasonable promptness, such information and data with respect to
the transactions contemplated by the Operative Agreements as from time
to time may be reasonably requested by the Liquidity Provider; and
permit the Liquidity Provider, upon reasonable notice, to inspect the
Borrower's books and records with respect to such transactions and to
meet with officers and employees of the Borrower to discuss such
transactions.
Section 5.2 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written consent
of the Liquidity Provider:
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<PAGE> 22
(a) Amendments. Modify, amend or supplement; or give any
consent to any modification, amendment, or supplement; or make any
waiver with respect to; any provision of the Trust Agreements or the
Intercreditor Agreement, except for any supplemental agreement to the
Trust Agreements provided for in Section 9.01 thereof.
(b) Borrower. Appoint or permit or suffer to be appointed any
successor Borrower without the prior written approval of the Liquidity
Provider (which approval shall not be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance. If (a) both (i) a Triggering Event
shall have occurred and be continuing and (ii) a Performing Note Deficiency
exists or (b) a Liquidity Event of Default shall have occurred and be
continuing, the Liquidity Provider may, in its discretion, make a Final Advance
whereupon (i) the Liquidity Provider shall have no further obligation to make
Advances hereunder, (ii) all other outstanding Advances shall be automatically
converted into Final Advances for purposes of determining the Applicable
Liquidity Rate for interest payable thereon, and (iii) subject to Sections 2.7
and 2.9, all Advances, any accrued interest thereon and any other amounts
outstanding hereunder shall become immediately due and payable to the Liquidity
Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 7.2 Notices, Etc. Except as otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be in writing (including telecopier and mailed or delivered or sent by
telecopier):
Borrower: Fleet National Bank
777 Main Street
Hartford, CT 06115
19
<PAGE> 23
Attention: Corporate Trust
Administration
Telecopy: (860) 986-7920
Liquidity
Provider: Kredietbank N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telecopy: (212) 956-5580
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Refunding Agreements at their respective addresses
set forth therein.
Section 7.3 No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.4 Further Assurances. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.5 Indemnification; Survival of Certain Provisions.
The Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Sections 10 and 13 of the Lease. In addition, the Borrower
agrees to indemnify, protect, defend and hold harmless the Liquidity Provider
from, against and in respect of, and shall pay on demand, all Expenses of any
kind or nature whatsoever, whether arising before, on or after the date hereof,
that may be imposed,
20
<PAGE> 24
incurred by or asserted against any Liquidity Indemnitee, in any way relating
to, resulting from, or arising out of or in connection with, this Agreement, the
Intercreditor Agreement or the Refunding Agreements; provided, however, that the
Borrower shall not be required to indemnify, protect, defend and hold harmless
any Liquidity Indemnitee in respect of any Expense of such Liquidity Indemnitee
(i) to the extent such Expense is attributable to the gross negligence or
willful misconduct of such Liquidity Indemnitee or any Related Indemnitee, (ii)
that is ordinary and usual operating overhead expense or (iii) to the extent
such Expense is attributable to the failure by such Liquidity Indemnitee or its
Related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement. The indemnities
contained in such Sections 10 and 13 of the Lease, and the provisions of
Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall survive the termination of this
Agreement.
Section 7.6 Liability of the Liquidity Provider. (a) Neither
the Liquidity Provider nor any of its officers or directors shall be liable or
responsible for: (i) the use which may be made of the Advances or any acts or
omissions of the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; or (iii) the making of
Advances by the Liquidity Provider against delivery of a Notice of Borrowing and
other documents which do not comply with the terms hereof; provided, however,
that the Borrower shall have a claim against the Liquidity Provider, and the
Liquidity Provider shall be liable to the Borrower, to the extent of any damages
suffered by the Borrower which were the result of (A) the Liquidity Provider's
willful misconduct or negligence in determining whether documents presented
hereunder comply with the terms hereof, or (B) any breach by the Liquidity
Provider of any of the terms of this Agreement, including, but not limited to,
the Liquidity Provider's failure to make lawful payment hereunder after the
delivery to it by the Borrower of a Notice of Borrowing strictly complying with
the terms and conditions hereof.
(b) The Liquidity Provider shall not be liable or responsible
in any respect for (i) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with this Agreement or any Notice of Borrowing
delivered hereunder, or (ii) any action, inaction or omission which may be taken
by it in good faith, absent willful misconduct or negligence (in which event the
extent of the Liquidity Provider's potential liability to the Borrower shall be
limited as set forth in the immediately preceding paragraph), in connection with
this Agreement or any Notice of Borrowing.
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<PAGE> 25
Section 7.7 Costs, Expenses and Taxes. The Borrower agrees to
pay, or cause to be paid (A) on the Effective Date and on such later date or
dates on which the Liquidity Provider shall make demand, all reasonable
out-of-pocket costs and expenses of the Liquidity Provider in connection with
the preparation, negotiation, execution, delivery, filing and recording of this
Agreement, any other Operative Agreement and any other documents which may be
delivered in connection with this Agreement, including, without limitation, the
reasonable fees and expenses of outside counsel for the Liquidity Provider and
(B) on demand, all reasonable costs and expenses of the Liquidity Provider
(including reasonable counsel fees and expenses) in connection with (i) the
enforcement of this Agreement or any other Operative Agreement, (ii) the
modification or amendment of, or supplement to, this Agreement or any other
Operative Agreement or such other documents which may be delivered in connection
herewith or therewith (whether or not the same shall become effective) or (iii)
any action or proceeding relating to any order, injunction, or other process or
decree restraining or seeking to restrain the Liquidity Provider from paying any
amount under this Agreement, the Intercreditor Agreement or any other Operative
Document or otherwise affecting the application of funds in the Cash Collateral
Accounts. In addition, the Borrower shall pay any and all recording, stamp and
other similar taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of this Agreement, any other
Operative Agreement and such other documents, and agrees to save the Liquidity
Provider harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
Section 7.8 Binding Effect; Participations. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.8) nor the
Borrower shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the other party, subject to the
requirement of Section 7.8(b). The Liquidity Provider may grant participations
herein or in any of its rights or security hereunder and under the other
Operative Agreements to such Persons as the Liquidity Provider may in its sole
discretion select, subject to the requirement of Section 7.8(b). No such
participation by the Liquidity Provider, however, will relieve the Liquidity
Provider of its obligations hereunder. In connection with any participation or
any proposed participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the Borrower is
required to deliver or to disclose to the Liquidity Provider pursuant to this
Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's
source of funds may derive in part from its participants. Accordingly,
references in
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<PAGE> 26
this Agreement and the other Operative Agreements to determinations, reserve and
capital adequacy requirements, increased costs, reduced receipts and the like as
they pertain to the Liquidity Provider shall be deemed also to include those of
each of its participants (subject, in each case, to the maximum amount that
would have been incurred by or attributable to the Liquidity Provider directly
if the Liquidity Provider, rather than the participant, had held the interest
participated).
(b) If, pursuant to subsection (a) above, the Liquidity
Provider sells any participation to any bank or other entity (each, a
"Participant"), then, concurrently with the effectiveness of such participation,
the Participant shall (i) represent to the Liquidity Provider (for the benefit
of the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld by the
Borrower or the Liquidity Provider with respect to any payments to be made to
such Participant in respect of this Agreement, (ii) furnish to the Liquidity
Provider and the Borrower either (x) a statement that it is incorporated under
the laws of the United States or a state thereof or (y) if it is not so
incorporated, two copies of a properly completed United States Internal Revenue
Service Form 4224 or Form 1001, as appropriate, or other applicable form,
certificate or document prescribed by the Internal Revenue Service certifying,
in each case, such Participant's entitlement to a complete exemption from United
States federal withholding tax in respect to any and all payments to be made
hereunder, and (iii) agree (for the benefit of the Liquidity Provider and the
Borrower) to provide the Liquidity Provider and the Borrower a new Form 4224 or
Form 1001, as appropriate, (A) on or before the date that any such form expires
or becomes obsolete or (B) after the occurrence of any event requiring a change
in the most recent form previously delivered by it and prior to the immediately
following due date of any payment by the Borrower hereunder, certifying in the
case of a Form 1001 or Form 4224 that such Participant is entitled to a complete
exemption from United States federal withholding tax on payments under this
Agreement. Unless the Borrower has received forms or other documents reasonably
satisfactory to it indicating that payments hereunder are not subject to United
States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate without any obligation
to gross-up or indemnify pursuant to Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8,
the Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
23
<PAGE> 27
Reserve Bank, provided that any payment in respect of such assigned Advances
made by the Borrower to the Liquidity Provider in accordance with the terms of
this Agreement shall satisfy the Borrower's obligations hereunder in respect of
such assigned Advance to the extent of such payment. No such assignment shall
release the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the nonexclusive general jurisdiction of
the courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and the appellate courts
from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) if such party does not maintain an office for the
transaction of its business in New York, agrees that service of process
in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar
form and mail), postage prepaid, to each party hereto at its address
set forth in Section 7.2, or at such other address of which the
Liquidity Provider shall have been notified pursuant thereto; and
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<PAGE> 28
(iv) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY.
Section 7.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement and the other Operative
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior understandings and
agreements of such parties.
Section 7.14 Headings; Section References. Section headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose. Unless the
context otherwise requires or otherwise indicated herein, all Section references
in this Agreement are references to Sections hereof.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
25
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first set forth above.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
KREDIETBANK N.V., NEW YORK BRANCH,
as Liquidity Provider
By ________________________________
Name:
Title:
By ________________________________
Name:
Title:
26
<PAGE> 30
Annex I to Irrevocable
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the
undersigned borrower (the "Borrower"), hereby certifies to KREDIETBANK N.V.,
acting through its New York Branch (the "Liquidity Provider"), with reference to
the Irrevocable Revolving Credit Agreement, Class A Certificates dated as of
November 26, 1996, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of an Interest Advance by the Liquidity Provider to be used
for the payment of interest on the Class A Certificates which was
payable on the Distribution Date falling on _____________ in accordance
with the terms and provisions of the Class A Trust Agreement and the
Class A Certificates and has not been paid pursuant to clause fourth of
Section 3.2 of the Intercreditor Agreement or clause sixth of Section
3.3 of the Intercreditor Agreement, which Advance is requested to be
made on _____________.
(3) The amount of the Interest Advance requested hereby (i) is
$___________ , to be applied in respect of the payment of interest
which was due and payable on the Class A Certificates on such
Distribution Date, (ii) does not include any amount with respect to the
payment of principal of, or premium on, the Class A Certificates, the
Class B Certificates, the Class C Certificates, the Class D
Certificates or Class E Certificates, or interest on the Class B
Certificates, the Class C Certificates, the Class D Certificates or the
Class E Certificates, (iii) was computed in accordance with the
provisions of the Class A Certificates, the Class A Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), (iv) does not exceed the Available Commitment on
the date hereof, and (v) has not been and is not the subject of a prior
or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance
with the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as
the case may be, (b) no portion of such amount shall be applied by the
Borrower for any other purpose and (c) no portion of such amount until
so
<PAGE> 31
applied shall be commingled with other funds held by the Borrower.
(5) The Borrower hereby requests that the Advance requested
hereby be a Base Rate Advance and that such Base Rate Advance be
converted into a LIBOR Rate Advance on the third Business Day following
your receipt of this notice.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, the making of the Interest Advance as requested by this
Notice of Borrowing shall automatically reduce, subject to reinstatement in
accordance with the terms of the Liquidity Agreement, the Available Commitment
by an amount equal to the amount of the Interest Advance requested to be made
hereby as set forth in clause (i) of paragraph (3) of this Certificate and such
reduction shall automatically result in corresponding reductions in the amounts
available to be borrowed pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Notice of Borrowing as of the _ day of ______________, ________.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
2
<PAGE> 32
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
3
<PAGE> 33
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the
undersigned subordination agent (the "Borrower"), hereby certifies to
KREDIETBANK, N.V., acting through its New York Branch (the "Liquidity
Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class
A Certificates dated as of November 26, 1996, between the Borrower and the
Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined or referenced),
that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of the Downgrade Advance by the Liquidity Provider to be
used for the funding of the Class A Cash Collateral Account in
accordance with Section 3.6(c) of the Intercreditor Agreement by reason
of the downgrading of the debt rating of the Liquidity Provider issued
by either Rating Agency below the applicable Threshold Rating, which
Advance is requested to be made on ______________________.
(3) The amount of the Downgrade Advance requested hereby (i)
is $___________, which equals the Available Commitment on the date
hereof and is to be applied in respect of the funding of the Class A
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect
to the payment of the principal of, or premium on, the Class A
Certificates, or principal of, or interest or premium on, the Class B
Certificates, the Class C Certificates, the Class D Certificates or the
Class E Certificates, (iii) was computed in accordance with the
provisions of the Class A Certificates, the Class A Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of
a prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the
Class A Cash Collateral Account and apply the same in accordance with
the terms of Section 3.6(c) of the Intercreditor Agreement, (b) no
portion of such amount shall be applied by the Borrower for any other
purpose and (c) no portion of such amount until so applied shall be
commingled with other funds held by the Borrower.
<PAGE> 34
(5) The Borrower hereby requests that the Advance requested
hereby be a Base Rate Advance and that such Base Rate Advance be
converted into a LIBOR Rate Advance on the third Business Day following
your receipt of this notice.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, (A) the making of the Downgrade Advance as requested by
this Notice of Borrowing shall automatically and irrevocably terminate the
obligation of the Liquidity Provider to make further Advances under the
Liquidity Agreement; and (B) following the making by the Liquidity Provider of
the Downgrade Advance requested by this Notice of Borrowing, the Borrower shall
not be entitled to request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Notice of Borrowing as of the _ day of __________, ________.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
2
<PAGE> 35
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE> 36
Annex III to Irrevocable
Revolving Credit Agreement
NOTICE OF REPLACEMENT BORROWER
[Date]
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Liquidity Agreement referred
to above. The transferee has succeeded the undersigned as Subordination Agent
under the Intercreditor Agreement referred to in the first paragraph of the
Liquidity Agreement.
By this transfer, all rights of the undersigned as Borrower
under the Liquidity Agreement are transferred to the transferee and the
transferee shall hereafter have the sole rights as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
We ask that this transfer be effective as of _______, _____.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
<PAGE> 37
Annex IV to Irrevocable
Revolving Credit Agreement
NOTICE OF AUTOMATIC REDUCTION OF COMMITMENT
[Date]
Ladies and Gentlemen:
The undersigned, a duly authorized signatory of the
undersigned subordination agent (the "Borrower"), hereby notifies Kredietbank
N.V., acting through its New York Branch (the "Liquidity Provider"), with
reference to the Irrevocable Revolving Credit Agreement dated as of November 26,
1996, between the Borrower and the Liquidity Provider (the "Liquidity
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that, pursuant to Section 2.4(a)
of the Liquidity Agreement, the Commitment has been automatically reduced to
$_________.
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Notice of Borrowing as of the _____ day of __________, ________.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By _______________________________
Name:
Title:
2
<PAGE> 1
EXHIBIT 4.8
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
Dated as of November 26, 1996
between
FLEET NATIONAL BANK,
as Subordination Agent,
as agent and trustee for the
America West Airlines Pass Through Trust 1996-1B,
as Borrower
and
KREDIETBANK N.V.,
NEW YORK BRANCH,
as Liquidity Provider
Relating to
America West Airlines Pass Through Trust 1996-1B
6.93% America West Airlines Pass Through Certificates,
Series 1996-1B
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TABLE OF CONTENTS
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ARTICLE I........................................... 1
DEFINITIONS................................................. 1
Section 1.1 Certain Defined Terms....................................... 1
ARTICLE II.......................................... 5
AMOUNT AND TERMS OF THE COMMITMENT.......................... 5
Section 2.1 The Advances................................................ 5
Section 2.2 Making the Advances......................................... 6
Section 2.3 Fees........................................................ 7
Section 2.4 Reduction or Termination of the Commitment.................. 8
Section 2.5 Repayments of Interest Advances or the Final Advance........ 8
Section 2.6 Repayments of Downgrade Advances............................ 9
Section 2.7 Payments to the Liquidity Provider Under
the Intercreditor Agreement................................. 9
Section 2.8 Book Entries................................................ 9
Section 2.9 Payments from Available Funds Only.......................... 10
ARTICLE III
OBLIGATIONS OF THE BORROWER................................. 10
Section 3.1 Increased Costs............................................. 10
Section 3.2 Capital Adequacy............................................ 11
Section 3.3 Payments Free of Deductions................................. 12
Section 3.4 Payments.................................................... 12
Section 3.5 Computations................................................ 13
Section 3.6 Payment on Non-Business Days................................ 13
Section 3.7 Interest.................................................... 13
Section 3.8 Replacement of Borrower..................................... 14
Section 3.9 Funding Loss Indemnification................................ 14
Section 3.10 Illegality................................................. 15
ARTICLE IV
CONDITIONS PRECEDENT........................................ 15
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1........ 15
Section 4.2 Conditions Precedent to Borrowing........................... 18
ARTICLE V
COVENANTS .................................................. 18
Section 5.1 Affirmative Covenants of the Borrower....................... 18
Section 5.2 Negative Covenants of the Borrower.......................... 18
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ARTICLE VI
FINAL ADVANCE............................................... 19
Section 6.1 Final Advance............................................... 19
ARTICLE VII
MISCELLANEOUS............................................... 19
Section 7.1 Amendments, Etc............................................. 19
Section 7.2 Notices, Etc................................................ 19
Section 7.3 No Waiver; Remedies......................................... 20
Section 7.4 Further Assurances.......................................... 20
Section 7.5 Indemnification; Survival of Certain Provisions............. 20
Section 7.6 Liability of the Liquidity Provider......................... 21
Section 7.7 Costs, Expenses and Taxes................................... 21
Section 7.8 Binding Effect; Participations.............................. 22
Section 7.9 Severability................................................ 24
Section 7.10 GOVERNING LAW.............................................. 24
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial........... 24
Section 7.12 Execution in Counterparts.................................. 25
Section 7.13 Entirety................................................... 25
Section 7.14 Headings; Section References............................... 25
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........... 25
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Annex I - Interest Advance Notice of Borrowing
Annex II - Downgrade Advance Notice of Borrowing
Annex III - Notice of Replacement Borrower
Annex IV - Notice of Automatic Reduction of Commitment
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IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS B CERTIFICATES
dated as of November 26, 1996 between FLEET NATIONAL BANK, a national banking
association, not in its individual capacity but solely as Subordination Agent
under the Intercreditor Agreement (each as defined below), as agent and trustee
for the Class B Trust (as defined below) (the "Borrower"), and KREDIETBANK N.V.,
acting through its New York Branch (the "Liquidity Provider").
W I T N E S S E T H
WHEREAS, pursuant to the Class B Trust Agreement (such term
and all other capitalized terms used in these recitals having the meanings set
forth or referred to in Section 1.1), the Class B Trust is issuing the Class B
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment
of a portion of the interest on the Class B Certificates in accordance with
their terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. (a) Definitions. As used in
this Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Advance" means an Interest Advance, a Final Advance or
a Downgrade Advance, as the case may be.
"Applicable Liquidity Rate" means the rates of interest
specified in Section 3.7 with respect to any Advance.
"Applicable Margin" means (x) with respect to any Downgrade
Advance (other than an Applied Downgrade Advance) .40% (40 basis points) per
annum and (y) with respect to any other Advance including an Applied Downgrade
Advance 1.5% (150 basis points) per annum.
"Applied Downgrade Advance" means any amount in respect of a
Downgrade Advance withdrawn from the Class B Cash Collateral Account for the
purpose of paying interest on the Class B
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Certificates in accordance with Section 3.6(f) of the Inter-creditor Agreement.
"Available Commitment" means, at any time of determination, an
amount equal to (i) the Commitment at such time less (ii) subject to the proviso
contained in the third sentence of Section 2.2(a), the aggregate amount of each
Advance outstanding at such time; provided that following a Downgrade Advance or
a Final Advance, the Available Commitment shall be zero.
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the higher of (i) the base commercial lending rate announced from time to time
by the Liquidity Provider, or (ii) the rate quoted by the Liquidity Provider, at
approximately 11:00 A.M., New York City time, to dealers in the New York Federal
funds market for overnight offering of dollars by the Liquidity Provider, for
deposit plus .50 of 1 percent (.50%).
"Base Rate Advance" means an Advance that bears interest at a
rate based upon the Base Rate.
"Borrower" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery
of a Notice of Borrowing or pursuant to Section 6.1.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close in New
York, New York or Hartford, Connecticut, and, if the applicable Business Day
relates to any Advance or other amount bearing interest based on the LIBOR Rate,
on which dealings are carried on in the London interbank market.
"Commitment" means, initially, $3,859,559.55 as the same may
be reduced from time to time in accordance with Section 2.4(a).
"Downgrade Advance" means an Advance made pursuant to
Section 2.2(b).
"Effective Date" has the meaning specified in Section 4.1. The
delivery of the certificate of the Liquidity Provider contemplated by Section
4.1(d) shall be conclusive evidence that the Effective Date has occurred.
"Expenses" means liabilities, obligations, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees
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and disbursements of legal counsel and costs of investigation), provided that
Expenses shall not include any Taxes.
"Expiry Date" means July 17, 2009.
"Final Advance" means an Advance made pursuant to
Sections 2.2(c) and 6.1.
"Intercreditor Agreement" means the Intercreditor Agreement
dated the date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider under each Liquidity Facility (other than this Agreement) and the
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Interest Advance" means an Advance made pursuant to
Section 2.2(a).
"Interest Period" means, with respect to any LIBOR Advance,
each of the following periods:
(i) the period beginning on the date such LIBOR Advance
is made (or is converted from a Base Rate Advance) and ending on the
next Regular Distribution Date; and
(ii) each subsequent period commencing on the last day
of the immediately preceding Interest Period and ending on the next
Regular Distribution Date.
"Lending Office" means the lending office of the Liquidity
Provider, presently located at 125 West 55th Street, New York, NY 10019, or such
other lending office as the Liquidity Provider from time to time shall notify
the Borrower at its lending office hereunder.
"LIBOR Advance" means an Advance bearing interest at a rate
based upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, the
rate per annum at which deposits in U.S. Dollars are offered for the relevant
Interest Period by the Liquidity Provider to prime banks in the London interbank
market at approximately 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in the principal amount of the Advance to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period, as quoted by the Liquidity Provider to the Subordination
Agent.
"Liquidity Event of Default" means the occurrence of the
following: all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final maturity.
A Liquidity Event of Default shall
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not occur upon an automatic acceleration of the Equipment Notes as a result of
an America West Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii)
each affiliate of the Liquidity Provider, (iii) the respective directors,
officers, employees, agents and servants of the Liquidity Provider and its
affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in
the recital of parties to this Agreement.
"Non-Excluded Tax" has the meaning specified in Section 3.3.
"Notice of Borrowing" has the meaning specified in Section
2.2(d).
"Notice of Replacement Borrower" has the meaning specified in
Section 3.8.
"Participant" has the meaning assigned to such term in Section
7.8(b).
"Prospectus" means the prospectus included in the registration
statement on Form S-3 (File No. 333-14691) filed by America West relating to
certain pass through certificates, as such Prospectus may be amended or
supplemented.
"Related Indemnitee" means, with respect to any Liquidity
Indemnitee, its director, officer, employee, agent, affiliate or employer.
"Replenishment Amount" has the meaning assigned to such term
in Section 2.6(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class B Certificates, that would be payable on the Class B
Certificates on each of the three successive semiannual Regular Distribution
Dates immediately following such day or, if such day is a Regular Distribution
Date, on such day and the succeeding two semiannual Regular Distribution Dates,
in each case calculated on the basis of the Pool Balance of the Class B
Certificates on such day and without regard to expected future payments of
principal on the Class B Certificates.
"Termination Date" means the earliest to occur of the
following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to
the Liquidity Provider a certificate, signed
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by a Responsible Officer of the Borrower, certifying that all of the Class B
Certificates have been paid in full (or provision has been made for such payment
in accordance with the Intercreditor Agreement and the Trust Agreements) or are
otherwise no longer entitled to the benefits of this Agreement; (iii) the date
on which the Borrower delivers to the Liquidity Provider a certificate, signed
by a Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full pursuant to
Section 3.6(e) of the Intercreditor Agreement; (iv) the date on which the
Liquidity Provider makes the Final Advance; and (v) the date on which no Advance
is or may (including by reason of reinstatement as herein provided) become
available for a Borrowing hereunder.
"Unpaid Advance" has the meaning assigned to such term in
Section 2.5.
(b) Terms Defined in the Intercreditor Agreement. For all
purposes of this Agreement, the following terms shall have the respective
meanings assigned to such terms in the Intercreditor Agreement:
"America West", "America West Bankruptcy Event", "Certificates", "Class
A Certificates", "Class B Certificates", "Class B Certificateholders",
"Class B Cash Collateral Account", "Class B Trust", "Class B Trust
Agreement", "Class B Trustee", "Class C Certificates", "Class D
Certificates", "Class E Certificates", "Closing Date", "Controlling
Party", "Corporate Trust Office", "Distribution Date", "$", "Equipment
Notes", "Indenture", "Investment Earnings", "Liquidity Facility",
"Moody's", "Operative Agreements", "Performing Equipment Note",
"Performing Note Deficiency", "Person", "Pool Balance", "Rating
Agency", "Refunding Agreement", "Regular Distribution Date",
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Standard & Poor's", "Stated Interest
Rate", "Subordination Agent", "Taxes", "Threshold Rating", "Triggering
Event", "Trust", "Trust Agreements", "Trustee", "Underwriters",
"Underwriting Agreement", and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby
irrevocably agrees, on the terms and conditions hereinafter set forth, to make
Advances to the Borrower from time to time on any Business Day during the period
from the Effective Date until 12:00 Noon (New York City time) on the Expiry Date
(unless the obligations of the Liquidity Provider shall be
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earlier terminated in accordance with the terms of Section 2.4(b)) in an
aggregate amount at any time outstanding not to exceed the Commitment.
Section 2.2 Making the Advances. (a) Interest Advances shall
be made in one or more Borrowings by delivery to the Liquidity Provider of one
or more written and completed Notices of Borrowing in substantially the form of
Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an
amount not exceeding the Available Commitment at such time and shall be used
solely for the payment when due of interest on the Class B Certificates at the
Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the Available Commitment and the amount available to be
borrowed hereunder by subsequent Advances by the amount of such Interest Advance
(subject to reinstatement as provided in the next sentence). Upon repayment to
the Liquidity Provider in full of the amount of any Interest Advance made
pursuant to this Section 2.2(a), together with accrued interest thereon (as
provided herein), the Available Commitment shall be reinstated by the amount of
such repaid Interest Advance; provided, however, that the Available Commitment
shall not be so reinstated at any time if (x) both (i) a Triggering Event shall
have occurred and be continuing and (ii) a Performing Note Deficiency exists or
(y) a Liquidity Event of Default shall have occurred and be continuing.
(b) A Downgrade Advance shall be made in a single Borrowing
upon a downgrading of the rating of the Liquidity Provider resulting in the
Liquidity Provider's ratings not meeting the Threshold Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility shall have been delivered to the Borrower in accordance with said
Section 3.6(c), by delivery to the Liquidity Provider of a written and completed
Notice of Borrowing in substantially the form of Annex II attached hereto,
signed by a Responsible Officer of the Borrower, in an amount not exceeding the
Available Commitment at such time, and shall be used to fund the Class B Cash
Collateral Account in accordance with said Section 3.6(c). The Liquidity
Provider shall promptly notify the Borrower of any downgrade of its unsecured
debt rating by Moody's or Standard & Poor's below the applicable Threshold
Rating.
(c) A Final Advance shall be made by the Liquidity Provider
without the necessity for a Notice of Borrowing at the option of the Liquidity
Provider on the occurrence of an event described in Section 6.1(a) or 6.1(b) in
an amount equal to the Available Commitment at such time, and shall be used to
fund the Class B Cash Collateral Account.
(d) Each Borrowing (other than under Section 2.2(c)) shall be
made on notice in writing (a "Notice of Borrowing") in
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substantially the form required by Section 2.2(a) or 2.2(b), as the case may be,
given not later than 12:00 Noon (New York City time) on the Business Day prior
to the day of the proposed Borrowing by the Borrower to the Liquidity Provider.
Upon satisfaction of the conditions precedent set forth in Section 4.2 with
respect to a requested Borrowing, the Liquidity Provider shall, before 12:00
Noon (New York City time) on the date of such Borrowing or on such later
Business Day specified by the Borrower in such Notice of Borrowing, make
available to the Borrower, in U.S. dollars and in immediately available funds,
the amount of such Borrowing to be paid to the Borrower in accordance with its
payment instructions. If a Notice of Borrowing is delivered by the Borrower in
respect of any Borrowing after 12:00 Noon (New York City time) on a Business
Day, the Liquidity Provider shall, before 12:00 Noon (New York City time) on the
second Business Day next following the day of receipt of such Notice of
Borrowing or on such later Business Day specified by the Borrower in such Notice
of Borrowing, make available to the Borrower, in U.S. dollars and in immediately
available funds, the amount of such Borrowing to be paid to the Borrower in
accordance with its payment instructions. Payments of proceeds of a Borrowing
shall be made by wire transfer of immediately available funds to the Borrower in
accordance with such wire transfer instructions as the Borrower shall furnish
from time to time to the Liquidity Provider for such purpose. Each Notice of
Borrowing shall be irrevocable and binding on the Borrower.
(e) Upon the making of any Advance requested pursuant to a
Notice of Borrowing, in accordance with the Borrower's payment instructions, the
Liquidity Provider shall be fully discharged of its obligation hereunder with
respect to such Notice of Borrowing, and the Liquidity Provider shall not
thereafter be obligated to make any further Advances hereunder in respect of
such Notice of Borrowing to the Borrower or to any other person (including the
holder of any Class B Certificate or the Class B Trustee) who makes to the Class
B Trustee or the Borrower a demand for payment with respect to any Class B
Certificate. By paying to the Borrower proceeds of Advances requested by the
Borrower in accordance with the provisions of this Agreement, the Liquidity
Provider makes no representation as to, and assumes no responsibility for, the
correctness or sufficiency for any purpose of the amount of the Advances so made
and requested.
Section 2.3 Fees. (a) The Borrower agrees to pay to the
Liquidity Provider a fee equal to 0.25% of the Commitment (as in effect on the
Effective Date). Such fee shall be payable on the Effective Date.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.40% per annum on the average Available
Commitment from the Effective Date to the
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earlier of the date on which a Downgrade Advance is made and the Termination
Date. Such fee shall be payable in arrears on each Regular Distribution Date.
Nothing contained in this Section 2.3 shall require the Borrower to pay any
amount under this Section 2.3 other than to the extent the Borrower shall have
funds available therefor.
Section 2.4 Reduction or Termination of the Commitment. (a)
Automatic Reductions. Promptly following each date on which the Required Amount
is reduced as a result of a reduction in the Pool Balance of the Class B
Certificates or otherwise, the Commitment shall automatically be reduced to an
amount equal to such reduced Required Amount (as calculated by the Borrower).
The Borrower shall give notice of any such automatic reduction of the Commitment
(substantially in the form of Annex IV hereto) to the Liquidity Provider (with a
copy to America West) within two Business Days thereof. The failure by the
Borrower to furnish any such notice shall not affect such automatic reduction of
the Commitment.
(b) Termination. Upon the making of any Downgrade Advance or
Final Advance hereunder or the occurrence of the Termination Date, the
obligation of the Liquidity Provider to make further Advances hereunder shall
automatically and irrevocably terminate, and the Borrower shall not be entitled
to request any further Borrowing hereunder.
Section 2.5 Repayments of Interest Advances or the Final
Advance. Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay, or
to cause to be paid, to the Liquidity Provider on each date on which the
Liquidity Provider shall make an Interest Advance or the Final Advance, an
amount equal to (a) the amount of such Interest Advance or the Final Advance
(any such Interest Advance or the Final Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
Unpaid Advance as provided in Section 3.7. Subject to Sections 2.6, 2.7 and 2.9,
unless otherwise waived by the Liquidity Provider, the Borrower shall be
obligated, without notice of an Advance or demand for repayment from the
Liquidity Provider (which notice and demand are hereby waived by the Borrower),
to repay the Liquidity Provider for all Interest Advances and Final Advances on
the same day as made and all Applied Downgrade Advances on the same day they
became Applied Downgrade Advances. The Borrower and the Liquidity Provider agree
that the repayment in full of each Interest Advance and the Final Advance on the
date such Interest Advance or the Final Advance is made and each Applied
Downgrade Advance on the date it becomes an Applied Downgrade Advance is
intended to be a contemporaneous exchange for new value given to the Borrower by
the Liquidity Provider.
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Section 2.6 Repayments of Downgrade Advances. (a) Amounts
advanced hereunder in respect of a Downgrade Advance shall be deposited in the
Class B Cash Collateral Account, and invested and withdrawn from the Class B
Cash Collateral Account, as set forth in Sections 3.6(c), (e) and (f) of the
Intercreditor Agreement. The Borrower agrees to pay to the Liquidity Provider,
on each Regular Distribution Date, commencing on the first Regular Distribution
Date after the making of a Downgrade Advance, interest on the principal amount
of any such Downgrade Advance as provided in Section 3.7. Immediately upon the
withdrawal of any amounts from the Class B Cash Collateral Account on account of
a reduction in the Required Amount, the Borrower shall repay the Downgrade
Advance in a principal amount equal to the amount of such reduction, plus
interest on the principal amount repaid as provided in Section 3.7.
(b) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, and prior to the effectiveness of any Replacement
Liquidity Facility, the Borrower agrees that all amounts owing to the Liquidity
Provider shall be repaid in full, whether from advances made by the Replacement
Liquidity Provider, from amounts remaining on deposit in the Class B Cash
Collateral Account after giving effect to any application of funds therefrom to
any payment of interest on the Class B Certificates on the date of such
replacement, or otherwise.
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider in the order of
priority required by the applicable provisions of Articles II and III of the
Intercreditor Agreement.
Section 2.8 Book Entries. The Liquidity Provider shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower resulting from Advances made from time to time
and the amounts of principal and interest payable hereunder and paid from time
to time in respect thereof; provided, however, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
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Section 2.9 Payments from Available Funds Only. All payments
to be made by the Borrower under this Agreement shall be made only from amounts
received by it that constitute Scheduled Payments or Special Payments and only
to the extent that the Borrower shall have sufficient income or proceeds
therefrom to enable the Borrower to make payments in accordance with the terms
hereof after giving effect to the priority of payments provisions set forth in
the Intercreditor Agreement. The Liquidity Provider agrees that it will look
solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided
in this Agreement, the Intercreditor Agreement or any Refunding Agreement.
Amounts on deposit in the Class B Cash Collateral Account shall be available to
make payments only to the extent and for the purposes expressly contemplated in
Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs. If the Liquidity Provider shall
determine that (a) any change in any law or regulation or in the interpretation
thereof by any court or administrative or governmental authority charged with
the administration thereof or in the compliance by the Liquidity Provider (or
its head office) with any applicable direction, request or requirement (whether
or not having the force of law) of any central bank or competent governmental or
other authority shall either (i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans made by, the Liquidity Provider, or (ii) impose on
the Liquidity Provider any other condition regarding this Agreement or any
Advance, or (iii) change the basis of taxation of any amounts payable to the
Liquidity Provider (other than Taxes imposed on the overall net or gross income
of the Liquidity Provider) and (b) the result of any event referred to in the
preceding clause (i), (ii) or (iii) shall be to increase the cost to the
Liquidity Provider of issuing or maintaining its commitment or funding or
maintaining Advances (which increase in cost shall be determined by the
Liquidity Provider's reasonable allocations of the aggregate of such cost
increases resulting from such event), then, no later than 30 days after demand
by the Liquidity Provider, the Borrower shall pay, or cause to be paid, to the
Liquidity Provider, from time to time as specified by the Liquidity Provider,
additional amounts which shall be sufficient to compensate the Liquidity
Provider for such increased cost. A certificate as to such increased cost
incurred by the Liquidity Provider as a result of any event mentioned in clause
(i), (ii) or (iii) above, prepared
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in reasonable detail and submitted by the Liquidity Provider to the Borrower,
shall be conclusive, absent manifest error, as to the amount thereof.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section 3.1
that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
Section 3.2 Capital Adequacy. If the Liquidity Provider shall
determine that the adoption after the date hereof of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change
after the date hereof in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance after the date hereof by
the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, is generally applicable to all
banks domiciled in Belgium with branches in the United States and not related to
the financial condition of the Liquidity Provider and has the effect of reducing
the rate of return on the Liquidity Provider's capital as a consequence of
issuing or maintaining its commitment hereunder or its funding or maintaining
Advances to a level below that which the Liquidity Provider could have achieved
but for such adoption, change or compliance (taking into consideration the
Liquidity Provider's policies with respect to capital adequacy) by an amount
deemed by the Liquidity Provider to be material, then, no later than 30 days
after demand by the Liquidity Provider, the Borrower shall pay to the Liquidity
Provider, from time to time as specified by the Liquidity Provider, additional
amounts which shall be sufficient to compensate the Liquidity Provider for such
reduction in respect of issuing or maintaining its commitment hereunder or its
funding or maintaining Advances. A certificate as to such additional amount
describing the event which has the effect of reducing the rate of return on the
Liquidity Provider's capital, prepared in reasonable detail and submitted by the
Liquidity Provider to the Borrower, shall be conclusive, absent manifest error,
as to the amount thereof. The Liquidity Provider further agrees that no amounts
shall be payable under this Section 3.2 unless the Liquidity Provider is
charging its other borrowers with whom it has agreements similar to this
agreement the amounts that are payable to the Liquidity Provider under this
Section 3.2.
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The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section 3.2
that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
Section 3.3 Payments Free of Deductions. All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding any Taxes imposed on the overall net
income of the Liquidity Provider and excluding United States federal income tax
withholding to the extent such withholding is, or would be, actually imposed
upon payments to the Liquidity Provider as of the date of this Agreement (such
non-excluded taxes being referred to herein, collectively, as "Non-Excluded
Taxes" and, individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes
are required to be withheld from any amounts payable to the Liquidity Provider
under this Agreement, the amounts so payable to the Liquidity Provider shall be
increased to the extent necessary to yield to the Liquidity Provider (after
payment of all Non-Excluded Taxes and taxes imposed on the receipt of such
increase) interest or any other such amounts payable under this Agreement at the
rates or in the amounts specified in this Agreement. Whenever any Non-Excluded
Tax is payable by the Borrower, promptly thereafter the Borrower shall send the
Liquidity Provider certified copies of tax receipts evidencing such payment by
the Borrower. The Liquidity Provider agrees to provide to the Borrower on or
prior to the Effective Date, and from time to time thereafter prior to the
expiration of the effectiveness of and promptly upon the occurrence of any event
requiring a change in the most recent form previously delivered by it (and prior
to the immediately following due date of any payment by the Borrower hereunder),
to the extent that the Liquidity Provider is legally entitled to do so, two
original Internal Revenue Service Form 1001 or 4224, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that the Liquidity Provider is completely exempt from United States withholding
tax on payments pursuant to this Agreement.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section 3.3
that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity
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Provider, be otherwise disadvantageous in any material respect to the Liquidity
Provider.
Section 3.4 Payments. The Borrower shall make or cause to be
made each payment to the Liquidity Provider under this Agreement so as to cause
the same to be received by the Liquidity Provider not later than 1:00 P.M. (New
York City time) on the day when due. The Borrower shall make all such payments
in lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to The Bank of New York, One Wall
Street, New York, NY 10286, ABA No. 021-000-018, for the account of Kredietbank
New York, Account No. 802-3015618 (referencing America West Airlines Liquidity
Facility).
Section 3.5 Computations. All computations of interest based
on the Base Rate shall be made on the basis of a year of 365 or 366 days, as the
case may be, and all computations of (x) interest based on the LIBOR Rate and
(y) fees payable to the Liquidity Provider, shall be made on the basis of a year
of 360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest is
payable.
Section 3.6 Payment on Non-Business Days. Whenever any payment
to be made hereunder (other than a payment on LIBOR Advances) becomes due and
payable on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a LIBOR Advance becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.
Section 3.7 Interest. (a) The Borrower shall pay, or shall
cause to be paid, interest on (i) the unpaid principal amount of each Advance
from and including the date of such Advance to but excluding the date such
principal amount shall be paid in full and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate for such Advance
for such day, but in no event at a rate per annum greater than the maximum rate
permitted by applicable law; provided, however, that, if at any time the
otherwise applicable interest
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rate as set forth in this Section 3.7 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.7 below the
maximum rate permitted by applicable law until the total amount of interest
accrued equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.7 had at all times been
in effect. Nothing contained in this Section 3.7 shall require the Borrower to
pay any amount under this Section 3.7 other than to the extent the Borrower
shall have funds available therefor.
(b) Each Advance will be either a Base Rate Advance or a LIBOR
Advance as provided in this Section. Each such Advance will be a Base Rate
Advance for the period from the date of its borrowing to (but excluding) the
third Business Day following the Liquidity Provider's receipt of the Notice of
Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR Advance;
provided that the Final Advance shall, until repaid in full, be a Base Rate
Advance and the Borrower may not convert the Final Advance into a LIBOR Advance.
(c) Each LIBOR Advance shall bear interest during each
Interest Period at a per annum rate equal to the LIBOR Rate for such Interest
Period plus the Applicable Margin for such LIBOR Advance, payable in arrears on
the last day of such Interest Period and, in the event of the payment of
principal of such LIBOR Advance on a day other than such last day, on the date
of such payment (to the extent of interest accrued on the amount of principal
repaid).
(d) Each Base Rate Advance shall bear interest at a per annum
rate equal to the Base Rate plus the Applicable Margin for such Base Rate
Advance, payable in arrears on each Regular Distribution Date and, in the event
of the payment of principal of such Base Rate Advance on a day other than a
Regular Distribution Date, on the date of such payment (to the extent of
interest accrued on the amount of principal repaid).
(e) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances) shall bear interest at the Base Rate.
(f) Each change in the Base Rate shall become effective
immediately.
Section 3.8 Replacement of Borrower. Subject to Section
5.2(b), from time to time, upon the effective date and time specified in a
written and completed Notice of Replacement Borrower in substantially the form
of Annex III attached hereto (a "Notice of Replacement Borrower") delivered to
the Liquidity Provider by the
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then Borrower, the successor Borrower designated therein shall be substituted
for as the Borrower for all purposes hereunder.
Section 3.9 Funding Loss Indemnification. The Borrower shall
pay to the Liquidity Provider, upon the request of the Liquidity Provider, such
amount or amounts as shall be sufficient (in the reasonable opinion of the
Liquidity Provider) to compensate it for any loss, cost, or expense incurred as
a result of:
(a) Any payment or prepayment of a LIBOR Advance on a
date other than the last day of the Interest Period for such
Advance; or
(b) Any failure by the Borrower to borrow a LIBOR Advance on
the date for borrowing specified in the relevant notice under Section
2.2 or 3.7.
Section 3.10 Illegality. Notwithstanding any other provision
in this Agreement, if any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request. In the event any change of the nature described in the preceding
sentence shall make it unlawful or impossible for the Liquidity Provider (or its
Lending Office) to maintain or fund its Base Rate Advances, the Liquidity
Provider shall have the right to cause a Replacement Liquidity Facility to be
substituted for this Agreement, subject to (i) the satisfaction of the
conditions precedent to the effectiveness of, and the other provisions
regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the
Intercreditor Agreement and (ii) such Replacement Liquidity Facility and
Replacement Liquidity Provider being reasonably acceptable to America West.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section
2.1. Section 2.1 of this Agreement shall become effective
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on and as of the first date (the "Effective Date") on which the following
conditions precedent have been satisfied or waived:
(a) The Liquidity Provider shall have received on or before
the Closing Date each of the following, each dated such date (except
for those documents delivered pursuant to paragraphs (v) and (vii) of
this Section 4.1(a)), and each in form and substance satisfactory to
the Liquidity Provider:
(i) This Agreement duly executed on behalf of the
Borrower;
(ii) The Intercreditor Agreement duly executed on
behalf of each of the parties thereto;
(iii) Counterparts (or certified copies thereof) of
each of the Operative Agreements (other than this Agreement
and the Intercreditor Agreement) which, when taken together,
bear the signatures of all of the respective parties thereto
and which are in full force and effect in accordance with
their respective terms;
(iv) A copy of the Prospectus and specimen copies of
the Class B Certificates;
(v) Evidence that, on the Effective Date, the Class A
Certificates, the Class B Certificates, the Class C
Certificates, the Class D Certificates and the Class E
Certificates will receive long-term credit ratings from
Moody's of not lower than A2, Baa2, Ba1, Ba3 and B1,
respectively, and from Standard & Poor's of not lower than
AA-, A-, BBB-, BB and B+, respectively;
(vi) An executed or certified copy of each document,
instrument, certificate and opinion delivered pursuant to the
Class B Trust Agreement, the Intercreditor Agreement, the
Refunding Agreements and the other Operative Agreements
(together with, in the case of each such opinion (unless such
opinion is addressed to the Liquidity Provider), other than
the opinion of counsel for the Underwriters, a letter from the
counsel rendering such opinion to the effect that the
Liquidity Provider is entitled to rely on such opinion as if
it were addressed to the Liquidity Provider);
(vii) Evidence that there shall have been made and
shall be in full force and effect, all filings, recordings
and/or registrations, and there shall have been given or taken
any notice or other similar action as may be reasonably
necessary or, to the extent reasonably requested by the
Liquidity Provider,
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reasonably advisable, in order to establish, perfect, protect
and preserve the right, title and interest, remedies, powers,
privileges, liens and security interests of, or for the
benefit of, the Trustees and the Liquidity Provider created by
the Operative Agreements;
(viii) Copies of the appraisals included in the
Prospectus;
(ix) A letter from America West agreeing to provide
to the Liquidity Provider the periodic financial reports
referred to in Section 8.04(a) of the Trust Agreements; and
(x) Such other documents, instruments, opinions and
approvals (and, if requested by the Liquidity Provider,
certified duplicates or executed copies thereof) as the
Liquidity Provider shall have reasonably requested.
(b) The following statements shall be true and shall be deemed
to have been represented by each party (other than clause (ii) below,
which shall be deemed to have been represented only by America West) to
the Refunding Agreements as being true on and as of the Effective Date:
(i) The representations and warranties of such Person
contained in each Refunding Agreement are true and correct on
and as of the Effective Date as though made on and as of the
Effective Date; and
(ii) No event has occurred and is continuing, or
would result from the entering into of this Agreement or the
making of any Advance, which constitutes a Liquidity Event of
Default.
The Liquidity Provider shall have received payment in full of
all fees and other sums required to be paid to or for the account of
the Liquidity Provider on or prior to the Effective Date.
(c) All conditions precedent to the issuance of the
Certificates under the Trust Agreements shall have been satisfied, all
conditions precedent to the effectiveness of the other Liquidity
Facilities shall have been satisfied, and all conditions precedent to
the purchase of the Certificates by the Underwriters under the
Underwriting Agreement shall have been satisfied (except for any of
such conditions precedent under the Underwriting Agreement that shall
have been waived by the Underwriters).
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(d) The Borrower shall have received a certificate, dated the
date hereof, signed by a duly authorized representative of the
Liquidity Provider, certifying that all conditions precedent to the
effectiveness of Section 2.1 have been satisfied or waived (other than
this Section 4.1(d)).
Section 4.2 Conditions Precedent to Borrowing. The obligation
of the Liquidity Provider to make an Advance on the occasion of each Borrowing
shall be subject to the conditions precedent that the Effective Date shall have
occurred and, except in the case of a Final Advance, prior to the date of such
Borrowing, the Borrower shall have delivered a Notice of Borrowing which
conforms to the terms and conditions of this Agreement and has been completed as
may be required by the relevant form of the Notice of Borrowing for the type of
Advance requested.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower. So long as
any Advance shall remain unpaid or the Liquidity Provider shall have any
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay
or cause to be paid all amounts payable by it under this Agreement and
the other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider
with reasonable promptness, such information and data with respect to
the transactions contemplated by the Operative Agreements as from time
to time may be reasonably requested by the Liquidity Provider; and
permit the Liquidity Provider, upon reasonable notice, to inspect the
Borrower's books and records with respect to such transactions and to
meet with officers and employees of the Borrower to discuss such
transactions.
Section 5.2 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written consent
of the Liquidity Provider:
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(a) Amendments. Modify, amend or supplement; or give any
consent to any modification, amendment, or supplement; or make any
waiver with respect to; any provision of the Trust Agreements or the
Intercreditor Agreement, except for any supplemental agreement to the
Trust Agreements provided for in Section 9.01 thereof.
(b) Borrower. Appoint or permit or suffer to be appointed any
successor Borrower without the prior written approval of the Liquidity
Provider (which approval shall not be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance. If (a) both (i) a Triggering Event
shall have occurred and be continuing and (ii) a Performing Note Deficiency
exists or (b) a Liquidity Event of Default shall have occurred and be
continuing, the Liquidity Provider may, in its discretion, make a Final Advance
whereupon (i) the Liquidity Provider shall have no further obligation to make
Advances hereunder, (ii) all other outstanding Advances shall be automatically
converted into Final Advances for purposes of determining the Applicable
Liquidity Rate for interest payable thereon, and (iii) subject to Sections 2.7
and 2.9, all Advances, any accrued interest thereon and any other amounts
outstanding hereunder shall become immediately due and payable to the Liquidity
Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 7.2 Notices, Etc. Except as otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be in writing (including telecopier and mailed or delivered or sent by
telecopier):
Borrower: Fleet National Bank
777 Main Street
Hartford, CT 06115
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Attention: Corporate Trust
Administration
Telecopy: (860) 986-7920
Liquidity
Provider: Kredietbank N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telecopy: (212) 956-5580
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Refunding Agreements at their respective addresses
set forth therein.
Section 7.3 No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.4 Further Assurances. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.5 Indemnification; Survival of Certain Provisions.
The Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Sections 10 and 13 of the Lease. In addition, the Borrower
agrees to indemnify, protect, defend and hold harmless the Liquidity Provider
from, against and in respect of, and shall pay on demand, all Expenses of any
kind or nature whatsoever, whether arising before, on or after the date hereof,
that may be imposed,
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incurred by or asserted against any Liquidity Indemnitee, in any way relating
to, resulting from, or arising out of or in connection with, this Agreement, the
Intercreditor Agreement or the Refunding Agreements; provided, however, that the
Borrower shall not be required to indemnify, protect, defend and hold harmless
any Liquidity Indemnitee in respect of any Expense of such Liquidity Indemnitee
(i) to the extent such Expense is attributable to the gross negligence or
willful misconduct of such Liquidity Indemnitee or any Related Indemnitee, (ii)
that is ordinary and usual operating overhead expense or (iii) to the extent
such Expense is attributable to the failure by such Liquidity Indemnitee or its
Related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement. The indemnities
contained in such Sections 10 and 13 of the Lease, and the provisions of
Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall survive the termination of this
Agreement.
Section 7.6 Liability of the Liquidity Provider. (a) Neither
the Liquidity Provider nor any of its officers or directors shall be liable or
responsible for: (i) the use which may be made of the Advances or any acts or
omissions of the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; or (iii) the making of
Advances by the Liquidity Provider against delivery of a Notice of Borrowing and
other documents which do not comply with the terms hereof; provided, however,
that the Borrower shall have a claim against the Liquidity Provider, and the
Liquidity Provider shall be liable to the Borrower, to the extent of any damages
suffered by the Borrower which were the result of (A) the Liquidity Provider's
willful misconduct or negligence in determining whether documents presented
hereunder comply with the terms hereof, or (B) any breach by the Liquidity
Provider of any of the terms of this Agreement, including, but not limited to,
the Liquidity Provider's failure to make lawful payment hereunder after the
delivery to it by the Borrower of a Notice of Borrowing strictly complying with
the terms and conditions hereof.
(b) The Liquidity Provider shall not be liable or responsible
in any respect for (i) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with this Agreement or any Notice of Borrowing
delivered hereunder, or (ii) any action, inaction or omission which may be taken
by it in good faith, absent willful misconduct or negligence (in which event the
extent of the Liquidity Provider's potential liability to the Borrower shall be
limited as set forth in the immediately preceding paragraph), in connection with
this Agreement or any Notice of Borrowing.
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Section 7.7 Costs, Expenses and Taxes. The Borrower agrees to
pay, or cause to be paid (A) on the Effective Date and on such later date or
dates on which the Liquidity Provider shall make demand, all reasonable
out-of-pocket costs and expenses of the Liquidity Provider in connection with
the preparation, negotiation, execution, delivery, filing and recording of this
Agreement, any other Operative Agreement and any other documents which may be
delivered in connection with this Agreement, including, without limitation, the
reasonable fees and expenses of outside counsel for the Liquidity Provider and
(B) on demand, all reasonable costs and expenses of the Liquidity Provider
(including reasonable counsel fees and expenses) in connection with (i) the
enforcement of this Agreement or any other Operative Agreement, (ii) the
modification or amendment of, or supplement to, this Agreement or any other
Operative Agreement or such other documents which may be delivered in connection
herewith or therewith (whether or not the same shall become effective) or (iii)
any action or proceeding relating to any order, injunction, or other process or
decree restraining or seeking to restrain the Liquidity Provider from paying any
amount under this Agreement, the Intercreditor Agreement or any other Operative
Document or otherwise affecting the application of funds in the Cash Collateral
Accounts. In addition, the Borrower shall pay any and all recording, stamp and
other similar taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of this Agreement, any other
Operative Agreement and such other documents, and agrees to save the Liquidity
Provider harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
Section 7.8 Binding Effect; Participations. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.8) nor the
Borrower shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the other party, subject to the
requirement of Section 7.8(b). The Liquidity Provider may grant participations
herein or in any of its rights or security hereunder and under the other
Operative Agreements to such Persons as the Liquidity Provider may in its sole
discretion select, subject to the requirement of Section 7.8(b). No such
participation by the Liquidity Provider, however, will relieve the Liquidity
Provider of its obligations hereunder. In connection with any participation or
any proposed participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the Borrower is
required to deliver or to disclose to the Liquidity Provider pursuant to this
Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's
source of funds may derive in part from its participants. Accordingly,
references in
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this Agreement and the other Operative Agreements to determinations, reserve and
capital adequacy requirements, increased costs, reduced receipts and the like as
they pertain to the Liquidity Provider shall be deemed also to include those of
each of its participants (subject, in each case, to the maximum amount that
would have been incurred by or attributable to the Liquidity Provider directly
if the Liquidity Provider, rather than the participant, had held the interest
participated).
(b) If, pursuant to subsection (a) above, the Liquidity
Provider sells any participation to any bank or other entity (each, a
"Participant"), then, concurrently with the effectiveness of such participation,
the Participant shall (i) represent to the Liquidity Provider (for the benefit
of the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld by the
Borrower or the Liquidity Provider with respect to any payments to be made to
such Participant in respect of this Agreement, (ii) furnish to the Liquidity
Provider and the Borrower either (x) a statement that it is incorporated under
the laws of the United States or a state thereof or (y) if it is not so
incorporated, two copies of a properly completed United States Internal Revenue
Service Form 4224 or Form 1001, as appropriate, or other applicable form,
certificate or document prescribed by the Internal Revenue Service certifying,
in each case, such Participant's entitlement to a complete exemption from United
States federal withholding tax in respect to any and all payments to be made
hereunder, and (iii) agree (for the benefit of the Liquidity Provider and the
Borrower) to provide the Liquidity Provider and the Borrower a new Form 4224 or
Form 1001, as appropriate, (A) on or before the date that any such form expires
or becomes obsolete or (B) after the occurrence of any event requiring a change
in the most recent form previously delivered by it and prior to the immediately
following due date of any payment by the Borrower hereunder, certifying in the
case of a Form 1001 or Form 4224 that such Participant is entitled to a complete
exemption from United States federal withholding tax on payments under this
Agreement. Unless the Borrower has received forms or other documents reasonably
satisfactory to it indicating that payments hereunder are not subject to United
States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate without any obligation
to gross-up or indemnify pursuant to Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8,
the Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
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Reserve Bank, provided that any payment in respect of such assigned Advances
made by the Borrower to the Liquidity Provider in accordance with the terms of
this Agreement shall satisfy the Borrower's obligations hereunder in respect of
such assigned Advance to the extent of such payment. No such assignment shall
release the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the nonexclusive general jurisdiction of
the courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and the appellate courts
from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) if such party does not maintain an office for the
transaction of its business in New York, agrees that service of process
in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar
form and mail), postage prepaid, to each party hereto at its address
set forth in Section 7.2, or at such other address of which the
Liquidity Provider shall have been notified pursuant thereto; and
24
<PAGE> 28
(iv) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel.
THIS WAIVER CANNOT BE MODIFIED ORALLY.
Section 7.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement and the other Operative
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior understandings and
agreements of such parties.
Section 7.14 Headings; Section References. Section headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose. Unless the
context otherwise requires or otherwise indicated herein, all Section references
in this Agreement are references to Sections hereof.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
25
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first set forth above.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
KREDIETBANK N.V., NEW YORK BRANCH,
as Liquidity Provider
By ________________________________
Name:
Title:
By ________________________________
Name:
Title:
26
<PAGE> 30
Annex I to Irrevocable
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the
undersigned borrower (the "Borrower"), hereby certifies to KREDIETBANK N.V.,
acting through its New York Branch (the "Liquidity Provider"), with reference to
the Irrevocable Revolving Credit Agreement, Class B Certificates dated as of
November 26, 1996, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of an Interest Advance by the Liquidity Provider to be used
for the payment of interest on the Class B Certificates which was
payable on the Distribution Date falling on _____________ in accordance
with the terms and provisions of the Class B Trust Agreement and the
Class B Certificates and has not been paid pursuant to clause fifth of
Section 3.2 of the Intercreditor Agreement or clause seventh of Section
3.3 of the Intercreditor Agreement, which Advance is requested to be
made on _____________.
(3) The amount of the Interest Advance requested hereby (i) is
$ , to be applied in respect of the payment of interest which was
due and payable on the Class B Certificates on such Distribution Date,
(ii) does not include any amount with respect to the payment of
principal of, or premium on, the Class A Certificates, the Class B
Certificates, the Class C Certificates, the Class D Certificates or
Class E Certificates, or interest on the Class A Certificates, the
Class C Certificates, the Class D Certificates or the Class E
Certificates, (iii) was computed in accordance with the provisions of
the Class B Certificates, the Class B Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto
as Schedule I), (iv) does not exceed the Available Commitment on the
date hereof, and (v) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance
with the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as
the case may be, (b) no portion of such amount shall be applied by the
Borrower for any other purpose and (c) no portion of such amount until
so
<PAGE> 31
applied shall be commingled with other funds held by the
Borrower.
(5) The Borrower hereby requests that the Advance requested
hereby be a Base Rate Advance and that such Base Rate Advance be
converted into a LIBOR Rate Advance on the third Business Day following
your receipt of this notice.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, the making of the Interest Advance as requested by this
Notice of Borrowing shall automatically reduce, subject to reinstatement in
accordance with the terms of the Liquidity Agreement, the Available Commitment
by an amount equal to the amount of the Interest Advance requested to be made
hereby as set forth in clause (i) of paragraph (3) of this Certificate and such
reduction shall automatically result in corresponding reductions in the amounts
available to be borrowed pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Notice of Borrowing as of the _ day of ______________, ______.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
2
<PAGE> 32
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
3
<PAGE> 33
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the
undersigned subordination agent (the "Borrower"), hereby certifies to
KREDIETBANK, N.V., acting through its New York Branch (the "Liquidity
Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class
B Certificates dated as of November 26, 1996, between the Borrower and the
Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined or referenced),
that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of the Downgrade Advance by the Liquidity Provider to be
used for the funding of the Class B Cash Collateral Account in
accordance with Section 3.6(c) of the Intercreditor Agreement by reason
of the downgrading of the debt rating of the Liquidity Provider issued
by either Rating Agency below the applicable Threshold Rating, which
Advance is requested to be made on _____________.
(3) The amount of the Downgrade Advance requested hereby (i)
is $___________, which equals the Available Commitment on the date
hereof and is to be applied in respect of the funding of the Class B
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect
to the payment of the principal of, or premium on, the Class B
Certificates, or principal of, or interest or premium on, the Class A
Certificates, the Class C Certificates, the Class D Certificates or the
Class E Certificates, (iii) was computed in accordance with the
provisions of the Class B Certificates, the Class B Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of
a prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the
Class B Cash Collateral Account and apply the same in accordance with
the terms of Section 3.6(c) of the Intercreditor Agreement, (b) no
portion of such amount shall be applied by the Borrower for any other
purpose and (c) no portion of such amount until so applied shall be
commingled with other funds held by the Borrower.
<PAGE> 34
(5) The Borrower hereby requests that the Advance requested
hereby be a Base Rate Advance and that such Base Rate Advance be
converted into a LIBOR Rate Advance on the third Business Day following
your receipt of this notice.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, (A) the making of the Downgrade Advance as requested by
this Notice of Borrowing shall automatically and irrevocably terminate the
obligation of the Liquidity Provider to make further Advances under the
Liquidity Agreement; and (B) following the making by the Liquidity Provider of
the Downgrade Advance requested by this Notice of Borrowing, the Borrower shall
not be entitled to request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and
delivered this Notice of Borrowing as of the _ day of __________,
_____.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
2
<PAGE> 35
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE> 36
Annex III to Irrevocable
Revolving Credit Agreement
NOTICE OF REPLACEMENT BORROWER
[Date]
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Liquidity Agreement referred
to above. The transferee has succeeded the undersigned as Subordination Agent
under the Intercreditor Agreement referred to in the first paragraph of the
Liquidity Agreement.
By this transfer, all rights of the undersigned as Borrower
under the Liquidity Agreement are transferred to the transferee and the
transferee shall hereafter have the sole rights as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
We ask that this transfer be effective as of __________,
______.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
<PAGE> 37
Annex IV to Irrevocable
Revolving Credit Agreement
NOTICE OF AUTOMATIC REDUCTION OF COMMITMENT
[Date]
Ladies and Gentlemen:
The undersigned, a duly authorized signatory of the
undersigned subordination agent (the "Borrower"), hereby notifies Kredietbank
N.V., acting through its New York Branch (the "Liquidity Provider"), with
reference to the Irrevocable Revolving Credit Agreement dated as of November 26,
1996, between the Borrower and the Liquidity Provider (the "Liquidity
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that, pursuant to Section 2.4(a)
of the Liquidity Agreement, the Commitment has been automatically reduced to
$_________.
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Notice of Borrowing as of the _ day of __________, _____.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By _______________________________
Name:
Title:
2
<PAGE> 1
EXHIBIT 4.9
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
Dated as of November 26, 1996
between
FLEET NATIONAL BANK,
as Subordination Agent,
as agent and trustee for the
America West Airlines Pass Through Trust 1996-1C,
as Borrower
and
KREDIETBANK N.V.,
NEW YORK BRANCH,
as Liquidity Provider
Relating to
America West Airlines Pass Through Trust 1996-1C
6.86% America West Airlines Pass Through Certificates,
Series 1996-1C
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I............................................... 1
DEFINITIONS................................................. 1
Section 1.1 Certain Defined Terms....................................... 1
ARTICLE II.............................................. 5
AMOUNT AND TERMS OF THE COMMITMENT.......................... 5
Section 2.1 The Advances................................................ 5
Section 2.2 Making the Advances......................................... 6
Section 2.3 Fees........................................................ 7
Section 2.4 Reduction or Termination of the Commitment.................. 8
Section 2.5 Repayments of Interest Advances or the Final Advance........ 8
Section 2.6 Repayments of Downgrade Advances............................ 8
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement..................................... 9
Section 2.8 Book Entries................................................ 9
Section 2.9 Payments from Available Funds Only.......................... 9
ARTICLE III
OBLIGATIONS OF THE BORROWER................................. 10
Section 3.1 Increased Costs............................................. 10
Section 3.2 Capital Adequacy............................................ 11
Section 3.3 Payments Free of Deductions................................. 11
Section 3.4 Payments.................................................... 12
Section 3.5 Computations................................................ 13
Section 3.6 Payment on Non-Business Days................................ 13
Section 3.7 Interest.................................................... 13
Section 3.8 Replacement of Borrower..................................... 14
Section 3.9 Funding Loss Indemnification................................ 14
Section 3.10 Illegality................................................. 15
ARTICLE IV
CONDITIONS PRECEDENT........................................ 15
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1........ 15
Section 4.2 Conditions Precedent to Borrowing........................... 17
ARTICLE V
COVENANTS .................................................. 18
Section 5.1 Affirmative Covenants of the Borrower....................... 18
Section 5.2 Negative Covenants of the Borrower.......................... 18
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE VI
FINAL ADVANCE.............................................. 19
Section 6.1 Final Advance.............................................. 19
ARTICLE VII
MISCELLANEOUS ............................................. 19
Section 7.1 Amendments, Etc............................................ 19
Section 7.2 Notices, Etc............................................... 19
Section 7.3 No Waiver; Remedies........................................ 20
Section 7.4 Further Assurances......................................... 20
Section 7.5 Indemnification; Survival of Certain ...................... 20
Section 7.6 Liability of the Liquidity Provider........................ 21
Section 7.7 Costs, Expenses and Taxes.................................. 21
Section 7.8 Binding Effect; Participations............................. 22
Section 7.9 Severability............................................... 24
Section 7.10 GOVERNING LAW............................................. 24
Section 7.11 Submission to Jurisdiction; Waiver of Trial............... 24
Section 7.12 Execution in Counterparts................................. 25
Section 7.13 Entirety.................................................. 25
Section 7.14 Headings; Section References.............................. 25
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE .................. 25
</TABLE>
Annex I - Interest Advance Notice of Borrowing
Annex II - Downgrade Advance Notice of Borrowing
Annex III - Notice of Replacement Borrower
Annex IV - Notice of Automatic Reduction of Commitment
ii
<PAGE> 4
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS C CERTIFICATES
dated as of November 26, 1996 between FLEET NATIONAL BANK, a national banking
association, not in its individual capacity but solely as Subordination Agent
under the Intercreditor Agreement (each as defined below), as agent and trustee
for the Class C Trust (as defined below) (the "Borrower"), and KREDIETBANK N.V.,
acting through its New York Branch (the "Liquidity Provider").
W I T N E S S E T H
WHEREAS, pursuant to the Class C Trust Agreement (such term
and all other capitalized terms used in these recitals having the meanings set
forth or referred to in Section 1.1), the Class C Trust is issuing the Class C
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment
of a portion of the interest on the Class C Certificates in accordance with
their terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. (a) Definitions. As used in
this Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Advance" means an Interest Advance, a Final Advance or a
Downgrade Advance, as the case may be.
"Applicable Liquidity Rate" means the rates of interest
specified in Section 3.7 with respect to any Advance.
"Applicable Margin" means (x) with respect to any Downgrade
Advance (other than an Applied Downgrade Advance) .40% (40 basis points) per
annum and (y) with respect to any other Advance including an Applied Downgrade
Advance 1.5% (150 basis points) per annum.
"Applied Downgrade Advance" means any amount in respect of a
Downgrade Advance withdrawn from the Class C Cash Collateral Account for the
purpose of paying interest on the Class C
<PAGE> 5
Certificates in accordance with Section 3.6(f) of the Intercreditor Agreement.
"Available Commitment" means, at any time of determination, an
amount equal to (i) the Commitment at such time less (ii) subject to the proviso
contained in the third sentence of Section 2.2(a), the aggregate amount of each
Advance outstanding at such time; provided that following a Downgrade Advance or
a Final Advance, the Available Commitment shall be zero.
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the higher of (i) the base commercial lending rate announced from time to time
by the Liquidity Provider, or (ii) the rate quoted by the Liquidity Provider, at
approximately 11:00 A.M., New York City time, to dealers in the New York Federal
funds market for overnight offering of dollars by the Liquidity Provider, for
deposit plus .50 of 1 percent (.50%).
"Base Rate Advance" means an Advance that bears interest at a
rate based upon the Base Rate.
"Borrower" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery
of a Notice of Borrowing or pursuant to Section 6.1.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close in New
York, New York or Hartford, Connecticut, and, if the applicable Business Day
relates to any Advance or other amount bearing interest based on the LIBOR Rate,
on which dealings are carried on in the London interbank market.
"Commitment" means, initially, $3,884,166.30 as the same may
be reduced from time to time in accordance with Section 2.4(a).
"Downgrade Advance" means an Advance made pursuant to Section
2.2(b).
"Effective Date" has the meaning specified in Section 4.1. The
delivery of the certificate of the Liquidity Provider contemplated by Section
4.1(d) shall be conclusive evidence that the Effective Date has occurred.
"Expenses" means liabilities, obligations, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
2
<PAGE> 6
"Expiry Date" means January 17, 2006.
"Final Advance" means an Advance made pursuant to Sections
2.2(c) and 6.1.
"Intercreditor Agreement" means the Intercreditor Agreement
dated the date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider under each Liquidity Facility (other than this Agreement) and the
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Interest Advance" means an Advance made pursuant to Section
2.2(a).
"Interest Period" means, with respect to any LIBOR Advance,
each of the following periods:
(i) the period beginning on the date such LIBOR Advance
is made (or is converted from a Base Rate Advance) and ending on the
next Regular Distribution Date; and
(ii) each subsequent period commencing on the last day
of the immediately preceding Interest Period and ending on the next
Regular Distribution Date.
"Lending Office" means the lending office of the Liquidity
Provider, presently located at 125 West 55th Street, New York, NY 10019, or such
other lending office as the Liquidity Provider from time to time shall notify
the Borrower at its lending office hereunder.
"LIBOR Advance" means an Advance bearing interest at a rate
based upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, the
rate per annum at which deposits in U.S. Dollars are offered for the relevant
Interest Period by the Liquidity Provider to prime banks in the London interbank
market at approximately 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in the principal amount of the Advance to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period, as quoted by the Liquidity Provider to the Subordination
Agent.
"Liquidity Event of Default" means the occurrence of the
following: all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final maturity.
A Liquidity Event of Default shall not occur upon an automatic acceleration of
the Equipment Notes as a result of an America West Bankruptcy Event.
3
<PAGE> 7
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii)
each affiliate of the Liquidity Provider, (iii) the respective directors,
officers, employees, agents and servants of the Liquidity Provider and its
affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in
the recital of parties to this Agreement.
"Non-Excluded Tax" has the meaning specified in Section 3.3.
"Notice of Borrowing" has the meaning specified in Section
2.2(d).
"Notice of Replacement Borrower" has the meaning specified in
Section 3.8.
"Participant" has the meaning assigned to such term in Section
7.8(b).
"Prospectus" means the prospectus included in the registration
statement on Form S-3 (File No. 333-14691) filed by America West relating to
certain pass through certificates, as such Prospectus may be amended or
supplemented.
"Related Indemnitee" means, with respect to any Liquidity
Indemnitee, its director, officer, employee, agent, affiliate or employer.
"Replenishment Amount" has the meaning assigned to such term
in Section 2.6(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class C Certificates, that would be payable on the Class C
Certificates on each of the three successive semiannual Regular Distribution
Dates immediately following such day or, if such day is a Regular Distribution
Date, on such day and the succeeding two semiannual Regular Distribution Dates,
in each case calculated on the basis of the Pool Balance of the Class C
Certificates on such day and without regard to expected future payments of
principal on the Class C Certificates.
"Termination Date" means the earliest to occur of the
following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to
the Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class C Certificates have been paid in full
(or provision has been made for such payment in accordance with the
Intercreditor
4
<PAGE> 8
Agreement and the Trust Agreements) or are otherwise no longer entitled to the
benefits of this Agreement; (iii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that a Replacement Liquidity Facility has been substituted
for this Agreement in full pursuant to Section 3.6(e) of the Intercreditor
Agreement; (iv) the date on which the Liquidity Provider makes the Final
Advance; and (v) the date on which no Advance is or may (including by reason of
reinstatement as herein provided) become available for a Borrowing hereunder.
"Unpaid Advance" has the meaning assigned to such term in
Section 2.5.
(b) Terms Defined in the Intercreditor Agreement. For all
purposes of this Agreement, the following terms shall have the respective
meanings assigned to such terms in the Intercreditor Agreement:
"America West", "America West Bankruptcy Event", "Certificates", "Class
A Certificates", "Class B Certificates", "Class C Certificates", "Class
C Certificateholders", "Class C Cash Collateral Account", "Class C
Trust", "Class C Trust Agreement", "Class C Trustee", "Class D
Certificates", "Class E Certificates", "Closing Date", "Controlling
Party", "Corporate Trust Office", "Distribution Date", "$", "Equipment
Notes", "Indenture", "Investment Earnings", "Liquidity Facility",
"Moody's", "Operative Agreements", "Performing Equipment Note",
"Performing Note Deficiency", "Person", "Pool Balance", "Rating
Agency", "Refunding Agreement", "Regular Distribution Date",
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Standard & Poor's", "Stated Interest
Rate", "Subordination Agent", "Taxes", "Threshold Rating", "Triggering
Event", "Trust", "Trust Agreements", "Trustee", "Underwriters",
"Underwriting Agreement", and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby
irrevocably agrees, on the terms and conditions hereinafter set forth, to make
Advances to the Borrower from time to time on any Business Day during the period
from the Effective Date until 12:00 Noon (New York City time) on the Expiry Date
(unless the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.4(b)) in an aggregate amount at any time
outstanding not to exceed the Commitment.
5
<PAGE> 9
Section 2.2 Making the Advances. (a) Interest Advances shall
be made in one or more Borrowings by delivery to the Liquidity Provider of one
or more written and completed Notices of Borrowing in substantially the form of
Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an
amount not exceeding the Available Commitment at such time and shall be used
solely for the payment when due of interest on the Class C Certificates at the
Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the Available Commitment and the amount available to be
borrowed hereunder by subsequent Advances by the amount of such Interest Advance
(subject to reinstatement as provided in the next sentence). Upon repayment to
the Liquidity Provider in full of the amount of any Interest Advance made
pursuant to this Section 2.2(a), together with accrued interest thereon (as
provided herein), the Available Commitment shall be reinstated by the amount of
such repaid Interest Advance; provided, however, that the Available Commitment
shall not be so reinstated at any time if (x) both (i) a Triggering Event shall
have occurred and be continuing and (ii) a Performing Note Deficiency exists or
(y) a Liquidity Event of Default shall have occurred and be continuing.
(b) A Downgrade Advance shall be made in a single Borrowing
upon a downgrading of the rating of the Liquidity Provider resulting in the
Liquidity Provider's ratings not meeting the Threshold Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility shall have been delivered to the Borrower in accordance with said
Section 3.6(c), by delivery to the Liquidity Provider of a written and completed
Notice of Borrowing in substantially the form of Annex II attached hereto,
signed by a Responsible Officer of the Borrower, in an amount not exceeding the
Available Commitment at such time, and shall be used to fund the Class C Cash
Collateral Account in accordance with said Section 3.6(c). The Liquidity
Provider shall promptly notify the Borrower of any downgrade of its unsecured
debt rating by Moody's or Standard & Poor's below the applicable Threshold
Rating.
(c) A Final Advance shall be made by the Liquidity Provider
without the necessity for a Notice of Borrowing at the option of the Liquidity
Provider on the occurrence of an event described in Section 6.1(a) or 6.1(b) in
an amount equal to the Available Commitment at such time, and shall be used to
fund the Class C Cash Collateral Account.
(d) Each Borrowing (other than under Section 2.2(c)) shall be
made on notice in writing (a "Notice of Borrowing") in substantially the form
required by Section 2.2(a) or 2.2(b), as the case may be, given not later than
12:00 Noon (New York City time) on the Business Day prior to the day of the
proposed Borrowing by the Borrower to the Liquidity Provider. Upon
6
<PAGE> 10
satisfaction of the conditions precedent set forth in Section 4.2 with respect
to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New
York City time) on the date of such Borrowing or on such later Business Day
specified by the Borrower in such Notice of Borrowing, make available to the
Borrower, in U.S. dollars and in immediately available funds, the amount of such
Borrowing to be paid to the Borrower in accordance with its payment
instructions. If a Notice of Borrowing is delivered by the Borrower in respect
of any Borrowing after 12:00 Noon (New York City time) on a Business Day, the
Liquidity Provider shall, before 12:00 Noon (New York City time) on the second
Business Day next following the day of receipt of such Notice of Borrowing or on
such later Business Day specified by the Borrower in such Notice of Borrowing,
make available to the Borrower, in U.S. dollars and in immediately available
funds, the amount of such Borrowing to be paid to the Borrower in accordance
with its payment instructions. Payments of proceeds of a Borrowing shall be made
by wire transfer of immediately available funds to the Borrower in accordance
with such wire transfer instructions as the Borrower shall furnish from time to
time to the Liquidity Provider for such purpose. Each Notice of Borrowing shall
be irrevocable and binding on the Borrower.
(e) Upon the making of any Advance requested pursuant to a
Notice of Borrowing, in accordance with the Borrower's payment instructions, the
Liquidity Provider shall be fully discharged of its obligation hereunder with
respect to such Notice of Borrowing, and the Liquidity Provider shall not
thereafter be obligated to make any further Advances hereunder in respect of
such Notice of Borrowing to the Borrower or to any other person (including the
holder of any Class C Certificate or the Class C Trustee) who makes to the Class
C Trustee or the Borrower a demand for payment with respect to any Class C
Certificate. By paying to the Borrower proceeds of Advances requested by the
Borrower in accordance with the provisions of this Agreement, the Liquidity
Provider makes no representation as to, and assumes no responsibility for, the
correctness or sufficiency for any purpose of the amount of the Advances so made
and requested.
Section 2.3 Fees. (a) The Borrower agrees to pay to the
Liquidity Provider a fee equal to 0.25% of the Commitment (as in effect on the
Effective Date). Such fee shall be payable on the Effective Date.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.40% per annum on the average Available
Commitment from the Effective Date to the earlier of the date on which a
Downgrade Advance is made and the Termination Date. Such fee shall be payable in
arrears on each Regular Distribution Date. Nothing contained in this Section 2.3
shall require the Borrower to pay any amount under this Section
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2.3 other than to the extent the Borrower shall have funds available therefor.
Section 2.4 Reduction or Termination of the Commitment. (a)
Automatic Reductions. Promptly following each date on which the Required Amount
is reduced as a result of a reduction in the Pool Balance of the Class C
Certificates or otherwise, the Commitment shall automatically be reduced to an
amount equal to such reduced Required Amount (as calculated by the Borrower).
The Borrower shall give notice of any such automatic reduction of the Commitment
(substantially in the form of Annex IV hereto) to the Liquidity Provider (with a
copy to America West) within two Business Days thereof. The failure by the
Borrower to furnish any such notice shall not affect such automatic reduction of
the Commitment.
(b) Termination. Upon the making of any Downgrade Advance or
Final Advance hereunder or the occurrence of the Termination Date, the
obligation of the Liquidity Provider to make further Advances hereunder shall
automatically and irrevocably terminate, and the Borrower shall not be entitled
to request any further Borrowing hereunder.
Section 2.5 Repayments of Interest Advances or the Final
Advance. Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay, or
to cause to be paid, to the Liquidity Provider on each date on which the
Liquidity Provider shall make an Interest Advance or the Final Advance, an
amount equal to (a) the amount of such Interest Advance or the Final Advance
(any such Interest Advance or the Final Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
Unpaid Advance as provided in Section 3.7. Subject to Sections 2.6, 2.7 and 2.9,
unless otherwise waived by the Liquidity Provider, the Borrower shall be
obligated, without notice of an Advance or demand for repayment from the
Liquidity Provider (which notice and demand are hereby waived by the Borrower),
to repay the Liquidity Provider for all Interest Advances and Final Advances on
the same day as made and all Applied Downgrade Advances on the same day they
became Applied Downgrade Advances. The Borrower and the Liquidity Provider agree
that the repayment in full of each Interest Advance and the Final Advance on the
date such Interest Advance or the Final Advance is made and each Applied
Downgrade Advance on the date it becomes an Applied Downgrade Advance is
intended to be a contemporaneous exchange for new value given to the Borrower by
the Liquidity Provider.
Section 2.6 Repayments of Downgrade Advances. (a) Amounts
advanced hereunder in respect of a Downgrade Advance shall be deposited in the
Class C Cash Collateral Account, and invested and withdrawn from the Class C
Cash Collateral Account, as set forth in Sections 3.6(c), (e) and (f) of the
Intercreditor
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Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Downgrade Advance, interest on the principal amount of any such
Downgrade Advance as provided in Section 3.7. Immediately upon the withdrawal of
any amounts from the Class C Cash Collateral Account on account of a reduction
in the Required Amount, the Borrower shall repay the Downgrade Advance in a
principal amount equal to the amount of such reduction, plus interest on the
principal amount repaid as provided in Section 3.7.
(b) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, and prior to the effectiveness of any Replacement
Liquidity Facility, the Borrower agrees that all amounts owing to the Liquidity
Provider shall be repaid in full, whether from advances made by the Replacement
Liquidity Provider, from amounts remaining on deposit in the Class C Cash
Collateral Account after giving effect to any application of funds therefrom to
any payment of interest on the Class C Certificates on the date of such
replacement, or otherwise.
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider in the order of
priority required by the applicable provisions of Articles II and III of the
Intercreditor Agreement.
Section 2.8 Book Entries. The Liquidity Provider shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower resulting from Advances made from time to time
and the amounts of principal and interest payable hereunder and paid from time
to time in respect thereof; provided, however, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
Section 2.9 Payments from Available Funds Only. All payments
to be made by the Borrower under this Agreement shall be made only from amounts
received by it that constitute Scheduled Payments or Special Payments and only
to the extent that the Borrower shall have sufficient income or proceeds
therefrom to enable the Borrower to make payments in accordance with the terms
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hereof after giving effect to the priority of payments provisions set forth in
the Intercreditor Agreement. The Liquidity Provider agrees that it will look
solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided
in this Agreement, the Intercreditor Agreement or any Refunding Agreement.
Amounts on deposit in the Class C Cash Collateral Account shall be available to
make payments only to the extent and for the purposes expressly contemplated in
Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs. If the Liquidity Provider shall
determine that (a) any change in any law or regulation or in the interpretation
thereof by any court or administrative or governmental authority charged with
the administration thereof or in the compliance by the Liquidity Provider (or
its head office) with any applicable direction, request or requirement (whether
or not having the force of law) of any central bank or competent governmental or
other authority shall either (i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans made by, the Liquidity Provider, or (ii) impose on
the Liquidity Provider any other condition regarding this Agreement or any
Advance, or (iii) change the basis of taxation of any amounts payable to the
Liquidity Provider (other than Taxes imposed on the overall net or gross income
of the Liquidity Provider) and (b) the result of any event referred to in the
preceding clause (i), (ii) or (iii) shall be to increase the cost to the
Liquidity Provider of issuing or maintaining its commitment or funding or
maintaining Advances (which increase in cost shall be determined by the
Liquidity Provider's reasonable allocations of the aggregate of such cost
increases resulting from such event), then, no later than 30 days after demand
by the Liquidity Provider, the Borrower shall pay, or cause to be paid, to the
Liquidity Provider, from time to time as specified by the Liquidity Provider,
additional amounts which shall be sufficient to compensate the Liquidity
Provider for such increased cost. A certificate as to such increased cost
incurred by the Liquidity Provider as a result of any event mentioned in clause
(i), (ii) or (iii) above, prepared in reasonable detail and submitted by the
Liquidity Provider to the Borrower, shall be conclusive, absent manifest error,
as to the amount thereof.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory
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restrictions) to change the jurisdiction of its Lending Office if making such
change would avoid the need for, or reduce the amount of, any amount payable
under this Section 3.1 that may thereafter accrue and would not, in the
reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in
any material respect to the Liquidity Provider.
Section 3.2 Capital Adequacy. If the Liquidity Provider shall
determine that the adoption after the date hereof of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change
after the date hereof in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance after the date hereof by
the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, is generally applicable to all
banks domiciled in Belgium with branches in the United States and not related to
the financial condition of the Liquidity Provider and has the effect of reducing
the rate of return on the Liquidity Provider's capital as a consequence of
issuing or maintaining its commitment hereunder or its funding or maintaining
Advances to a level below that which the Liquidity Provider could have achieved
but for such adoption, change or compliance (taking into consideration the
Liquidity Provider's policies with respect to capital adequacy) by an amount
deemed by the Liquidity Provider to be material, then, no later than 30 days
after demand by the Liquidity Provider, the Borrower shall pay to the Liquidity
Provider, from time to time as specified by the Liquidity Provider, additional
amounts which shall be sufficient to compensate the Liquidity Provider for such
reduction in respect of issuing or maintaining its commitment hereunder or its
funding or maintaining Advances. A certificate as to such additional amount
describing the event which has the effect of reducing the rate of return on the
Liquidity Provider's capital, prepared in reasonable detail and submitted by the
Liquidity Provider to the Borrower, shall be conclusive, absent manifest error,
as to the amount thereof.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section 3.2
that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider. The Liquidity Provider further agrees that no amounts shall
be payable under this Section 3.2 unless the Liquidity Provider is charging its
other borrowers with whom it has agreements similar to this agreement the
amounts that are payable to the Liquidity Provider under this Section 3.2.
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Section 3.3 Payments Free of Deductions. All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding any Taxes imposed on the overall net
income of the Liquidity Provider and excluding United States federal income tax
withholding to the extent such withholding is, or would be, actually imposed
upon payments to the Liquidity Provider as of the date of this Agreement (such
non-excluded taxes being referred to herein, collectively, as "Non-Excluded
Taxes" and, individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes
are required to be withheld from any amounts payable to the Liquidity Provider
under this Agreement, the amounts so payable to the Liquidity Provider shall be
increased to the extent necessary to yield to the Liquidity Provider (after
payment of all Non-Excluded Taxes and taxes imposed on the receipt of such
increase) interest or any other such amounts payable under this Agreement at the
rates or in the amounts specified in this Agreement. Whenever any Non-Excluded
Tax is payable by the Borrower, promptly thereafter the Borrower shall send the
Liquidity Provider certified copies of tax receipts evidencing such payment by
the Borrower. The Liquidity Provider agrees to provide to the Borrower on or
prior to the Effective Date, and from time to time thereafter prior to the
expiration of the effectiveness of and promptly upon the occurrence of any event
requiring a change in the most recent form previously delivered by it (and prior
to the immediately following due date of any payment by the Borrower hereunder),
to the extent that the Liquidity Provider is legally entitled to do so, two
original Internal Revenue Service Form 1001 or 4224, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that the Liquidity Provider is completely exempt from United States withholding
tax on payments pursuant to this Agreement.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section 3.3
that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
Section 3.4 Payments. The Borrower shall make or cause to be
made each payment to the Liquidity Provider under this Agreement so as to cause
the same to be received by the Liquidity Provider not later than 1:00 P.M. (New
York City time) on the day when due. The Borrower shall make all such payments
in lawful money of the United States of America, to the Liquidity
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Provider in immediately available funds, by wire transfer to The Bank of New
York, One Wall Street, New York, NY 10286, ABA No. 021-000-018, for the account
of Kredietbank New York, Account No. 802-3015618 (referencing America West
Airlines Liquidity Facility).
Section 3.5 Computations. All computations of interest based
on the Base Rate shall be made on the basis of a year of 365 or 366 days, as the
case may be, and all computations of (x) interest based on the LIBOR Rate and
(y) fees payable to the Liquidity Provider, shall be made on the basis of a year
of 360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest is
payable.
Section 3.6 Payment on Non-Business Days. Whenever any payment
to be made hereunder (other than a payment on LIBOR Advances) becomes due and
payable on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a LIBOR Advance becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.
Section 3.7 Interest. (a) The Borrower shall pay, or shall
cause to be paid, interest on (i) the unpaid principal amount of each Advance
from and including the date of such Advance to but excluding the date such
principal amount shall be paid in full and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate for such Advance
for such day, but in no event at a rate per annum greater than the maximum rate
permitted by applicable law; provided, however, that, if at any time the
otherwise applicable interest rate as set forth in this Section 3.7 shall exceed
the maximum rate permitted by applicable law, then any subsequent reduction in
such interest rate will not reduce the rate of interest payable pursuant to this
Section 3.7 below the maximum rate permitted by applicable law until the total
amount of interest accrued equals the amount of interest that would have accrued
if such otherwise applicable interest rate as set forth in this Section 3.7 had
at all times been in effect. Nothing contained in this Section 3.7 shall require
the Borrower to pay any amount
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under this Section 3.7 other than to the extent the Borrower shall have funds
available therefor.
(b) Each Advance will be either a Base Rate Advance or a LIBOR
Advance as provided in this Section. Each such Advance will be a Base Rate
Advance for the period from the date of its borrowing to (but excluding) the
third Business Day following the Liquidity Provider's receipt of the Notice of
Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR Advance;
provided that the Final Advance shall, until repaid in full, be a Base Rate
Advance and the Borrower may not convert the Final Advance into a LIBOR Advance.
(c) Each LIBOR Advance shall bear interest during each
Interest Period at a per annum rate equal to the LIBOR Rate for such Interest
Period plus the Applicable Margin for such LIBOR Advance, payable in arrears on
the last day of such Interest Period and, in the event of the payment of
principal of such LIBOR Advance on a day other than such last day, on the date
of such payment (to the extent of interest accrued on the amount of principal
repaid).
(d) Each Base Rate Advance shall bear interest at a per annum
rate equal to the Base Rate plus the Applicable Margin for such Base Rate
Advance, payable in arrears on each Regular Distribution Date and, in the event
of the payment of principal of such Base Rate Advance on a day other than a
Regular Distribution Date, on the date of such payment (to the extent of
interest accrued on the amount of principal repaid).
(e) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances) shall bear interest at the Base Rate.
(f) Each change in the Base Rate shall become effective
immediately.
Section 3.8 Replacement of Borrower. Subject to Section
5.2(b), from time to time, upon the effective date and time specified in a
written and completed Notice of Replacement Borrower in substantially the form
of Annex III attached hereto (a "Notice of Replacement Borrower") delivered to
the Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.
Section 3.9 Funding Loss Indemnification. The Borrower shall
pay to the Liquidity Provider, upon the request of the Liquidity Provider, such
amount or amounts as shall be sufficient (in the reasonable opinion of the
Liquidity Provider) to compensate it for any loss, cost, or expense incurred as
a result of:
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(a) Any payment or prepayment of a LIBOR Advance on a
date other than the last day of the Interest Period for such
Advance; or
(b) Any failure by the Borrower to borrow a LIBOR Advance on
the date for borrowing specified in the relevant notice under Section
2.2 or 3.7.
Section 3.10 Illegality. Notwithstanding any other provision
in this Agreement, if any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request. In the event any change of the nature described in the preceding
sentence shall make it unlawful or impossible for the Liquidity Provider (or its
Lending Office) to maintain or fund its Base Rate Advances, the Liquidity
Provider shall have the right to cause a Replacement Liquidity Facility to be
substituted for this Agreement, subject to (i) the satisfaction of the
conditions precedent to the effectiveness of, and the other provisions
regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the
Intercreditor Agreement and (ii) such Replacement Liquidity Facility and
Replacement Liquidity Provider being reasonably acceptable to America West.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section
2.1. Section 2.1 of this Agreement shall become effective on and as of the first
date (the "Effective Date") on which the following conditions precedent have
been satisfied or waived:
(a) The Liquidity Provider shall have received on or before
the Closing Date each of the following, each dated such date (except
for those documents delivered pursuant to paragraphs (v) and (vii) of
this Section 4.1(a)), and each in form and substance satisfactory to
the Liquidity Provider:
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(i) This Agreement duly executed on behalf of the
Borrower;
(ii) The Intercreditor Agreement duly executed on
behalf of each of the parties thereto;
(iii) Counterparts (or certified copies thereof) of
each of the Operative Agreements (other than this Agreement
and the Intercreditor Agreement) which, when taken together,
bear the signatures of all of the respective parties thereto
and which are in full force and effect in accordance with
their respective terms;
(iv) A copy of the Prospectus and specimen copies of
the Class C Certificates;
(v) Evidence that, on the Effective Date, the Class A
Certificates, the Class B Certificates, the Class C
Certificates, the Class D Certificates and the Class E
Certificates will receive long-term credit ratings from
Moody's of not lower than A2, Baa2, Ba1, Ba3 and B1,
respectively, and from Standard & Poor's of not lower than
AA-, A-, BBB-, BB and B+, respectively;
(vi) An executed or certified copy of each document,
instrument, certificate and opinion delivered pursuant to the
Class C Trust Agreement, the Intercreditor Agreement, the
Refunding Agreements and the other Operative Agreements
(together with, in the case of each such opinion (unless such
opinion is addressed to the Liquidity Provider), other than
the opinion of counsel for the Underwriters, a letter from the
counsel rendering such opinion to the effect that the
Liquidity Provider is entitled to rely on such opinion as if
it were addressed to the Liquidity Provider);
(vii) Evidence that there shall have been made and
shall be in full force and effect, all filings, recordings
and/or registrations, and there shall have been given or taken
any notice or other similar action as may be reasonably
necessary or, to the extent reasonably requested by the
Liquidity Provider, reasonably advisable, in order to
establish, perfect, protect and preserve the right, title and
interest, remedies, powers, privileges, liens and security
interests of, or for the benefit of, the Trustees and the
Liquidity Provider created by the Operative Agreements;
(viii) Copies of the appraisals included in the
Prospectus;
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(ix) A letter from America West agreeing to provide
to the Liquidity Provider the periodic financial reports
referred to in Section 8.04(a) of the Trust Agreements; and
(x) Such other documents, instruments, opinions and
approvals (and, if requested by the Liquidity Provider,
certified duplicates or executed copies thereof) as the
Liquidity Provider shall have reasonably requested.
(b) The following statements shall be true and shall be deemed
to have been represented by each party (other than clause (ii) below,
which shall be deemed to have been represented only by America West) to
the Refunding Agreements as being true on and as of the Effective Date:
(i) The representations and warranties of such Person
contained in each Refunding Agreement are true and correct on
and as of the Effective Date as though made on and as of the
Effective Date; and
(ii) No event has occurred and is continuing, or
would result from the entering into of this Agreement or the
making of any Advance, which constitutes a Liquidity Event of
Default.
The Liquidity Provider shall have received payment in full of
all fees and other sums required to be paid to or for the account of
the Liquidity Provider on or prior to the Effective Date.
(c) All conditions precedent to the issuance of the
Certificates under the Trust Agreements shall have been satisfied, all
conditions precedent to the effectiveness of the other Liquidity
Facilities shall have been satisfied, and all conditions precedent to
the purchase of the Certificates by the Underwriters under the
Underwriting Agreement shall have been satisfied (except for any of
such conditions precedent under the Underwriting Agreement that shall
have been waived by the Underwriters).
(d) The Borrower shall have received a certificate, dated the
date hereof, signed by a duly authorized representative of the
Liquidity Provider, certifying that all conditions precedent to the
effectiveness of Section 2.1 have been satisfied or waived (other than
this Section 4.1(d)).
Section 4.2 Conditions Precedent to Borrowing. The obligation
of the Liquidity Provider to make an Advance on the occasion of each Borrowing
shall be subject to the conditions
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precedent that the Effective Date shall have occurred and, except in the case of
a Final Advance, prior to the date of such Borrowing, the Borrower shall have
delivered a Notice of Borrowing which conforms to the terms and conditions of
this Agreement and has been completed as may be required by the relevant form of
the Notice of Borrowing for the type of Advance requested.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower. So long as
any Advance shall remain unpaid or the Liquidity Provider shall have any
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay
or cause to be paid all amounts payable by it under this Agreement and
the other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider
with reasonable promptness, such information and data with respect to
the transactions contemplated by the Operative Agreements as from time
to time may be reasonably requested by the Liquidity Provider; and
permit the Liquidity Provider, upon reasonable notice, to inspect the
Borrower's books and records with respect to such transactions and to
meet with officers and employees of the Borrower to discuss such
transactions.
Section 5.2 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written consent
of the Liquidity Provider:
(a) Amendments. Modify, amend or supplement; or give any
consent to any modification, amendment, or supplement; or make any
waiver with respect to; any provision of the Trust Agreements or the
Intercreditor Agreement, except for any supplemental agreement to the
Trust Agreements provided for in Section 9.01 thereof.
(b) Borrower. Appoint or permit or suffer to be
appointed any successor Borrower without the prior written
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approval of the Liquidity Provider (which approval shall not
be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance. If (a) both (i) a Triggering Event
shall have occurred and be continuing and (ii) a Performing Note Deficiency
exists or (b) a Liquidity Event of Default shall have occurred and be
continuing, the Liquidity Provider may, in its discretion, make a Final Advance
whereupon (i) the Liquidity Provider shall have no further obligation to make
Advances hereunder, (ii) all other outstanding Advances shall be automatically
converted into Final Advances for purposes of determining the Applicable
Liquidity Rate for interest payable thereon, and (iii) subject to Sections 2.7
and 2.9, all Advances, any accrued interest thereon and any other amounts
outstanding hereunder shall become immediately due and payable to the Liquidity
Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 7.2 Notices, Etc. Except as otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be in writing (including telecopier and mailed or delivered or sent by
telecopier):
Borrower: Fleet National Bank
777 Main Street
Hartford, CT 06115
Attention: Corporate Trust
Administration
Telecopy: (860) 986-7920
19
<PAGE> 23
Liquidity
Provider: Kredietbank N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telecopy: (212) 956-5580
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Refunding Agreements at their respective addresses
set forth therein.
Section 7.3 No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.4 Further Assurances. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.5 Indemnification; Survival of Certain Provisions.
The Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Sections 10 and 13 of the Lease. In addition, the Borrower
agrees to indemnify, protect, defend and hold harmless the Liquidity Provider
from, against and in respect of, and shall pay on demand, all Expenses of any
kind or nature whatsoever, whether arising before, on or after the date hereof,
that may be imposed, incurred by or asserted against any Liquidity Indemnitee,
in any way relating to, resulting from, or arising out of or in connection with,
this Agreement, the Intercreditor Agreement or the Refunding Agreements;
provided, however, that the Borrower
20
<PAGE> 24
shall not be required to indemnify, protect, defend and hold harmless any
Liquidity Indemnitee in respect of any Expense of such Liquidity Indemnitee (i)
to the extent such Expense is attributable to the gross negligence or willful
misconduct of such Liquidity Indemnitee or any Related Indemnitee, (ii) that is
ordinary and usual operating overhead expense or (iii) to the extent such
Expense is attributable to the failure by such Liquidity Indemnitee or its
Related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement. The indemnities
contained in such Sections 10 and 13 of the Lease, and the provisions of
Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall survive the termination of this
Agreement.
Section 7.6 Liability of the Liquidity Provider. (a) Neither
the Liquidity Provider nor any of its officers or directors shall be liable or
responsible for: (i) the use which may be made of the Advances or any acts or
omissions of the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; or (iii) the making of
Advances by the Liquidity Provider against delivery of a Notice of Borrowing and
other documents which do not comply with the terms hereof; provided, however,
that the Borrower shall have a claim against the Liquidity Provider, and the
Liquidity Provider shall be liable to the Borrower, to the extent of any damages
suffered by the Borrower which were the result of (A) the Liquidity Provider's
willful misconduct or negligence in determining whether documents presented
hereunder comply with the terms hereof, or (B) any breach by the Liquidity
Provider of any of the terms of this Agreement, including, but not limited to,
the Liquidity Provider's failure to make lawful payment hereunder after the
delivery to it by the Borrower of a Notice of Borrowing strictly complying with
the terms and conditions hereof.
(b) The Liquidity Provider shall not be liable or responsible
in any respect for (i) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with this Agreement or any Notice of Borrowing
delivered hereunder, or (ii) any action, inaction or omission which may be taken
by it in good faith, absent willful misconduct or negligence (in which event the
extent of the Liquidity Provider's potential liability to the Borrower shall be
limited as set forth in the immediately preceding paragraph), in connection with
this Agreement or any Notice of Borrowing.
Section 7.7 Costs, Expenses and Taxes. The Borrower agrees to
pay, or cause to be paid (A) on the Effective Date and on such later date or
dates on which the Liquidity Provider shall
21
<PAGE> 25
make demand, all reasonable out-of-pocket costs and expenses of the Liquidity
Provider in connection with the preparation, negotiation, execution, delivery,
filing and recording of this Agreement, any other Operative Agreement and any
other documents which may be delivered in connection with this Agreement,
including, without limitation, the reasonable fees and expenses of outside
counsel for the Liquidity Provider and (B) on demand, all reasonable costs and
expenses of the Liquidity Provider (including reasonable counsel fees and
expenses) in connection with (i) the enforcement of this Agreement or any other
Operative Agreement, (ii) the modification or amendment of, or supplement to,
this Agreement or any other Operative Agreement or such other documents which
may be delivered in connection herewith or therewith (whether or not the same
shall become effective) or (iii) any action or proceeding relating to any order,
injunction, or other process or decree restraining or seeking to restrain the
Liquidity Provider from paying any amount under this Agreement, the
Intercreditor Agreement or any other Operative Document or otherwise affecting
the application of funds in the Cash Collateral Accounts. In addition, the
Borrower shall pay any and all recording, stamp and other similar taxes and fees
payable or determined to be payable in connection with the execution, delivery,
filing and recording of this Agreement, any other Operative Agreement and such
other documents, and agrees to save the Liquidity Provider harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes or fees.
Section 7.8 Binding Effect; Participations. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.8) nor the
Borrower shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the other party, subject to the
requirement of Section 7.8(b). The Liquidity Provider may grant participations
herein or in any of its rights or security hereunder and under the other
Operative Agreements to such Persons as the Liquidity Provider may in its sole
discretion select, subject to the requirement of Section 7.8(b). No such
participation by the Liquidity Provider, however, will relieve the Liquidity
Provider of its obligations hereunder. In connection with any participation or
any proposed participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the Borrower is
required to deliver or to disclose to the Liquidity Provider pursuant to this
Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's
source of funds may derive in part from its participants. Accordingly,
references in this Agreement and the other Operative Agreements to
determinations, reserve and capital adequacy requirements, increased costs,
reduced receipts and the like as they pertain to
22
<PAGE> 26
the Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity
Provider sells any participation to any bank or other entity (each, a
"Participant"), then, concurrently with the effectiveness of such participation,
the Participant shall (i) represent to the Liquidity Provider (for the benefit
of the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld by the
Borrower or the Liquidity Provider with respect to any payments to be made to
such Participant in respect of this Agreement, (ii) furnish to the Liquidity
Provider and the Borrower either (x) a statement that it is incorporated under
the laws of the United States or a state thereof or (y) if it is not so
incorporated, two copies of a properly completed United States Internal Revenue
Service Form 4224 or Form 1001, as appropriate, or other applicable form,
certificate or document prescribed by the Internal Revenue Service certifying,
in each case, such Participant's entitlement to a complete exemption from United
States federal withholding tax in respect to any and all payments to be made
hereunder, and (iii) agree (for the benefit of the Liquidity Provider and the
Borrower) to provide the Liquidity Provider and the Borrower a new Form 4224 or
Form 1001, as appropriate, (A) on or before the date that any such form expires
or becomes obsolete or (B) after the occurrence of any event requiring a change
in the most recent form previously delivered by it and prior to the immediately
following due date of any payment by the Borrower hereunder, certifying in the
case of a Form 1001 or Form 4224 that such Participant is entitled to a complete
exemption from United States federal withholding tax on payments under this
Agreement. Unless the Borrower has received forms or other documents reasonably
satisfactory to it indicating that payments hereunder are not subject to United
States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate without any obligation
to gross-up or indemnify pursuant to Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8,
the Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the
23
<PAGE> 27
Borrower's obligations hereunder in respect of such assigned Advance to the
extent of such payment. No such assignment shall release the Liquidity Provider
from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the nonexclusive general jurisdiction of
the courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and the appellate courts
from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) if such party does not maintain an office for the
transaction of its business in New York, agrees that service of process
in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar
form and mail), postage prepaid, to each party hereto at its address
set forth in Section 7.2, or at such other address of which the
Liquidity Provider shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
24
<PAGE> 28
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel.
THIS WAIVER CANNOT BE MODIFIED ORALLY.
Section 7.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement and the other Operative
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior understandings and
agreements of such parties.
Section 7.14 Headings; Section References. Section headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose. Unless the
context otherwise requires or otherwise indicated herein, all Section references
in this Agreement are references to Sections hereof.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
25
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first set forth above.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
KREDIETBANK N.V., NEW YORK BRANCH,
as Liquidity Provider
By ________________________________
Name:
Title:
By ________________________________
Name:
Title:
26
<PAGE> 30
Annex I to Irrevocable
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the
undersigned borrower (the "Borrower"), hereby certifies to KREDIETBANK N.V.,
acting through its New York Branch (the "Liquidity Provider"), with reference to
the Irrevocable Revolving Credit Agreement, Class C Certificates dated as of
November 26, 1996, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of an Interest Advance by the Liquidity Provider to be used
for the payment of interest on the Class C Certificates which was
payable on the Distribution Date falling on _____________ in accordance
with the terms and provisions of the Class C Trust Agreement and the
Class C Certificates and has not been paid pursuant to clause sixth of
Section 3.2 of the Intercreditor Agreement or clause eighth Section 3.3
of the Intercreditor Agreement, which Advance is requested to be made
on _____________.
(3) The amount of the Interest Advance requested hereby (i) is
$___________ , to be applied in respect of the payment of interest
which was due and payable on the Class C Certificates on such
Distribution Date, (ii) does not include any amount with respect to the
payment of principal of, or premium on, the Class A Certificates, the
Class B Certificates, the Class C Certificates, the Class D
Certificates or Class E Certificates, or interest on the Class A
Certificates, the Class B Certificates, the Class D Certificates or the
Class E Certificates, (iii) was computed in accordance with the
provisions of the Class C Certificates, the Class C Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), (iv) does not exceed the Available Commitment on
the date hereof, and (v) has not been and is not the subject of a prior
or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance
with the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as
the case may be, (b) no portion of such amount shall be applied by the
Borrower for
<PAGE> 31
any other purpose and (c) no portion of such amount until so applied
shall be commingled with other funds held by the Borrower.
(5) The Borrower hereby requests that the Advance requested
hereby be a Base Rate Advance and that such Base Rate Advance be
converted into a LIBOR Rate Advance on the third Business Day following
your receipt of this notice.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, the making of the Interest Advance as requested by this
Notice of Borrowing shall automatically reduce, subject to reinstatement in
accordance with the terms of the Liquidity Agreement, the Available Commitment
by an amount equal to the amount of the Interest Advance requested to be made
hereby as set forth in clause (i) of paragraph (3) of this Certificate and such
reduction shall automatically result in corresponding reductions in the amounts
available to be borrowed pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Notice of Borrowing as of the _ day of ________________, ________.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
2
<PAGE> 32
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
3
<PAGE> 33
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the
undersigned subordination agent (the "Borrower"), hereby certifies to
KREDIETBANK, N.V., acting through its New York Branch (the "Liquidity
Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class
C Certificates dated as of November 26, 1996, between the Borrower and the
Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined or referenced),
that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of the Downgrade Advance by the Liquidity Provider to be
used for the funding of the Class C Cash Collateral Account in
accordance with Section 3.6(c) of the Intercreditor Agreement by reason
of the downgrading of the debt rating of the Liquidity Provider issued
by either Rating Agency below the applicable Threshold Rating, which
Advance is requested to be made on ___________.
(3) The amount of the Downgrade Advance requested hereby (i)
is $___________, which equals the Available Commitment on the date
hereof and is to be applied in respect of the funding of the Class C
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect
to the payment of the principal of, or premium on, the Class C
Certificates, or principal of, or interest or premium on, the Class A
Certificates, the Class B Certificates, the Class D Certificates or the
Class E Certificates, (iii) was computed in accordance with the
provisions of the Class C Certificates, the Class C Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of
a prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the
Class C Cash Collateral Account and apply the same in accordance with
the terms of Section 3.6(c) of the Intercreditor Agreement, (b) no
portion of such amount shall be applied by the Borrower for any other
purpose and (c) no portion of such amount until so applied shall be
commingled with other funds held by the Borrower.
<PAGE> 34
(5) The Borrower hereby requests that the Advance requested
hereby be a Base Rate Advance and that such Base Rate Advance be
converted into a LIBOR Rate Advance on the third Business Day following
your receipt of this notice.
The Borrower hereby acknowledges that, pursuant to the
Liquidity Agreement, (A) the making of the Downgrade Advance as requested by
this Notice of Borrowing shall automatically and irrevocably terminate the
obligation of the Liquidity Provider to make further Advances under the
Liquidity Agreement; and (B) following the making by the Liquidity Provider of
the Downgrade Advance requested by this Notice of Borrowing, the Borrower shall
not be entitled to request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Notice of Borrowing as of the _ day of __________, _________.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
2
<PAGE> 35
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE> 36
Annex III to Irrevocable
Revolving Credit Agreement
NOTICE OF REPLACEMENT BORROWER
[Date]
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Liquidity Agreement referred
to above. The transferee has succeeded the undersigned as Subordination Agent
under the Intercreditor Agreement referred to in the first paragraph of the
Liquidity Agreement.
By this transfer, all rights of the undersigned as Borrower
under the Liquidity Agreement are transferred to the transferee and the
transferee shall hereafter have the sole rights as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
We ask that this transfer be effective as of
__________, ________.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By ________________________________
Name:
Title:
<PAGE> 37
Annex IV to Irrevocable
Revolving Credit Agreement
NOTICE OF AUTOMATIC REDUCTION OF COMMITMENT
[Date]
Ladies and Gentlemen:
The undersigned, a duly authorized signatory of the
undersigned subordination agent (the "Borrower"), hereby notifies Kredietbank
N.V., acting through its New York Branch (the "Liquidity Provider"), with
reference to the Irrevocable Revolving Credit Agreement dated as of November 26,
1996, between the Borrower and the Liquidity Provider (the "Liquidity
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that, pursuant to Section 2.4(a)
of the Liquidity Agreement, the Commitment has been automatically reduced to
$_________.
IN WITNESS WHEREOF, the Borrower has executed and
delivered this Notice of Borrowing as of the _ day of __________,
______.
FLEET NATIONAL BANK, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By_______________________________
Name:
Title:
2
<PAGE> 1
EXHIBIT 4.10
INTERCREDITOR AGREEMENT
Dated as of
November 26, 1996
AMONG
FLEET NATIONAL BANK,
not in its individual capacity
but solely as Trustee under the
America West Airlines Pass Through Trust 1996-1A,
America West Airlines Pass Through Trust 1996-1B,
America West Airlines Pass Through Trust 1996-1C
America West Airlines Pass Through Trust 1996-1D,
and
America West Airlines Pass Through Trust 1996-1E.
KREDIETBANK N.V.,
NEW YORK BRANCH,
as Class A Liquidity Provider,
Class B Liquidity Provider
and Class C Liquidity Provider,
AND
FLEET NATIONAL BANK,
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and trustee hereunder
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS ....................................................... 2
SECTION 1.1 Definitions........................................................ 2
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY.................................. 21
SECTION 2.1 Agreement to Terms of Subordination; Payments from
Monies Received Only .............................................. 21
SECTION 2.2 Trust Accounts..................................................... 22
SECTION 2.3 Deposits to the Collection Account and Special
Payments Account................................................... 23
SECTION 2.4 Distributions of Special Payments.................................. 23
SECTION 2.5 Designated Representatives......................................... 26
SECTION 2.6 Controlling Party.................................................. 27
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED.......... 28
SECTION 3.1 Written Notice of Distribution..................................... 28
SECTION 3.2 Distribution of Amounts on Deposit in the Collection Account....... 31
SECTION 3.3 Distribution of Amounts on Deposit Following a Triggering Event.... 32
SECTION 3.4 Other Payments..................................................... 34
SECTION 3.5 Payments to the Trustees and the Liquidity Providers............... 34
SECTION 3.6 Liquidity Facilities............................................... 35
ARTICLE IV
EXERCISE OF REMEDIES .............................................. 41
SECTION 4.1 Directions from the Controlling Party.............................. 41
SECTION 4.2 Remedies Cumulative................................................ 42
SECTION 4.3 Discontinuance of Proceedings...................................... 42
SECTION 4.4 Right of Certificateholders to Receive Payments Not to Be
Impaired .......................................................... 43
SECTION 4.5 Undertaking for Costs.............................................. 43
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF
TRUSTEES, ETC ..................................................... 43
SECTION 5.1 Notice of Indenture Default or Triggering Event.................... 43
SECTION 5.2 Indemnification.................................................... 44
SECTION 5.3 No Duties Except as Specified in Intercreditor Agreement........... 44
SECTION 5.4 Notice from the Liquidity Providers and Trustees................... 45
ARTICLE VI
THE SUBORDINATION AGENT ........................................... 45
SECTION 6.1 Authorization; Acceptance of Trusts and Duties..................... 45
SECTION 6.2 Absence of Duties.................................................. 46
SECTION 6.3 No Representations or Warranties as to Documents................... 46
SECTION 6.4 No Segregation of Monies; No Interest.............................. 46
SECTION 6.5 Reliance; Agents; Advice of Counsel................................ 46
SECTION 6.6 Capacity in Which Acting........................................... 47
SECTION 6.7 Compensation....................................................... 47
SECTION 6.8 May Become Certificateholder....................................... 47
SECTION 6.9 Subordination Agent Required; Eligibility.......................... 47
SECTION 6.10 Money to Be Held in Trust.......................................... 48
ARTICLE VII
INDEMNIFICATION AND REIMBURSEMENT OF SUBORDINATION AGENT........... 48
SECTION 7.1 Scope of Indemnification and Reimbursement......................... 48
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT...................................... 48
SECTION 8.1 Replacement of Subordination Agent;
Appointment of Successor........................................... 48
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS ........................................ 50
SECTION 9.1 Amendments, Waivers, Etc........................................... 50
SECTION 9.2 Subordination Agent Protected...................................... 51
SECTION 9.3 Effect of Supplemental Agreements.................................. 51
SECTION 9.4 Notice to Rating Agencies.......................................... 51
ARTICLE X
MISCELLANEOUS ..................................................... 52
SECTION 10.1 Termination of Intercreditor Agreement............................. 52
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees, Liquidity
Providers and Subordination Agent.................................. 52
SECTION 10.3 Notices............................................................ 52
SECTION 10.4 Severability....................................................... 53
SECTION 10.5 No Oral Modifications or Continuing Waivers........................ 53
SECTION 10.6 Successors and Assigns............................................. 53
SECTION 10.7 Headings........................................................... 53
SECTION 10.8 Counterpart Form................................................... 53
SECTION 10.9 Subordination...................................................... 53
SECTION 10.10 GOVERNING LAW.................................................... 55
Schedule 1 Indentures
Schedule 2 Refunding Agreements
</TABLE>
iii
<PAGE> 5
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT (as amended, modified and supplemented
from time to time, this "Agreement") dated as of November 26, 1996, among FLEET
NATIONAL BANK, a national banking association ("Fleet"), not in its individual
capacity but solely as Trustee of each Trust (each as defined below),
KREDIETBANK N.V., acting through its New York Branch ("Kredietbank"), as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider,
and FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as expressly set forth herein, but solely as Subordination Agent
and trustee hereunder (in such capacity, together with any successor appointed
pursuant to Article VIII hereof, the "Subordination Agent").
WHEREAS, all capitalized terms used herein shall have the
respective meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture, the related Owner Trustee
proposes to issue on a nonrecourse basis up to five series of Equipment Notes to
refinance the current indebtedness of such Owner Trustee originally incurred to
finance the purchase of the Aircraft or Spare Engine referred to in such
Indenture which has been leased to America West pursuant to the related Lease;
WHEREAS, pursuant to the Refunding Agreements, each Trust will
acquire those Equipment Notes having an interest rate equal to the interest rate
applicable to the Certificates to be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the Trust created
thereby proposes to issue a single series of Certificates (a "Class") bearing
the interest rate and having the final distribution date described in such Trust
Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Underwriting Agreement, the
Underwriters propose to purchase the Certificates issued by each Trust in the
aggregate face amount set forth under the name of such Trust on Schedule I
thereto on the terms and subject to the conditions set forth therein;
WHEREAS, each Liquidity Provider proposes to enter into a
revolving credit agreement (each, a "Liquidity Facility") with the Subordination
Agent, as agent for the respective Trustee of each Trust (other than the Class D
and Class E Trusts), for the benefit of the Certificateholders of such Trust;
and
WHEREAS, it is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement that the Subordination Agent, the
Trustees and the Liquidity Providers agree to the terms of subordination set
forth in this Agreement in respect of each Class of Certificates, and the
Subordination Agent, the Trustees and the Liquidity Providers, by entering into
<PAGE> 6
this Agreement, hereby acknowledge and agree to such terms of subordination and
the other provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article
have the meanings assigned to them in this Article, and include the
plural as well as the singular;
(2) all references in this Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Agreement;
(3) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision; and
(4) the term "including" shall mean "including without
limitation".
"Acceleration" means, with respect to the amounts payable in
respect of the Equipment Notes issued under any Indenture, the declaration or
deemed declaration (pursuant to Section 4.04(b) of such Indenture) of such
amounts to be immediately due and payable. "Accelerate" and "Accelerated" have
meanings correlative to the foregoing.
"Adjusted Expected Distributions" means, with respect to the
Certificates of any Class on any Current Distribution Date, the sum of (x) the
amount of accrued and unpaid interest on such Certificates plus (y) the greater
of:
(A) the difference between (x) the Pool Balance of such
Certificates as of the immediately preceding Distribution Date and (y)
the Pool Balance of such Certificates as of the Current Distribution
Date, calculated on the basis that (i) the principal of the
Non-Performing Equipment Notes held in such Trust has been paid in full
and
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<PAGE> 7
such payments have been distributed to the holders of such Certificates
and (ii) the principal of the Performing Equipment Notes has been paid
when due (but without giving effect to any acceleration of Performing
Equipment Notes) and has been distributed to the holders of such
Certificates; and
(B) the amount if any by which (i) the Pool Balance of such
Class of Certificates as of the immediately preceding Distribution Date
exceeds (ii) the Aggregate LTV Collateral Amount for such Class of
Certificates for the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals, clause (B) above
shall not be applicable.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such Person. For the purposes of this definition, "control" means 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; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate LTV Collateral Amount" means, for any Class of
Certificates for any Distribution Date, the sum of the applicable LTV Collateral
Amounts for each Aircraft and Spare Engine minus the Pool Balance for each Class
of Certificates, if any, senior to such Class after giving effect to any
distribution of principal on such Distribution Date on such senior Class or
Classes, but in no event an amount less than zero.
"Agreement" has the meaning assigned to such term in the
heading hereof.
"Aircraft" means, with respect to each Indenture relating to
Equipment Notes that are secured by an aircraft, the "Aircraft" referred to
therein.
"America West" means America West Airlines, Inc., a Delaware
corporation, and its successors and assigns.
"America West Bankruptcy Event" means the occurrence and
continuation of any of the following:
(a) the commencement of an involuntary case or other
proceeding in respect of America West in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law
in the United States or seeking the
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<PAGE> 8
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of America West or for all or
substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or
other proceeding undismissed and unstayed for a period of ninety (90)
consecutive days or an order, judgment or decree shall be entered in
any proceeding by any court of competent jurisdiction appointing,
without the consent of America West, a receiver, trustee or liquidator
of America West, or of substantially all of its property, or
sequestering substantially all of the property of America West and any
such order, judgment or decree or appointment or sequestration shall be
final or shall remain in force undismissed, unstayed or unvacated for a
period of ninety (90) days after the date of entry thereof; or
(b) the commencement by America West of a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or any other applicable federal or state bankruptcy, insolvency or
other similar law in the United States, or the consent by America West
to the appointment of or taking, possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of America West or for all or substantially all of its property, or the
making by America West of any assignment for the benefit of creditors
generally or the taking by America West of any corporate action to
authorize any of the foregoing.
"Appraised Current Market Value" of any Aircraft or Spare
Engine means the lower of the average or the median of the most recent three LTV
Appraisals of such Aircraft or Spare Engine obtained pursuant to Section
4.1(a)(iv).
"Appraisers" means BK Associates, Inc., Aircraft Information
Services, Inc. and Morton Beyer and Associates.
"Available Amount" means, with respect to any Liquidity
Facility on any drawing date, an amount equal to (a) the Stated Amount of such
Liquidity Facility, less (b) the amount of each Interest Drawing honored by the
Liquidity Provider under such Liquidity Facility on or prior to such date which
has not been reimbursed or reinstated as of such date; provided that, following
a Downgrade Drawing or a Final Drawing under such Liquidity Facility, the
Available Amount of such Liquidity Facility shall be zero.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or
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<PAGE> 9
authorized to close in New York, New York or Hartford Connecticut.
"Cash Collateral Account" means the Class A Cash Collateral
Account, the Class B Cash Collateral Account or the Class C Cash Collateral
Account, as applicable.
"Certificate" means a Class A Certificate, a Class B
Certificate, a Class C Certificate, a Class D Certificate or a Class E
Certificate, as applicable.
"Certificateholder" means any holder of one or more
Certificates.
"Class" has the meaning assigned to such term in the
preliminary statements to this Agreement.
"Class A Cash Collateral Account" means an Eligible Deposit
Account in the name of the Subordination Agent maintained at the Subordination
Agent, into which all amounts drawn under the Class A Liquidity Facility
pursuant to Section 3.6(c) or 3.6(i) shall be deposited.
"Class A Certificateholder" means, at any time, any holder of
one or more Class A Certificates.
"Class A Certificates" means the certificates issued by the
Class A Trust, substantially in the form of Exhibit A to the Class A Trust
Agreement, and authenticated by the Class A Trustee, representing fractional
undivided interests in the Class A Trust, and any certificates issued in
exchange therefor or replacement thereof pursuant to the terms of the Class A
Trust Agreement.
"Class A Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of November 26, 1996, between the
Subordination Agent, as agent and trustee for the Class A Trust, and the Class A
Liquidity Provider, and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class A Liquidity Provider" means Kredietbank N.V., acting
through its New York Branch, together with any Replacement Liquidity Provider
which has issued a Replacement Liquidity Facility to replace the Class A
Liquidity Facility pursuant to Section 3.6(e).
"Class A Trust" means America West Airlines 1996-1A Pass
Through Trust created and administered pursuant to the Class A Trust Agreement.
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<PAGE> 10
"Class A Trust Agreement" means the Pass Through Trust
Agreement dated as of November 26, 1996 between America West and the Class A
Trustee, as supplemented by the Supplement No. 1996-1A thereto dated November
26, 1996, governing the creation and administration of the Class A Trust and the
issuance of the Class A Certificates, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Class A Trustee" means Fleet, not in its individual capacity
except as expressly set forth in the Class A Trust Agreement, but solely as
trustee under the Class A Trust Agreement, together with any successor trustee
appointed pursuant thereto.
"Class B Cash Collateral Account" means an Eligible Deposit
Account in the name of the Subordination Agent maintained at the Subordination
Agent, into which all amounts drawn under the Class B Liquidity Facility
pursuant to Section 3.6(c) or 3.6(i) shall be deposited.
"Class B Certificateholder" means, at any time, any holder of
one or more Class B Certificates.
"Class B Certificates" means the certificates issued by the
Class B Trust, substantially in the form of Exhibit A to the Class B Trust
Agreement, and authenticated by the Class B Trustee, representing fractional
undivided interests in the Class B Trust, and any certificates issued in
exchange therefor or replacement thereof pursuant to the terms of the Class B
Trust Agreement.
"Class B Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of November 26, 1996, between the
Subordination Agent, as agent and trustee for the Class B Trust, and the Class B
Liquidity Provider, and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class B Liquidity Provider" means Kredietbank N.V., acting
through its New York Branch, together with any Replacement Liquidity Provider
which has issued a Replacement Liquidity Facility to replace the Class B
Liquidity Facility pursuant to Section 3.6(e).
"Class B Trust" means America West Airlines 1996-1B Pass
Through Trust created and administered pursuant to the Class B Trust Agreement.
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<PAGE> 11
"Class B Trust Agreement" means the Pass Through Trust
Agreement dated as of November 26, 1996, between America West and the Class B
Trustee, as supplemented by the Supplement No. 1996-1B thereto dated November
26, 1996, governing the creation and administration of the Class B Trust and the
issuance of the Class B Certificates, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Class B Trustee" means Fleet, not in its individual capacity
except as expressly set forth in the Class B Trust Agreement, but solely as
trustee under the Class B Trust Agreement, together with any successor trustee
appointed pursuant thereto.
"Class C Cash Collateral Account" means an Eligible Deposit
Account in the name of the Subordination Agent maintained at the Subordination
Agent, into which all amounts drawn under the Class C Liquidity Facility
pursuant to Section 3.6(c) or 3.6(i) shall be deposited.
"Class C Certificateholder" means, at any time, any holder of
one or more Class C Certificates.
"Class C Certificates" means the certificates issued by the
Class C Trust, substantially in the form of Exhibit A to the Class C Trust
Agreement, and authenticated by the Class C Trustee, representing fractional
undivided interests in the Class C Trust, and any certificates issued in
exchange therefor or in replacement thereof pursuant to the terms of the Class C
Trust Agreement.
"Class C Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of November 26, 1996, between the
Subordination Agent, as agent and trustee for the Class C Trust, and the Class C
Liquidity Provider and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class C Liquidity Provider" means Kredietbank N.V., acting
through its New York Branch, together with any Replacement Liquidity Provider
which has issued a Replacement Liquidity Facility to replace the Class C
Liquidity Facility pursuant to Section 3.6(e).
"Class C Trust" means America West Airlines 1996-1C Pass
Through Trust created and administered pursuant to the Class C Trust Agreement.
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<PAGE> 12
"Class C Trust Agreement" means the Pass Through Trust
Agreement dated as of November 26, 1996, between America West and the Class C
Trustee, as supplemented by the Supplement No. 1996-1C thereto dated November
26, 1996, governing the creation and administration of the Class C Trust and the
issuance of the Class C Certificates, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Class C Trustee" means Fleet, not in its individual capacity
except as expressly set forth in the Class C Trust Agreement, but solely as
trustee under the Class C Trust Agreement, together with any successor trustee
appointed pursuant thereto.
"Class D Certificateholder" means, at any time, any holder of
one or more Class D Certificates.
"Class D Certificates" means the certificates issued by the
Class D Trust, substantially in the form of Exhibit A to the Class D Trust
Agreement, and authenticated by the Class D Trustee, representing fractional
undivided interests in the Class D Trust, and any certificates issued in
exchange therefor or in replacement thereof pursuant to the terms of the Class D
Trust Agreement.
"Class D Trust" means America West Airlines 1996-1D Pass
Through Trust created and administered pursuant to the Class D Trust Agreement.
"Class D Trust Agreement" means the Pass Through Trust
Agreement dated as of November 26, 1996, between America West and the Class D
Trustee, as supplemented by the Supplement No. 1996- 1D thereto dated November
26, 1996, governing the creation and administration of the Class D Trust and the
issuance of the Class D Certificates, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Class D Trustee" means Fleet, not in its individual capacity
except as expressly set forth in the Class D Trust Agreement, but solely as
trustee under the Class D Trust Agreement, together with any successor trustee
appointed pursuant thereto.
"Class E Certificateholder" means, at any time, any holder of
one or more Class E Certificates.
"Class E Certificates" means the certificates issued by the
Class E Trust, substantially in the form of Exhibit A to the Class E Trust
Agreement, and authenticated by the Class E Trustee, representing fractional
undivided interests in the
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<PAGE> 13
Class E Trust, and any certificates issued in exchange therefor or in
replacement thereof pursuant to the terms of the Class E Trust Agreement.
"Class E Trust" means America West Airlines 1996-1E Pass
Through Trust created and administered pursuant to the Class E Trust Agreement.
"Class E Trust Agreement" means the Pass Through Trust
Agreement dated as of November 26, 1996, between America West and the Class E
Trustee, as supplemented by the Supplement No. 1996-1E thereto dated November
26, 1996, governing the creation and administration of the Class E Trust and the
issuance of the Class E Certificates, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Class E Trustee" means Fleet, not in its individual capacity
except as expressly set forth in the Class E Trust Agreement, but solely as
trustee under the Class E Trust Agreement, together with any successor trustee
appointed pursuant thereto.
"Closing Date" means November 26, 1996.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the Eligible Deposit Account
established by the Subordination Agent pursuant to Section 2.2 which the
Subordination Agent shall make deposits in and withdrawals from in accordance
with this Agreement.
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of Section 2.6.
"Corporate Trust Office" means, with respect to any Trustee,
the Subordination Agent or any Indenture Trustee, the office of such Person in
the city at which, at any particular time, its corporate trust business shall be
principally administered.
"Current Distribution Date" means a Distribution Date
specified as a reference date for calculating the Adjusted Expected
Distributions or Expected Distributions with respect to the Certificates of any
Trust as of such Distribution Date.
"Designated Representatives" means the Subordination Agent
Representatives, the Trustee Representatives and the LP Representatives
identified under Section 2.5.
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<PAGE> 14
"Distribution Date" means a Regular Distribution Date or a
Special Distribution Date.
"Dollars" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c).
"Downgraded Facility" has the meaning assigned to such term in
Section 3.6(c).
"Drawing" means an Interest Drawing, a Final Drawing or a
Downgrade Drawing, as the case may be.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia (or any U.S. branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution has a long-term unsecured debt
rating from each Rating Agency of at least A-3 or its equivalent. An Eligible
Deposit Account may be maintained with a Liquidity Provider so long as such
Liquidity Provider is an Eligible Institution; provided that such Liquidity
Provider shall have waived all rights of setoff and counterclaim with respect to
such account.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or any Trustee, as applicable, or (b) a
depository institution organized under the laws of the United States of America
or any one of the states thereof or the District of Columbia (or any U.S. branch
of a foreign bank), which has a long-term unsecured debt rating from each Rating
Agency of at least A-3 or its equivalent.
"Eligible Investments" means (a) investments in obligations
of, or guaranteed by, the United States Government having maturities no later
than 90 days following the date of such investment, (b) investments in open
market commercial paper of any corporation incorporated under the laws of the
United States of America or any state thereof with a short-term unsecured debt
rating issued by Moody's and Standard & Poor's of at least A-1 and P-1,
respectively, having maturities no later than 90 days following the date of such
investment, (c) investments in negotiable certificates of deposit, time
deposits, banker's acceptances, commercial paper or other direct obligations of,
or obligations guaranteed by, commercial banks organized under the laws of the
United States or of any political subdivision thereof (or any U.S. branch of a
foreign bank) with
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<PAGE> 15
issuer ratings of at least B/C by Thomson BankWatch, Inc., having maturities no
later than 90 days following the date of such investment or (d) investments in
any U.S. money market fund registered under the Investment Company Act of 1940,
as amended, which has been issued the highest rating in its category by Moody's
and Standard & Poor's that invests solely in obligations described in clause (a)
above; provided, however, that (x) all Eligible Investments that are bank
obligations shall be denominated in U.S. dollars; and (y) the aggregate amount
of Eligible Investments at any one time that are bank obligations issued by any
one bank shall not be in excess of 5% of such bank's capital surplus; provided
further that (1) any investment of the types described in clauses (a), (b), (c)
and (d) above may be made through a repurchase agreement in commercially
reasonable form with a bank or other financial institution qualifying as an
Eligible Institution so long as such investment is held by a third party
custodian also qualifying as an Eligible Institution, and (2) all such
investments set forth in clauses (a), (b), (c) and (d) above mature no later
than the Business Day immediately preceding the next Regular Distribution Date;
provided further, however, that in the case of any Eligible Investment issued by
a domestic branch of a foreign bank, the income from such investment shall be
from sources within the United States for purposes of the Code. Notwithstanding
the foregoing, no investment of the types described in clause (b), (c) or (d)
above which is issued or guaranteed by a Liquidity Provider or America West or
any of their respective Affiliates shall be an Eligible Investment.
"Equipment" means, with respect to each Indenture, the
"Aircraft" or "Spare Engine" referred to therein.
"Equipment Notes" means, at any time, the Series A Equipment
Notes, the Series B Equipment Notes, the Series C Equipment Notes, the Series D
Equipment Notes and the Series E Equipment Notes, collectively, and in each
case, any Equipment Notes issued in exchange therefor or replacement thereof
pursuant to the terms of the Indentures.
"Expected Distributions" means, with respect to the
Certificates of any Trust on any Current Distribution Date, the sum of (x)
accrued and unpaid interest on such Certificates and (y) the difference between
(A) the Pool Balance of such Certificates as of the immediately preceding
Distribution Date and (B) the Pool Balance of such Certificates as of the
Current Distribution Date, calculated on the basis that the principal of the
Equipment Notes held in such Trust has been paid when due (whether at stated
maturity or upon redemption, prepayment, purchase or acceleration or otherwise)
and such payments have been distributed to the holders of such Certificates.
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<PAGE> 16
"Final Distributions" means, with respect to the Certificates
of any Trust on any Distribution Date, the sum of (a) the aggregate amount of
all accrued and unpaid interest on such Certificates and (b) the Pool Balance of
such Certificates as of the immediately preceding Distribution Date.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such Liquidity
Facility in accordance with the provisions thereof other than a Downgrade
Drawing.
"Final Legal Distribution Date" means, for the Class A
Certificates, January 2, 2011, for the Class B Certificates, July 2, 2009, for
the Class C Certificates, January 2, 2006, for the Class D Certificates, July 2,
2002 and for the Class E Certificates, January 2, 2004.
"Fleet" has the meaning assigned to such term in the heading
of this Agreement.
"Indenture" means each Trust Indenture and Security Agreement
listed on Schedule 1 hereto, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Indenture Default" means, with respect to any Indenture, any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
"Indenture Trustee" means, with respect to any Indenture, the
indenture trustee thereunder.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a).
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of the
Subordination Agent in making such investments.
"Lease" means, with respect to each Indenture, the "Lease"
referred to therein.
"Lien" means any mortgage, pledge, lien, charge, claim,
disposition of title, encumbrance or security interest of any kind, including,
without limitation, any thereof arising under any conditional sales or other
title retention agreement.
"Liquidity Event of Default" with respect to any Liquidity
Facility, has the meaning assigned to such term in such Liquidity Facility.
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<PAGE> 17
"Liquidity Expenses" means all Liquidity Obligations other
than (i) the principal amount of any Drawings under the Liquidity Facilities and
(ii) any interest accrued on any Liquidity Obligations.
"Liquidity Facility" means, at any time, the Class A Liquidity
Facility, the Class B Liquidity Facility or the Class C Liquidity Facility, as
applicable.
"Liquidity Obligations" means all principal, interest, fees
and other amounts owing to the Liquidity Providers under the Liquidity
Facilities, Sections 10 and 13 of the Leases and Section 21 of the Refunding
Agreements.
"Liquidity Provider" means, at any time, the Class A Liquidity
Provider, the Class B Liquidity Provider or the Class C Liquidity Provider, as
applicable.
"LP Incumbency Certificate" has the meaning assigned to such
term in Section 2.5(c).
"LP Representatives" has the meaning assigned to such term in
Section 2.5(c).
"LTV Appraisal" means a current fair market appraisal (which
may be a "desktop" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell, both parties having knowledge of all
relevant facts.
"LTV Collateral Amount" of any Aircraft or Spare Engine for
any Class of Certificates on any Distribution Date means the lesser of (i) the
LTV Ratio for such Class of Certificates multiplied by the Appraised Current
Market Value of such Aircraft or Spare Engine and (ii) the outstanding principal
amount of the Equipment Notes secured by such Aircraft or Spare Engine after
giving effect to any principal payments of such Equipment Notes on or before
such Distribution Date.
"LTV Ratio" means for the Class A Certificates 39.4%, for the
Class B Certificates 54.1%, for the Class C Certificates 69.1%, for the Class D
Certificates 80.8% and for the Class E Certificates 93.4%.
"Margin" has the meaning assigned thereto in each of the
Liquidity Facilities.
"Minimum Sale Price" means, with respect to any Equipment or
the Equipment Notes issued in respect of such Equipment, at any time, the lesser
of (a) 75% of the Appraised
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<PAGE> 18
Current Market Value of such Equipment based upon the most recent LTV Appraisal
and (b) the aggregate outstanding principal amount of such Equipment Notes, plus
accrued and unpaid interest thereon.
"Moody's" means Moody's Investors Service, Inc.
"Non-Controlling Party" means, at any time, any Trustee or
Liquidity Provider which is not the Controlling Party at such time.
"Non-Performing Equipment Notes" means Equipment Notes issued
pursuant to an Indenture other than Performing Equipment Notes.
"Officer's Certificate" of any Person means a certification
signed by a Responsible Officer of such Person.
"Operative Agreements" means this Agreement, the Liquidity
Facilities, the Indentures, the Trust Agreements, the Underwriting Agreement,
the Refunding Agreements, the Leases, the Equipment Notes and the Certificates,
together with all exhibits and schedules included with any of the foregoing and
each of the other documents and instruments referred to in the definition of
"Operative Documents" contained in the Leases.
"Outstanding" means, when used with respect to each Class of
Certificates, as of the date of determination, all Certificates of such Class
theretofore authenticated and delivered under the related Trust Agreement,
except:
(i) Certificates of such Class theretofore cancelled by
the Registrar (as defined in such Trust Agreement) or delivered to the
Trustee thereunder or such Registrar for cancellation;
(ii) Certificates of such Class for which money in the
full amount required to make the final distribution with respect to
such Certificates pursuant to Section 11.01 of such Trust Agreement has
been theretofore deposited with the related Trustee in trust for the
holders of such Certificates as provided in Section 4.01 of such Trust
Agreement pending distribution of such money to such Certificateholders
pursuant to such final distribution payment; and
(iii) Certificates of such Class in exchange for or in
lieu of which other Certificates have been authenticated and delivered
pursuant to such Trust Agreement;
provided, however, that in determining whether the holders of the requisite
outstanding amount of such Certificates have given any
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request, demand, authorization, direction, notice, consent or waiver hereunder,
any Certificates owned by America West, any related Owner Trustee, any related
Owner Participant or any Affiliate of such Person shall be disregarded and
deemed not to be outstanding (provided that if any such Person or Affiliate
thereof owns 100% of the Certificates of any Class, such Certificates shall not
be so disregarded), except that, in determining whether such Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that a Responsible Officer of the
Trustee knows to be so owned shall be so disregarded. Certificates so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the applicable Trustee the pledgee's right so
to act with respect to such Certificates and that the pledgee is not America
West or any of its Affiliates.
"Overdue Scheduled Payment" means any Scheduled Payment which
is not in fact received by the Subordination Agent within five days of the
Scheduled Payment Date relating thereto.
"Owner Participant" means, with respect to any Refunding
Agreement, the Owner Participant (as defined therein).
"Owner Trustee" means, with respect to any Indenture, the
Owner Trustee (as defined therein) not in its individual capacity but solely as
trustee under the related owner trust agreement, together with any successor
trustee appointed pursuant to such owner trust agreement.
"Performing Equipment Note" means an Equipment Note issued
pursuant to an Indenture with respect to which no payment default has occurred
and is continuing (without giving effect to any acceleration thereof); provided
that in the event of a bankruptcy proceeding involving America West under Title
11 of the United States Code (the "Bankruptcy Code"), (i) any payment default
existing during 60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code
(or such longer period as may apply under Section 1110(b) of the Bankruptcy
Code) (the "Section 1110 Period") shall not be taken into consideration, unless
during such period the trustee in such proceeding or America West refuses to
assume or agree to perform its obligations under the Lease related to such
Equipment Notes and (ii) any payment default occurring after the date of the
order of relief in such proceeding shall not be taken into consideration if such
payment default is cured under Section 1110(a)(1)(B) of the Bankruptcy Code
before the later of (A) 30 days after the date of such default or (B) the
expiration of the Section 1110 Period.
"Performing Note Deficiency" means any time that less than 65%
of the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
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"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, trustee, unincorporated organization or government or any agency or
political subdivision thereof.
"Pool Balance" means, with respect to each Trust or the
Certificates issued by any Trust, as of any date, (i) the original aggregate
face amount of the Certificates of such Trust less (ii) the aggregate amount of
all payments made in respect of the Certificates of such Trust other than
payments made in respect of interest or premium thereon or reimbursement of any
costs and expenses in connection therewith. The Pool Balance for each Trust or
the Certificates issued by any Trust as of any Distribution Date shall be
computed after giving effect to any payment of principal, if any, on the
Equipment Notes or other Trust Property held in such Trust and the distribution
thereof to be made on such Distribution Date.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"PTC Event of Default" means, with respect to each Trust
Agreement, the failure to pay within 10 Business Days of the due date thereof:
(i) the outstanding Pool Balance of the applicable Class of Certificates on the
Final Legal Distribution Date for such Class or (ii) interest due on such
Certificates on any Distribution Date (unless, in the case of the Class A, Class
B or Class C Certificates, the Subordination Agent shall have made an Interest
Drawing with respect thereto in an amount sufficient to pay such interest and
shall have distributed such amount to the holders of the Certificates entitled
thereto).
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to rate the
Certificates and which shall then be rating the Certificates. Initially, the
Rating Agencies shall consist of Moody's and Standard & Poor's.
"Ratings Confirmation" means, with respect to any action
proposed to be taken, a written confirmation from each of the Rating Agencies
that such action would not result in (i) a reduction of the rating for any Class
of Certificates below the then current rating for such Class of Certificates or
(ii) a withdrawal or suspension of the rating of any Class of Certificates.
"Refunding Agreements" means each of the Refunding Agreements
listed on Schedule 2 hereto, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
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"Regular Distribution Dates" means each January 2 and July 2,
commencing on January 2, 1997; provided, however, that, if any such day shall
not be a Business Day, the regular distribution shall be made on the next
succeeding Business Day without additional interest.
"Replacement Liquidity Facility" means, for any Trust, an
irrevocable revolving credit agreement in substantially the form of the initial
Liquidity Facility for such Trust, including reinstatement provisions or in such
other form (which may include a letter of credit) as shall permit the Rating
Agencies to confirm in writing their respective ratings then in effect for the
Certificates (before downgrading of such ratings, if any, as a result of the
downgrading of the Liquidity Provider), in a face amount equal to the Required
Amount for such Liquidity Facility and issued by a Replacement Liquidity
Provider, provided that, if a form of Liquidity Facility that is not
substantially in the form of the replaced Liquidity Facility is to be used,
America West shall have received a satisfactory opinion of tax counsel
satisfactory to America West with respect to such form of Replacement Liquidity
Facility and to the effect that the related Trust continues to be a "grantor
trust" (and a copy of such opinion shall be furnished to the Subordination
Agent).
"Replacement Liquidity Provider" means a Person having
unsecured debt ratings which are equal to or higher than the Threshold Rating,
who issues a Replacement Liquidity Facility.
"Required Amount" means, with respect to each Liquidity
Facility and each Cash Collateral Account related thereto, for any day, the sum
of the aggregate amount of interest, calculated at the rate per annum equal to
the Stated Interest Rate for the related Class of Certificates, that would be
payable on such Class of Certificates on each of the three successive Regular
Distribution Dates immediately following such day or, if such day is a Regular
Distribution Date, on such day and the succeeding two Regular Distribution
Dates, in each case calculated on the basis of the Pool Balance of such Class of
Certificates on such date and without regard to expected future payments of
principal on such Class of Certificates.
"Responsible Officer" means (i) with respect to the
Subordination Agent and each of the Trustees, any officer in the corporate trust
administration department of the Subordination Agent or such Trustee or any
other officer customarily performing functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with a particular subject and (ii) with respect to each Liquidity Provider, any
authorized officer of such Liquidity Provider.
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"Scheduled Payment" means, with respect to any Equipment Note,
(i) any payment of principal and interest on such Equipment Note (other than an
Overdue Scheduled Payment) due from the obligor thereon or (ii) any payment of
interest on the corresponding Class of Certificates with funds drawn under any
Liquidity Facility, which payment represents the installment of principal at the
stated maturity of such installment of principal on such Equipment Note, the
payment of regularly scheduled interest accrued on the unpaid principal amount
of such Equipment Note, or both; provided that any payment of principal of,
premium, if any, or interest resulting from the redemption or purchase of any
Equipment Note shall not constitute a Scheduled Payment.
"Scheduled Payment Date" means, with respect to any Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be made.
"Series A Equipment Notes" means the 6.85% Series A Equipment
Notes issued pursuant to each Indenture by the related Owner Trustee and
authenticated by the Indenture Trustee thereunder, and any such Equipment Notes
issued in exchange therefor or replacement thereof pursuant to the terms of such
Indenture.
"Series B Equipment Notes" means the 6.93% Series B Equipment
Notes issued pursuant to each Indenture by the related Owner Trustee and
authenticated by the Indenture Trustee thereunder, and any such Equipment Notes
issued in exchange therefor or replacement thereof pursuant to the terms of such
Indenture.
"Series C Equipment Notes" means the 6.86% Series C Equipment
Notes issued pursuant to each Indenture by the related Owner Trustee and
authenticated by the Indenture Trustee thereunder, and any such Equipment Notes
issued in exchange therefor or replacement thereof pursuant to the terms of such
Indenture.
"Series D Equipment Notes" means the 8.16% Series D Equipment
Notes issued pursuant to each Indenture by the related Owner Trustee and
authenticated by the Indenture Trustee thereunder, and any such Equipment Notes
issued in exchange therefor or replacement thereof pursuant to the terms of such
Indenture.
"Series E Equipment Notes" means the 10.50% Series E Equipment
Notes issued pursuant to the Indenture relating to certain of the Equipment (as
specified in such Indenture) by the related Owner Trustee and authenticated by
the Indenture Trustee thereunder, and any such Equipment Notes issued in
exchange
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therefor or replacement thereof pursuant to the terms of such Indenture.
"Spare Engine" means, with respect to each Indenture relating
to Equipment Notes that are secured by a spare engine, the "Spare Engine"
referred to therein.
"Special Distribution Date" means, with respect to any Special
Payment, the date chosen by the Subordination Agent pursuant to Section 2.4(a)
for the distribution of such Special Payment in accordance with this Agreement;
provided, however, that, if any such day shall not be a Business Day, the
related distribution shall be made on the next succeeding Business Day without
additional interest.
"Special Payment" means any payment (other than a Scheduled
Payment) in respect of, or any proceeds of, any Equipment Note or Trust
Indenture Estate (as defined in each Indenture), including Overdue Scheduled
Payments, payments in respect of the redemption or repurchase of any Equipment
Note and payments in respect of the sale of any Equipment Note to the related
Owner Trustee, Owner Participant or any other Person.
"Special Payments Account" means the Eligible Deposit Account
created pursuant to Section 2.2 as a sub-account to the Collection Account.
"Standard & Poor's" means Standard & Poor's Ratings Group, a
division of McGraw-Hill Inc.
"Stated Amount" with respect to any Liquidity Facility, means
the Commitment (as defined in such Liquidity Facility) of the applicable
Liquidity Provider thereunder.
"Stated Interest Rate" means (i) with respect to the Class A
Certificates, 6.85% per annum, (ii) with respect to the Class B Certificates,
6.93% per annum, and (iii) with respect to the Class C Certificates, 6.86% per
annum.
"Subordination Agent" has the meaning assigned to it in
the preamble to this Agreement.
"Tax" and "Taxes" mean any and all taxes, fees, levies, duties
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, loss, damage, liability, expense, additions to tax and
additional amounts or costs incurred or imposed with respect thereto) imposed or
otherwise assessed by the United States or by any state, local or foreign
government (or any subdivision or agency thereof) or other taxing authority,
including, without limitation: taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock,
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payroll, employment, social security, workers, compensation, unemployment
compensation, or net worth and similar charges; taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value added, taxes
on goods and services, gains taxes, license, registration and documentation
fees, customs duties, tariffs, and similar charges.
"Threshold Rating" means the short-term unsecured debt rating
of P-1 by Moody's and A-1 by Standard & Poor's, provided that, in the event a
person's short-term unsecured debt is not rated by either Moody's or Standard &
Poor's, the long-term unsecured debt rating by Moody's and Standard & Poor's at
least equal to the initial rating by each of Moody's and Standard & Poor's on
the Class A Certificates.
"Treasury Regulations" means regulations, including proposed
or temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Triggering Event" means (x) the occurrence of an Indenture
Default under all of the Indentures resulting in a PTC Event of Default with
respect to the most senior Class of Certificates then Outstanding, (y) the
Acceleration of, or a failure to pay at final maturity, all of the outstanding
Equipment Notes or (z) the occurrence of an America West Bankruptcy Event.
"Trust" means any of the Class A Trust, the Class B Trust, the
Class C Trust, the Class D Trust or the Class E Trust.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a).
"Trust Agreement" means any of the Class A Trust Agreement,
Class B Trust Agreement, Class C Trust Agreement, Class D Trust Agreement or
Class E Trust Agreement.
"Trustee" means any of the Class A Trustee, the Class B
Trustee, the Class C Trustee, the Class D Trustee or the Class E Trustee.
"Trustee Incumbency Certificate" has the meaning assigned to
such term in Section 2.5(a).
"Trustee Representatives" has the meaning assigned to such
term in Section 2.5(a).
"Underwriters" means Morgan Stanley & Co. Incorporated,
Citicorp Securities, Inc., Lehman Brothers Inc. and Salomon Brothers Inc.
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"Underwriting Agreement" means the Underwriting Agreement
dated November 20, 1996, among the Underwriters, America West, GPA Group plc,
GPA Leasing USA I, Inc. and GPA Leasing USA Sub I, Inc. relating to the purchase
of the Certificates by the Underwriters, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Written Notice" means, from the Subordination Agent, any
Trustee or any Liquidity Provider, a written instrument executed by the
Designated Representative of such Person. An invoice delivered by a Liquidity
Provider pursuant to Section 3.1 in accordance with its normal invoicing
procedures shall constitute Written Notice under such Section.
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination; Payments from
Monies Received Only. (a) Each Trustee hereby acknowledges and agrees to the
terms of subordination set forth in this Agreement in respect of each Class of
Certificates and agrees to enforce such provisions and cause all payments in
respect of the Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. In addition, each Trustee hereby
agrees to cause the Equipment Notes purchased by the related Trust to be
registered in the name of the Subordination Agent, as agent and trustee for such
Trustee, to be held in trust by the Subordination Agent solely for the purpose
of facilitating the enforcement of the subordination and other provisions of
this Agreement.
(b) Except as otherwise expressly provided in the next
succeeding sentence of this Section 2.1, all payments to be made by the
Subordination Agent hereunder shall be made only from amounts received by it
that constitute Scheduled Payments, Special Payments or payments under Sections
10 or 13 of the Leases or Section 21 of the Refunding Agreements, and only to
the extent that the Subordination Agent shall have received sufficient income or
proceeds therefrom to enable it to make such payments in accordance with the
terms hereof. Each of the Trustees and the Subordination Agent hereby agrees
and, as provided in each Trust Agreement, each Certificateholder, by its
acceptance of a Certificate, and each Liquidity Provider, by entering into the
Liquidity Facility to which it is a party, has agreed to look solely to such
amounts to the extent available for distribution to it as provided in this
Agreement and that none of the Trustees, Owner Trustees, Indenture Trustees,
Owner Participants nor the Subordination Agent is personally liable to any of
them for any amounts payable or any liability under this
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Agreement, any Trust Agreement, any Liquidity Facility or such Certificate,
except (in the case of the Subordination Agent) as expressly provided herein or
(in the case of the Trustees) as expressly provided in each Trust Agreement or
(in the case of the Owner Trustees and the Indenture Trustees) as expressly
provided in any Operative Agreement.
SECTION 2.2 Trust Accounts. (a) Upon the execution of this
Agreement, the Subordination Agent shall establish and maintain in its name (i)
the Collection Account as an Eligible Deposit Account, bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Trustees, the Certificateholders and the Liquidity Providers and
(ii) as a sub-account in the Collection Account, the Special Payments Account as
an Eligible Deposit Account, bearing a designation clearly indicating that the
funds deposited therein are held in trust for the benefit of the Trustees, the
Certificateholders and the Liquidity Providers. The Subordination Agent shall
establish and maintain the Cash Collateral Accounts pursuant to and under the
circumstances set forth in Section 3.6(f) hereof. Upon such establishment and
maintenance under Section 3.6(f) hereof, the Cash Collateral Accounts shall,
together with the Collection Account, constitute the "Trust Accounts" hereunder.
(b) Funds on deposit in the Trust Accounts shall be invested
and reinvested by the Subordination Agent in Eligible Investments selected by
the Subordination Agent if such investments are reasonably available and have
maturities no later than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the Regular
Distribution Date or any then specified Special Distribution Date pursuant to
Section 2.4 hereof, as the case may be, next following the date of such
investment; provided, however, that following the making of a Downgrade Drawing,
(i) the Subordination Agent shall invest and reinvest such amounts at the
direction of the Liquidity Provider funding such Drawing and (ii) the Liquidity
Provider funding such drawing shall use reasonable efforts to cause such amounts
to be invested in Eligible Investments which yield at least an amount equal to
the interest (excluding Margin) that is payable to such Liquidity Provider in
respect of such amounts pursuant to Section 3.7 of the relevant Liquidity
Facility (it being understood that it may not be feasible to obtain such a
yield). Any Investment Earnings shall be deposited in the Collection Account
when received by the Subordination Agent and shall be applied by the
Subordination Agent in the same manner as the principal amount of such
investment is to be applied and any losses shall be charged against the
principal amount invested, in each case net of the Subordination Agent's
reasonable fees and expenses in making such investments. The Subordination Agent
shall not be liable for any loss resulting from any investment, reinvestment or
liquidation
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required to be made under this Agreement other than by reason of its willful
misconduct or gross negligence. Eligible Investments and any other investment
required to be made hereunder shall be held to their maturities except that any
such investment may be sold (without regard to its maturity) by the
Subordination Agent without instructions whenever such sale is necessary to make
a distribution required under this Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
(c) The Subordination Agent shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon, except as otherwise provided
herein with respect to Investment Earnings). The Trust Accounts shall be held in
trust by the Subordination Agent under the sole dominion and control of the
Subordination Agent for the benefit of the Trustees, the Certificateholders and
the Liquidity Providers, as the case may be. If, at any time, any of the Trust
Accounts ceases to be an Eligible Deposit Account, the Subordination Agent shall
within 10 Business Days (or such longer period, not to exceed 30 calendar days,
to which each Rating Agency may consent) establish a new Collection Account,
Special Payments Account or Cash Collateral Account, as the case may be, as an
Eligible Deposit Account and shall transfer any cash and/or any investments to
such new Collection Account, Special Payments Account or Cash Collateral
Account, as the case may be. Initially, the Trust Accounts shall be maintained
with Fleet as Eligible Deposit Accounts.
SECTION 2.3 Deposits to the Collection Account and Special
Payments Account. (a) The Subordination Agent shall, upon receipt thereof,
deposit in the Collection Account all Scheduled Payments received by it.
(b) The Subordination Agent shall, on each date when one or
more Special Payments are made to the Subordination Agent as holder of the
Equipment Notes, deposit in the Special Payments Account the aggregate amount of
such Special Payments.
SECTION 2.4 Distributions of Special Payments. (a) Notice of
Special Payment. Upon receipt by the Subordination Agent, as registered holder
of the Equipment Notes, of any notice of a Special Payment (or, in the absence
of any such notice, upon receipt by the Subordination Agent of a Special
Payment), the Subordination Agent shall promptly give notice thereof to each
Trustee and the Liquidity Providers. The Subordination Agent shall promptly
calculate the amount of the redemption or purchase of Equipment Notes or the
amount of any Overdue Scheduled Payment, as the case may be, comprising such
Special Payment under the applicable Indenture or Indentures and shall promptly
send to each Trustee a Written Notice of such amount and the amount allocable to
each Trust. Such Written Notice shall also
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set the distribution date for such Special Payment (a "Special Distribution
Date"), which shall be the first Business Day which follows the later to occur
of (x) the 22nd day after the date such Written Notice is received by the
Trustees or (y) the date the Subordination Agent receives or expects to receive
such Special Payment. Amounts on deposit in the Special Payments Account shall
be distributed in accordance with Sections 2.4(b) and 2.4(c) hereof, as
applicable.
(b) (i) Redemptions and Purchases of Equipment Notes. So long
as no Triggering Event shall have occurred (whether or not continuing), the
Subordination Agent shall make distributions pursuant to this Section 2.4(b) of
amounts on deposit in the Special Payments Account on account of the redemption
or purchase of all of the Equipment Notes issued pursuant to an Indenture on the
Special Distribution Date for such Special Payment in the following order of
priority:
first, such amount as shall be required to pay (A) all accrued
and unpaid Liquidity Expenses then in arrears plus (B) the product of
(x) the aggregate amount of all accrued and unpaid Liquidity Expenses
not in arrears to such Special Payment Date multiplied by (y) a
fraction, the numerator of which is the aggregate outstanding principal
amount of Equipment Notes being redeemed or purchased on such Special
Payment Date and the denominator of which is the aggregate outstanding
principal amount of all Equipment Notes, shall be distributed to the
Liquidity Providers pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
second, such amount as shall be required to pay (A) all
accrued and unpaid interest then in arrears on all Liquidity
Obligations plus (B) the product of (x) the aggregate amount of all
accrued and unpaid interest on all Liquidity Obligations not in arrears
to such Special Payment Date (at the rate provided in the applicable
Liquidity Facility) multiplied by (y) a fraction, the numerator of
which is the aggregate outstanding principal amount of Equipment Notes
being redeemed or purchased on such Special Payment Date and the
denominator of which is the aggregate outstanding principal amount of
all Equipment Notes, shall be distributed to the Liquidity Providers
pari passu on the basis of the amount of Liquidity Obligations owed to
each Liquidity Provider;
third, such amount as shall be required (A) to pay or
reimburse the Liquidity Providers in an amount equal to the amount of
any unreimbursed Interest Drawings under the Liquidity Facilities shall
be distributed to the Liquidity
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Providers or (B) if any Cash Collateral Account had previously been
funded as provided in Section 3.6(f), to replenish such Cash Collateral
Account up to its Required Amount shall be deposited in such Cash
Collateral Account, in each such case, pari passu on the basis of the
amounts of such unreimbursed Interest Drawings and/or deficiencies;
fourth, such amount as shall be required to pay in full
Expected Distributions to the holders of Class A Certificates on such
Special Distribution Date shall be distributed to the Class A Trustee;
fifth, such amount as shall be required to pay in full
Expected Distributions to the holders of Class B Certificates on such
Special Distribution Date shall be distributed to the Class B Trustee;
sixth, such amount as shall be required to pay in full
Expected Distributions to the holders of Class C Certificates on such
Special Distribution Date shall be distributed to the Class C Trustee;
seventh, such amount as shall be required to pay in full
Expected Distributions to the holders of Class D Certificates on such
Special Distribution Date shall be distributed to the Class D Trustee;
eighth, such amount as shall be required to pay in full
Expected Distributions to the holders of Class E Certificates on such
Special Distribution Date shall be distributed to the Class E Trustee;
and
ninth, the balance, if any, of such Special Payment shall be
transferred to the Collection Account for distribution in accordance
with Section 3.2 hereof.
(ii) Upon the occurrence of a Triggering Event (whether or not
continuing), the Subordination Agent shall make distributions pursuant to this
Section 2.4(b) of amounts on deposit in the Special Payments Account on account
of the redemption or purchase of all of the Equipment Notes issued pursuant to
an Indenture on the Special Distribution Date for such Special Payment in
accordance with Section 3.3 hereof.
(c) Other Special Payments. Any amounts on deposit in the
Special Payments Account other than in respect of amounts to be distributed
pursuant to Section 2.4(b) shall be distributed on the Special Distribution Date
therefor in accordance with Article III hereof.
(d) Investment of Amounts in Special Payments Account. Any
amounts on deposit in the Special Payments Account prior to
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the distribution thereof pursuant to Section 2.4(b) or (c) shall be invested in
accordance with Section 2.2(b). Investment Earnings on such investments shall be
distributed in accordance with Section 2.4(b) or (c), as the case may be.
SECTION 2.5 Designated Representatives. (a) With the delivery
of this Agreement, the Subordination Agent shall furnish to each Liquidity
Provider and each Trustee, and from time to time thereafter may furnish to each
Liquidity Provider and each Trustee, at the Subordination Agent's discretion, or
upon any Liquidity Provider's or Trustee's request (which request shall not be
made more than one time in any 12-month period), a certificate (a "Subordination
Agent Incumbency Certificate") of a Responsible Officer of the Subordination
Agent certifying as to the incumbency and specimen signatures of the officers of
the Subordination Agent and the attorney-in-fact and agents of the Subordination
Agent (the "Subordination Agent Representatives") authorized to give Written
Notices on behalf of the Subordination Agent hereunder. Until each Liquidity
Provider and Trustee receives a subsequent Subordination Agent Incumbency
Certificate, it shall be entitled to rely on the last Subordination Agent
Incumbency Certificate delivered to it hereunder.
(b) With the delivery of this Agreement, each Trustee shall furnish to
the Subordination Agent, and from time to time thereafter may furnish to the
Subordination Agent, at such Trustee's discretion, or upon the Subordination
Agent's request (which request shall not be made more than one time in any 12-
month period), a certificate (a "Trustee Incumbency Certificate") of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the attorney-in-fact and agents
of such Trustee (the "Trustee Representatives") authorized to give Written
Notices on behalf of such Trustee hereunder. Until the Subordination Agent
receives a subsequent Trustee Incumbency Certificate, it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.
(c) With the delivery of this Agreement, each Liquidity
Provider shall furnish to the Subordination Agent, and from time to time
thereafter may furnish to the Subordination Agent, at such Liquidity Provider's
discretion, or upon the Subordination Agent's request (which request shall not
be made more than one time in any 12-month period), a certificate (an "LP
Incumbency Certificate") of any authorized signatory of such Liquidity Provider
certifying as to the incumbency and specimen signatures of any officer,
attorney-in-fact, agent or other designated representative of such Liquidity
Provider (the "LP Representatives" and, together with the Trustee
Representatives and the Subordination Agent Representatives, the "Designated
Representatives") authorized to give Written Notices on behalf of such Liquidity
Provider hereunder. Until the Subordination Agent
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receives a subsequent LP Incumbency Certificate, it shall be entitled to rely on
the last LP Incumbency Certificate delivered to it hereunder.
SECTION 2.6 Controlling Party. (a) The Trustees and the
Liquidity Providers hereby agree that, with respect to any Indenture at any
given time, the Indenture Trustee thereunder will be directed (i) in taking, or
refraining from taking, any action with respect to such Indenture or the
Equipment Notes issued thereunder, so long as no Indenture Default has occurred
and is continuing thereunder, by the holders of at least a majority of the
outstanding principal amount of such Equipment Notes (provided that, for so long
as the Subordination Agent is the registered holder of the Equipment Notes, the
Subordination Agent shall act with respect to this clause (i) in accordance with
the directions of the Trustees representing holders of Certificates representing
an undivided interest in such principal amount of Equipment Notes), and (ii)
after the occurrence and during the continuance of an Indenture Default
thereunder (which has not been cured by the applicable Owner Trustee or the
applicable Owner Participant pursuant to Section 4.3 of such Indenture), in
taking, or refraining from taking, any action with respect to such Indenture or
such Equipment Notes, including exercising remedies thereunder (including
accelerating the Equipment Notes issued thereunder or foreclosing the Lien on
the Aircraft or Spare Engine securing such Equipment Notes), by the Controlling
Party.
(b) The Person who shall be the "Controlling Party" with
respect to any Indenture shall be: (v) the Class A Trustee; (w) upon payment of
Final Distributions to the holders of Class A Certificates, the Class B Trustee;
(x) upon payment of Final Distributions to the holders of Class B Certificates,
the Class C Trustee; (y) upon payment of Final Distributions to the holders of
Class C Certificates, the Class D Trustee; and (z) upon payment of Final
Distributions to the holders of Class D Certificates, the Class E Trustee. For
purposes of giving effect to the foregoing, the Trustees (other than the
Controlling Party) irrevocably agree (and the Certificateholders (other than the
Certificateholders represented by the Controlling Party) shall be deemed to
agree by virtue of their purchase of Certificates) that the Subordination Agent,
as record holder of the Equipment Notes, shall exercise its voting rights in
respect of the Equipment Notes as directed by the Controlling Party and any vote
so exercised shall be binding upon the Trustees and all Certificateholders.
The Subordination Agent shall give written notice to all of
the other parties to this Agreement promptly upon a change in the identity of
the Controlling Party. Each of the parties hereto agrees that it shall not
exercise any of the rights of the Controlling Party at such time as it is not
the Controlling Party
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hereunder; provided, however, that nothing herein contained shall prevent or
prohibit any Non-Controlling Party from exercising such rights as shall be
specifically granted to such Non-Controlling Party hereunder and under the
other Operative Agreements.
(c) Notwithstanding the foregoing, the Liquidity Provider with
the then greatest amount of unreimbursed Liquidity Obligations payable to it
under the Liquidity Facilities shall have the right to elect, by Written Notice
to the Subordination Agent and each of the Trustees, to become the Controlling
Party hereunder with respect to any Indenture at any time from and including the
date which is 18 months after the earlier of (i) the Acceleration of the
Equipment Notes under such Indenture and (ii) a Final Drawing with respect to
the Liquidity Facilities, if, in the case of clause (i) or (ii) above, at the
time of such election all Liquidity Obligations owed to such Liquidity Provider
under the Liquidity Facilities have not been paid in full.
(d) The exercise of remedies by the Controlling Party under
this Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
(e) The Controlling Party shall not be entitled to require or
obligate any Non-Controlling Party to provide funds necessary to exercise any
right or remedy hereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution. (a) No later than
3:00 P.M. (New York City time) on the Business Day immediately preceding each
Distribution Date (or Special Distribution Date for purposes of Section 2.4(b)
hereof, as the case may be), each of the following Persons shall deliver to the
Subordination Agent a Written Notice setting forth the following information as
at the close of business on such Business Day:
(i) With respect to the Class A Certificates, the Class
A Trustee shall separately set forth the amounts to be paid in
accordance with clause "fourth" of Section 3.2 or Section 2.4(b), as
the case may be, hereof;
(ii) With respect to the Class B Certificates, the Class
B Trustee shall separately set forth the amounts to be paid in
accordance with clause "fifth" of Section 3.2 or Section 2.4(b), as the
case may be, hereof;
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(iii) With respect to the Class C Certificates, the Class
C Trustee shall separately set forth the amounts to be paid in
accordance with clause "sixth" of Section 3.2 or Section 2.4(b), as the
case may be, hereof;
(iv) With respect to the Class D Certificates, the Class
D Trustee shall separately set forth the amounts to be paid in
accordance with clause "seventh" of Section 3.2 or Section 2.4(b), as
the case may be, hereof;
(v) With respect to the Class E Certificates, the Class
E Trustee shall separately set forth the amounts to be paid in
accordance with clause "eighth" of Section 3.2 or Section 2.4(b), as
the case may be, hereof; and
(vi) With respect to each Liquidity Facility, the
Liquidity Provider thereunder shall separately set forth the amounts to
be paid in accordance with clauses "first", "second" and "third" of
Section 3.2 or Section 2.4(b), as the case may be, hereof.
The notices required under this Section 3.1(a) may be in the form of a schedule
or similar document provided to the Subordination Agent by the parties
referenced therein or by any one of them, which schedule or similar document may
state that, unless there has been a prepayment of the Certificates, such
schedule or similar document is to remain in effect until any substitute notice
or amendment shall be given to the Subordination Agent by the party providing
such notice.
(b) Following the occurrence of a Triggering Event, the
Subordination Agent shall request the following information from the following
Persons, and each of the following Persons shall, upon the request of the
Subordination Agent, deliver a Written Notice to the Subordination Agent setting
forth for such Person the following information:
(i) With respect to the Class A Certificates, the Class
A Trustee shall separately set forth the amounts to be paid in
accordance with clauses "first" (relating to indemnity payments made by
the Class A Certificateholders) and "sixth" of Section 3.3 hereof;
(ii) With respect to the Class B Certificates, the Class
B Trustee shall separately set forth the amounts to be paid in
accordance with clauses "first" (relating to indemnity payments made by
the Class B Certificateholders) and "seventh" of Section 3.3 hereof;
(iii) With respect to the Class C Certificates, the
Class C Trustee shall separately set forth the amounts to be
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paid in accordance with clauses "first" (relating to indemnity payments
made by the Class C Certificateholders) and "eighth" of Section 3.3
hereof;
(iv) With respect to the Class D Certificates, the Class
D Trustee shall separately set forth the amounts to be paid in
accordance with clauses "first" (relating to indemnity payments made by
the Class D Certificateholders) and "ninth" of Section 3.3 hereof;
(v) With respect to the Class E Certificates, the Class
E Trustee shall separately set forth the amounts to be paid in
accordance with clauses "first" (relating to indemnity payments made by
the Class E Certificateholders) and "tenth" of Section 3.3 hereof; and
(vi) With respect to each Liquidity Facility, the
Liquidity Provider thereunder shall separately set forth the amounts to
be paid in accordance with clauses "second", "third" and "fourth" of
Section 3.3 hereof.
(c) At such time as a Trustee or a Liquidity Provider shall
have received all amounts owing to it (and, in the case of a Trustee, the
Certificateholders for which it is acting) pursuant to Section 2.4, 3.2 or 3.3
hereof, as applicable, and, in the case of a Liquidity Provider, its commitment
under the related Liquidity Facility shall have terminated or expired, such
Person shall, by a Written Notice, so inform the Subordination Agent and each
other party to this Agreement.
(d) As provided in Section 6.5 hereof, the Subordination Agent
shall be fully protected in relying on any of the information set forth in a
Written Notice provided by any Trustee or any Liquidity Provider pursuant to
paragraphs (a) through (c) above and shall have no independent obligation to
verify, calculate or recalculate any amount set forth in any Written Notice
delivered in accordance with such paragraphs.
(e) Any Written Notice delivered by a Trustee or a Liquidity
Provider, as applicable, pursuant to Section 3.1(a), 3.1(b) or 3.1(c) hereof, if
made prior to 10:00 A.M. (New York City time) shall be effective on the date
delivered (or if delivered later on a given date shall be effective as of the
next Business Day). Subject to the terms of this Agreement, the Subordination
Agent shall as promptly as practicable comply with any such instructions;
provided, however, that any transfer of funds pursuant to any instruction
received after 10:00 A.M. (New York City time) on any Business Day may be made
on the next succeeding Business Day.
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(f) In the event the Subordination Agent shall not receive
from any Person any information set forth in paragraphs (a) or (b) above which
is required to enable the Subordination Agent to make a distribution to such
Person pursuant to Section 2.4(b), 3.2 or 3.3 hereof, the Subordination Agent
shall request such information and, failing to receive any such information, the
Subordination Agent shall not make such distribution(s) to such Person. In such
event, the Subordination Agent shall make distributions pursuant to clauses
"first" through "eighth" of Section 2.4(b), clauses "first" through "ninth" of
Section 3.2 and clauses "first" through "tenth" of Section 3.3 to the extent it
shall have sufficient information to enable it to make such distributions, and
shall continue to hold any funds remaining, after making such distributions,
until the Subordination Agent shall receive all necessary information to enable
it to distribute any funds so withheld.
(g) On such dates (but not more frequently than monthly) as
any Liquidity Provider or any Trustee shall request, the Subordination Agent
shall send to such party a written statement reflecting all amounts on deposit
with the Subordination Agent pursuant to Section 3.1(f) hereof.
SECTION 3.2 Distribution of Amounts on Deposit in the
Collection Account. Except as otherwise provided in Sections 2.4, 3.1(f), 3.3,
3.4 and 3.6(b), amounts on deposit in the Collection Account (or, in the case of
any amount described in Section 2.4(c), on deposit in the Special Payments
Account) shall be promptly distributed on each Distribution Date in the
following order of priority and in accordance with the information provided to
the Subordination Agent pursuant to Section 3.1(a) hereof:
first, such amount as shall be required to pay all accrued and
unpaid Liquidity Expenses owed to each Liquidity Provider shall be
distributed to the Liquidity Providers pari passu on the basis of the
amount of Liquidity Expenses owed to each Liquidity Provider;
second, such amount as shall be required to pay in full the
aggregate amount of interest accrued on all Liquidity Obligations (at
the rate provided in the applicable Liquidity Facility) shall be
distributed to the Liquidity Providers pari passu on the basis of the
amount of Liquidity Obligations owed to each Liquidity Provider;
third, such amount as shall be required (A) to pay or
reimburse the Liquidity Providers in an amount equal to the amount of
all Liquidity Obligations then due (other than amounts payable pursuant
to clause "first" or "second" of this Section 3.2) shall be distributed
to the Liquidity
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Providers, and (B) if any Cash Collateral Account had previously been
funded as provided in Section 3.6(f), to replenish such Cash Collateral
Account up to its Required Amount shall be deposited in such Cash
Collateral Account, in each such case, pari passu on the basis of the
amounts of such unreimbursed Liquidity Obligations and/or deficiencies;
fourth, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class A Certificates on
such Distribution Date shall be distributed to the Class A Trustee;
fifth, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class B Certificates on
such Distribution Date shall be distributed to the Class B Trustee;
sixth, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class C Certificates on
such Distribution Date shall be distributed to the Class C Trustee;
seventh, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class D Certificates on
such Distribution Date shall be distributed to the Class D Trustee;
eighth, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class E Certificates on
such Distribution Date shall be distributed to the Class E Trustee; and
ninth, such amount as shall be required to pay in full the
aggregate unpaid amount of fees and expenses payable as of such
Distribution Date to the Subordination Agent and each Trustee pursuant
to the terms of this Agreement and the Trust Agreements, as the case
may be, shall be distributed to the Subordination Agent and such
Trustee.
SECTION 3.3 Distribution of Amounts on Deposit Following a
Triggering Event. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b)
hereof, upon the occurrence of a Triggering Event and at all times thereafter,
all funds in the Collection Account or the Special Payments Account shall be
promptly distributed by the Subordination Agent in the following order of
priority:
first, such amount as shall be required to reimburse (i) the
Subordination Agent for any out-of-pocket costs and expenses actually
incurred by it (to the extent not previously reimbursed) in the
protection of, or the realization of the value of, the Equipment Notes
or any
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Trust Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any
amounts of the nature described in clause (i) above actually incurred
by it under the applicable Trust Agreement (to the extent not
previously reimbursed), shall be distributed to such Trustee and (iii)
any Liquidity Provider or Certificateholder for payments, if any, made
by it to the Subordination Agent or any Trustee in respect of amounts
described in clause (i) above, shall be distributed to such Liquidity
Provider or to the applicable Trustee for the account of such
Certificateholder, in each such case, pari passu on the basis of all
amounts described in clauses (i) through (iii) above;
second, such amount remaining as shall be required to pay all
accrued and unpaid Liquidity Expenses shall be distributed to each
Liquidity Provider pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
third, such amount remaining as shall be required to pay
accrued and unpaid interest on the Liquidity Obligations as provided in
the Liquidity Facilities shall be distributed to each Liquidity
Provider pari passu on the basis of the amount of such accrued and
unpaid interest owed to each Liquidity Provider;
fourth, such amount remaining as shall be required (A) to pay
in full the outstanding amount of all Liquidity Obligations, whether or
not then due (other than amounts payable pursuant to clause "second" or
"third" of this Section 3.3) shall be distributed to each Liquidity
Provider that has not funded a Cash Collateral Account in accordance
with Section 3.6(c) or 3.6(i) hereof, and/or (B) if applicable, so long
as no Performing Note Deficiency exists and no Liquidity Event of
Default has occurred and is continuing, to replenish the Cash
Collateral Accounts up to their respective Required Amounts shall be
deposited in the Cash Collateral Accounts, in each case, pari passu on
the basis of the amount of Liquidity Obligations owed to each Liquidity
Provider and/or such deficiencies;
fifth, such amount as shall be required to reimburse or pay
(i) the Subordination Agent for any Tax (other than Taxes imposed on
compensation paid hereunder), expense, fee, charge or other loss
incurred by or any other amount payable to the Subordination Agent in
connection with the transactions contemplated hereby (to the extent not
previously reimbursed), shall be applied by the Subordination Agent in
reimbursement of such amount, (ii) each Trustee for any Tax (other than
Taxes imposed on compensation paid under the applicable Trust
Agreement),
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expense, fee, charge, loss or any other amount payable to such Trustee
under the applicable Trust Agreements (to the extent not previously
reimbursed), shall be distributed to such Trustee and (iii) each
Certificateholder for payments, if any, made by it pursuant to Section
5.2 hereof in respect of amounts described in clause (i) above, shall
be distributed to the applicable Trustee for the account of such
Certificateholder, in each such case, pari passu on the basis of all
amounts described in clauses (i) through (iii) above;
sixth, such amount remaining as shall be required to pay in
full Adjusted Expected Distributions on the Class A Certificates shall
be distributed to the Class A Trustee;
seventh, such amount remaining as shall be required to pay in
full Adjusted Expected Distributions on the Class B Certificates shall
be distributed to the Class B Trustee;
eighth, such amount remaining as shall be required to pay in
full Adjusted Expected Distributions on the Class C Certificates shall
be distributed to the Class C Trustee;
ninth, such amount remaining as shall be required to pay in
full Adjusted Expected Distributions on the Class D Certificates shall
be distributed to the Class D Trustee; and
tenth, such amount remaining as shall be required to pay in
full Adjusted Expected Distributions on the Class E Certificates shall
be distributed to the Class E Trustee.
SECTION 3.4 Other Payments. Any payments received by the
Subordination Agent for which no provision as to the application thereof is made
in this Agreement shall be distributed by the Subordination Agent in the order
of priority specified in Section 3.3 hereof.
SECTION 3.5 Payments to the Trustees and the Liquidity
Providers. Any amounts distributed hereunder to any Liquidity Provider shall be
paid to such Liquidity Provider by wire transfer of funds to the address such
Liquidity Provider shall provide to the Subordination Agent. The Subordination
Agent shall provide a Written Notice of any such transfer to the applicable
Liquidity Provider, as the case may be, at the time of such transfer. Any
amounts distributed hereunder by the Subordination Agent to any Trustee which
shall not be the same institution as the Subordination Agent shall be paid to
such Trustee by wire transfer funds at the address such Trustee shall provide to
the Subordination Agent.
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SECTION 3.6 Liquidity Facilities. (a) Interest Drawings. If on
any Distribution Date, after giving effect to the subordination provisions of
this Agreement, the Subordination Agent shall not have sufficient funds for the
payment of any amounts due and owing in respect of accrued interest on the Class
A Certificates, the Class B Certificates or the Class C Certificates (at the
Stated Interest Rate for such Class of Certificates), then, prior to 12:00 noon
(New York City time) on the Business Day following such Distribution Date, the
Subordination Agent shall request a drawing (each such drawing, an "Interest
Drawing") under the Liquidity Facility with respect to such Class of
Certificates in an amount equal to the lesser of (i) an amount sufficient to pay
the amount of such accrued interest (at the Stated Interest Rate for such Class
of Certificates) and (ii) the Available Amount under such Liquidity Facility,
and shall pay such amount to the Trustee with respect to such Class of
Certificates in payment of such accrued interest.
(b) Application of Interest Drawings. Notwithstanding anything
to the contrary contained in this Agreement, (i) all payments received by the
Subordination Agent in respect of an Interest Drawing under the Class A
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class A Cash Collateral Account, and payable in each case to the Class A
Certificateholders, shall be promptly distributed to the Class A Trustee, (ii)
all payments received by the Subordination Agent in respect of an Interest
Drawing under the Class B Liquidity Facility and all amounts withdrawn by the
Subordination Agent from the Class B Cash Collateral Account, and payable in
each case to the Class B Certificateholders, shall be promptly distributed to
the Class B Trustee and (iii) all payments received by the Subordination Agent
in respect of an Interest Drawing under the Class C Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class C Cash Collateral
Account, and payable in each case to the Class C Certificateholders, shall be
promptly distributed to the Class C Trustee.
(c) Downgrade Drawings. If at any time the debt rating of any
Liquidity Provider issued by either Rating Agency is lower than the applicable
Threshold Rating, within 30 days after receiving notice of such downgrading (but
no later than the expiration date of the Liquidity Facility issued by the
downgraded Liquidity Provider (the "Downgraded Facility")), such Liquidity
Provider may arrange, or the Subordination Agent (in consultation with America
West (whose recommendations the Subordination Agent will accept)) may arrange,
for a Replacement Liquidity Provider to issue and deliver a Replacement
Liquidity Facility to the Subordination Agent. If a Downgraded Facility has not
been replaced in accordance with the terms of this paragraph, the Subordination
Agent shall, on such 30th day (or if
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such 30th day is not a Business Day, on the next succeeding Business Day) (or,
if earlier, the expiration date of such Downgraded Facility), request a drawing
in accordance with and to the extent permitted by such Downgraded Facility (such
drawing, a "Downgrade Drawing") of all available and undrawn amounts thereunder.
Amounts drawn pursuant to a Downgrade Drawing shall be maintained and invested
as provided in Section 3.6(f) hereof.
(d) [Reserved.]
(e) Issuance of Replacement Liquidity Facility. At any time,
the Subordination Agent may, at its option, in consultation with America West
(whose recommendations the Subordination Agent will accept), arrange for a
Replacement Liquidity Facility to replace the Liquidity Facility for any Class
of Certificates; provided that the initial Liquidity Provider may not be
replaced pursuant to this paragraph unless (i) there shall have become due to
the initial Liquidity Provider amounts pursuant to Section 3.1, 3.2 or 3.3 of
the Liquidity Facilities and the replacement of the initial Liquidity Provider
would reduce or eliminate the obligation to pay such amounts, (ii) it shall
become unlawful or impossible for the initial Liquidity Provider (or its Lending
Office) to maintain or fund its LIBOR Advances as described in Section 3.10 of
each Liquidity Facility or (iii) a Downgrade Drawing shall have occurred under
any Liquidity Facility. In any such consultation, the Subordination Agent shall
accept the recommendations of America West in the absence of a good faith reason
not to do so. If such Replacement Liquidity Facility is provided at any time
after a Downgrade Drawing has been made, all funds on deposit in the relevant
Cash Collateral Account will be returned to the Liquidity Provider being
replaced. No such Replacement Liquidity Facility executed in connection
therewith shall become effective and no such Replacement Liquidity Facility
shall be deemed a "Liquidity Facility" under the Operative Agreements, unless
and until (i) the conditions referred to in the immediately following paragraph
shall have been satisfied and (ii) if such Replacement Liquidity Facility shall
materially adversely affect the rights, remedies, interests or obligations of
the Class A Certificate- holders, the Class B Certificateholders or the Class C
Certificateholders under any of the Operative Agreements, the applicable Trustee
shall have consented, in writing, to the execution and issuance of such
Replacement Liquidity Facility.
In connection with the issuance of each Replacement Liquidity
Facility, the Subordination Agent shall (x) prior to the issuance of such
Replacement Liquidity Facility, receive written confirmation from each Rating
Agency that such Replacement Liquidity Facility will not cause a reduction,
withdrawal or suspension of the rating then in effect for any Class of
Certificates by such Rating Agency (without regard to the ratings of any
Liquidity Provider being replaced pursuant to
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Section 3.6(c) hereof), (y) pay all Liquidity Obligations then owing to the
replaced Liquidity Provider (which payment shall be made first from available
funds in the Cash Collateral Account as described in clause (vii) of Section
3.6(f) hereof and thereafter from any other available source, including, without
limitation, a drawing under the Replacement Liquidity Facility, it being
understood that no Replacement Liquidity Facility shall become effective (other
than insofar as necessary to permit the repayment of amounts owed to the
replaced Liquidity Provider) until all amounts owed to the replaced Liquidity
Provider have been paid) and (z) cause the issuer of the Replacement Liquidity
Facility to deliver the Replacement Liquidity Facility to the Subordination
Agent, together with a legal opinion opining that such Replacement Liquidity
Facility is an enforceable obligation of such Replacement Liquidity Provider.
Upon satisfaction of the conditions set forth in this Section 3.6(e), (i) the
replaced Liquidity Facility shall terminate and (ii) such Replacement Liquidity
Provider shall be deemed to be a Liquidity Provider with the rights and
obligations of a Liquidity Provider hereunder and under the other Operative
Agreements and such Replacement Liquidity Facility shall be deemed to be a
Liquidity Facility hereunder and under the other Operative Agreements.
(f) Cash Collateral Accounts; Withdrawals; Investments. In the
event the Subordination Agent shall draw all available amounts under the Class A
Liquidity Facility, the Class B Liquidity Facility or the Class C Liquidity
Facility pursuant to Section 3.6(c) or a Final Drawing shall be made as provided
in the Liquidity Facility, amounts so drawn shall be deposited by the
Subordination Agent in the Class A Cash Collateral Account, the Class B Cash
Collateral Account or the Class C Cash Collateral Account, respectively. Amounts
so deposited shall be invested in Eligible Investments in accordance with
Section 2.2(b) hereof. Investment Earnings on amounts on deposit in the Cash
Collateral Accounts shall be deposited in the Collection Account. In addition,
from and after the date funds are so deposited, the Subordination Agent shall
make withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent
shall, to the extent it shall not have received funds to pay accrued
and unpaid interest on the Class A Certificates (at the Stated Interest
Rate for the Class A Certificates) from any other source, withdraw from
the Class A Cash Collateral Account, and pay to the Class A Trustee an
amount equal to the lesser of (x) an amount necessary to pay accrued
and unpaid interest (at the Stated Interest Rate for the Class A
Certificates) on such Class A Certificates and (y) the amount on
deposit in the Class A Cash Collateral Account;
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(ii) on each Distribution Date, the Subordination Agent
shall, to the extent it shall not have received funds to pay accrued
and unpaid interest on the Class B Certificates (at the Stated Interest
Rate for the Class B Certificates) from any other source, withdraw from
the Class B Cash Collateral Account, and pay to the Class B Trustee an
amount equal to the lesser of (x) an amount necessary to pay accrued
and unpaid interest (at the Stated Interest Rate for the Class B
Certificates) on such Class B Certificates and (y) the amount on
deposit in the Class B Cash Collateral Account;
(iii) on each Distribution Date, the Subordination Agent
shall, to the extent it shall not have received funds to pay accrued
and unpaid interest on the Class C Certificates (at the Stated Interest
Rate for the Class C Certificates) from any other source, withdraw from
the Class C Cash Collateral Account, and pay to the Class C Trustee an
amount equal to the lesser of (x) an amount necessary to pay accrued
and unpaid interest (at the Stated Interest Rate for the Class C
Certificates) on such Class C Certificates and (y) the amount on
deposit in the Class C Cash Collateral Account;
(iv) on each date on which the Pool Balance of the Class
A Trust shall have been reduced by payments made to the Class A
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof, the
Subordination Agent shall withdraw from the Class A Cash Collateral
Account such amount as is necessary so that, after giving effect to the
reduction of the Pool Balance on such date (including any such
reduction resulting from a prior withdrawal of amounts on deposit in
the Class A Cash Collateral Account on such date), the Required Amount
(with respect to the Class A Liquidity Facility) will be on deposit in
the Class A Cash Collateral Account and shall first, pay such amount to
the Class A Liquidity Provider until the Liquidity Obligations (with
respect to the Class A Certificates) shall have been paid in full, and
second, deposit any remaining amount in the Collection Account;
(v) on each date on which the Pool Balance of the Class
B Trust shall have been reduced by payments made to the Class B
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof, the
Subordination Agent shall withdraw from the Class B Cash Collateral
Account such amount as is necessary so that, after giving effect to the
reduction of the Pool Balance on such date (including any such
reduction resulting from a prior withdrawal of amounts on deposit in
the Class B
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Cash Collateral Account on such date), the Required Amount (with
respect to the Class B Liquidity Facility) will be on deposit in the
Class B Cash Collateral Account and shall first, pay such amount to the
Class B Liquidity Provider until the Liquidity Obligations (with
respect to the Class B Certificates) shall have been paid in full, and
second, deposit any remaining amount in the Collection Account;
(vi) on each date on which the Pool Balance of the Class
C Trust shall have been reduced by payments made of the Class C
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof, the
Subordination Agent shall withdraw from the Class C Cash Collateral
Account such amount as is necessary so that, after giving effect to the
reduction of the Pool Balance on such date (including any such
reduction resulting from a prior withdrawal of amounts on deposit in
the Class C Cash Collateral Account on such date), the Required Amount
(with respect to the Class C Liquidity Facility) will be on deposit in
the Class C Cash Collateral Account and shall first, pay such amount to
the Class C Liquidity Provider until the Liquidity Obligations (with
respect to the Class C Certificates) shall have been paid in full, and
second, deposit any remaining amount in the Collection Account;
(vii) if a Replacement Liquidity Facility for any Class
of Certificates shall be delivered to the Subordination Agent following
the date on which funds have been deposited into the Cash Collateral
Account for such Class of Certificates, the Subordination Agent shall
withdraw all amounts on deposit in such Cash Collateral Account and
shall pay such amounts to the replaced Liquidity Provider until all
Liquidity Obligations owed to such Person shall have been paid in full,
and shall deposit any remaining amount in the Collection Account; and
(viii) following the payment of Final Distributions with
respect to any Class of Certificates (other than the Class D and Class
E Certificates), on the date on which the Subordination Agent shall
have been notified by the Liquidity Provider for such Class of
Certificates that the Liquidity Obligations owed to such Liquidity
Provider have been paid in full, the Subordination Agent shall withdraw
all amounts on deposit in the Cash Collateral Account in respect of
such Class of Certificates and shall deposit such amount in the
Collection Account.
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(g) Reinstatement. With respect to any Interest Drawing under
the Liquidity Facility for any Trust, upon the reimbursement of the applicable
Liquidity Provider for all or any part of the amount of such Interest Drawing,
together with any accrued interest thereon, the Available Amount of such
Liquidity Facility shall be reinstated by an amount equal to the amount so
reimbursed to the applicable Liquidity Provider; provided, however, that such
Liquidity Facility shall not be so reinstated in part or in full at any time if
(x) both (i) a Triggering Event shall have occurred and (ii) a Performing Note
Deficiency exists or (y) a Liquidity Event of Default shall have occurred and be
continuing under such Liquidity Facility. In the event that at any time prior to
both the occurrence of a Triggering Event and the existence of a Performing Note
Deficiency funds are withdrawn from any Cash Collateral Account pursuant to
clauses (i), (ii) or (iii) of Section 3.6(f) hereof, then funds received by the
Subordination Agent prior to both the occurrence of a Triggering Event and the
existence of a Performing Note Deficiency shall be deposited in such Cash
Collateral Account as provided in clause "third" of Section 2.4(b)(i), clause
"third" of Section 3.2 or clause "fourth" of Section 3.3, as applicable, and
applied in accordance with Section 3.6(f) hereof.
(h) Reimbursement. The amount of each drawing under the
Liquidity Facilities shall be due and payable, together with interest thereon,
on the dates and at the rates, respectively, provided in the Liquidity
Facilities.
(i) Final Drawing. If any action is expressly required under a
Liquidity Facility to be taken by the Subordination Agent in order to make a
Final Drawing thereunder, the Subordination Agent shall not fail to take such
action. Upon receipt of the proceeds of a Final Drawing under the related
Liquidity Facility, the Subordination Agent shall maintain and invest such
proceeds in accordance with Section 3.6(f) hereof.
(j) Reduction of Stated Amount. Promptly following each date
on which the Required Amount of the Liquidity Facility for a Class of
Certificates is reduced as a result of a distribution to the Certificateholders
of such Class of Certificates, the Subordination Agent shall, if such Liquidity
Facility provides for reductions of the Stated Amount of such Liquidity Facility
and if such reductions are not automatic, request the Liquidity Provider for
such Class of Certificates to reduce such Stated Amount to an amount equal to
the Required Amount with respect to such Liquidity Facility (as calculated by
the Subordination Agent after giving effect to such payment). Each such request
shall be made in accordance with the provisions of the applicable Liquidity
Facility.
(k) Relation to Subordination Provisions. Interest Drawings
under the Liquidity Facilities and withdrawals from the
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Cash Collateral Accounts, in each case, in respect of interest on the
Certificates of any Class, will be distributed to the Trustee for such Class of
Certificates, notwithstanding Sections 2.4(b), 3.2, and 3.3 hereof.
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party. (a) (i)
Following the occurrence and during the continuation of an Indenture Default
under any Indenture, the Controlling Party shall direct the Indenture Trustee
under such Indenture in the exercise of remedies available to the holders of the
Equipment Notes issued pursuant to such Indenture, including, without
limitation, the ability to vote all such Equipment Notes in favor of declaring
all of the unpaid principal amount of such Equipment Notes and accrued interest
thereon to be due and payable under, and in accordance with, the provisions of
such Indenture. Subject to the Owner Trustees' and the Owner Participants'
rights set forth in the Indentures to purchase the Equipment Notes, if the
Equipment Notes issued pursuant to any Indenture have been Accelerated following
an Indenture Default with respect thereto, the Controlling Party may, on the
terms and conditions set forth in such Indenture, direct the related Trustee to
sell, assign, contract to sell or otherwise dispose of and deliver all (but not
less than all) of such Equipment Notes to any Person at public or private sale,
at any location at the option of the Controlling Party, all upon such terms and
conditions as it may reasonably deem advisable in accordance with applicable
law.
(ii) Subject to the Owner Trustees' and the Owner Participants'
rights set forth in the Indentures to purchase the Equipment Notes, and
notwithstanding the foregoing, so long as any Certificates remain Outstanding,
during the period ending on the date which is nine months after the earlier of
(x) the Acceleration of the Equipment Notes issued pursuant to any Indenture or
(y) the occurrence of an America West Bankruptcy Event, without the consent of
each Trustee, (A) no Aircraft or Spare Engine subject to the Lien of such
Indenture or such Equipment Notes may be sold if the net proceeds from such sale
would be less than the Minimum Sale Price for such Aircraft, Spare Engine or
such Equipment Notes, and (B) the amount and payment dates of rentals payable by
America West under the Lease for such Aircraft or Spare Engine may not be
adjusted if, as a result of such adjustment, the discounted present value of all
such rentals would be less than 75% of the discounted present value of the
rentals payable by America West under such Lease before giving effect to such
adjustment, in each case, using the weighted average interest rate of the
Equipment Notes then outstanding pursuant to such Indenture as the discount
rate.
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(iii) At the request of the Controlling Party, the Subordination
Agent may from time to time during the continuance of an Indenture Default (and
before the occurrence of a Triggering Event) commission LTV Appraisals with
respect to the related Aircraft or Spare Engine.
(iv) After a Triggering Event occurs and any Equipment Note
becomes a Non-Performing Equipment Note, the Subordination Agent shall obtain
LTV Appraisals for each Aircraft and Spare Engine as soon as practicable and
additional LTV Appraisals on or prior to each anniversary of the date of such
initial LTV Appraisals; provided that, if the Controlling Party reasonably
objects to the appraised value of the Aircraft or Spare Engine shown in any such
LTV Appraisals, the Controlling Party shall have the right to obtain or cause to
be obtained substitute LTV Appraisals (including any LTV Appraisals based upon
physical inspection of the Aircraft or Spare Engine).
(b) The Controlling Party shall take such actions as it may
reasonably deem most effectual to complete the sale or other disposition of such
Aircraft, Spare Engine or Equipment Notes. In addition, in lieu of any sale,
assignment, contract to sell or other disposition, the Subordination Agent, on
behalf of the Controlling Party, may maintain possession of such Equipment Notes
and continue to apply monies received in respect of such Equipment Notes in
accordance with Article III hereof. In addition, in lieu of such sale,
assignment, contract to sell or other disposition, or in lieu of such
maintenance of possession, the Controlling Party may instruct the Indenture
Trustee under such Indenture to foreclose on the Lien on the related Aircraft or
Spare Engine or to take any other remedial action permitted under such Indenture
or applicable law.
SECTION 4.2 Remedies Cumulative. Each and every right power
and remedy given to the Trustees, the Controlling Party or the Subordination
Agent specifically or otherwise in this Agreement 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, subject always to the terms and conditions hereof, be exercised from time
to time and as often and in such order as may be deemed expedient by any
Trustee, the Controlling Party or the Subordination Agent, as appropriate, 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 any
Trustee, the Controlling Party or the Subordination Agent 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 or to be an
acquiescence therein.
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SECTION 4.3 Discontinuance of Proceedings. In case any party
to this Agreement (including the Controlling Party in such capacity) shall have
instituted any Proceeding to enforce any right, power or remedy under this
Agreement 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 Person instituting such Proceeding, then and in every such case
each such party shall, subject to any determination in such proceedings, be
restored to its former position and rights hereunder, and all rights, remedies
and powers of such party shall continue as if no such Proceedings had been
instituted.
SECTION 4.4 Right of Certificateholders to Receive Payments
Not to Be Impaired. Anything in this Agreement to the contrary notwithstanding
but subject to each Trust Agreement, the right of any Certificateholder or any
Liquidity Provider, respectively, to receive payments pursuant to Section 2.4,
3.2 or 3.3 hereof when due, or to institute suit for the enforcement of any such
payment on or after the applicable Distribution Date, shall not be impaired or
affected without the consent of such Certificateholder or such Liquidity
Provider, respectively.
SECTION 4.5 Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Agreement or in any suit against
any Controlling Party or the Subordination Agent for any action taken or omitted
by it as Controlling Party or Subordination Agent, as the case may be, a court
in its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys, fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. The provisions of
this Section do not apply to a suit instituted by the Subordination Agent, a
Liquidity Provider or a Trustee or a suit by Certificateholders holding more
than 10% of the original principal amount of any Class of Certificates.
SECTION 4.6 No Action Contrary to America West's Rights Under
the Lease. Notwithstanding any of the provisions of this Agreement to the
contrary, each of the parties hereto agrees for the benefit of America West that
it will not take any action contrary to America West's rights under any Lease,
including the right of America West to possession and use and quiet enjoyment of
the Equipment subject to such Lease, except in accordance with the provisions of
such Lease.
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ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event,
Etc. (a) In the event the Subordination Agent shall have actual knowledge of the
occurrence of an Indenture Default or a Triggering Event, as promptly as
practicable, and in any event within 10 days after obtaining knowledge thereof,
the Subordination Agent shall transmit by mail to the Rating Agencies, the
Liquidity Providers and the Trustees notice of such Indenture Default or
Triggering Event, unless such Indenture Default or Triggering Event shall have
been cured or waived. For all purposes of this Agreement, in the absence of
actual knowledge on the part of a Responsible officer, the Subordination Agent
shall not be deemed to have knowledge of any Indenture Default or Triggering
Event unless notified in writing by one or more Trustees, one or more Liquidity
Providers or one or more Certificateholders.
(b) Other Notices. The Subordination Agent will furnish to
each Liquidity Provider and Trustee, promptly upon receipt thereof, duplicates
or copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Subordination Agent as
registered holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been required to be
directly distributed to such Liquidity Provider or Trustee, as applicable,
pursuant to the express provision of any other Operative Agreement.
(c) Determinations and Notice. The Subordination Agent agrees
to make the determinations and notifications required to be made by it pursuant
to Section 2.02 of each Indenture.
SECTION 5.2 Indemnification. The Subordination Agent shall not
be required to take any action or refrain from taking any action under Section
5.1 (other than the first sentence thereof) or Article IV hereof unless the
Subordination Agent shall have been indemnified (to the extent and in the manner
reasonably satisfactory to the Subordination Agent) against any liability, cost
or expense (including counsel fees and expenses) which may be incurred in
connection therewith. The Subordination Agent shall not be under any obligation
to take any action under this Agreement and nothing contained in this Agreement
shall require the Subordination Agent 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
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against such risk or liability is not reasonably assured to it. The
Subordination Agent shall not be required to take any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof, nor shall any
other provision of this Agreement be deemed to impose a duty on the
Subordination Agent to take any action, if the Subordination Agent shall have
been advised by counsel that such action is contrary to the terms hereof or is
otherwise contrary to law.
SECTION 5.3 No Duties Except as Specified in Intercreditor
Agreement. The Subordination Agent shall not have any duty or obligation to take
or refrain from taking any action under, or in connection with, this Agreement,
except as expressly provided by the terms of this Agreement; and no implied
duties or obligations shall be read into this Agreement against the
Subordination Agent. The Subordination Agent agrees that it will, in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Section 7.1 hereof)
promptly take such action as may be necessary to discharge duly all Liens on any
of the Trust Accounts or any monies deposited therein which result from claims
against it in its individual capacity not related to its activities hereunder or
any other Operative Agreement.
SECTION 5.4 Notice from the Liquidity Providers and Trustees.
If a Responsible Officer of any Liquidity Provider or Trustee has notice of an
Indenture Default or a Triggering Event, such Liquidity Provider or Trustee, as
the case may be, shall promptly give notice thereof to all other Liquidity
Providers and Trustees and to the Subordination Agent, provided, however, that
no such Person shall have any liability hereunder as a result of its failure to
deliver any such notice.
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and Duties.
Each of the Class A Trustee, Class B Trustee and Class C Trustee hereby
designates and appoints the Subordination Agent as the agent and trustee of such
Trustee under the applicable Liquidity Facility and authorizes the Subordination
Agent to enter into the applicable Liquidity Facility as agent and trustee for
such Trustee. Each of the Liquidity Providers and the Trustees hereby designates
and appoints the Subordination Agent as the Subordination Agent under this
Agreement.
Fleet National Bank hereby accepts the duties hereby created
and applicable to it as the Subordination Agent and agrees to perform the same
but only upon the terms of this Agreement and agrees to receive and disburse all
monies received
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by it in accordance with the terms hereof. The Subordination Agent shall not be
answerable or accountable under any circumstances, except (a) for its own
willful misconduct or gross negligence (other than for the handling of funds,
for which the standard of accountability shall be negligence) and (b) for
liabilities that may result from the material inaccuracy of any representation
or warranty of the Subordination Agent made in its individual capacity in any
Operative Agreement. The Subordination Agent shall not be liable for any error
of judgment made in good faith by a Responsible officer of the Subordination
Agent, unless it is proved that the Subordination Agent was grossly negligent in
ascertaining the pertinent facts.
SECTION 6.2 Absence of Duties. The Subordination Agent shall
have no duty to see to any recording or filing of this Agreement or any other
document, or to see to the maintenance of any such recording or filing.
SECTION 6.3 No Representations or Warranties as to Documents.
The Subordination Agent in its individual capacity does not make nor shall be
deemed to have made any representation or warranty as to the validity, legality
or enforceability of this Agreement or any other Operative Agreement or as to
the correctness of any statement contained in any thereof, except for the
representations and warranties of the Subordination Agent, made in its
individual capacity, under any Operative Agreement to which it is a party. The
Certificateholders, the Trustees and the Liquidity Providers make no
representation or warranty hereunder whatsoever.
SECTION 6.4 No Segregation of Monies; No Interest. Any monies
paid to or retained by the Subordination Agent pursuant to any provision hereof
and not then required to be distributed to any Trustee or any Liquidity Provider
as provided in Articles II and III hereof need not be segregated in any manner
except to the extent required by such Articles II and III and by law, and the
Subordination Agent shall not (except as otherwise provided in Section 2.2
hereof) be liable for any interest thereon; provided, however, that any payments
received or applied hereunder by the Subordination Agent shall be accounted for
by the Subordination Agent so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
SECTION 6.5 Reliance; Agents; Advice of Counsel. The
Subordination Agent shall not 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. As to the Pool
Balance of any Trust as of any date, the Subordination Agent may for all
purposes hereof rely on a certificate signed by any
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Responsible Officer of the applicable Trustee, and such certificate shall
constitute full protection to the Subordination Agent for any action taken or
omitted to be taken by it in good faith in reliance thereon. As to any fact or
matter relating to the Liquidity Providers or the Trustees the manner of
ascertainment of which is not specifically described herein, the Subordination
Agent may for all purposes hereof rely on a certificate, signed by any
Responsible Officer of the applicable Liquidity Provider or Trustee, as the case
may be, as to such fact or matter, and such certificate shall constitute full
protection to the Subordination Agent for any action taken or omitted to be
taken by it in good faith in reliance thereon. The Subordination Agent shall
assume, and shall be fully protected in assuming, that each of the Liquidity
Providers and each of the Trustees are authorized to enter into this Agreement
and to take all action to be taken by them pursuant to the provisions hereof,
and shall not inquire into the authorization of each of the Liquidity Providers
and each of the Trustees with respect thereto. In the administration of the
trusts hereunder, the Subordination Agent may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may consult with counsel, accountants and other skilled
persons to be selected and retained by it, and the Subordination Agent shall not
be liable for the acts or omissions of any agent appointed with due care or for
anything done, suffered or omitted in good faith by it in accordance with the
advice or written opinion of any such counsel, accountants or other skilled
persons.
SECTION 6.6 Capacity in Which Acting. The Subordination Agent
acts hereunder solely as agent and trustee herein and not in its individual
capacity, except as otherwise expressly provided in the Operative Agreements.
SECTION 6.7 Compensation. The Subordination Agent shall be
entitled to reasonable compensation, including expenses and disbursements, for
all services rendered hereunder and shall have a priority claim to the extent
set forth in Article III hereof on all monies collected hereunder for the
payment of such compensation, to the extent that such compensation shall not be
paid by others. The Subordination Agent agrees that it shall have no right
against any Trustee or Liquidity Provider for any fee as compensation for its
services as agent under this Agreement. The provisions of this Section 6.7 shall
survive the termination of this Agreement.
SECTION 6.8 May Become Certificateholder. The institution
acting as Subordination Agent hereunder may become a Certificateholder and have
all rights and benefits of a Certificateholder to the same extent as if it were
not the institution acting as the Subordination Agent.
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SECTION 6.9 Subordination Agent Required; Eligibility. There
shall at all times be a Subordination Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any State or the District of Columbia having a combined capital
and surplus of at least $100,000,000 (or the obligations of which, whether now
in existence or hereafter incurred, are fully and unconditionally guaranteed by
a corporation organized and doing business under the laws of the United States,
any State thereof or of the District of Columbia and having a combined capital
and surplus of at least $100,000,000), if there is such an institution willing
and able to perform the duties of the Subordination Agent hereunder upon
reasonable or customary terms. Such corporation shall be a citizen of the United
States and shall be authorized under the laws of the United States or any State
thereof or of the District of Columbia to exercise corporate trust powers and
shall be subject to supervision or examination by federal, state or District of
Columbia authorities. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of any of the aforesaid
supervising or examining authorities, then, for the purposes of this Section
6.9, the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.
In case at any time the Subordination Agent shall cease to be
eligible in accordance with the provisions of this Section, the Subordination
Agent shall resign immediately in the manner and with the effect specified in
Section 8.1.
SECTION 6.10 Money to Be Held in Trust. All Equipment Notes,
monies and other property deposited with or held by the Subordination Agent
pursuant to this Agreement shall be held in trust for the benefit of the parties
entitled to such Equipment Notes, monies and other property. All such Equipment
Notes, monies or other property shall be held in the Trust Department of the
institution acting as Subordination Agent hereunder.
ARTICLE VII
INDEMNIFICATION AND REIMBURSEMENT OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification and Reimbursement. The
Subordination Agent shall be indemnified hereunder to the extent and in the
manner described in Sections 10 and 13 of the Leases and shall be reimbursed for
expenses to the extent and in the manner described in Section 21 of the
Refunding Agreements. The indemnities or rights to reimbursement for expenses
contained in such Sections of the Leases and the Refunding Agreements shall
survive the termination of this Agreement.
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ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment of
Successor. The Subordination Agent may resign at any time by so notifying the
Trustees and the Liquidity Providers. The Liquidity Provider or the Controlling
Party (or, prior to the occurrence of a Triggering Event, the Person who would
be the Controlling Party if a Triggering Event had occurred) may remove the
Subordination Agent for cause by so notifying the Subordination Agent and may
appoint a successor Subordination Agent. The Controlling Party (or, prior to the
occurrence of a Triggering Event, the Person who would be the Controlling Party
if a Triggering Event had occurred) shall remove the Subordination Agent if:
(1) the Subordination Agent fails to comply with
Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt
or insolvent;
(3) a receiver or other public officer takes charge of
the Subordination Agent or its property; or
(4) the Subordination Agent otherwise becomes
incapable of acting.
If the Subordination Agent resigns or is removed or if a
vacancy exists in the office of Subordination Agent for any reason (the
Subordination Agent in such event being referred to herein as the retiring
Subordination Agent), the Controlling Party (or, prior to the occurrence of a
Triggering Event, the Person who would be the Controlling Party if a Triggering
Event had occurred) shall promptly appoint a successor Subordination Agent.
Any corporation into which the Subordination Agent 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
Subordination Agent shall be a party, or any corporation to which substantially
all the corporate trust business of the Subordination Agent may be transferred,
shall, subject to the terms of Section 6.9 hereof, be the Subordination Agent
hereunder and under the other Operative Agreements to which the Subordination
Agent is a party without further act, except that such Person shall give prompt
subsequent notice of such transaction to the Liquidity Provider and each
Trustee.
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A successor Subordination Agent shall deliver a written
acceptance of its appointment as Subordination Agent hereunder to the retiring
Subordination Agent, upon which the resignation or removal of the retiring
Subordination Agent shall become effective, and the successor Subordination
Agent shall have all the rights, powers and duties of the Subordination Agent
under this Agreement. The successor Subordination Agent shall mail a notice of
its succession to the Liquidity Providers and the Trustees. The retiring
Subordination Agent shall promptly transfer its rights under each of the
Liquidity Facilities and all of the property held by it as Subordination Agent
to the successor Subordination Agent.
If a successor Subordination Agent does not take office within
60 days after the retiring Subordination Agent resigns or is removed, the
retiring Subordination Agent or one or more of the Trustees may petition any
court of competent jurisdiction for the appointment of a successor Subordination
Agent.
If the Subordination Agent fails to comply with Section 6.9
hereof (to the extent applicable), one or more of the Trustees or one or more of
the Liquidity Providers may petition any court of competent jurisdiction for the
removal of the Subordination Agent and the appointment of a successor
Subordination Agent.
Notwithstanding the foregoing, no resignation or removal of
the Subordination Agent shall be effective unless and until a successor has been
appointed. No appointment of a successor Subordination Agent shall be effective
unless and until the Rating Agencies shall have delivered a Ratings
Confirmation.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc. (a) This Agreement may
not be supplemented, amended or modified without the consent of each Trustee
(acting with the consent of holders of Certificates of the related Class
evidencing interests in the related Trust aggregating not less than a majority
in interest in such Trust), the Subordination Agent and each Liquidity Provider;
provided, however, that this Agreement may be supplemented, amended or modified
without the consent of any Trustee if such supplement or amendment cures an
ambiguity or inconsistency or does not materially adversely affect such Trustee
or the holders of the related Class of Certificates. Notwithstanding the
foregoing, without the consent of each Certificateholder and each Liquidity
Provider, no supplement, amendment or modification of this Agreement may (i)
reduce the percentage of the interest in any Trust evidenced by the Certificates
issued by such Trust
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necessary to consent to modify or amend any provision of this Agreement or to
waive compliance therewith or (ii) modify Section 2.4, 3.2 or 3.3 hereof,
relating to the distribution of monies received by the Subordination Agent
hereunder from the Equipment Notes or pursuant to the Liquidity Facilities.
Nothing contained in this Section shall require the consent of a Trustee at any
time following the payment of Final Distributions with respect to the related
Class of Certificates.
(b) In the event that the Subordination Agent, as the
registered holder of any Equipment Notes, receives a request for its consent to
any amendment, modification or waiver under such Equipment Notes, the Indenture
pursuant to which such Equipment Notes were issued, or the Lease, Refunding
Agreement or other related document, (i) if no Indenture Default shall have
occurred and be continuing, the Subordination Agent shall request instructions
with respect to each Series of Equipment Notes from the Trustee of the Trust
which holds such Equipment Notes and shall vote or consent in accordance with
the instructions of such Trustee and (ii) if any Indenture Default (which has
not been cured by the applicable Owner Trustee or the applicable Owner
Participant pursuant to such Indenture) shall have occurred and be continuing
with respect to such Indenture, the Subordination Agent will exercise its voting
rights as directed by the Controlling Party; provided that no such amendment,
modification or waiver shall, without the consent of each Liquidity Provider,
reduce the amount of rent, supplemental rent or stipulated loss values payable
by the lessee under the Lease.
SECTION 9.2 Subordination Agent Protected. If, in the
reasonable opinion of the institution acting as the Subordination Agent
hereunder, any document required to be executed pursuant to the terms of
Section 9.1 affects any right, duty, immunity or indemnity with respect to it
under this Agreement or any Liquidity Facility, the Subordination Agent may in
its discretion decline to execute such document.
SECTION 9.3 Effect of Supplemental Agreements. Upon the
execution of any amendment or supplement hereto pursuant to the provisions
hereof, this Agreement shall be and be deemed to be and shall be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Agreement of the parties
hereto and beneficiaries hereof shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental agreement shall be and
be deemed to be and shall be part of the terms and conditions of this Agreement
for any and all purposes. In executing or accepting any supplemental agreement
permitted by this Article IX, the Subordination Agent shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel (as
defined in the Trust
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Agreements) stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement.
SECTION 9.4 Notice to Rating Agencies. Promptly following its
receipt of each amendment, consent, modification, supplement or waiver
contemplated by this Article IX, the Subordination Agent shall send a copy
thereof to each Rating Agency.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement. Following
payment of Final Distributions with respect to each Class of Certificates and
the payment in full of all Liquidity obligations to the Liquidity Providers and
provided that there shall then be no other amounts due to the
Certificateholders, the Trustees, the Liquidity Providers and the Subordination
Agent hereunder or under the Trust Agreements, and that the commitment of the
Liquidity Providers under the Liquidity Facilities shall have expired or been
terminated, this Agreement and the trusts created hereby shall terminate and
this Agreement shall be of no further force or effect. Except as aforesaid or
otherwise provided, this Agreement and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers and Subordination Agent. Nothing in this Agreement, whether
express or implied, shall be construed to give to any Person other than,the
Trustees, the Liquidity Providers and the Subordination Agent any legal or
equitable right, remedy or claim under or in respect of this Agreement.
SECTION 10.3 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
Agreement to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telecopy and
(i) if to the Subordination Agent, addressed to at its
office at:
Fleet National Bank
777 Main Street
Hartford, CT 06115
Attention: Corporate Trust Administration
Telecopy: (860) 986-7920
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<PAGE> 57
(ii) if to any Trustee, addressed to it at its office
at:
Fleet National Bank
777 Main Street
Hartford, CT 06115
Attention: Corporate Trust Administration
Telecopy: (860) 986-7920
(iii) if to any Liquidity Provider, addressed to it at
its office at:
Kredietbank N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telecopy: (212) 956-5580
Whenever any notice in writing is required to be given by any Trustee or
Liquidity Provider or the Subordination Agent to any of the other of them, such
notice shall be deemed given and such requirement satisfied when such notice is
received. Any party hereto may change the address to which notices to such party
will be sent by giving notice of such change to the other parties to this
Agreement.
SECTION 10.4 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 10.5 No Oral Modifications or Continuing Waivers. No
terms or provisions of this Agreement 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 Agreement and any waiver of the terms hereof shall be
effective only in the specific instance and for the specific purpose given.
SECTION 10.6 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.
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<PAGE> 58
SECTION 10.7 Headings. The headings of the various Articles
and Sections herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.8 Counterpart Form. This Agreement 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 agreement.
SECTION 10.9 Subordination. (a) As between the Liquidity
Providers, on the one hand, and the Trustees and the Certificateholders, on the
other hand, this Agreement shall be a subordination agreement for purposes of
Section 510 of the United States Bankruptcy Code, as amended from time to time.
(b) Notwithstanding the provisions of this Agreement, if prior
to the payment in full to the Liquidity Providers of all Liquidity Obligations
then due and payable, any party hereto shall have received any payment or
distribution in respect of Equipment Notes or any other amount under the
Indentures or other Operative Agreements which, had the subordination provisions
of this Agreement been properly applied to such payment, distribution or other
amount, would not have been distributed to such Person, then such payment,
distribution or other amount shall be received and held in trust by such Person
and paid over or delivered to the Subordination Agent for application as
provided herein.
(c) If any Trustee, any Liquidity Provider or the
Subordination Agent receives any payment in respect of any obligations owing
hereunder (or, in the case of the Liquidity Providers, in respect of the
Liquidity Obligations), which is subsequently invalidated, declared
preferential, set aside and/or required to be repaid to a trustee, receiver or
other party, then, to the extent of such payment, such obligations (or, in the
case of the Liquidity Providers, such Liquidity Obligations) intended to be
satisfied shall be revived and continue in full force and effect as if such
payment had not been received.
(d) The Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent confirm that
the payment priorities specified in Sections 2.4, 3.2 and 3.3 shall apply in all
circumstances (including to the payment of any sum which would have accrued but
for the commencement of any applicable insolvency proceeding), notwithstanding
the fact that the obligations owed to the Trustees and the holders of
Certificates are secured by certain assets and the Liquidity Obligations are not
so secured. The Trustees expressly agree (on behalf of themselves and the
holders of Certificates) not to assert priority over the holders of
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<PAGE> 59
Liquidity Obligations due to their status as secured creditors in any
bankruptcy, insolvency or other legal proceeding.
(e) Each of the Trustees (on behalf of themselves and the
holders of Certificates), the Liquidity Providers and the Subordination Agent
may take any of the following actions without impairing its rights under this
Agreement:
(i) obtain a lien on any property to secure any amounts owing to
it hereunder, including, in the case of the Liquidity Providers, the
Liquidity Obligations,
(ii) obtain the primary or secondary obligation of any other
obligor with respect to any amounts owing to it hereunder, including,
in the case of the Liquidity Providers, any of the Liquidity
Obligations,
(iii) renew, extend, increase, alter or exchange any amounts owing
to it hereunder, including, in the case of the Liquidity Providers, any
of the Liquidity Obligations, or release or compromise any obligation
of any obligor with respect thereto,
(iv) refrain from exercising any right or remedy, or delay in
exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a
subordinated party or a surety under applicable law.
SECTION 10.10 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written, and acknowledge that
this Agreement has been made and delivered in the City of New York, and this
Agreement has become effective only upon such execution and delivery.
FLEET NATIONAL BANK,
not in its individual capacity but
solely as Trustee for each of the
Trusts
By______________________________
Name:
Title:
KREDIETBANK N.V.,
NEW YORK BRANCH,
as Class A Liquidity Provider, Class B
Liquidity Provider and Class C
Liquidity Provider
By_______________________________
Name:
Title:
By_______________________________
Name:
Title:
FLEET NATIONAL BANK, not in its
individual capacity except as
expressly set forth herein but
solely as Subordination Agent and
Trustee
By_______________________________
Name:
Title:
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<PAGE> 61
SCHEDULE 1 TO
INTERCREDITOR AGREEMENT
Indentures
Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989
BN-5] dated as of November 26, 1996 between Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee and The Chase Manhattan Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989
BN-6] dated as of November 26, 1996 between Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee and The Chase Manhattan Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
Second Amended and Restated Trust Indenture and Security Agreement [GPA 1989
BN-10] dated as of November 26, 1996 between Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as Owner
Trustee and The Chase Manhattan Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
First Amended and Restated Trust Indenture and Security Agreement [GPA 1989
BN-12] dated as of November 26, 1996 between Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as Owner
Trustee and The Chase Manhattan Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
First Amended and Restated Trust Indenture and Security Agreement [GPA 1990
AWA-13] dated as of November 26, 1996 between Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as Owner
Trustee and Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
First Amended and Restated Trust Indenture and Security Agreement [GPA 1990
AWA-14] dated as of November 26, 1996 between Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as Owner
Trustee and Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
First Amended and Restated Trust Indenture and Security Agreement [GPA 1990
AWA-15] dated as of November 26, 1996 between Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as Owner
Trustee and Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
<PAGE> 62
First Amended and Restated Trust Indenture and Security Agreement [GPA 1990
AWA-16] dated as of November 26, 1996 between Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as Owner
Trustee and Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
First Amended and Restated Trust Indenture and Security Agreement [GPA 1991
AWA-E1] dated as of November 26, 1996 between Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as Owner
Trustee and Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
First Amended and Restated Trust Indenture and Security Agreement [GPA 1991
AWA-E2] dated as of November 26, 1996 between Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as Owner
Trustee and Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
First Amended and Restated Trust Indenture and Security Agreement [GPA 1991
AWA-E3] dated as of November 26, 1996 between Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as Owner
Trustee and Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
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<PAGE> 63
SCHEDULE 2 TO
INTERCREDITOR AGREEMENT
Refunding Agreements
Refunding Agreement [GPA 1989 BN-5] dated as of November 20, 1996 among America
West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head
Lessee, GPA Group plc, as Parent Guarantor Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee, Fleet National Bank, not in its individual capacity except as expressly
provided therein but solely as Pass Through Trustee under each of the Pass
Through Trust Agreements, Chrysler Capital Corporation, as Owner Participant,
Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, not
in its individual capacity except as expressly provided therein but solely as
Indenture Trustee
Refunding Agreement [GPA 1989 BN-6] dated as of November 20, 1996 among America
West Airlines, Inc., as Lessee, GPA Leasing USA I, Inc., as Original Head
Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee, Fleet National Bank, not in its individual capacity except as expressly
provided therein but solely as Pass Through Trustee under each of the Pass
Through Trust Agreements, Chrysler Capital Corporation, as Owner Participant,
Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, not
in its individual capacity except as expressly provided therein but solely as
Indenture Trustee
Refunding Agreement [GPA 1989 BN-10] dated as of November 20, 1996 among America
West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head
Lessee GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee, Fleet National Bank, not in its individual capacity except as expressly
provided therein but solely as Pass Through Trustee under each of the Pass
Through Trust Agreements, Chrysler Capital Corporation, as Owner Participant,
Fleet National Bank, as Subordination Agent, and The Chase Manhattan Bank, not
in its individual capacity except as expressly provided therein but solely as
Indenture Trustee
Refunding Agreement [GPA 1989 BN-12] dated as of November 20, 1996 among America
West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head
Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee, Fleet National Bank, not in its individual capacity except as expressly
provided therein but solely as Pass Through Trustee under each of the Pass
Through Trust Agreements, Philip Morris Capital Corporation, as Owner
Participant, Fleet National Bank, as Subordination Agent, and The Chase
Manhattan Bank, not
<PAGE> 64
in its individual capacity except as expressly provided therein but solely as
Indenture Trustee
Refunding Agreement [GPA 1990 AWA-13] dated as of November 20, 1996 among
America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original
Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not
in its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner
Participant, Fleet National Bank, as Subordination Agent, and Fleet National
Bank, not in its individual capacity except as expressly provided therein but
solely as Indenture Trustee
Refunding Agreement [GPA 1990 AWA-14] dated as of November 20, 1996 among
America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original
Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not
in its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner
Participant, Fleet National Bank, as Subordination Agent and Fleet National
Bank, not in its individual capacity except as expressly provided therein but
solely as Indenture Trustee
Refunding Agreement [GPA 1990 AWA-15] dated as of November 20, 1996 among
America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original
Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not
in its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner
Participant, Fleet National Bank, as Subordination Agent, and Fleet National
Bank, not in its individual capacity except as expressly provided therein but
solely as Indenture Trustee
Refunding Agreement [GPA 1990 AWA-16] dated as of November 20, 1996 among
America West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original
Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not
in its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner
Participant, Fleet National Bank, as Subordination Agent, and Fleet National
Bank, not in its
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<PAGE> 65
individual capacity except as expressly provided therein but solely as Indenture
Trustee
Refunding Agreement [GPA 1991 AWA-E1] dated as of November 20, 1996 among
America West Airlines, Inc., as Lessee, GPA Leasing USA I, Inc., as Original
Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not
in its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner
Participant, Fleet National Bank, as Subordination Agent, and Fleet National
Bank, not in its individual capacity except as expressly provided therein but
solely as Indenture Trustee
Refunding Agreement [GPA 1990 AWA-E2] dated as of November 20, 1996 among
America West Airlines, Inc., as Lessee, GPA Leasing USA I, Inc., as Original
Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not
in its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner
Participant, Fleet National Bank, as Subordination Agent, and Fleet National
Bank, not in its individual capacity except as expressly provided therein but
solely as Indenture Trustee
Refunding Agreement [GPA 1990 AWA-E3] dated as of November 20, 1996 among
America West Airlines, Inc., as Lessee, GPA Leasing USA I, Inc., as Original
Head Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not
in its individual capacity except as expressly provided therein but solely as
Owner Trustee Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, Philip Morris Capital Corporation, as Owner
Participant, Fleet National Bank, as Subordination Agent, and Fleet National
Bank, not in its individual capacity except as expressly provided therein but
solely as Indenture Trustee
-3-
<PAGE> 1
Exhibit 4.11
REFUNDING AGREEMENT
[GPA 1989 BN-5]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
[----------------------------------],
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 55
Registration No. N624AW
Leased by America West Airlines, Inc.
<PAGE> 2
TABLE OF CONTENTS
Page
SECTION 1. Purchase of Equipment Notes; Refunding..................... 7
SECTION 2. Equipment Notes............................................ 10
SECTION 3. Conditions Precedent....................................... 10
SECTION 4. Certain Conditions Precedent to the Obligations
of the Original Head Lessee and the Parent
Guarantor; Certain Conditions Precedent to
the Obligations of the Lessee; Conditions
Precedent with respect to the Pass Through
Trustee............................................... 18
SECTION 5. Amendment and Restatement of the First Amended and Restated
Indenture................................................. 21
SECTION 6. Amendment and Restatement of the First and Restated Lease.. 22
SECTION 7. Termination of the Participation Agreement; Termination of
Sublease, etc............................................. 22
SECTION 8. Representations and Warranties of the Lessee............... 22
SECTION 9. Representations and Warranties............................. 27
SECTION 10. Transfer of Owner Participant's Interest................... 43
SECTION 11. Re-Registration of the Aircraft............................ 46
SECTION 12. Quiet Enjoyment............................................ 50
SECTION 13. Liens...................................................... 51
SECTION 14. Certain Additional Provisions Relating to
Original Head Lessee, Parent Guarantor, Trust Company,
Owner Trustee and Owner Participant................... 53
SECTION 15. Certain Retained Rights and Releases....................... 56
SECTION 16. Certain Additional Obligations of the Lessee,
the Owner Trustee, the Owner Participant and the
Indenture Trustee..................................... 62
SECTION 17. Lessee Protection of Title................................. 62
SECTION 18. Jurisdictional and Related Matters......................... 62
SECTION 19. Limitation on Recourse..................................... 64
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<PAGE> 3
Page
----
SECTION 20. Notices.................................................... 64
SECTION 21. Expenses................................................... 64
SECTION 22. Reliance of Liquidity Provider............................. 65
SECTION 23. Miscellaneous.............................................. 65
SECTION 24. Governing Law.............................................. 67
SECTION 25. Effectiveness.............................................. 67
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Schedule IV OP SLV Amount
Schedule V GPA SLV Amount
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1989 BN-5]
REFUNDING AGREEMENT [GPA 1989 BN-5] (this "Agreement"), dated
as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) [____________________], a
Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a
Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
four separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank, successor by merger to Manufacturers Hanover
Trust Company), a New York corporation, not in its individual capacity except as
otherwise expressly provided herein, but solely as Indenture Trustee (the
"Indenture Trustee") under the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, FG Unity Leasing Co., Ltd., a Japanese limited
purpose corporation (the "Japanese Lessor") and Air Tara Caymans I, Limited, a
Cayman Islands corporation wholly-owned by the Parent Guarantor ("GPA
Offshore"), entered into the Agreement to Purchase and Lease [GPA 1989 BN-5],
dated as of September 22, 1989 among GPA Offshore, the Parent Guarantor,
Barclays Bank plc, a public limited company organized under the laws of England
and acting through its Tokyo branch (the "Japanese Lender") and the Japanese
Lessor (the "Agreement to Purchase and Lease"), pursuant to which, among other
things, GPA Offshore agreed to sell to Japanese Lessor, and Japanese Lessor
agreed to purchase from GPA Offshore, the Aircraft (as defined below) on the
Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement (as defined below), the Japanese Lessor and GPA Offshore
entered into the Japanese Lease Agreement
<PAGE> 5
[GPA 1989 BN-5] dated as of September 22, 1989, as supplemented by Lease
Supplement No. 1, dated September 25, 1989 (the "Japanese Lease Supplement") (as
so supplemented, the "Japanese Lease") pursuant to which the Japanese Lessor
agreed to lease to GPA Offshore (in its capacity as lessee thereunder, together
with its successors and assigns, the "Japanese Lessee"), and GPA Offshore agreed
to lease from the Japanese Lessor, the Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, GPA Offshore and the Grand Cayman branch of the
Japanese Lender (the "Defeasance Bank") entered into two Assumption Agreements,
dated as of September 22, 1989, for Yen payments and Pounds Sterling payments,
respectively (as amended, modified or supplemented from time to time in
accordance with the terms thereof and of the Operative Documents, collectively,
the "Assumption Agreements"), pursuant to which the Defeasance Bank assumed
certain of the obligations of GPA Offshore under the Japanese Lease for certain
rent, termination and deficiency payments to be made thereunder (the portion
thereof so assumed being herein called the "Defeased Payments" and the Yen
portion thereof not so assumed being herein called the "Undefeased Yen Amount")
in consideration of the unconditional and irrevocable payment to it by GPA
Offshore of the agreed amounts set forth therein;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor delivered to the Japanese Lessor
the Japanese Lease Guaranty dated as of September 22, 1989 (the "Japanese Lease
Guaranty");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Defeasance Bank and the Japanese Lessor entered
into two Confirmations and Agreements, dated as of September 22, 1989 for Yen
payments and Pounds Sterling payments, respectively, (as amended, modified, or
supplemented from time to time in accordance with the terms thereof and of the
Operative Documents, collectively, the "Confirmation and Agreement"), pursuant
to which the Defeasance Bank agreed to undertake directly with the Japanese
Lessor to make the Defeased Payments under the Japanese Lease;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Japanese Lessor and GPA Offshore entered into the
Supplemental Agreement dated as of September 22, 1989 (the "Supplemental
Agreement") pursuant to which the Japanese Lessor agreed with GPA Offshore that
the Japanese Lessor's interest in the Aircraft shall be subject and subordinate
to the security interest of the Indenture Trustee, and that the Japanese Lessor
shall relinquish to the Indenture Trustee any proceeds of a disposition of the
Aircraft in the case of a foreclosure proceeding;
- 2 -
<PAGE> 6
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, GPA Offshore and the Owner Trustee entered into a Lease
Assignment, dated as of September 22, 1989 ("Japanese Lease Assignment")
pursuant to which GPA Offshore assigned to the Owner Trustee all of its right,
title and interest (but not any of its obligations) in the Aircraft, the
Japanese Lease, the Japanese Lease Supplement, the Assumption Agreement, the
Confirmation and Agreement, the Supplemental Agreement, the Omnibus Agreement,
the FUYO Guaranty, and GPA Offshore remained solely liable for its obligations
under the Japanese Lease;
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Manufacturers Hanover Trust Company, as Lender (the
"Lender"), the Owner Trustee and the Indenture Trustee entered into the
Participation Agreement [GPA 1989 BN-5], dated as of September 22, 1989 (as
amended, supplemented or otherwise modified from time to time, the
"Participation Agreement"), providing for the financing of one Airbus A320-231
aircraft (the "Aircraft");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust Indenture and Security Agreement [GPA 1989 BN-5], dated as of
September 22, 1989, as supplemented by Trust Indenture Supplement No. 1 [GPA
1989 BN-5], dated September 25, 1989 (as so supplemented, the "Original
Indenture");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1989 BN-5], dated as of September 22,
1989, as supplemented by Lease Supplement [GPA 1989 BN-5] No. 1 dated September
25, 1989 (as so supplemented, the "Original Lease"), whereby, subject to the
terms and conditions set forth therein, the Owner Trustee agreed to lease to the
Original Head Lessee, and the Original Head Lessee agreed to lease from the
Owner Trustee, the Aircraft commencing on the Delivery Date (as therein
defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1989 BN-5] dated as of September 22, 1989 (the "Parent Head Lease
Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent
Guarantor guaranteed all of the obligations of the Original Head Lessee under
the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1989 BN-5],
- 3 -
<PAGE> 7
dated as of September 22, 1989, as supplemented by Trust Agreement Supplement
[GPA 1989 BN-5] No. 1 dated September 25, 1989, and as further supplemented by
Trust Agreement Supplement [GPA 1989 BN-5] No. 2 dated October 24, 1991 (as
amended, supplemented or otherwise modified to the date hereof, the "Original
Trust Agreement"), pursuant to which the Owner Trustee agreed, among other
things, to hold the Trust Estate defined in Section 1.1 thereof for the benefit
of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1989 BN-5], dated
as of September 22, 1989 (as amended, supplemented or otherwise modified to the
date hereof, the "Head Lease TIA");
WHEREAS, the Original Head Lessee in its capacity as sublessor
(in such capacity, the "Sublessor") and America West Airlines, Inc. in its
capacity as sublessee (in such capacity, the "Sublessee") entered into the
Aircraft Sublease Agreement [GPA 1989 BN-5] dated as of September 21, 1990, as
supplemented by Sublease Supplement No. 1 [GPA 1989 BN-5] dated September 28,
1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989
BN-5] dated as of June 25, 1991 and Amendment No. 2 to Aircraft Sublease
Agreement [GPA 1989 BN-5] dated as of August 26, 1991 (as amended, supplemented
or otherwise modified to the date hereof, the "Sublease"), whereby, subject to
the terms and conditions set forth therein, the Sublessor agreed to sublease to
the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the
Aircraft commencing on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1989
BN-5] dated as of September 21, 1990 (as amended, modified or otherwise
supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the
Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of
the Original Head Lessee under Section 21(f) of the Sublease;
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1989 BN-5], dated as of September 21, 1990
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease and Sublessee Consent and Agreement [GPA 1989 BN-5] dated as of
September 21, 1990, as amended by Amendment No. 1 to Assignment of Sublease and
Sublessee Consent
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<PAGE> 8
and Agreement [GPA 1989 BN-5] dated as of October 1, 1991 (as amended, modified
or otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, in connection with the Term Refunding (as defined in
the Participation Agreement), the Original Head Lessee, the Parent Guarantor,
the Owner Participant, the Owner Trustee and the Indenture Trustee entered into
Amendment No. 1 to Participation Agreement [GPA 1989 BN-5], dated as of October
1, 1991 ("PA Amendment No. 1");
WHEREAS, concurrently with the execution and delivery of PA
Amendment No. 1, the Owner Trustee and the Indenture Trustee entered into the
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5],
dated as of October 1, 1991, as supplemented by Trust Indenture Supplement No. 2
[GPA 1989 BN-5], dated October 24, 1991 (as so amended and restated,
supplemented or otherwise modified to the date hereof, the "First Amended and
Restated Indenture");
WHEREAS, pursuant to the First Amended and Restated Indenture,
the Owner Trustee issued equipment trust certificates substantially in the form
set forth in Exhibit C thereof (the "Original Certificates") to the holders
thereof (the "Original Certificate Holders") as evidence of the indebtedness
then being made by the Owner Trustee to refinance a portion of the purchase
price of the Aircraft;
WHEREAS, concurrently with the execution and delivery of PA
Amendment No. 1, the Owner Trustee and the Original Head Lessee entered into the
Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5], dated as of
October 1, 1991, as supplemented by Lease Supplement [GPA 1989 BN-5] No. 2,
dated October 24, 1991 (as so amended and restated, supplemented or otherwise
modified to the date hereof, the "First Amended and Restated Lease");
WHEREAS, concurrently with the execution and delivery of PA
Amendment No. 1, the Owner Participant and the Original Head Lessee entered into
the Amended and Restated Head Lease Tax Indemnification Agreement [GPA 1989
BN-5], dated as of October 1, 1991 (as so amended and restated, supplemented or
otherwise modified to the date hereof, the "First Amended and Restated Head
Lease TIA");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will further amend and restate the First Amended and
Restated Indenture as the Second Amended and Restated Trust Indenture and
Security Agreement [GPA 1989 BN-5], dated as of the Restatement Date, as
supplemented by Trust Indenture Supplement No. 3 dated the Restatement Date (the
"Second Amended and Restated Indenture" and, the First Amended
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<PAGE> 9
and Restated Indenture as so amended and restated, the "Indenture"), under which
Indenture the Owner Trustee will issue secured equipment notes substantially in
the form set forth in Section 2.01 thereof (the "Equipment Notes") in four
series, the proceeds from the issuance and sale of which will be applied in part
to the redemption in full of the Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
First Amended and Restated Lease as the Second Amended and Restated Lease (as so
amended and restated, the "Lease");
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-5] No. 3 ("Trust
Supplement No. 3"), amending the Original Trust Agreement (as so amended and as
further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Second Amended and Restated Head Lease
Tax Indemnification Agreement, amending and restating the First Amended and
Restated Head Lease TIA (as so amended and restated, the "Second Amended and
Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into
the Amended and Restated Sublease Tax Indemnification Agreement amending and
restating the Sublease TIA (as so amended and restated, the "Amended and
Restated Sublease TIA");
WHEREAS, at the Closing, the Parent Guarantor and The Chase
Manhattan Bank (the "Deposit Bank") will enter into the Yen Deposit Agreement
("Yen Deposit Agreement"), providing for the Parent Guarantor to place on
deposit the Undefeased Yen Amount (as defined in the Yen Deposit Agreement) (the
"Cash Deposit") with the Deposit Bank;
WHEREAS, at the Closing, the Parent Guarantor and the
Indenture Trustee will enter into the Yen Deposit Charge Agreement (the "Yen
Deposit Charge Agreement") under which the Parent Guarantor shall charge and
assign to the Indenture Trustee all of its right, title and interest in and to
the Yen Deposit Agreement and the Cash Deposit to secure the Parent Guarantor's
obligations under Section 15(h) of this Agreement;
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<PAGE> 10
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
four separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving credit agreements
(each, a "Liquidity Facility"), for the benefit of the Holders of Equipment
Notes of each of three Pass Through Trusts, with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination
Agent will enter into the Intercreditor Agreement, dated as of the Restatement
Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject
to the satisfaction or waiver of the conditions set forth herein, on November
26, 1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as
a payment of Supplemental Rent under the Sublease all accrued
and unpaid Rent under the Sublease up to the Restatement Date,
if any, (less any amounts for which Sublessee is indemnified
by Sublessor) and (B) the Original Head Lessee shall pay to
the Owner Trustee, as a payment of Supplemental Rent under the
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<PAGE> 11
Original Lease, an amount equal to the accrued and unpaid
interest on the Original Certificates to but not including the
Restatement Date plus an amount equal to all other amounts due
to the holders of the Original Certificates under the Original
Indenture and the other Operative Documents (as defined in the
Original Indenture) payable on the Restatement Date under
Section 2.16(b)(ii) of the Original Indenture;
(ii) the Pass Through Trustee for each Pass Through
Trust shall pay to the Owner Trustee the aggregate purchase
price of the Equipment Notes being issued to such Pass Through
Trustee as set forth in clause (xiii) below;
(iii) the Owner Trustee (to the extent of proceeds
received under clauses (i) and (ii)) shall pay to the
Indenture Trustee for the benefit of the holders of the
Original Certificates an amount equal to (A) the unpaid
principal amount of the Original Certificates and (B) the
amounts specified in clause (i)(B) of this Section 1
(collectively, the "Aggregate Redemption Amount");
(iv) the Indenture Trustee shall disburse to the
holders of the Original Certificates the Aggregate Redemption
Amount owing to them on the Restatement Date with respect to
the Original Certificates as a redemption of the Original
Certificates;
(v) the Indenture Trustee shall receive the
Original Certificates for cancellation;
(vi) the Parent Guarantor and the Deposit Bank
shall enter into the Yen Deposit Agreement and the Parent
Guarantor shall place the Cash Deposit with the Deposit Bank,
and the Parent Guarantor and the Indenture Trustee shall enter
into the Yen Deposit Charge Agreement securing the Parent
Guarantor's obligations under Section 15(h) of this Agreement;
(vii) the Owner Trustee and the Indenture Trustee
shall enter into the Indenture (including Trust Indenture
Supplement No. 3);
(viii) the Original Head Lessee, the Sublessee, the
Owner Trustee and the Indenture Trustee shall enter into Lease
Amendment No. 1;
(ix) the Owner Participant and the Trust Company
shall enter into Trust Supplement No. 3;
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<PAGE> 12
(x) the Original Head Lessee and the Owner
Participant shall enter into the Second Amended and Restated
Head Lease TIA and the Sublessor and the Sublessee shall enter
into the Amended and Restated Sublease TIA;
(xi) the Original Head Lessee, GPA Leasing USA Sub
I, Inc., the Parent Guarantor and the Lessee shall enter into
an agreement in form and substance reasonably satisfactory to
each, inter alia, confirming the termination of certain rights
which the Parent Guarantor has to "put" aircraft to the Lessee
and the obligation of the Lessee to accept and lease such
aircraft (the "Put Termination Agreement");
(xii) the Parent Guarantor and/or one or more of its
affiliates and the Lessee will enter into an agreement (the
"Deed of Indemnity") pursuant to which the Parent Guarantor
and/or one or more of its affiliates, on the one hand, and the
Lessee, on the other, will indemnify each other with respect
to certain information included in the Prospectus and the
Registration Statement (as such terms are defined in the
Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xiii) the Owner Trustee shall issue, pursuant to
Article II of the Indenture, to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass
Through Trusts, Equipment Notes of the maturity and aggregate
principal amount, bearing the interest rate and for the
purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust.
(b) The Owner Participant, by its execution and delivery
hereof, requests and directs the Owner Trustee to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions contemplated
herein.
(c) The closing (the "Closing") of the transactions described
in this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement
Date, or at such other place as the parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
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<PAGE> 13
(e) In order to facilitate the transactions contemplated
hereby, the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent
Guarantor and the Lessee have entered into the Underwriting Agreement, dated as
of November 20, 1996 (the "Underwriting Agreement"), among such Persons and
Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and
Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the
terms and conditions hereof, the Lessee will enter into each of the Pass Through
Trust Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be
payable as to principal in accordance with the terms of the Indenture, and the
Equipment Notes shall provide for a fixed rate of interest per annum and shall
contain the terms and provisions provided for the Equipment Notes in the
Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Equipment Notes bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Equipment Notes in the aggregate shall be in the principal amounts set forth on
Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust
Agreements and of the other Operative Documents, all such Equipment Notes shall
be dated and authenticated as of the Restatement Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass
Through Trustee to make the payments described in Section 1(a)(ii) and the
obligations of the Owner Trustee to make the payments described in Section
1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner
Trustee, the Owner Participant and the Indenture Trustee to participate in the
transactions contemplated by this Agreement on the Restatement Date are subject
to the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent (except that paragraphs (a), (f) and (j) shall not be
conditions precedent to the obligations of the Owner Trustee hereunder,
paragraphs (g) and (l) shall not be conditions precedent to the obligations of
the Owner Participant hereunder and paragraphs (e) and (k) shall not be
conditions precedent to the obligations of the Indenture Trustee hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes
to the Indenture Trustee for authentication, and the Indenture Trustee shall
have authenticated such Equipment Notes and shall have tendered the Equipment
Notes to the Subordination Agent on behalf of the Pass Through Trustee in
accordance with Section 1.
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<PAGE> 14
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of the
following documents and the Indenture Trustee shall have received executed
counterparts of items (1) through (8):
(1) this Agreement;
(2) Lease Amendment No. 1, the Second Amended and
Restated Lease and Lease Supplement No. 3;
(3) Trust Supplement No. 3;
(4) the Second Amended and Restated Indenture and
Trust Indenture Supplement No. 3;
(5) each of the Pass Through Trust Agreements and each
Pass Through Trust Supplement set forth in
Schedule I hereto;
(6) the Intercreditor Agreement;
(7) the Liquidity Facility for each of the Class A,
Class B and Class C Trusts (as defined in the
Intercreditor Agreement); and
(8) the Yen Deposit Agreement and the Yen Deposit
Charge Agreement.
(c) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received the following:
(1) an incumbency certificate of each of the Original
Head Lessee, the Lessee and the Parent Guarantor as to the
person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on
behalf of such Person in connection with the transactions
contemplated hereby (including, without limitation, each of
the documents referred to herein) and as to the signatures of
such person or persons;
(2) a copy of the resolutions of the board of
directors of each of the Original Head Lessee, the Lessee and
the Parent Guarantor or the applicable committee thereof,
certified by the Secretary or an Assistant Secretary of such
Person, duly authorizing the transactions contemplated hereby
and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of
such
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<PAGE> 15
Person in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of
each of the Original Head Lessee and the Lessee, certified by
the Secretary of State of its state of incorporation, a copy
of the by-laws of each of the Original Head Lessee and the
Lessee, certified by the Secretary or Assistant Secretary of
such Person, and a certificate or other evidence from the
Secretary of State of its state of incorporation, dated as of
a date reasonably near the Restatement Date, as to its due
incorporation and good standing in such state; and
(4) a copy of the Memorandum and Articles of
Association of the Parent Guarantor certified to be true and
correct by the Secretary or an Assistant Secretary of the
Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case of (1),
(5) and (6) below, a certificate signed by an authorized officer of the Lessee
and, in the case of (2), (3) and (4) below, a certificate signed by an
authorized officer of the Original Head Lessee, dated the Restatement Date,
certifying that:
(1) the Aircraft has been duly certified by the
FAA as to type and airworthiness and has a current,
valid certificate of airworthiness;
(2) the Second Aircraft FAA Bill of Sale (as defined
in the Participation Agreement), the Original Lease, the First
Amended and Restated Lease, the Original Indenture and the
First Amended and Restated Indenture have each been duly
recorded, and the Original Trust Agreement has been duly
filed, with the FAA pursuant to the sections of Title 49 of
the United States Code relating to aviation (the "Federal
Aviation Act");
(3) Lease Amendment No. 1, the Second Amended and
Restated Lease, Lease Supplement No. 3, the Second
Amended and Restated Indenture, Trust Indenture
Supplement No. 3 and Trust Supplement No. 3 covering
the Aircraft shall have been duly filed for recordation
with the FAA pursuant to the Federal Aviation Act;
(4) the Aircraft has been registered with the FAA
in the name of the Owner Trustee;
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<PAGE> 16
(5) the Lessee has authority to operate the
Aircraft; and
(6) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the
Secretary, an Assistant Secretary or other appropriate officer
of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Indenture Trustee, each certified by the Secretary, an
Assistant Secretary or other appropriate officer of the
Indenture Trustee; and
(4) a certificate signed by an authorized officer of
the Indenture Trustee, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Indenture Trustee are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner
Trustee as to the person or persons authorized to
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<PAGE> 17
execute and deliver this Agreement and each of the other
documents to be executed on behalf of the Owner Trustee in
connection with the transactions contemplated hereby
(including, without limitation, each of the documents referred
to herein) and as to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Owner Trustee, each certified by the Secretary or an
Assistant Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
(1) an incumbency certificate of the Owner
Participant as to the person or persons authorized to execute
and deliver this Agreement and each of the other documents to
be executed on behalf of the Owner Participant in connection
with the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Participant or the applicable committee
thereof, certified by the Secretary or an Assistant Secretary
of the Owner Participant, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Owner Participant in connection
with the transactions contemplated hereby;
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<PAGE> 18
(3) a copy of the certificate of incorporation of the
Owner Participant, certified by the Secretary of State of its
state of incorporation, a copy of the by-laws of the Owner
Participant, certified by the Secretary or Assistant Secretary
of the Owner Participant, and a certificate or other evidence
from the Secretary of State of its state of incorporation,
dated as of a date reasonably near the Restatement Date, as to
its due incorporation and good standing in such state; and
(4) a certificate signed by an authorized officer of
the Owner Participant, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Owner Participant are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the Lessee a
report from Willis Corroon in substantially the form of Exhibit D attached
hereto.
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion addressed
to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews &
Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President-
Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the
Lessee, in each case in form and substance satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received an opinion addressed to it from
Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in
form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from (i) Kelley
Drye & Warren LLP, special counsel for the Indenture Trustee, and (ii) Shipman &
Goodwin LLP, special counsel for the Subordination Agent and the Pass Through
Trustee, in each case in form and substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received an opinion addressed to it from (i)
Morgan, Lewis & Bockius LLP, special
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<PAGE> 19
counsel for the Owner Participant and (ii) in-house counsel for the Owner
Participant, in each case in form and substance satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case, special
counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity
Provider, in each case in form and substance satisfactory to the Pass Through
Trustee, the Owner Trustee and the Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma
City, Oklahoma, in form and substance satisfactory to each of them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York
counsel for the Original Head Lessee and the Parent Guarantor, in form and
substance satisfactory to each of them.
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from McCann FitzGerald, special Irish counsel for the Parent
Guarantor, in form and substance satisfactory to each of them.
(q) The Pass Through Trustee, the Owner Trustee and the
Indenture Trustee each shall have received an opinion addressed to it from
Freshfields, special English counsel for the Parent Guarantor, in form and
substance satisfactory to each of them.
(r) The Original Head Lessee, the Lessee, GPA Leasing USA Sub
I, Inc. and the Parent Guarantor shall have entered into the Underwriting
Agreement and the Lessee shall have entered into each of the Pass Through Trust
Agreements, the Certificates shall have been issued and sold pursuant to the
Underwriting Agreement and the Pass Through Trust Agreements, and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the aggregate purchase price of the Equipment
Notes to be purchased from the Owner Trustee.
(s) The Original Head Lessee and the Owner Participant shall
each have executed and delivered to the other the Second Amended and Restated
Head Lease TIA.
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<PAGE> 20
(t) The Sublessor and the Sublessee shall each have executed
and delivered to the other the Amended and Restated Sublease TIA.
(u) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or interpretations thereof
by appropriate regulatory authorities or any court that would make it illegal
for the Pass Through Trustee to make the payments described in Section 1(a)(ii)
or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner
Participant or any other party hereto to participate in the transactions
contemplated by this Agreement on the Restatement Date.
(v) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in connection with
the Pass Through Trustee's making of the payments described in Section 1(a)(ii)
or the Owner Trustee's or the Owner Participant's participation in the
transactions contemplated by this Agreement on the Restatement Date shall have
been duly obtained.
(w) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security interests
created by or pursuant to the Indenture that are not covered by the recording
system established by the Federal Aviation Act shall have been executed and
delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the
Owner Trustee, as the case may be, and such financing, termination, amendment
and continuation statement or statements or documents to the same purposes shall
have been duly filed in all places necessary or advisable, and any additional
Uniform Commercial Code financing, termination, amendment and continuation
statements deemed advisable by the Original Head Lessee, the Lessee, the Owner
Participant or the Indenture Trustee shall have been executed and delivered by
the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner
Trustee, as the case may be, and duly filed in all places advisable.
(x) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or interpretations thereof
by appropriate regulatory authorities or any court that would adversely affect
the tax consequences of the transactions contemplated by this Agreement to the
Owner Participant, the Owner Trustee or any of their respective Affiliates.
(y) The Owner Trustee shall have received a letter of credit
in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the
Lease.
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<PAGE> 21
(z) The Owner Participant shall have received any other
documents and evidence as the Owner Participant or its counsel may request.
Promptly following the recording of Lease Amendment No. 1, the
Second Amended and Restated Lease (including Lease Supplement No. 3) and the
Second Amended and Restated Indenture (including Trust Indenture Supplement No.
3) pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement
No. 3, the Second Amended and Restated Indenture, Trust Indenture Supplement No.
3 and Trust Supplement No. 3. Promptly following the execution and delivery of
the Yen Deposit Charge Agreement (and in no event later than the deadline
prescribed by law), the Parent Guarantor shall cause the prescribed particulars
in respect of the Yen Deposit Charge Agreement and the Yen Deposit Charge
Agreement itself to be delivered to the registrar of companies in the United
Kingdom and Ireland for filing.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
(i) Each of the Original Head Lessee and the Parent Guarantor
shall have received counterparts of the following documents executed by
each of the parties thereto other than the Original Head Lessee and the
Parent Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Second Amended
and Restated Lease and Lease Supplement No.
3;
(3) the Second Amended and Restated Head Lease
TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
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<PAGE> 22
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee and such other
releases and terminations as it may
reasonably request;
(9) that certain letter agreement dated as of
the Restatement Date relating to Stipulated
Loss Values with respect to the Amended and
Restated Lease (the "SLV Letter Agreement");
and
(10) the Yen Deposit Agreement and the Yen
Deposit Charge Agreement.
(ii) Each of the Original Head Lessee and the Parent Guarantor
shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee
referred to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i),
Section 3(j), Section 3(k), Section 3(l),
Section 3(m) and Section 3(n), in each case
addressed to each of the Original Head
Lessee and the Parent Guarantor and in form
and substance satisfactory to each of them;
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form
and substance reasonably satisfactory to
each of them; and
(6) the report referred to in Section 3(h)
addressed to each of the Original Head
Lessee and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent
Guarantor shall have received such other documents and
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<PAGE> 23
evidence with respect to each other party hereto as each of them or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein or therein set forth.
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Second Amended
and Restated Lease and Lease Supplement No.
3;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the following
documents:
(1) the incumbency certificate of the Original
Head Lessee and Parent Guarantor referred to
in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee
and Parent Guarantor referred to in
Section 3(c)(2);
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<PAGE> 24
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j),
Section 3(k), Section 3(l), Section 3(m),
Section 3(n), Section 3(o) and Section 3(p),
in each case addressed to Lessee and in form
and substance satisfactory to Lessee; and
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to Lessee and in form
and substance reasonably satisfactory to
Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass Through Trust Agreements of the Pass Through
Trustee are correct as of the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary action in connection therewith and compliance with the conditions
herein set forth.
SECTION 5. Amendment and Restatement of the First Amended and
Restated Indenture. Subject to the satisfaction or waiver of the conditions
precedent set forth herein, the Owner Participant, by execution and delivery
hereof, requests,
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<PAGE> 25
authorizes and directs the Owner Trustee to execute and deliver the Second
Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee,
by execution and delivery hereof, agree to execute and deliver the Second
Amended and Restated Indenture. Each of the Original Head Lessee, the Parent
Guarantor and the Lessee, by execution and delivery hereof, consent to such
execution and delivery of the Second Amended and Restated Indenture. The Second
Amended and Restated Indenture shall be effective as of the Restatement Date.
SECTION 6. Amendment and Restatement of the First Amended and
Restated Lease. Subject to the satisfaction or waiver of the conditions
precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the
Parent Guarantor and the Owner Participant, by execution and delivery hereof,
consent to the assignments, delegations, and releases set forth in, and to the
amendment and restatement of the First Amended and Restated Lease effected by,
and the Owner Participant requests and instructs the Owner Trustee to execute
and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head
Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery
hereof, to execute and deliver Lease Amendment No. 1. The Second Amended and
Restated Lease shall be effective as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner Trustee,
the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect on and after the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no obligations on the parties thereto. Upon
the execution and delivery of Lease Amendment No. 1 by each of the parties
thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease
shall be terminated as and to the extent set forth herein and therein. Lease
Amendment No. 1 shall be effective as of the Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original Head
Lessee (except as to the representation and warranty contained in Section 8(i)),
the Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State
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<PAGE> 26
of Delaware, has the corporate power and authority to own or hold under lease
its properties, has, or had on the respective dates of execution thereof, the
corporate power and authority to enter into and perform its obligations under
this Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust
Agreements, the Amended and Restated Sublease TIA, the SLV Letter Agreement and
any certificate delivered by the Lessee pursuant to the foregoing (the "Lessee
Documents") and is duly qualified to do business as a foreign corporation in
each jurisdiction where the failure to so qualify would have a material adverse
effect on its business, operations or condition (financial or otherwise), or on
its ability to perform its obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform Commercial
Code in effect in the State of Arizona) is located at 4000 East Sky Harbor
Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under the Lessee
Documents have been duly authorized by all necessary corporate action on the
part of the Lessee, do not require any stockholder approval, or approval or
consent of any trustee or holder of any material indebtedness or material
obligations of the Lessee, except such as have been duly obtained and are in
full force and effect, and do not contravene any law, governmental rule,
regulation, judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions of, or
constitute a default under, or result in the creation of any Lien (other than
Permitted Liens) upon the property of the Lessee under, any indenture, mortgage,
contract, lease or other agreement in each case having payment obligations in
excess of $500,000 to which the Lessee is a party or by which it may be bound or
affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee under the
Lessee Documents nor the consummation by the Lessee of any of the transactions
contemplated by the Lessee Documents, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other action in
respect of, the Department of Transportation, the FAA, or any other federal,
state, local or foreign governmental authority having jurisdiction, other than
those which have already been received and which the Lessee is in compliance
with and (i) the registration of the Certificates under the Securities Act of
1933, as amended (the "Securities Act") and the securities laws of any state in
which the Certificates may be offered for sale if the laws of such state require
such action, (ii) the qualification of the Pass Through Trust Agreements under
the
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<PAGE> 27
Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers,
exemptions, authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee required to be
obtained on or prior to the Restatement Date, which orders, permits, waivers,
exemptions, authorizations and approvals have been duly obtained and are, or
will on the Restatement Date be in full force and effect, (B) the registration
of the Aircraft pursuant to the Federal Aviation Act and (C) such consents,
approvals, notices, registrations and other actions required by the terms of the
Lessee Documents to the extent required to be given or obtained only after the
Restatement Date and (iv) the registrations and filings referred to in Section
8(i);
(e) each Lessee Document has been duly executed and delivered
by the Lessee and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, each Lessee Document constitutes, or when
executed will constitute, the legal, valid and binding obligations of the Lessee
enforceable against the Lessee in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors or lessors
generally and by general principles of equity, whether considered in a
proceeding at law or in equity, and except, in the case of the Lease, as may be
limited by applicable laws which may affect the remedies provided in the Lease,
which laws, however, do not make the remedies provided in the Lease inadequate
for the practical realization of the benefits intended to be afforded thereby;
(f) except as disclosed in the Prospectus, there are no
pending or, to its knowledge, threatened actions or proceedings before any court
or administrative agency or regulatory commission or other governmental agency
against or affecting the Lessee that are reasonably expected to materially
adversely affect the ability of Lessee to enter into or perform its obligations
under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be free
and clear of any and all Liens (other than Permitted Liens) created by or
through the Lessee;
(i) except for the registration of the Aircraft pursuant to
the Federal Aviation Act, the filing for recordation pursuant to the Federal
Aviation Act (with confidential financial terms redacted) of Lease Amendment No.
1, the Second Amended and Restated Lease, Lease Supplement No. 3, Trust
Supplement No. 3, the First Amended and Restated Indenture and Indenture
Supplement
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<PAGE> 28
No. 2, and each of the other documents referred to in Annex A hereto, all with
the FAA, the filing of a Uniform Commercial Code ("UCC") amended financing
statement with the Secretary of State of the State of Delaware with regard to
the Original Lease, the filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC financing statement with
the Secretary of State of the State of Arizona with respect to the Lease, the
filing of a UCC termination statement with the Secretary of State of the State
of Arizona with respect to the Sublease, and the filing of a UCC termination
statement with the Secretary of State of the State of Delaware with respect to
the Initial Sublease Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly effected as of the
Restatement Date (and assignments thereof and continuation statements at
periodic intervals), and other than the taking of possession by the Indenture
Trustee of the original counterparts of the Original Lease, Lease Amendment No.
1, the Second Amended and Restated Lease, and all Lease Supplements thereto (to
the extent the Lease constitutes chattel paper), and the placing of the Lease
identification required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any financing
statement under Article 9 of the UCC of the State of Delaware, New York or
Arizona) and no further action is necessary, under the laws of the United States
of America or the States of Delaware, New York and Arizona in order to perfect
the Owner Trustee's interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the Indenture Trustee
in the Owner Trustee's interest in the Aircraft and in the Lease;
(j) all obligations of the Lessee owing to the Lessor in
connection with the Lease are at least pari passu with all unsecured and
unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default but for
the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an Event of Loss
with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are required to be
filed and has paid or will pay or has caused or will cause to be paid all taxes
shown to be due or payable on said returns and on any assessment received by the
Lessee, to the extent such taxes have become due and payable, except for taxes
and returns with respect thereto the nonpayment
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<PAGE> 29
or nonfiling of which, either in any case or in the aggregate, could have no
material adverse effect on the Lessee, its condition (financial or otherwise),
business, operations or prospects, or on its ability to perform its obligations
under the Lease or which are being diligently contested by the Lessee in good
faith by appropriate proceedings and with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all material
respects and fairly present the Lessee's financial condition as of September 30,
1996 and the results of its operations for the period covered in conformance
with GAAP (except as otherwise noted therein and with which any such change the
independent auditors of the Lessee have agreed), since September 30, 1996, there
has been no material adverse change in the Lessee's business, operations,
condition (financial or otherwise) or prospects which has not been disclosed in
writing to the Owner Participant and the Indenture Trustee and does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary,
duties or other similar Taxes then due and for which the Lessee is responsible
pursuant to the Lessee Documents, shall have been paid, other than such Taxes
which are being contested by the Lessee in good faith and by appropriate
proceedings (and for which the Lessee shall have established such reserves as
are required under GAAP) so long as such proceedings do not involve any material
danger to the sale, forfeiture or loss of the Aircraft;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations or the
Cuban Assets Control Regulations of the United States Treasury Department, 31
Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any
regulations, interpretations or rulings issued thereunder, and the Lessee is
not, and is not acting on behalf of or for the benefit of, an "Iranian Entity"
within the meaning of the Iranian Assets Control Regulations of the United
States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter
V, as amended, and the transactions contemplated by this Agreement are not
prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control
Regulations or any regulations, interpretations or rulings issued under any
thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made out of the
assets of any "employee benefit plan" as defined in Section 3(3) of ERISA;
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<PAGE> 30
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the Owner
Participant or the Indenture Trustee by the Lessee in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. There is no fact known to the Lessee (other than matters of a
general economic nature) which the Lessee has not disclosed in writing to the
Owner Participant or the Indenture Trustee which could impair its ability to
perform its obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy
Code, the Lessor as lessor of the Aircraft under the Lease, and the Indenture
Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to
the Indenture, would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to the Aircraft.
SECTION 9. Representations and Warranties. Each of the parties
below represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below) represents and
warrants that:
(1) the Indenture Trustee is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of New York, is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal
Aviation Act and the rules and regulations of the FAA
thereunder (as so defined, a "Citizen of the United States")
(without making use of a voting trust, voting powers agreement
or similar arrangement), will notify promptly all parties to
this Agreement if in its reasonable opinion its status as a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement) is
likely to change and will resign as Indenture Trustee as
provided in Section 8.02 of the Indenture promptly after it
obtains actual knowledge that it has ceased to be such a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement), and
has the full corporate power, authority and legal right under
the laws of the State of New York and the federal laws of the
United States of America pertaining to its
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<PAGE> 31
banking, trust and fiduciary powers to execute and deliver
each of this Agreement, the Indenture, the Yen Deposit Charge
Agreement and each other Operative Document to which it is a
party and to carry out its obligations under this Agreement,
the Indenture and each other Operative Document to which it is
a party;
(2) the execution and delivery by the Indenture
Trustee of this Agreement, the Indenture, Lease Amendment No.
1, the Yen Deposit Charge Agreement and each other Operative
Document to which it is a party and the performance by the
Indenture Trustee of its obligations under this Agreement, the
Indenture and each other Operative Document to which it is a
party have been duly authorized by the Indenture Trustee and
will not violate its articles of association or by-laws or the
provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the Indenture and
the Yen Deposit Charge Agreement, when executed and delivered
by the Indenture Trustee, will constitute, the legal, valid
and binding obligations of the Indenture Trustee enforceable
against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Yen Deposit Charge Agreement
and the Operative Documents to which it is a party;
(5) there are no Lenders' Liens (as defined in the
Lease) on the Aircraft or any portion of the Trust Estate
created by or through the Indenture Trustee in its individual
capacity; and
(6) it has possession of the chattel paper original
counterpart of the Original Lease, the First Amended and
Restated Lease, Lease Amendment No. 1 and the Second Amended
and Restated Lease.
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<PAGE> 32
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties are made
solely by the Owner Trustee) and the Owner Trustee represents and warrants that:
(1) the Trust Company is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and
authority to carry on its business as now conducted, has, or
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver Trust
Supplement No. 3, has the corporate power and authority to
carry out the terms of the Trust Agreement, and each of the
Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the
authorization, execution and delivery of Trust Supplement No.
3 by the Owner Participant), the corporate power and authority
to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Equipment Notes, Lease Amendment
No. 1, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
(2) (i) each of the Trust Company and the Owner
Trustee has duly authorized, executed and delivered the Trust
Agreement and this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
3 by the Owner Participant) the Trust Agreement constitutes a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity, (ii) the Owner
Trustee has duly authorized, executed and delivered this
Agreement and (assuming the due authorization, execution and
delivery of Trust Supplement No. 3 by the Owner Participant)
this Agreement and the Trust Agreement constitute, and the
Indenture and the Lease, when entered into, will constitute, a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
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<PAGE> 33
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) assuming the due authorization, execution and
delivery of Trust Supplement No. 3 by the Owner Participant,
the Owner Trustee has duly authorized, and on the Restatement
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Equipment Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Equipment Note on the Restatement Date
will constitute the valid and binding obligation of the Owner
Trustee and will be entitled to the benefits and security
afforded by the Indenture in accordance with the terms of such
Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner
Trustee or the Trust Company, as the case may be, of this
Agreement, the Original Trust Agreement, Trust Supplement No.
3, the Original Indenture, the First Amended and Restated
Indenture, the Indenture, the Original Lease, the First
Amended and Restated Lease, Lease Amendment No. 1, the Lease,
the Equipment Notes or any other Operative Document to which
it is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the
compliance by it with any of the terms and provisions hereof
and thereof, (A) requires or will require any approval of its
stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or
by-laws, or contravenes or will contravene any provision of,
or constitutes or will constitute a default under, or results
or will result in any breach of, or results or will result in
the creation of any Lien (other than as permitted under the
Operative Documents) upon its property under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other
agreement or instrument to which it is a party or by which it
is bound, or contravenes or will contravene any law,
governmental rule or regulation of the State of Delaware or
any United States of America governmental authority or agency
governing the trust powers of the Owner Trustee, or any
judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any state or local governmental
authority or agency or any State of
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<PAGE> 34
Delaware or any United States governmental authority or agency
regulating the trust powers of the Trust Company is required
for the execution and delivery of, or the carrying out by, the
Trust Company or the Owner Trustee, as the case may be, of any
of the transactions contemplated hereby or by the Trust
Agreement, the Indenture, the Lease, Lease Amendment No. 1,
the Equipment Notes, or any other Operative Document to which
it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice
or action as has been duly obtained, given or taken or which
is described in Section 8(d);
(6) there exists no Lessor's Lien or Head Lessor's
Lien (each as defined in the Lease) (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens) attributable to
the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's
Lien (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens) attributable to the Trust Company;
(8) there are no Taxes payable by the Owner Trustee
or the Trust Company imposed by the State of Delaware or any
political subdivision thereof in connection with the
redemption of the Original Certificates or the issuance of the
Equipment Notes, or the execution and delivery by it of any of
the instruments referred to in clauses (1), (2), (3) and (4)
above, that, in each case, would not have been imposed if the
Trust Estate were not located in the State of Delaware and the
Trust Company had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner
Trustee) any or all of its duties under the Operative
Documents in, and (c) engaged in any activities unrelated to
the transactions contemplated by the Operative Documents in,
the State of Delaware;
(9) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner Trustee,
either in its individual capacity or as Owner Trustee, before
any court or administrative agency which, if determined
adversely to it, would materially adversely affect the ability
of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under
any of
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<PAGE> 35
the instruments referred to in clauses (1), (2), (3)
and (4) above;
(10) both its chief executive office, and the place
where its records concerning the Aircraft and all its
interests in, to and under all documents relating to the Trust
Estate (other than such as may be maintained and held by the
Indenture Trustee pursuant to the Indenture), are located in
Wilmington, Delaware. Owner Trustee, in its individual
capacity or as Owner Trustee, agrees that it will not change
the location of such office to a location outside of Delaware,
without prior written notice to all parties hereto; and
(11) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangements).
(c) The Owner Participant represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, has the
corporate power and authority to carry on its present business
and operations and to own or lease its properties, has, or had
on the respective dates of execution thereof, as the case may
be, the corporate power and authority to enter into and to
perform its obligations under this Agreement, the Trust
Agreement, the SLV Letter Agreement and the Second Amended and
Restated Head Lease TIA; this Agreement, the SLV Letter
Agreement and Trust Supplement No. 3 have been duly
authorized, executed and delivered by it; and this Agreement,
the Trust Agreement, the SLV Letter Agreement and the Second
Amended and Restated Head Lease TIA constitute the legal,
valid and binding obligations of the Owner Participant
enforceable against it in accordance with their respective
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a
proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Second Amended and Restated Head
Lease TIA or any other Operative Document to which it is a
party nor (B) compliance by it with all of the provisions
hereof or thereof, (x) will contravene any law or order of any
court or
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<PAGE> 36
governmental authority or agency applicable to or binding on
the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements
of the Owner Participant under applicable law), or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its
certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its
property may be bound or affected;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Second Amended and Restated Head Lease TIA
(it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee other than the laws, rules or regulations relating to
aircraft lease transactions generally or to the citizenship
requirements of the Owner Participant under the Federal
Aviation Act);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant before any court or administrative agency or
arbitrator which, if determined adversely to the Owner
Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement or
the Second Amended and Restated Head Lease TIA;
(5) neither the Owner Participant nor anyone
authorized by it to act on its behalf (it being understood
that in proposing, facilitating and otherwise taking any
action in connection with the refinancing contemplated hereby
and agreed to herein by the Owner Participant, the Lessee has
not acted as agent of the Owner Participant) has directly or
indirectly offered any Equipment Notes or Certificates or any
interest in and to the Trust Estate, the Trust Agreement or
any similar interest for sale to, or
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<PAGE> 37
solicited any offer to acquire any of the same from, more than
ten Persons; the Owner Participant's interest in the Trust
Estate and the Trust Agreement was acquired for its own
account and was purchased for investment and not with a view
to any resale or distribution thereof;
(6) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant (including for this purpose Liens
that would be Lessor's Liens but for the first proviso in the
definition of Lessor's Liens); and
(7) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangement). If at any time Owner
Participant has ceased to be, or shall have actual knowledge
that it is likely to cease to be, such a citizen, and (i) the
Aircraft shall be or would thereupon become ineligible for
registration in the name of Owner Trustee under the Federal
Aviation Act as in effect at such time (without regard to the
"based and primarily used" provisions thereof) and the
regulations then applicable thereunder, or (ii) the Aircraft
is registered in a jurisdiction other than the United States
of America, in circumstances in which the preceding clause (i)
does not apply and the Lessee or any Permitted Sublessee at
any time proposes to register the Aircraft in the United
States of America, then Owner Participant shall (at its own
expense and without any reimbursement or indemnification from
the Lessee or any Permitted Sublessee) (A) immediately either
(1) transfer in accordance with Section 10 hereof all of its
right, title and interest in and to the Trust Agreement, the
Trust Estate, this Agreement and the Second Amended and
Restated Head Lease TIA or (2) take such other action,
including, without limitation, the establishment of a voting
trust or voting powers agreement (in which case Owner
Participant shall remain the beneficial owner of the Trust
Estate), as may be necessary to prevent the deregistration of
the Aircraft under the Federal Aviation Act or to maintain
such registration of the Aircraft or to make possible such
registration of the Aircraft in the United States of America
and to prevent Indenture Trustee, the Holders of the Equipment
Notes, the Lessee or any Permitted Sublessee from being
adversely affected as a result thereof and (B) indemnify the
Lessee, the Indenture Trustee, the Holders of the Equipment
Notes and any Permitted Sublessee, from and against any and
all Claims incurred or suffered as a result of Owner
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<PAGE> 38
Participant's failure to be such a citizen or loss of such
citizenship, including, without limitation, as a result of the
Aircraft's becoming ineligible or ceasing to remain eligible
for such registration.
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly organized,
validly existing and in good standing under the federal laws
of the United States of America, and has the full corporate
power, authority and legal right under the federal laws of the
United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Intercreditor Agreement, and
this Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement will
have been, duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement constitutes, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement, will
constitute, the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement or this Agreement, the
purchase by the Pass Through Trustee of the Equipment Notes
pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Pass Through Trustee's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Pass Through Trustee and does not contravene or
result in any breach of, or constitute a default under, the
Pass Through Trustee's articles of association or by-laws or
any agreement or instrument
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<PAGE> 39
to which the Pass Through Trustee is a party or by
which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(5) assuming that the trusts created by the Pass
Through Trust Agreements will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code for
federal income tax purposes, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the acquisition, possession or ownership by
the Pass Through Trustee of any of the Equipment Notes (other
than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
prior to the exercise of remedies upon the occurrence of an
Indenture Event of Default, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
such trusts will not be subject to any Taxes imposed by the
State of Connecticut or any political subdivision or taxing
authority thereof; upon the exercise of remedies following the
occurrence of an Indenture Event of Default, there will be no
Taxes payable by the Pass Through Trustee imposed by the State
of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery
and performance by the Pass Through
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<PAGE> 40
Trustee of this Agreement, any of the Pass Through Trust
Agreements or the Intercreditor Agreement (other than
franchise or other Taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by
any of the Pass Through Trust Agreements), and the trusts
created by the Pass Through Trust Agreements will not be
subject to any Taxes imposed by the State of Connecticut or
any political subdivision thereof, solely because the Pass
Through Trustee maintains an office in, and administers the
trusts created by the Pass Through Trust Agreements in, the
State of Connecticut;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly
or indirectly offered any Equipment Notes for sale to any
Person or solicited any offer to acquire any Equipment Notes
from any Person, nor has the Pass Through Trustee authorized
anyone to act on its behalf to offer directly or indirectly
any Equipment Notes for sale to any Person, or to solicit any
offer to acquire any Equipment Notes from any Person; and the
Pass Through Trustee is not in default under any Pass Through
Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(e) The Subordination Agent represents and warrants that:
(1) the Subordination Agent is a duly organized
national banking association, validly existing and in good
standing with the Comptroller of the Currency under the laws
of the United States of America and has the full corporate
power, authority and legal right under the laws of the United
States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Liquidity
Facilities, the Intercreditor Agreement and this
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<PAGE> 41
Agreement and to perform its obligations under this
Agreement, the Liquidity Facilities and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement will have been,
duly authorized, executed and delivered by the Subordination
Agent; this Agreement constitutes, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement, will constitute,
the legal, valid and binding obligations of the Subordination
Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Subordination Agent of each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement or
the performance by the Subordination Agent of this Agreement,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Subordination Agent and do not contravene or
result in any breach of, or constitute a default under, the
Subordination Agent's articles of association or by-laws or
any agreement or instrument to which the Subordination Agent
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement or this Agreement nor the consummation
by the Subordination Agent of any of the transactions
contemplated hereby or thereby requires the consent or
approval of, the giving of notice to, the registration with,
or the taking of any other action with respect to, any State
of Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordina-
tion Agent imposed by the State of Connecticut or any
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<PAGE> 42
political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Subordination Agent of this Agreement, any of the Liquidity
Facilities or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services
rendered in connection with the transactions contemplated by
the Intercreditor Agreement or any of the Liquidity
Facilities) solely because the Subordination Agent maintains
an office and administers its trust business in the State of
Connecticut, and there are no Taxes payable by the
Subordination Agent imposed by the State of Connecticut or any
political subdivision thereof in connection with the
acquisition, possession or ownership by the Subordination
Agent of any of the Equipment Notes solely because the
Subordination Agent maintains an office and administers its
trust business in the State of Connecticut (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services
rendered in connection with the transactions contemplated by
the Intercreditor Agreement or any of the Liquidity
Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any Person
or solicited any offer to acquire any Equipment Note from any
Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any
Equipment Note for sale to any Person, or to solicit any offer
to acquire any Equipment Note from any Person; and the
Subordination Agent is not in default under any Liquidity
Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants
that:
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<PAGE> 43
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Second Amended and Restated Head Lease TIA, the
Amended and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents nor (B) compliance
by it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Original
Head Lessee, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument
to which the Original Head Lessee is a party or by which it or
any of its property may be bound or affected, except where
such contravention or default would not result in any
liability to any other party hereto or have a material adverse
effect on the rights or on the remedies of the other parties
hereto or on its ability to perform its obligations hereunder
or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Original Head Lessee of this
Agreement and each of the other Original Head Lessee
Transaction Documents;
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<PAGE> 44
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Original Head Lessee before any court
or administrative agency or arbitrator which, if determined
adversely to the Original Head Lessee, would materially
adversely affect the Original Head Lessee's ability to perform
its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease);
(6) on the Delivery Date, the Owner Trustee received
good title to the Aircraft free and clear of all Liens, except
the rights of the parties to the Japanese Financing Documents,
the rights of the Original Head Lessee under the Original
Lease, the rights of the Sublessee under the Sublease, the
Lien of the Original Indenture, the beneficial interest of the
Owner Participant in the Aircraft, and Permitted Liens under
the Original Lease;
(7) [intentionally omitted]; and
(8) except for the registration of the Aircraft
pursuant to the Federal Aviation Act, the filing for
recordation pursuant to the Federal Aviation Act (with
confidential financial terms redacted) of Lease Amendment No.
1, the Second Amended and Restated Lease, Lease Supplement No.
3, Trust Supplement No. 3, the First Amended and Restated
Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all with the
FAA, the filing of a Uniform Commercial Code ("UCC") amended
financing statement with the Secretary of State of the State
of Delaware with regard to the Original Lease, the filing of
UCC termination statements with regard to the Original Head
Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC
financing statement with the Secretary of State of the State
of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State
of Arizona with respect to the Sublease, and the filing of a
UCC termination statement with the Secretary of State of the
State of Delaware with respect to the Initial Sublease
Assignment (as defined in the Original Lease) all of which
financing and termination statements shall
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<PAGE> 45
have been duly effected as of the Restatement Date (and
assignments thereof and continuation statements at periodic
intervals), and other than the taking of possession by the
Indenture Trustee of the original counterparts of the Original
Lease, Lease Amendment No. 1, the Second Amended and Restated
Lease, and all Lease Supplements thereto (to the extent the
Lease constitutes chattel paper), and the placing of the Lease
identification required by Section 6(e) of the Lease, no
further filing or recording of the Lease or of any other
document (including any financing statement under Article 9 of
the UCC of the State of Delaware, New York or Arizona) and no
further action is necessary, under the laws of the United
States of America or the States of Delaware, New York and
Arizona in order to perfect the Owner Trustee's interest in
the Aircraft as against the Lessee and any third parties, or
to perfect the security interest in favor of the Indenture
Trustee in the Owner Trustee's interest in the Aircraft and in
the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement, the Yen Deposit Agreement and the Yen Deposit
Charge Agreement (collectively, the "Parent Guarantor
Transaction Documents"); each Parent Guarantor Transaction
Document has been duly authorized, and upon the execution and
delivery thereof, will constitute, the legal, valid and
binding obligations of the Parent Guarantor enforceable
against it in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(2) neither (A) the execution and delivery by the
Parent Guarantor of this Agreement and each of the other
Parent Guarantor Transaction Documents nor (B) compliance by
it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Parent
Guarantor, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its Memorandum and Articles of Association or any
indenture, mortgage, contract or other agreement or instrument
to which the Parent Guarantor is a party or
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<PAGE> 46
by which it or any of its property may be bound or affected,
except where such contravention or default would not result in
any liability to any other party hereto or have a material
adverse effect on the rights or on the remedies of the other
parties hereto or on its ability to perform its obligations
hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Parent Guarantor of this
Agreement and each of the other Parent Guarantor Transaction
Documents;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement or any other Parent Guarantor
Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty in Section 9(f)(8) shall be only
for the benefit of Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by consolidation, merger, sale of assets or otherwise) any of
its right, title or interest in and to the Trust Estate, the Aircraft, the
Lease, this Agreement, the Trust Agreement, the Second Amended and Restated Head
Lease TIA or any other Operative Document or any proceeds therefrom; provided
that, subject to the conditions set forth below, Owner Participant may transfer
to a Transferee (as defined below) all (but not less than all) of its right
(except for such rights accruing prior to transfer), title and interest as an
entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust
Agreement, the Second Amended and Restated Head Lease TIA and
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<PAGE> 47
each other Operative Document to which Owner Participant is a party or by which
Owner Participant is bound. Each such transfer shall be subject to the following
conditions:
(i) the Person to whom such transfer is to be made (a
"Transferee") is either (A) a bank or other financial institution with
a combined capital, surplus and undivided profits of at least
$60,000,000, or a corporation whose consolidated tangible net worth is
at least $60,000,000, exclusive of goodwill, all of the foregoing
determined in accordance with U.S. generally accepted accounting
principles, (B) any wholly-owned subsidiary of such bank, financial
institution or corporation if such bank, financial institution or
corporation furnishes to Owner Trustee, Indenture Trustee, Original
Head Lessee and Lessee an agreement or agreements of such bank,
financial institution or corporation guaranteeing such subsidiary's
obligations as Owner Participant contained in this Agreement, the Trust
Agreement, the Second Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is bound, which
guarantee shall be substantially in the form attached as Exhibit A
hereto or (C) an Affiliate or a subsidiary of Owner Participant if
Owner Participant furnishes to Owner Trustee, Indenture Trustee,
Original Head Lessee and Lessee an agreement whereby Owner Participant
will guarantee such Affiliate's or subsidiary's obligations as Owner
Participant contained in this Agreement, the Trust Agreement, the
Second Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is bound, which guarantee shall be
substantially in the form attached as Exhibit A hereto;
(ii) Owner Trustee, Indenture Trustee, Original Head
Lessee and Lessee shall have received at least 15 days' prior written
notice of such transfer specifying the name and address of any proposed
transferee and specifying the facts necessary to determine whether such
proposed transferee qualifies as a "Transferee" under clause (i) above
and does not violate clause (viii) below; provided that if such
Transferee is an Affiliate of Owner Participant, such notice may be
given promptly following rather than prior to such transfer;
(iii) upon giving effect to such transfer, such Transferee
is a Citizen of the United States, and such Transferee shall deliver to
Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an
affidavit to such effect;
(iv) such Transferee has the requisite power and authority
and legal right to enter into and carry out the transactions
contemplated hereby;
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<PAGE> 48
(v) such Transferee enters into an agreement in
substantially the form attached as Exhibit B hereto whereby such
Transferee confirms that it shall be deemed a party to this Agreement,
the Trust Agreement, the Second Amended and Restated Head Lease TIA and
each other Operative Document to which Owner Participant is a party or
by which Owner Participant is bound, and in which the transferee shall
agree to be bound by and undertake the obligations of Owner Participant
in the Operative Documents and shall make representations and
warranties comparable to those of Owner Participant contained herein;
(vi) such transfer does not violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or create a relationship that would be in violation
thereof, or violate any provisions of the Securities Act or any other
applicable Federal, state or other law, rule or regulation;
(vii) such transfer does not and will not involve, either
directly or indirectly, the assets of any "employee benefit plan" as
defined in Section 3(3) of ERISA that would cause a violation of any
provision of ERISA or the imposition of an excise tax under the Code;
(viii) such Transferee is not an airline, a commercial air
carrier, an air freight forwarder, a freight transporter, any Person
engaged in the business of parcel transport by air, or a subsidiary or
an Affiliate thereof;
(ix) an opinion of counsel of the Transferee confirming the
matters referred to in clauses (iv) and (vi) above (with appropriate
reliance on certificates of corporate officers or public officials as
to matters of fact) and confirming that the agreement referred to in
clause (v) above is the legal, valid, binding and enforceable
obligation of the Transferee and that the guarantee referred to in
clause (i)(B) or (C) above, if any, is the legal, valid, binding and
enforceable obligation of the Transferee's guarantor shall be provided,
at least 3 days prior to such transfer, to Lessee, Owner Trustee,
Original Head Lessee and Indenture Trustee, which shall be in form and
substance reasonably satisfactory to each of them; and
(x) the terms of the Operative Documents and the Second
Amended and Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Second Amended and Restated Head Lease TIA and each
other Operative Document to
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<PAGE> 49
which Owner Participant is a party or by which Owner Participant is bound, and
shall be deemed to have made the original participation in the Aircraft
previously made by Owner Participant; and except as the context otherwise
requires, each reference in this Agreement, the Trust Agreement, the Second
Amended and Restated Head Lease TIA and each other Operative Document to "Owner
Participant" shall thereafter be deemed to include such Transferee as provided
in this Section 10. No transfer shall release Owner Participant from its
obligations hereunder, under the Second Amended and Restated Head Lease TIA and
under the other Operative Documents, except to the extent expressly assumed by
the Transferee in accordance with this Section 10, provided, that
notwithstanding such an assumption, in no event shall Owner Participant be
released from its obligations hereunder or under any of the other Operative
Documents with respect to claims under this Agreement or under the Second
Amended and Restated Head Lease TIA by or against Owner Participant which have
been made prior to the date of such transfer. The transferor Owner Participant
shall pay all expenses of each party hereto related to any such transfer.
Owner Participant covenants and warrants that it shall not
transfer all or any portion of its interest in the Trust Estate except in
accordance with this Section 10 and that it shall not itself, or direct Owner
Trustee to, take any action in contravention of the Lessee's rights under the
Lease except in accordance with the provisions of the Lease.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions of
clause (A) of paragraph (7) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease. The Lessee
shall have no obligation to prevent any such deregistration or assist in
maintaining or otherwise enhancing the Aircraft's eligibility for registration
by restricting the use of the Aircraft.
SECTION 11. Re-Registration of the Aircraft. The Indenture
Trustee agrees, that if the Owner Participant consents thereto, which consent
shall not be unreasonably withheld, at any time after the Restricted Use Period,
Lessee may, in connection with effecting a Permitted Sublease elect to effect a
change in registration of the Aircraft, at Lessee's cost and expense, so long as
(a) the country of registry of the Aircraft is a country listed on Exhibit C
hereto (or such other country as the Owner Participant approves) (each, an
"Eligible Country") and (b) the following conditions are met: (i) unless the
country of registry is Taiwan, the United States of America maintains normal
diplomatic relations with the country of registry of the Aircraft, and if the
country of registry is Taiwan, the United
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<PAGE> 50
States of America maintains diplomatic relations at least as good as those in
effect on the Restatement Date; and (ii) the Owner Trustee, the Owner
Participant and the Indenture Trustee shall have received favorable opinions
(subject to customary exceptions) addressed to each such party, from counsel of
recognized reputation qualified in the laws of the relevant jurisdiction and
reasonably acceptable to the Owner Participant to the effect of the following
and as to such other matters as the Owner Participant may reasonably request:
(A) the Owner Trustee's ownership interest in the Aircraft and
interest in the Lease and any Permitted Sublease shall be recognized
under the laws of such Eligible Country,
(B) the obligations of Lessee, and the rights and remedies of
the Owner Trustee, under the Lease shall remain valid, binding and
(subject to customary bankruptcy and equitable remedies exceptions and
to other exceptions customary in foreign opinions generally)
enforceable under the laws of such Eligible Country (or the laws of the
jurisdiction to which the laws of such Eligible Country would refer as
the applicable governing law),
(C) after giving effect to such change in registration, the
Lien of the Indenture on the Owner Trustee's right, title and interest
in and to the Aircraft, the Lease and any Permitted Sublease shall
continue as a valid and duly perfected security interest and all
filing, recording or other action necessary to protect the same shall
have been accomplished (or, if such opinion cannot be given at the time
of such proposed change in registration because such change in
registration is not yet effective, (1) the opinion shall detail what
filing, recording or other action is necessary and (2) the Owner
Trustee and the Indenture Trustee shall have received a certificate
from Lessee that all possible preparations to accomplish such filing,
recording and other action shall have been done, and such filing,
recording and other action shall be accomplished and a supplemental
opinion to that effect shall be delivered to the Owner Trustee and the
Indenture Trustee on or prior to the effective date of such change in
registration),
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other activity
of the Owner Trustee, the Owner Participant or the Indenture Trustee
(or any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such Eligible Country,
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<PAGE> 51
(E) there is no tort liability of the owner of an aircraft not
in possession thereof under the laws of such Eligible Country (it being
agreed that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is provided
to cover such risk),
(F) (unless Lessee shall have agreed, or pursuant to the Lease
shall have been required, to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such Eligible
Country so long as such Aircraft is registered under the laws of such
Eligible Country) the laws of such jurisdiction require fair
compensation by the government of such Eligible Country payable in
currency freely convertible into Dollars for the loss of use of such
Aircraft in the event of the requisition by such government of such
use,
(G) upon such change in registration, under the laws of such
Eligible Country, any import or export permits necessary to take the
Aircraft into or out of such Eligible Country and any foreign exchange
or other like permits or approvals necessary to allow all "basic rent",
"renewal rent" and casualty value payments provided for in such
Permitted Sublease, which are obtainable at the commencement of such
Permitted Sublease, will be in full force and effect,
(H) under the Laws of such Eligible Country, the remedies set
forth in such Permitted Sublease are effective to enable Lessee or its
assignee as sublessor to repossess, subject to compliance with
applicable Law in such Eligible Country in connection therewith, the
Aircraft following a valid termination thereof, and there is no
provision of such Laws which by its terms would prevent Lessee or its
assignee as sublessor, upon compliance with the provisions of
applicable Law in such Eligible Country, from de-registering the
Aircraft under the laws of such Eligible Country, and exporting the
Aircraft from such Eligible Country, without reference to any
particular time period,
(I) upon such change in registration, the resulting
jurisdiction of one or more Governmental Entities of such Eligible
Country over Lessee, Owner Trustee, Indenture Trustee, the Permitted
Sublessee, the Aircraft or the operation or operator of the Aircraft
(or over any interest in any thereof), as the case may be, and the
consummation of the transactions contemplated by the Operative
Documents after giving effect to the proposed re-registration of the
Aircraft, do not violate any provision of the Trading with the Enemy
Act of 1917, as amended, or any Executive Orders
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<PAGE> 52
of the President of the United States of America or any regulations of
the United States Treasury Department (including, without limitation,
the Foreign Assets Control Regulations and the Transaction Control
Regulations issued thereunder) or of any other Governmental Entity of
the United States of America issued thereunder or otherwise violate any
other like law or regulation of the United States of America, after
giving effect to any licenses, permits or approvals thereunder obtained
by, or on behalf of, Lessee, the Permitted Sublessee, Owner Trustee or
Indenture Trustee, all of which are in full force and effect as of the
date of such change in registration. Owner Trustee, Owner Participant
and Indenture Trustee shall cooperate, at Lessee's expense and as it
may reasonably request, in obtaining any such licenses, permits or
approvals,
(J) to such further effect with respect to such other matters
relating to the recognition of Owner Trustee's interest in the Aircraft
and perfection of the Lien of the Indenture if it has not been
discharged pursuant to the terms thereof, as Owner Trustee, Owner
Participant or Indenture Trustee may reasonably request, and
(K) the aircraft maintenance standards of the new country of
registry shall not be materially less stringent than those of the FAA
or not materially less stringent than those of the United Kingdom Civil
Aviation Authority.
The following statements shall be true and correct at the time
of the re-registration of the Aircraft:
(a) no unindemnified tax risks or Taxes affecting Owner
Participant or Owner Trustee will result from such re-registration; and
(b) such re-registration shall not be in conflict with, and
all action shall have been taken as may be required by, the terms of
the Japanese Financing Documents in connection with such change in
registration.
Prior to the re-registration of the Aircraft as contemplated
by this Section 11, Lessee shall furnish to Owner Participant and Indenture
Trustee (1) an Officer's Certificate (as defined in the Indenture) stating that
(i) all conditions precedent provided for in this Agreement and the Lease
relating to the proposed re-registration of the Aircraft have been complied
with, (ii) that the re-registration is in conformity with the requirements of
this Agreement and the Lease, (iii) after giving effect to such re-registration,
no Event of Default shall have occurred and be continuing, and (iv) the
insurance required by Section 12 of the Lease is in full force and effect
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<PAGE> 53
at the time of such change in registration after giving effect to such change in
registration and (2) an opinion of counsel (which shall be by counsel other than
an employee of Lessee) addressed to Owner Trustee, Owner Participant and
Indenture Trustee stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
At any time during the Term of the Lease, the Owner Trustee,
Indenture Trustee and Owner Participant shall, subject to the terms and
conditions hereof, at the request and sole expense of Lessee cooperate with
Lessee to comply with all terms of Section 7(a) of the Japanese Lease. Except as
provided in this Section 11, Owner Trustee shall not cause any change in the
registration of the Aircraft pursuant to Section 7(a) of the Japanese Lease
during the Term of the Lease. Anything herein or in any other Operative Document
to the contrary notwithstanding, at no time during the term of the Japanese
Lease shall Lessee permit the Aircraft to be registered in Japan.
The Operative Documents shall be amended in a manner
reasonably satisfactory to Lessee, Owner Trustee and Indenture Trustee so as to
include such covenants as may be appropriate to establish, protect and preserve
the validity, priority and perfection of Owner Trustee's interest in the
Aircraft, Lessee's interest under the Lease and the Lien of the Indenture in
favor of Indenture Trustee.
Lessee shall pay all costs, expenses, fees and recording,
registration or any other Taxes, including the reasonable fees and expenses of
counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee,
and other charges in connection with any such change in registration.
SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming by, through or on behalf of it to interfere with the
right of Lessee or any Permitted Sublessee to the possession, use, operation and
quiet enjoyment of and other rights with respect to the Aircraft under the
Lease, and all rents, revenues, profits and income therefrom, in accordance with
the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner
Participant shall not be liable for any such interference by Indenture Trustee,
Pass Through Trustee, holders of any Equipment Notes, or any other Person
claiming by, through or on behalf of them.
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<PAGE> 54
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate or the Indenture Estate. Each of Trust Company,
Owner Trustee and Owner Participant severally agrees that it will promptly, at
its own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Lessor's Lien or Head
Lessor's Lien attributable to it. For all purposes of this Agreement and the
other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a
result of the nonpayment of any Tax imposed on or measured by the net income of
the Trust Estate or the trust created by the Trust Agreement that is not
indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through
Trustee and Subordination Agent severally agrees that it will promptly, at its
own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Trustee's Lien attributable to it and to make restitution to the Trust Estate
and the Indenture Estate for any diminution of the assets thereof resulting
therefrom and will indemnify and hold harmless Lessee and each Indemnitee
against any claims incurred or suffered by any such Person and any reduction in
amounts payable out of, or diminution in the assets of, the Trust Estate or the
Indenture Estate resulting from any such Trustee's Lien attributable to it. For
purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee), Pass Through Trustee in its individual capacity (and not as
Pass Through Trustee) or Subordination Agent in its individual capacity (and not
as Subordination Agent) on or in respect of (as the case may be) the Aircraft or
any other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against
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<PAGE> 55
such Person not related to its interest in the Aircraft or the administration of
the Trust Estate or the Trust Indenture Estate pursuant to the Indenture,
whether under Section 9-207(2)(e) of the Uniform Commercial Code or otherwise,
(ii) acts or omissions of such Person not contemplated hereunder or under the
other Operative Documents, or acts or omissions of such Person which are in
violation of any of the Operative Documents, or (iii) Taxes imposed on or Claims
against such Person which are excluded from indemnification by Lessee, or (iv)
Claims against such Person arising out of the voluntary or involuntary transfer
by such Person of all or any portion of its interest in the Aircraft, the
Airframe, any Engine, the Trust Estate, the Trust Indenture Estate or the
Operative Documents (except a Claim resulting from the exercise of remedies
under and in accordance with the Indenture or for a transfer provided for in the
Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the Original Head Lessee and Parent Guarantor
severally agrees that it will promptly, at its own expense (and without any
right of indemnification or reimbursement from Lessee), take such action as may
be necessary duly to discharge any such Sublessor's Lien attributable to it or
other Lien or disposition of title created by or through Original Head Lessee,
Parent Guarantor, or any Affiliate of either thereof which would have
constituted a Sublessor's Lien had the Sublease remained in effect and to make
restitution to the Trust Estate and the Indenture Estate for any diminution of
the assets thereof resulting therefrom and will indemnify and hold harmless
Lessee and each Indemnitee against any claims incurred or suffered by any such
Person and any reduction in amounts payable out of, or diminution in the assets
of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's
Lien attributable to it or other Lien or disposition of title created by or
through Original Head Lessee, Parent Guarantor, or any Affiliate of either
thereof which would have constituted a Sublessor's Lien had the Sublease
remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien
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<PAGE> 56
or disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original
Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees with
Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement and (iii) not to terminate or revoke the Trust Agreement.
(b) Notwithstanding anything to the contrary in the Trust
Agreement, but subject always to the provisions of Section 14(c) hereof, Owner
Participant shall not consent to or direct a change in the situs of the Trust
Estate so long as a successor Owner Trustee meeting the requirements of the
Trust Agreement is reasonably available at the present situs of the Trust Estate
(A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have
been given 45 days' prior notice thereof and (B) if, within 45 days after notice
of such a proposed change is given to Lessee and the Original Head Lessee,
either (1) Lessee or Original Head Lessee delivers to Owner Participant and
Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which
counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee,
to the effect that such proposed change in the situs of the Trust Estate would
have an adverse effect on the rights or obligations of Lessee or Original Head
Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and
Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which
counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee,
to the effect that such proposed change in the situs of the Trust Estate would
cause an increase in the amount for which Lessee may be required to indemnify
any Person pursuant to the provisions of Section 10 of the Lease or for which
Original Head Lessee is required to indemnify any Person pursuant to the
provisions of the Second Amended and Restated Head Lease TIA, unless any and all
Persons entitled to indemnification pursuant to Section 10 of the Lease or
applicable provision of the Second Amended and Restated Head Lease TIA shall
waive indemnification under Section 10 of the Lease or applicable provision of
the Second Amended and Restated Head Lease TIA for any adverse tax or other
consequences to it of such a change in the situs of the Trust Estate, (C) unless
Indenture Trustee receives from Owner Participant an opinion of counsel, which
counsel shall be reasonably satisfactory to Indenture Trustee, to the effect
that such
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<PAGE> 57
proposed change in the situs of the Trust Estate would not have an adverse
effect on the validity or priority of the Lien of the Indenture and that such
Uniform Commercial Code and FAA filings as are required to maintain the validity
and priority of the Lien of Indenture have been made, and (D) such change does
not affect the registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to any
Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as
a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States of America from the state in which
it is then located, the situs of the trust shall be moved and Owner Participant
will take whatever action may be requested by Lessee that is reasonably
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification with respect to such change of situs and
request of Lessee as Original Head Lessee, Owner Participant or the Indenture
Trustee may reasonably request, (B) promptly after notice thereof Owner
Participant has not notified Lessee and provided reasonable evidence of an
adverse effect on Owner Participant's rights or obligations under the Trust
Agreement, (C) Indenture Trustee shall have received an opinion of counsel
selected by Lessee, which counsel shall be reasonably satisfactory to Indenture
Trustee, to the effect that the validity and priority of the Lien of the
Indenture Estate will not be adversely affected by such action, and that such
Uniform Commercial Code and FAA filings as are required to maintain the validity
and the priority of the Lien of the Indenture have been made, (D) Owner
Participant and Indenture Trustee shall have received an opinion or opinions of
counsel selected by Owner Participant to the effect that, with customary
exceptions, (I) the trust, as thus removed, shall remain a validly established
trust, (II) any amendments to the Trust Agreement or the Indenture necessitated
by such removal shall have been duly authorized, executed and delivered by the
parties thereto and shall constitute the legal, valid and binding obligations of
such parties, enforceable in accordance with their terms, (III) if such removal
involves the replacement of Owner Trustee, an opinion of counsel to such
successor Owner Trustee in form and substance reasonably satisfactory to
Indenture Trustee and to Owner Participant covering the matters described in the
opinion described in Section 3(j) hereof, and (IV) covering such other matters
as Owner Participant or the Indenture Trustee may reasonably request, and (E)
Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee,
Owner Participant and their respective Affiliates and Indenture Trustee against
any and all reasonable and actual costs and expenses including reasonable
attorneys' fees and disbursements, registration, recording or filing fees and
other Taxes incurred by Owner Trustee, Owner Participant and their respective
Affiliates, or
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Indenture Trustee in connection with such change of situs and shall indemnify
and hold harmless Owner Participant, Owner Trustee and their respective
Affiliates, and Indenture Trustee on an after tax basis from and against any
increase in Taxes borne by such Person that results from such change in situs.
(d) Owner Trustee or any successor may resign or be removed by
Owner Participant, a successor Owner Trustee may be appointed, and a corporation
may become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that Owner
Participant has actual knowledge that Owner Trustee is not in compliance with
its covenants contained herein. No successor Owner Trustee shall be appointed
unless Lessee and Indenture Trustee shall have given written consent thereto,
which consent shall not be unreasonably withheld. Owner Participant will not
instruct Owner Trustee to terminate any Operative Document or take any action
thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Aircraft as contemplated hereby.
Lessee shall pay expenses relating to the resignation or, if requested by
Lessee, the removal of Owner Trustee, provided that the Owner Participant shall
pay expenses relating to the removal of the Owner Trustee, if such removal was
at the request of the Owner Participant.
(e) The Trust Company agrees that if at any time it shall
obtain actual knowledge that it has ceased to be or will likely cease to be a
Citizen of the United States, it will promptly resign as Owner Trustee (if and
so long as such citizenship is necessary under such Federal Aviation Act or any
other law to permit the continued registration of the Aircraft in the name of
the Lessor or, if it is not necessary, if and so long as Owner Trustee's
citizenship would have any material adverse effect on any holder of Equipment
Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of
the successor Owner Trustee in accordance with Section 10.1 of the Trust
Agreement.
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SECTION 15. Certain Retained Rights and Releases. (a) Each of
Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to
and confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Second Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head
Lessee and Parent Guarantor shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable for
all of its obligations under Sections 10 and 13 of the Sublease, with respect to
the period up to (but excluding) the Restatement Date and each of Parent
Guarantor, Original Head Lessee and Lessee shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the termination or expiration thereof (including, without
limitation, any such liability arising from and including the Restatement Date
under the Sublease in respect of the period up to (but excluding), or acts or
omissions or circumstances arising prior to (but excluding), the Restatement
Date), (ii) all rights, benefits, obligations and liabilities under the Sublease
TIA (which rights, benefits, obligations and liabilities are amended and
restated as of the Restatement Date) and (iii) Original Head Lessee and Parent
Guarantor shall remain liable to Sublessee under the Sublease and the Sublease
Guaranty for Sublessor's Liens (as therein defined); all of which rights,
benefits, obligations and liabilities shall expressly survive the termination of
the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is
agreed that (x) Original Head Lessee shall continue to be liable to the
Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens and (y) Parent Guarantor is hereby released from any and all obligations
and liabilities under the Sublease Guaranty, other than in respect of the
obligations and liabilities of the Original Head Lessee in respect of
Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner Participant
agree as among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: (i) Owner Trustee,
Owner Participant and the other "Indemnitees" (as such term is defined in the
Sublease) other than Original Head Lessee and Parent Guarantor and (ii) the
Lessee shall retain all rights, benefits, obligations and liabilities under the
Sublease, including that Sublessee shall remain liable for all of its
obligations under Sections 10 and 13 of the Sublease, with respect to the period
up to (but excluding)
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the Restatement Date and each of Lessee, Owner Trustee and Owner Participant
shall retain all rights and liabilities under any provision of the Sublease
which by the express terms thereof survives the termination thereof (including,
without limitation, any such liability arising on or after the Restatement Date
under the Sublease in respect of the period up to (but excluding), or acts or
omissions or circumstances arising prior to (but excluding) the Restatement
Date), all of which rights, benefits, obligations and liabilities shall
expressly survive the termination of the Sublease. In furtherance of the
foregoing, it is agreed by Sublessee that the indemnities contained in Sections
10 and 13 of the Sublease are expressly made for the benefit of and shall be
enforceable by each Indemnitee (as such term is defined in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA
to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent Guarantor shall, as of the Restatement Date, have no
liabilities or obligations under the "Operative Documents" (as defined in the
Original Head Lease as in effect immediately prior to the Restatement Date and
excluding the Head Lease TIA (which rights, benefits, obligations and
liabilities are amended and restated as of the Restatement Date)) and are
released from all such obligations and liabilities, except the Original Head
Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i)
shall continue to be liable to the parties hereto for the removal of any
Sublessor's Liens and (ii) (without releasing Sublessor as provided in the
Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner
Trustee, the Indenture Trustee and the Owner Participant agree as among
themselves and for the benefit of the other "Indemnitees" (as such term is
defined in the Original Head Lease) that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period up to (but excluding) the Restatement Date and under any
other provision of the Participation Agreement which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising from and including the Restatement Date under the
Participation Agreement in respect of the period up to (but excluding), or acts
or omissions or circumstances arising prior to (but excluding), the Restatement
Date) shall survive the termination of the Participation Agreement, the Original
Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights,
benefits, obligations and liabilities of Parent Guarantor and Original Head
Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In
furtherance of the foregoing, the parties hereto consent and agree that the
Parent Guarantor is hereby released from any and all "Obligations" under and as
defined in the Parent Head Lease Guaranty, except in respect of the Retained
Head Lease Rights and
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Obligations and except in respect of the Second Amended and Restated Head Lease
TIA, the "Obligations" in respect of which shall continue in full force and
effect in accordance with the Parent Head Lease Guaranty and are hereby ratified
and confirmed by the Parent Guarantor.
(e) The Owner Participant hereby directs the Owner Trustee,
and the Owner Trustee hereby agrees for the benefit of the Owner Participant,
the Indenture Trustee, the Original Head Lessee, the Parent Guarantor, GPA
Offshore and, to the extent provided in paragraph (ii) below, Lessee, that it
shall, provided no Event of Default under the Lease shall have occurred and be
continuing and the Lease shall not have been declared or deemed in default:
(i)(A) with respect to the Japanese Financing
Documents (as defined in the Indenture) to which it is or is
made a party (or under which it has rights or obligations),
and subject to the terms and conditions thereof, comply with
all of the provisions with which it has undertaken to comply
pursuant to the Japanese Lease Assignment that impose on Owner
Trustee a duty or obligation, if and to the extent not
performed or complied with, or required to be performed or
complied with, by the Original Head Lessee or an Affiliate
thereof, and not take any affirmative action that is in
violation of any provisions (whether or not the Owner Trustee
is bound by such provisions) of such Japanese Financing
Documents or this Section 15, (B) observe and fulfill all
conditions to be fulfilled by it pursuant to any of the
Japanese Financing Documents in order to exercise rights under
such documents which are vested in it, and (C) except as
provided in paragraphs (iv), (v), (vi) and (vii) below and in
Section 15(f) and (h), not exercise any discretionary actions
under or with respect to the Japanese Financing Documents
except solely at the written direction or with written consent
of the Original Head Lessee or the Parent Guarantor or, if an
Event of Default under the Lease shall have occurred and be
continuing and the Lease shall have been declared or deemed to
be in default, of the Indenture Trustee (so long as the Lien
of the Indenture shall not have been discharged) or the Owner
Participant (thereafter) and the Trust Company shall comply
with any such directions given in accordance with the
provisions of this Section 15;
(ii) not amend, supplement or otherwise modify or
waive any provision of the Japanese Financing Documents or
consent to any such amendment, supplement, modification or
waiver, or grant any consent requested under any provision
thereof, in any such case without the
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prior written consent of the Original Head Lessee, the Parent
Guarantor, the Owner Participant, and (so long as the Lien of
the Indenture shall not have been discharged) the Indenture
Trustee and, if any obligation of the Lessee hereunder or
under the Lease would be increased thereby, the Lessee;
(iii) deliver promptly to the Original Head Lessee,
the Lessee and (so long as the Lien of the Indenture shall not
have been discharged) the Indenture Trustee, copies of all
notices and other documents given by the Owner Trustee or
received by it under any of the Japanese Financing Documents
and copies of all amendments, supplements and modifications
entered into from time to time to any Japanese Financing
Documents to which it is or is made a party (or under which it
possesses rights);
(iv) exercise the purchase option provided for in
Section 19 of the Japanese Lease effective (unless the
Japanese Lease has previously been terminated in accordance
with its terms) at the end of the scheduled Japanese Lease
term by giving, no later than 120 days prior to the end of
such scheduled Term, a written notice to the Japanese Lessor
of the Owner Trustee's election to exercise such purchase
option; provided that if the Owner Trustee shall fail to give
such notice to the Japanese Lessor on or prior to such 120th
day, each of the Owner Participant, the Original Head Lessee
and the Indenture Trustee may at any time thereafter cause
such purchase option to be exercised directly in the name of
and on behalf of the Owner Trustee;
(v) exercise the rights of termination provided for
in Sections 9(a), 9(b) and 9(c) and the related purchase
option provided for in Section 9(e) of the Japanese Lease,
effective as of any time when such rights of termination and
related purchase option are exercisable under said Sections
9(a), 9(b), 9(c) and 9(e), at the direction of the Original
Head Lessee (other than the end of the scheduled Japanese
Lease Term and other than as otherwise provided in this
Section 15); provided that, with respect to any right of
termination effected pursuant to Section 9(b)(ii), 9(b)(iii),
9(b)(iv) and 9(d)(i) (for an acceleration of the loan pursuant
to subparagraphs (b), (c), (d), (e), (f) or (k) of Section 5.1
of the Japanese Loan Agreement) of the Japanese Lease, such
right of termination and related purchase option shall be
exercisable at the direction of the Original Head Lessee, the
Parent Guarantor, the Owner Trustee or the
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Owner Participant or (so long as the Lien of the Indenture
shall not have been discharged) the Indenture Trustee;
(vi) exercise the purchase options referred to in
Section 9 (upon the occurrence of a termination) and 10(a)(ii)
of the Japanese Lease (upon the occurrence of an Event of Loss
thereunder without replacement of the Airframe, under the
Lease), at the direction of the Original Head Lessee, the
Parent Guarantor, the Owner Trustee or (so long as the Lien of
the Indenture has not been discharged) the Indenture Trustee;
(vii) anything contained in this Section 15 to the
contrary notwithstanding, exercise the purchase option
referred to in Section 15(a) of the Japanese Lease, at the
direction of the Indenture Trustee (so long as the Lien of the
Indenture has not been discharged) and, if the Lien of the
Indenture shall have been discharged, the Owner Participant or
the Original Head Lessee; and
(viii) not exercise any right to terminate or revoke
any Japanese Financing Document, except as provided in this
Section 15.
(f) (i) Provided that no Event of Default under the Lease
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, any rights or claims that the Owner Trustee or the
Indenture Trustee may have against the Japanese Lessor with respect to any of
its representations, warranties and covenants under the Japanese Lease or any of
the other Japanese Financing Documents may be enforced by the Original Head
Lessee or the Parent Guarantor on behalf of the Owner Trustee or the Indenture
Trustee, directly by the Original Head Lessee in its own name or in the name of
or by the Owner Trustee or the Indenture Trustee; provided that if such rights
or claims are exercised by the Owner Trustee or the Indenture Trustee (A) the
Original Head Lessee and the Parent Guarantor shall be subrogated to any such
rights of the Owner Trustee or the Indenture Trustee to the extent of any
recovery by the Owner Trustee in respect thereof and (B) no such right or claim
shall be enforced in a manner inconsistent with the provisions of this Section
15 specifying the party or parties entitled to take particular actions.
(ii) Notwithstanding any other provision of this Section 15,
should any provision of the Lease (including, without limitation, Sections 6, 9
and 11 thereof) require transfer of title to, or a release of the Lien of the
Indenture on, the Aircraft, the Airframe or an Engine at a time when the
Japanese Lease is in effect, after written notice thereof to and at the
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<PAGE> 64
request and sole expense of the Original Head Lessee, the Owner Participant
shall direct the Owner Trustee to use its reasonable best efforts to cause the
Japanese Lessor to transfer such title pursuant to the terms of the Japanese
Lease to the Owner Trustee free and clear of all Japanese Lessor Liens.
(g) The Indenture Trustee shall not exercise any of the Owner
Trustee's rights under the Japanese Financing Documents that have been assigned
to the Indenture Trustee pursuant to the Indenture except as provided therein
and in this Section 15. The Indenture Trustee consents to the performance by the
Owner Trustee of the Owner Trustee's obligations under Sections 15(e) and 15(f)
hereof and to the Original Head Lessee's and the Parent Guarantor's rights set
forth therein.
(h) Without limiting the foregoing, the Original Head Lessee
and the Parent Guarantor hereby jointly and severally agree to procure the
performance by the Japanese Lessee of its obligation to pay to the Japanese
Lessor the Special Termination Payment (as defined in the Japanese Lease) in
full when due upon any termination of the Japanese Lease pursuant to the
provisions thereof. In furtherance thereof the Parent Guarantor has charged in
favor of the Indenture Trustee an amount equal to the amount needed to fully
satisfy the Japanese Lessee's obligation to make such Special Termination
Payment to the Japanese Lessor, and authorizes and instructs the Indenture
Trustee to exercise the rights of the Chargee under and as defined in the Yen
Deposit Charge Agreement upon any termination of the Japanese Lease and the
Special Termination Payment becoming due. The Original Head Lessee and the
Parent Guarantor do hereby confirm to and agree with the Owner Trustee and the
Indenture Trustee that (i) the Lease is and shall be deemed to be an Affiliated
Sublease as defined in the Japanese Financing Documents and for the purpose of
Section 14(j) of the Japanese Lease and (ii) upon the occurrence of an Event of
Default under the Lease and the Lease having been declared or deemed in default
and the exercise of one or more remedies under the Lease, the Indenture Trustee
(so long as the Lien of the Indenture has not been discharged) and, if the Lien
of the Indenture shall have been discharged, the Owner Trustee is hereby
authorized, in their sole and absolute discretion, to deliver the certificate
referred to in such Section 14(j) of the Japanese Lease and/or effect a
voluntary termination of the Japanese Lease pursuant to the provisions thereof
and in connection therewith to cause the Cash Deposit to be applied to the
payment due to the Japanese Lessor thereunder. The Indenture Trustee agrees that
upon the discharge of the Lien of the Indenture it shall, if the Yen Deposit
Agreement and the Yen Deposit Charge Agreement are still in effect, assign to
the Owner Trustee its rights as Chargee under the Yen Deposit Charge Agreement.
The Owner Trustee and Indenture Trustee hereby agree to release or cause the
release to the Parent Guarantor of any amounts consisting of the Cash Deposit or
otherwise covered by
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the Yen Deposit Agreement or Yen Deposit Charge Agreement in excess of the
Special Termination Payment amount from time to time and acknowledge and agree
that such charges and agreements will be deemed released upon the expiration of
the Japanese Lease, or the termination thereof and payment of the Special
Termination Payment.
(i) The Lessee agrees with the Original Head Lessee, the Owner
Trustee, the Indenture Trustee, GPA Offshore and the Parent Guarantor that the
Lessee will perform all of its covenants and obligations under the Lease,
including Section 12(a) thereof, for the purposes of ensuring compliance with
corresponding obligations under the Japanese Lease.
(j) The Owner Participant hereby directs the Owner Trustee,
and the Owner Trustee hereby agrees to pay to the Parent Guarantor, after
payment to the Owner Participant of the OP SLV Amount set forth in Schedule IV
hereto, the GPA SLV Amount set forth on Schedule V hereto from all and any
amounts paid payable to the Owner Trustee or the Owner Participant upon the
occurrence of an Event of Loss.
SECTION 16. Certain Additional Obligations of the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee,
Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and
agrees for the benefit of each other that it will be bound by the terms of the
other Operative Documents to which it or its applicable trustee is a party, and
comply with and perform its agreements, covenants and indemnities set forth in
the other Operative Documents to which it or its applicable trustee is a party,
as amended, supplemented or otherwise modified from time to time as permitted
hereby.
SECTION 17. Lessee Protection of Title. Each of the Owner
Trustee and the Indenture Trustee agrees to execute and deliver such documents
or other instruments as the Lessee may reasonably request to enable the Lessee
to perform its obligations under Section 15 of the Lease for the benefit of such
Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee,
Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and
Lessee (i) hereby irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York in New York
County, and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions
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<PAGE> 66
contemplated hereby or thereby, and (ii) hereby waives, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, to the extent permitted by applicable law, any immunity
(including, without limitation, sovereign immunity), that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper, or that this Agreement, the Lease or any other
Operative Document or any of the transactions contemplated hereby or thereby may
not be enforced in or by such courts.
(b) Service of Process. Lessee generally consents to service
of process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John
Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its
agent for service of process, and covenants and agrees that service of process
in any suit, action or proceeding may be made upon it at the office of such
agent or such other office of Parent Guarantor or such other agent, as from time
to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner
Participant and Indenture Trustee. Original Head Lessee hereby generally
consents to service of process by registered mail, return receipt requested,
addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury,
Connecticut 06810 or such other office of Original Head Lessee as from time to
time may be designated by Original Head Lessee in writing to Owner Trustee,
Owner Participant and Indenture Trustee. Owner Participant generally consents to
service of process by registered mail, return receipt requested, addressed to it
at _______________________________ or such other office of Owner Participant as
from time to time may be designated by Owner Participant in writing to Owner
Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee
generally consents to service of process by registered mail, return receipt
requested, addressed to it at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from
time to time may be designated by Owner Trustee in writing to Owner Participant,
Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally
consents to service of process by registered mail, return receipt requested,
addressed to it at 450 West 33rd Street, New York, New York 10001 or such other
office of Indenture Trustee as from time to time may be designated in writing to
Owner Participant, Original Head Lessee, Owner Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of
which has not been stayed) against Owner Participant, Owner
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Trustee, Lessee, Original Head Lessee, Parent Guarantor and Indenture Trustee
obtained in any suit in the court of the State of New York in New York County or
in the United States District Court for the Southern District of New York shall
be conclusive, and, to the extent permitted by applicable law, may be enforced
in other jurisdictions by suit on the judgment, a certified or true copy of
which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Lessee therein described; provided that the
plaintiff at its option may bring suit, or institute other judicial proceedings
against, Lessee or any of its assets in the courts of any country or place where
Lessee or such assets may be found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the Original
Head Lessee of invoices therefor in reasonable detail prior to the Restatement
Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by
the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee,
the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the
Original Certificate Holders in connection with the transactions contemplated by
this Agreement, the other Operative Documents, the Lease, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided therein)
shall be paid on or prior to the Closing by the Original Head Lessee, including,
without limitation:
(1) the reasonable fees, expenses and disbursements
allocable to the Equipment Notes issued under the Indenture of
(A) Shipman & Goodwin LLP, special counsel for the Pass
Through Trustee and the Subordination Agent, (B) Kelley Drye &
Warren LLP, special counsel for the Indenture Trustee, (C)
Morris, James, Hitchens & Williams, special counsel for the
Owner Trustee, (D) Daugherty, Fowler & Peregrin, special
counsel in
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Oklahoma City, Oklahoma and (E) Milbank, Tweed, Hadley &
McCloy, special counsel for the Underwriters;
(2) the reasonable fees, expenses and disbursements
of Morgan, Lewis & Bockius LLP, special counsel for the Owner
Participant;
(3) the fees, expenses and disbursements of Andrews &
Kurth L.L.P. and Latham & Watkins, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity
Provider, the Pass Through Trustee, the Indenture Trustee, the
Owner Trustee and the Subordination Agent;
(6) the costs of filing and recording documents with
the FAA and filing Uniform Commercial Code financing
statements in the United States of America; and
(7) the reasonable fees, expenses and disbursements
of White & Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred to
in this Section 21.
(c) The Lessee agrees to pay the amounts it is obligated to
pay under Section 21(j) of the Lease.
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations and
warranties were made to the Liquidity Provider directly. The terms of this
Agreement shall inure to the benefit of the Liquidity Provider, its successors
and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this
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Agreement. This Agreement may be executed in any number of counterparts (and
each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Agreement, including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by each party hereto; and no such termination,
amendment, supplement, waiver or modification shall be effective unless a signed
copy thereof shall have been delivered to each party hereto. The index preceding
this Agreement and the headings of the various Sections of this Agreement are
for convenience of reference only and shall not modify, define, expand or limit
any of the terms or provisions hereof. The terms of this Agreement shall be
binding upon, and shall inure to the benefit of, the Original Head Lessee and
its successors and permitted assigns, the Parent Guarantor and its successors
and permitted assigns, the Lessee and its successors and permitted assigns, the
Pass Through Trustee and its successors as Pass Through Trustee (and any
additional trustee appointed) under any of the Pass Through Trust Agreements,
the Indenture Trustee and its successors as Indenture Trustee (and any
additional Indenture Trustee appointed) under the Indenture, the Subordination
Agent and its successors as Subordination Agent under the Intercreditor
Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust
Agreement, and the Owner Participant and its successors and permitted assigns.
No purchaser or holder of any Equipment Notes shall be deemed to be a successor
or assign of any holder of the Original Certificates.
(b) Upon the release of the Aircraft from the lien of the
Indenture and the termination of the Indenture pursuant to and in accordance
with Section 10.01 thereof, each requirement in the Operative Documents that the
consent of Indenture Trustee be obtained or that the Indenture Trustee be given
notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any
Operative Document, the parties hereto hereby agree that the Put
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Termination Agreement and the Deed of Indemnity (as such terms are defined
herein) shall not constitute Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that this
Agreement shall be effective among all such parties on and as of the Restatement
Date.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:______________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA I, INC.
By:______________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:______________________________
Name:
Title:
Address: GPA House
Shannon, County Clare
Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner Trustee
By:______________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust
Administration
[_______________________]
By:______________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
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THE CHASE MANHATTAN BANK,
not in its individual
capacity, except as
otherwise provided herein,
but solely as Indenture
Trustee
By:_______________________________
Name:
Title:
Address: 450 West 33rd Street
New York, New York 10001
Telephone: (212) 946-3348
Telecopier: (212) 946-8160
Attention: Corporate Trust
Department
FLEET NATIONAL BANK, not in
its individual capacity,
except as otherwise
provided herein, but solely
as Subordination Agent
By:______________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust
Administration
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FLEET NATIONAL BANK, not in
its individual capacity,
except as otherwise
provided herein, but solely
as Pass Through Trustee
By:_______________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust
Administration
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SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1D, dated November 26, 1996.
<PAGE> 76
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
<S> <C> <C> <C> <C>
Class A $ 11,936,661 02-Jul-2005 6.85% $ 11,936,661
Class B $ 4,476,247 02-Jan-2002 6.93% $ 4,476,247
Class C $ 4,476,247 02-Jan-2002 6.86% $ 4,476,247
Class D $ 2,288,832 02-Jan-98 8.16% $ 2,288,832
</TABLE>
<PAGE> 77
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115,
Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of
Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290.
<PAGE> 78
SCHEDULE IV to
Refunding Agreement
OP SLV AMOUNT
[to come]
<PAGE> 79
SCHEDULE V to
Refunding Agreement
GPA SLV AMOUNT
[to come]
<PAGE> 80
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1989 BN-5]
TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-5], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, [_____________________], a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1989 BN-5], dated as of November 20, 1996 among Lessee, Original Head
Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee,
Subordination Agent and Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the
benefit of Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms defined in the
Refunding Agreement are used herein as therein defined, unless otherwise defined
herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably guarantees to
Beneficiaries and their respective successors, endorsees, transferees and
assigns, the prompt and complete payment by Transferee when due (whether at the
stated maturity, by acceleration or otherwise) of, and the faithful performance
of, and compliance with, all payment obligations of Transferee under the
Refunding Agreement, the Second Amended and Restated
<PAGE> 81
Head Lease TIA and each other Operative Document to which Owner Participant is a
party and each other Operative Document to which Transferee is a party or by
which either is bound (collectively, the "Relevant Documents"), strictly in
accordance with the terms thereof and the timely performance of all other
obligations of Transferee thereunder (such payment and other obligations, the
"Obligations"), and Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) that may
be paid or incurred by Beneficiaries in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting, any or all of
the Obligations and/or enforcing any rights with respect to, or collecting
against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any other
guarantor or any other Person or received or collected by any Beneficiary from
Transferee, Guarantor, any other guarantor or any other person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of Guarantor
hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or observed by
Transferee (whether affirmative or negative in character) shall not be observed
or performed, or if any amount payable by Transferee referred to in Section 1(a)
hereof shall not be paid promptly when due and payable, Guarantor shall promptly
perform or observe or cause to be performed or observed each such Obligation or
undertaking and shall forthwith pay such amount at the place and to the person
or entity entitled thereto pursuant to the Relevant Documents regardless of
whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through
Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of
them shall have instituted any suit, action or proceeding or exhausted its
remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments made by
Guarantor hereunder or any setoff or application of funds of Guarantor by any
Beneficiary, Guarantor shall not be entitled to be subrogated to any of the
rights of any Beneficiary against Transferee or any collateral, security or
guarantee or right of set-off held by any Beneficiary for the payment of the
Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement
from Transferee in respect of payments made by Guarantor hereunder, until all
amounts and performance owing to Beneficiaries by Transferee on account of the
Obligations are paid and performed in full.
- 2 -
<PAGE> 82
4. Amendments, etc., with respect to the Obligations; Waiver of Rights.
The Guarantor shall remain fully obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor and without notice to or
further assent by the Guarantor, any demand for payment or performance of any of
the Obligations made by any Beneficiary may be rescinded by such party and any
of the Obligations continued, and the Obligations, or the liability of any other
party upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not assign,
convey or otherwise transfer to any person (a) any of its interest in Transferee
unless in connection therewith, Guarantor assigns its rights and obligations
hereunder to a guarantor which meets the requirements of Section 10 of the
Refunding Agreement; provided that nothing contained in this Section 5 shall be
construed to prohibit any merger, consolidation or other corporate restructuring
of Transferee or Guarantor so long as the resulting corporation meets the
requirements of Section 10 of the Refunding Agreement and assumes the
obligations of the corporation merged or consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives any and
all notice of the creation, renewal, extension or
- 3 -
<PAGE> 83
accrual of any of the Obligations and notice of or proof of reliance by any
Beneficiary upon this Guarantee or acceptance of this Guarantee; the
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guarantee; and all dealings between the Transferee or the Guarantor
and any Beneficiary shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. The Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Transferee or the Guarantor with respect to the Obligations. The
Guarantor understands and agrees that this Guarantee shall be construed as a
continuing, absolute and unconditional guarantee of payment and performance (and
not merely of collectibility) without regard to (a) the validity, regularity or
enforceability of any Relevant Document, any of the Obligations or any
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by any Beneficiary, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) that may at any time be available to or be asserted by the
Transferee against any Beneficiary, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Transferee or the Guarantor) that
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Transferee for the Obligations, or of the Guarantor under this
Guarantee, in bankruptcy or in any other instance. When pursuing its rights and
remedies hereunder against the Guarantor, any Beneficiary may, but shall be
under no obligation to, pursue such rights and remedies as it may have against
the Transferee or any other person or entity or against any collateral security
or guarantee for the Obligations or any right of offset with respect thereto,
and any failure by any Beneficiary to pursue such other rights or remedies or to
collect any payments from the Transferee or any such other person or entity or
to realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Transferee or any such other person
or entity or any such collateral security, guarantee or right of offset, shall
not relieve the Guarantor of any liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Beneficiary against the Guarantor. This Guarantee shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms upon the Guarantor and the successors and assigns thereof,
and shall inure to the benefit of the Beneficiaries, and their respective
successors, endorsees, transferees and assigns, until all of the Obligations and
the Obligations of the Guarantor under this Agreement shall have been satisfied
by payment and performance in full. The Guarantor further agrees that, without
limiting the generality of this Guarantee, if any Beneficiary (or any assignee
thereof) shall be prevented by applicable law from exercising its remedies (or
any of them) against the Transferee under any Operative Document, such
Beneficiary (or any assignee thereof) shall be entitled to receive hereunder
from the Guarantor, upon demand
- 4 -
<PAGE> 84
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Transferee or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Transferee or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made. The
Guarantor shall not commence any "case" (as defined in Title 11 of the United
States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments hereunder
shall be paid without set-off, counterclaim, deduction or withholding except as
required by law or regulation. If any payment hereunder is subject to deduction
or withholding, Guarantor shall pay an additional amount such that, after
deduction of all amounts required to be deducted or withheld, the net amount
actually received will equal the amount that would have been received had such
deduction or withholding not been required (provided that the recipients of any
payments hereunder shall not be entitled to receive any greater amount than if
Transferee had made such payment).
9. Representations and Warranties. The Guarantor hereby represents and
warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged;
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Guarantee, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the
creation or imposition of any
- 5 -
<PAGE> 85
lien on any of the properties or revenues of the Guarantor pursuant to
any requirement of law or contractual obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or governmental authority and no
consent of any other person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee;
(f) no litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
against any of its properties or revenues (i) with respect to this
Guarantee or any of the transactions contemplated hereby or (ii) that
could have a material adverse effect on the business, operations,
property or financial or other condition of the Guarantor;
(g) the balance sheet of the Guarantor as at _________________
and the related statement of income and retained earnings for the
fiscal year then ended (copies of which have heretofore been furnished
to each Beneficiary) have been prepared in accordance with generally
accepted accounting principles applied consistently throughout the
period involved, are complete and correct and present fairly the
financial condition of the Guarantor as at such date and the results of
its operations for such fiscal year; since such date there has been no
material adverse change in the business, operations, property or
financial or other condition of the Guarantor; the Guarantor has no
material contingent obligation, contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment that
is not reflected in the foregoing statements or in the notes thereto;
and
(h) the Guarantor is [type of legal personality] with
a net worth of at least $60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act
(except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of
- 6 -
<PAGE> 86
any Beneficiary, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire agreement of
Guarantor with respect to the subject matter hereof and there are no promises or
representations by any Beneficiary relative to the subject matter hereof not
reflected herein.
13. Amendments and Waivers. None of the terms or provisions of this
Guarantee may be waived, amended or supplemented or otherwise modified except by
a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this Guarantee are
for convenience of reference only and not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding upon the
successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon the Guarantor
or any Beneficiary to be effective shall be in writing or by telegraph, telex or
telecopy and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or, in the case of mail,
two days after deposit in the postal system, first class postage pre-paid, or,
in the case of telegraphic notice, when sent, answerback received, addressed to
(a) in the case of the Guarantor, the address provided on the signature page
hereof, and (b) in the case of any Beneficiary, the address provided for such
party in the Refunding Agreement.
- 7 -
<PAGE> 87
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered by its duly authorized officer as of the day and the
year first above written.
[NAME OF GUARANTOR]
By: _______________________________
Title:
- 8 -
<PAGE> 88
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1989 BN-5]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-5]
("Assignment") dated as of _____________, between ______________, a ___________
corporation ("Assignor") and ________________, a __________ corporation
("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee,
Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned
below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer
by Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
[_______________________], Fleet National Bank, as Subordination Agent, and The
Chase Manhattan Bank, as Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement"), (ii) the Trust Agreement
identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the
Trust Agreement), (iv) the Second Amended and Restated Head Lease TIA identified
in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture
(as defined in the Refunding Agreement) and (b) the assumption by Assignee of
the obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the meaning ascribed thereto in the Refunding Agreement.
For purposes of this Assignment, the defined term "Operative Document" shall
have the meaning ascribed thereto in the Refunding Agreement and shall be deemed
to include the Second Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned,
transferred and set over, and does hereby sell, convey, assign, transfer and set
over, unto Assignee, as of the date hereof, all of its right, title and interest
in, under and with respect to the Refunding Agreement, the Trust Agreement, the
Trust Estate, the Second Amended and Restated Head Lease TIA, the Indenture, all
of the other Operative Documents to which Assignor is a party or any other
contract, agreement, document or instrument relating to the Trust Estate by
which Assignor is bound, and any proceeds therefrom, together with all other
documents and instruments evidencing any of such right, title and interest,
except such rights of Assignor as have accrued to Assignor prior to the date
hereof (including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust
<PAGE> 89
Agreement as of a date prior to such date and the right to receive any indemnity
payment pursuant to the Refunding Agreement or the Lease with respect to events
occurring prior to such date).
3. Assumption. Assignee hereby undertakes all of the duties
and obligations of Assignor whenever accrued (other than duties and obligations
of Assignor required to be performed by it on or prior to the date hereof under
the Operative Documents to which Owner Participant is a party and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound), pursuant to the Trust Agreement
and any of the other Operative Documents by which Assignor is bound or any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound, and hereby confirms that
it shall be deemed a party to the Trust Agreement and shall be bound by each of
the other Operative Documents and each other contract, agreement, document or
other instrument relating to the Trust Estate to which Assignor is a party or by
which it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the
within assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
- 2 -
<PAGE> 90
6. Payments. Assignor hereby covenants and agrees to pay over
to Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Assignor that, under Section 2 hereof, belong to Assignee, and
Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents that it is
acquiring the Trust Estate interests and other interests hereby assigned to it
for its own account for the purpose of investment and not with a view to the
distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents and
warrants that:
(a) it has all requisite power and authority and legal right
to enter into and carry out the transactions contemplated hereby and to
carry out and perform the transactions of Owner Participant as
contemplated by the Operative Documents;
(b) on the date hereof it is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act
and the rules and regulations of the FAA thereunder;
(c) on and as of the date hereof, the representations and
warranties of Owner Participant set forth in Section 9 of the Refunding
Agreement and as set forth in any other Agreement to which Owner
Participant is a party are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of
the Refunding Agreement;
(e) Assignee or its guarantor has a net worth of not
less than $60,000,000.
9. Governing Law. This Assignment and Assumption Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
- 3 -
<PAGE> 91
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:_______________________________
Title:
[ASSIGNEE]
By:_______________________________
Title:
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<PAGE> 92
EXHIBIT C to
REFUNDING AGREEMENT
LIST OF COUNTRIES
Australia
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Luxembourg
Netherlands
New Zealand
Norway
Singapore
South Korea
Sweden
Switzerland
United Kingdom
<PAGE> 93
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 94
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1989 BN-5] No. 3 dated
November 26, 1996 (the "Trust Agreement Supplement") between
the Owner Trustee and the Owner Participant, amending the
Trust Agreement, which Trust Agreement Supplement was filed
with the FAA at 12:20 p.m., C.S.T. on November 26, 1996;
(b) Second Amended and Restated Trust Indenture and
Security Agreement [GPA 1989 BN-5] dated as of November
26, 1996 (the "Amended and Restated Indenture") between
the Owner Trustee and the Indenture Trustee, amending
and restating the Original Indenture with attached
thereto Trust Agreement and Indenture Supplement No. 3
[GPA 1989 BN-5] dated November 26, 1996 (the "Indenture
Supplement"), with respect to the Aircraft, which
Amended and Restated Indenture with the Indenture
Supplement attached was filed with the FAA at 12:21
p.m., C.S.T. on November 26, 1996;
(c) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of November 26, 1996 (the "Lease
Amendment") among the Original Head Lessee, as
assignor, the Owner Trustee, as lessor, the Lessee, as
assignee, and the Indenture Trustee, which (i) assigns
all right, title and interest of the Original Head
Lessee in and to the Original Head Lease to the Lessee,
(ii) terminates the Sublease and (iii) releases the
Sublease Collateral Assignment, which Lease Amendment
was filed with the FAA at 12:22 p.m., C.S.T. on
November 26, 1996; and
(d) Second Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-5] dated as of September 22, 1989, amended
and restated as of October 1, 1991 and amended and
<PAGE> 1
Exhibit 4.12
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REFUNDING AGREEMENT
[GPA 1989 BN-6]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA SUB I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
[--------------------------],
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
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Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 65
Registration No. N626AW
Leased by America West Airlines, Inc.
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. Purchase of Equipment Notes; Refunding.................................................... 8
SECTION 2. Equipment Notes........................................................................... 10
SECTION 3. Conditions Precedent...................................................................... 10
SECTION 4. Certain Conditions Precedent to the Obligations
of the Original Head Lessee and the Parent
Guarantor; Certain Conditions Precedent to the
Obligations of the Lessee; Conditions Precedent
with respect to the Pass Through Trustee............................................ 18
SECTION 5. Amendment and Restatement of the First Amended
and Restated Indenture.............................................................. 22
SECTION 6. Amendment and Restatement of the First Amended
and Restated Lease.................................................................. 22
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc........................................................ 22
SECTION 8. Representations and Warranties of the Lessee............................................. 23
SECTION 9. Representations and Warranties........................................................... 27
SECTION 10. Transfer of Owner Participant's Interest................................................. 42
SECTION 11. Re-Registration of the Aircraft.......................................................... 46
SECTION 12. Quiet Enjoyment.......................................................................... 49
SECTION 13. Liens.................................................................................... 50
SECTION 14. Certain Additional Provisions Relating to
Original Head Lessee, Parent Guarantor, Trust
Company, Owner Trustee and Owner Participant........................................ 52
SECTION 15. Certain Retained Rights and Releases..................................................... 55
SECTION 16. Certain Additional Obligations of the Lessee,
the Owner Trustee, the Owner Participant and
the Indenture Trustee............................................................... 61
SECTION 17. Lessee Protection of Title............................................................... 61
SECTION 18. Jurisdictional and Related Matters....................................................... 61
SECTION 19. Limitation on Recourse................................................................... 63
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 20. Notices................................................................................... 63
SECTION 21. Expenses.................................................................................. 63
SECTION 22. Reliance of Liquidity Provider............................................................ 64
SECTION 23. Miscellaneous............................................................................. 64
SECTION 24. Governing Law............................................................................. 66
SECTION 25. Effectiveness............................................................................. 59
</TABLE>
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Schedule IV OP SLV Amount
Schedule V GPA SLV Amount
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
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<PAGE> 4
REFUNDING AGREEMENT
[GPA 1989 BN-6]
REFUNDING AGREEMENT [GPA 1989 BN-6] (this "Agreement"), dated
as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) [_______________________], a
Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a
Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
four separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank, successor by merger to Manufacturers Hanover
Trust Company), a New York corporation, not in its individual capacity except as
otherwise expressly provided herein, but solely as Indenture Trustee (the
"Indenture Trustee") under the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, FG Vision Leasing Co., Ltd., a Japanese limited
purpose corporation (the "Japanese Lessor") and Air Tara Caymans II, Limited, a
Cayman Islands corporation wholly-owned by the Parent Guarantor ("GPA
Offshore"), entered into the Agreement to Purchase and Lease [GPA 1989 BN-6],
dated as of September 28, 1989 among GPA Offshore, the Parent Guarantor,
Barclays Bank plc, a public limited company organized under the laws of England
and acting through its Tokyo branch (the "Japanese Lender") and the Japanese
Lessor (the "Agreement to Purchase and Lease"), pursuant to which, among other
things, GPA Offshore agreed to sell to Japanese Lessor, and Japanese Lessor
agreed to purchase from GPA Offshore, the Aircraft (as defined below) on the
Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery
of the Agreement to Purchase and Lease, the Japanese Lessor and
<PAGE> 5
GPA Offshore entered into the Japanese Lease Agreement [GPA 1989 BN-6] dated as
of September 28, 1989, as supplemented by Lease Supplement No. 1, dated
September 29, 1989 (the "Japanese Lease Supplement") (as so supplemented, the
"Japanese Lease") pursuant to which the Japanese Lessor agreed to lease to GPA
Offshore (in its capacity as lessee thereunder, together with its successors and
assigns, the "Japanese Lessee"), and GPA Offshore agreed to lease from the
Japanese Lessor, the Aircraft;
WHEREAS, on September 29, 1989 GPA Offshore and the Grand
Cayman branch of the Japanese Lender (the "Defeasance Bank") entered into two
Assumption Agreements, dated as of September 28, 1989, for Yen payments and
Pounds Sterling payments, respectively (as amended, modified or supplemented
from time to time in accordance with the terms thereof and of the Operative
Documents, collectively, the "Assumption Agreements"), pursuant to which the
Defeasance Bank assumed certain of the obligations of GPA Offshore under the
Japanese Lease for certain rent, termination and deficiency payments to be made
thereunder (the portion thereof so assumed being herein called the "Defeased
Payments" and the Yen portion thereof not so assumed being herein called the
"Undefeased Yen Amount") in consideration of the unconditional and irrevocable
payment to it by GPA Offshore of the agreed amounts set forth therein;
WHEREAS, on September 29, 1989, the Parent Guarantor delivered
to the Japanese Lessor the Japanese Lease Guaranty dated as of September 28,
1989 (the "Japanese Lease Guaranty");
WHEREAS, on September 29, 1989, the Defeasance Bank and the
Japanese Lessor entered into two Confirmations and Agreements, dated as of
September 28, 1989 for Yen payments and Pounds Sterling payments, respectively,
(as amended, modified, or supplemented from time to time in accordance with the
terms thereof and of the Operative Documents, collectively, the "Confirmation
and Agreement"), pursuant to which the Defeasance Bank agreed to undertake
directly with the Japanese Lessor to make the Defeased Payments under the
Japanese Lease;
WHEREAS, concurrently with the execution and delivery of the
Agreement to Purchase and Lease, the Japanese Lessor and GPA Offshore entered
into the Supplemental Agreement dated as of September 28, 1989 (the
"Supplemental Agreement") pursuant to which the Japanese Lessor agreed with GPA
Offshore that the Japanese Lessor's interest in the Aircraft shall be subject
and subordinate to the security interest of the Indenture Trustee, and that the
Japanese Lessor shall relinquish to the Indenture Trustee any proceeds of a
disposition of the Aircraft in the case of a foreclosure proceeding;
WHEREAS, concurrently with the execution and delivery
of the Agreement to Purchase and Lease, GPA Offshore and the
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Original Head Lessee entered into a Lease Assignment, dated as of September 28,
1989 ("First Japanese Lease Assignment") pursuant to which GPA Offshore assigned
to the Original Head Lessee all of its right, title and interest (but not any of
its obligations) in the Aircraft under the Japanese Lease, the Japanese Lease
Supplement, the Assumption Agreement, the Confirmation and Agreement, the
Supplemental Agreement, the Japanese Security Agreement (as defined below), the
Omnibus Agreement, the FUYO Guaranty and the other Japanese Financing Documents,
and GPA Offshore remained solely liable for its obligations under the Japanese
Lease and such other agreements;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement (as defined below), the Original Head Lessee
and the Owner Trustee entered into the Lease Assignment dated as of December 15,
1989 (as amended, modified or supplemented from time to time in accordance with
the terms thereof and of the Operative Documents, the "Second Japanese Lease
Assignment"), pursuant to which the Original Head Lessee agreed to assign to the
Owner Trustee all of its right, title and interest (but not any of its
obligations) in the Aircraft under the Japanese Lease, the Japanese Lease
Supplement, the First Japanese Lease Assignment, the Japanese Security
Agreement, the Assumption Agreement, the Confirmation and Agreement, the
Supplemental Agreement, the Omnibus Agreement, the FUYO Guaranty and the other
Japanese Financing Documents in which it has an interest.
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Manufacturers Hanover Trust Company and The Mitsubishi Trust
and Banking Corporation, as Lenders (the "Lenders"), the Owner Trustee and the
Indenture Trustee entered into the Participation Agreement [GPA 1989 BN-6],
dated as of December 15, 1989 (as amended, supplemented or otherwise modified
from time to time, the "Participation Agreement"), providing for the financing
of one Airbus A320-231 aircraft (the "Aircraft");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust Indenture and Security Agreement [GPA 1989 BN-6], dated as of
December 15, 1989, as supplemented by Trust Indenture Supplement No. 1 [GPA 1989
BN-6], dated December 22, 1989 (as so supplemented, the "Original Indenture");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1989 BN-6], dated as of December 15,
1989, as supplemented by Lease Supplement [GPA 1989 BN-6] No. 1 dated December
22, 1989 (as so supplemented, the "Original Lease"), whereby, subject to
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<PAGE> 7
the terms and conditions set forth therein, the Owner Trustee agreed to lease to
the Original Head Lessee, and the Original Head Lessee agreed to lease from the
Owner Trustee, the Aircraft commencing on the Delivery Date (as therein
defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1989 BN-6] dated as of December 15, 1989 (the "Parent Head Lease
Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent
Guarantor guaranteed all of the obligations of the Original Head Lessee under
the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1989 BN-6], dated as of December 15, 1989, as
supplemented by Trust Agreement Supplement [GPA 1989 BN-6] No. 1 dated December
22, 1989, and as further supplemented by Trust Agreement Supplement [GPA 1989
BN-6] No. 2 dated October 24, 1991 (as amended, supplemented or otherwise
modified to the date hereof, the "Original Trust Agreement"), pursuant to which
the Owner Trustee agreed, among other things, to hold the Trust Estate defined
in Section 1.1 thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1989 BN-6], dated
as of December 15, 1989 (as amended, supplemented or otherwise modified to the
date hereof, the "Head Lease TIA");
WHEREAS, the Original Head Lessee in its capacity as sublessor
(in such capacity, the "Sublessor") and America West Airlines, Inc. in its
capacity as sublessee (in such capacity, the "Sublessee") entered into the
Aircraft Sublease Agreement [GPA 1989 BN-6] dated as of September 21, 1990, as
supplemented by Sublease Supplement No. 1 [GPA 1989 BN-6] dated September 28,
1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989
BN-6] dated as of June 25, 1991 and Amendment No. 2 to Aircraft Sublease
Agreement [GPA 1989 BN-6] dated as of August 26, 1991 (as amended, supplemented
or otherwise modified to the date hereof, the "Sublease"), whereby, subject to
the terms and conditions set forth therein, the Sublessor agreed to sublease to
the Sublessee, and the Sublessee agreed to sublease from the Sublessor, the
Aircraft commencing on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1989
BN-6] dated as of September 21, 1990
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<PAGE> 8
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease Guaranty") for the benefit of the Sublessee pursuant to which the
Parent Guarantor guaranteed the obligations of the Original Head Lessee under
Section 21(f) of the Sublease;
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1989 BN-6], dated as of September 21, 1990
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease and Sublessee Consent and Agreement [GPA 1989 BN-6] dated as of
September 21, 1990, as amended by Amendment No. 1 to Assignment of Sublease and
Sublessee Consent and Agreement [GPA 1989 BN-6] dated as of October 1, 1991 (as
amended, modified or otherwise supplemented to the date hereof, the "Assignment
of Sublease");
WHEREAS, in connection with the Term Refunding (as defined in
the Participation Agreement), the Original Head Lessee, the Parent Guarantor,
the Owner Participant, the Owner Trustee and the Indenture Trustee entered into
Amendment No. 1 to Participation Agreement [GPA 1989 BN-6], dated as of October
1, 1991 ("PA Amendment No. 1");
WHEREAS, concurrently with the execution and delivery of PA
Amendment No. 1, the Owner Trustee and the Indenture Trustee entered into the
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6],
dated as of October 1, 1991, as supplemented by Trust Indenture Supplement No. 2
[GPA 1989 BN-6], dated October 24, 1991 (as so amended and restated,
supplemented or otherwise modified to the date hereof, the "First Amended and
Restated Indenture");
WHEREAS, pursuant to the First Amended and Restated Indenture,
the Owner Trustee issued equipment trust certificates substantially in the form
set forth in Exhibit C thereof (the "Original Certificates") to the holders
thereof (the "Original Certificate Holders") as evidence of the indebtedness
then being made by the Owner Trustee to refinance a portion of the purchase
price of the Aircraft;
WHEREAS, concurrently with the execution and delivery of PA
Amendment No. 1, the Owner Trustee and the Original Head Lessee entered into the
Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6], dated as of
October 1, 1991, as supplemented by Lease Supplement [GPA 1989 BN-6] No. 2,
dated October 24, 1991 (as so amended and restated, supplemented or otherwise
modified to the date hereof, the "First Amended and Restated Lease");
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<PAGE> 9
WHEREAS, concurrently with the execution and delivery of PA
Amendment No. 1, the Owner Participant and the Original Head Lessee entered into
the Amended and Restated Head Lease Tax Indemnification Agreement [GPA 1989
BN-6], dated as of October 1, 1991 (as so amended and restated, supplemented or
otherwise modified to the date hereof, the "First Amended and Restated Head
Lease TIA");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will further amend and restate the First Amended and
Restated Indenture as the Second Amended and Restated Trust Indenture and
Security Agreement [GPA 1989 BN-6], dated as of the Restatement Date, as
supplemented by Trust Indenture Supplement No. 3 dated the Restatement Date (the
"Second Amended and Restated Indenture" and, the First Amended and Restated
Indenture as so amended and restated, the "Indenture"), under which Indenture
the Owner Trustee will issue secured equipment notes substantially in the form
set forth in Section 2.01 thereof (the "Equipment Notes") in four series, the
proceeds from the issuance and sale of which will be applied in part to the
redemption in full of the Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
First Amended and Restated Lease as the Second Amended and Restated Lease (as so
amended and restated, the "Lease");
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-6] No. 3 ("Trust
Supplement No. 3"), amending the Original Trust Agreement (as so amended and as
further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Second Amended and Restated Head Lease
Tax Indemnification Agreement, amending and restating the First Amended and
Restated Head Lease TIA (as so amended and restated, the "Second Amended and
Restated Head Lease TIA") and the Sublessor and the Sublessee will enter into
the Amended and Restated Sublease Tax Indemnification Agreement amending and
restating the Sublease TIA (as so amended and restated, the "Amended and
Restated Sublease TIA");
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<PAGE> 10
WHEREAS, at the Closing, the Parent Guarantor and The Chase
Manhattan Bank (the "Deposit Bank") will enter into the Yen Deposit Agreement
("Yen Deposit Agreement"), providing for the Parent Guarantor to place on
deposit the Undefeased Yen Amount (as defined in the Yen Deposit Agreement) (the
"Cash Deposit") with the Deposit Bank;
WHEREAS, at the Closing, the Parent Guarantor and the
Indenture Trustee will enter into the Yen Deposit Charge Agreement (the "Yen
Deposit Charge Agreement") under which the Parent Guarantor shall charge and
assign to the Indenture Trustee all of its right, title and interest in and to
the Yen Deposit Agreement and the Cash Deposit to secure the Parent Guarantor's
obligations under Section 15(h) of this Agreement;
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
four separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving credit agreements
(each, a "Liquidity Facility"), for the benefit of the Holders of Equipment
Notes of each of three Pass Through Trusts, with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination
Agent will enter into the Intercreditor Agreement, dated as of the Restatement
Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of
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<PAGE> 11
which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject
to the satisfaction or waiver of the conditions set forth herein, on November
26, 1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as
a payment of Supplemental Rent under the Sublease all accrued
and unpaid Rent under the Sublease up to the Restatement Date,
if any, (less any amounts for which Sublessee is indemnified
by Sublessor) and (B) the Original Head Lessee shall pay to
the Owner Trustee, as a payment of Supplemental Rent under the
Original Lease, an amount equal to the accrued and unpaid
interest on the Original Certificates to but not including the
Restatement Date plus an amount equal to all other amounts due
to the holders of the Original Certificates under the Original
Indenture and the other Operative Documents (as defined in the
Original Indenture) payable on the Restatement Date under
Section 2.16(b)(ii) of the Original Indenture;
(ii) the Pass Through Trustee for each Pass Through
Trust shall pay to the Owner Trustee the aggregate purchase
price of the Equipment Notes being issued to such Pass Through
Trustee as set forth in clause (xiii) below;
(iii) the Owner Trustee (to the extent of proceeds
received under clauses (i) and (ii)) shall pay to the
Indenture Trustee for the benefit of the holders of the
Original Certificates an amount equal to (A) the unpaid
principal amount of the Original Certificates and (B) the
amounts specified in clause (i)(B) of this Section 1
(collectively, the "Aggregate Redemption Amount");
(iv) the Indenture Trustee shall disburse to the
holders of the Original Certificates the Aggregate Redemption
Amount owing to them on the Restatement Date with respect to
the Original Certificates as a redemption of the Original
Certificates;
(v) the Indenture Trustee shall receive the Original
Certificates for cancellation;
(vi) the Parent Guarantor and the Deposit Bank shall
enter into the Yen Deposit Agreement and the Parent Guarantor
shall place the Cash Deposit with the Deposit Bank, and the
Parent Guarantor and the
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<PAGE> 12
Indenture Trustee shall enter into the Yen Deposit Charge
Agreement securing the Parent Guarantor's obligations under
Section 15(h) of this Agreement;
(vii) the Owner Trustee and the Indenture Trustee
shall enter into the Indenture (including Trust Indenture
Supplement No. 3);
(viii) the Original Head Lessee, the Sublessee, the
Owner Trustee and the Indenture Trustee shall enter into Lease
Amendment No. 1;
(ix) the Owner Participant and the Trust Company
shall enter into Trust Supplement No. 3;
(x) the Original Head Lessee and the Owner
Participant shall enter into the Second Amended and Restated
Head Lease TIA and the Sublessor and the Sublessee shall enter
into the Amended and Restated Sublease TIA;
(xi) the Original Head Lessee, GPA Leasing USA I,
Inc., the Parent Guarantor and the Lessee shall enter into an
agreement in form and substance reasonably satisfactory to
each, inter alia, confirming the termination of certain rights
which the Parent Guarantor has to "put" aircraft to the Lessee
and the obligation of the Lessee to accept and lease such
aircraft (the "Put Termination Agreement");
(xii) the Parent Guarantor and/or one or more of its
affiliates and the Lessee will enter into an agreement (the
"Deed of Indemnity") pursuant to which the Parent Guarantor
and/or one or more of its affiliates, on the one hand, and the
Lessee, on the other, will indemnify each other with respect
to certain information included in the Prospectus and the
Registration Statement (as such terms are defined in the
Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xiii) the Owner Trustee shall issue, pursuant to
Article II of the Indenture, to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass
Through Trusts, Equipment Notes of the maturity and aggregate
principal amount, bearing the interest rate and for the
purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust.
(b) The Owner Participant, by its execution and
delivery hereof, requests and directs the Owner Trustee to
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execute and deliver this Agreement and, subject to the terms hereof, to take the
actions contemplated herein.
(c) The closing (the "Closing") of the transactions described
in this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement
Date, or at such other place as the parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated
hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor
and the Lessee have entered into the Underwriting Agreement, dated as of
November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan
Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon
Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and
conditions hereof, the Lessee will enter into each of the Pass Through Trust
Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be
payable as to principal in accordance with the terms of the Indenture, and the
Equipment Notes shall provide for a fixed rate of interest per annum and shall
contain the terms and provisions provided for the Equipment Notes in the
Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Equipment Notes bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Equipment Notes in the aggregate shall be in the principal amounts set forth on
Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust
Agreements and of the other Operative Documents, all such Equipment Notes shall
be dated and authenticated as of the Restatement Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass
Through Trustee to make the payments described in Section 1(a)(ii) and the
obligations of the Owner Trustee to make the payments described in Section
1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner
Trustee, the Owner Participant and the Indenture Trustee to participate in the
transactions contemplated by this Agreement on the Restatement Date are subject
to the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent (except
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that paragraphs (a), (f) and (j) shall not be conditions precedent to the
obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be
conditions precedent to the obligations of the Owner Participant hereunder and
paragraphs (e) and (k) shall not be conditions precedent to the obligations of
the Indenture Trustee hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes
to the Indenture Trustee for authentication, and the Indenture Trustee shall
have authenticated such Equipment Notes and shall have tendered the Equipment
Notes to the Subordination Agent on behalf of the Pass Through Trustee in
accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of the
following documents and the Indenture Trustee shall have received executed
counterparts of items (1) through (8):
(1) this Agreement;
(2) Lease Amendment No. 1, the Second Amended and
Restated Lease and Lease Supplement No. 3;
(3) Trust Supplement No. 3;
(4) the Second Amended and Restated Indenture and
Trust Indenture Supplement No. 3;
(5) each of the Pass Through Trust Agreements and each
Pass Through Trust Supplement set forth in
Schedule I hereto;
(6) the Intercreditor Agreement;
(7) the Liquidity Facility for each of the Class A,
Class B and Class C Trusts (as defined in the
Intercreditor Agreement); and
(8) the Yen Deposit Agreement and the Yen Deposit
Charge Agreement.
(c) The Pass Through Trustee, the Indenture Trustee,
the Owner Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of each of the Original
Head Lessee, the Lessee and the Parent Guarantor as to the
person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on
behalf of such Person
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<PAGE> 15
in connection with the transactions contemplated hereby
(including, without limitation, each of the documents referred
to herein) and as to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of each of the Original Head Lessee, the Lessee and
the Parent Guarantor or the applicable committee thereof,
certified by the Secretary or an Assistant Secretary of such
Person, duly authorizing the transactions contemplated hereby
and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of
such Person in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of
each of the Original Head Lessee and the Lessee, certified by
the Secretary of State of its state of incorporation, a copy
of the by-laws of each of the Original Head Lessee and the
Lessee, certified by the Secretary or Assistant Secretary of
such Person, and a certificate or other evidence from the
Secretary of State of its state of incorporation, dated as of
a date reasonably near the Restatement Date, as to its due
incorporation and good standing in such state; and
(4) a copy of the Memorandum and Articles of
Association of the Parent Guarantor certified to be true and
correct by the Secretary or an Assistant Secretary of the
Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case of (1),
(5) and (6) below, a certificate signed by an authorized officer of the Lessee
and, in the case of (2), (3) and (4) below, a certificate signed by an
authorized officer of the Original Head Lessee, dated the Restatement Date,
certifying that:
(1) the Aircraft has been duly certified by the
FAA as to type and airworthiness and has a current,
valid certificate of airworthiness;
(2) the Second Aircraft FAA Bill of Sale (as defined
in the Participation Agreement), the Original Lease, the First
Amended and Restated Lease, the Original Indenture and the
First Amended and Restated Indenture have each been duly
recorded, and the Original Trust Agreement has been duly
filed, with the FAA pursuant to the sections of Title 49 of
the United
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<PAGE> 16
States Code relating to aviation (the "Federal Aviation
Act");
(3) Lease Amendment No. 1, the Second Amended and
Restated Lease, Lease Supplement No. 3, the Second
Amended and Restated Indenture, Trust Indenture
Supplement No. 3 and Trust Supplement No. 3 covering
the Aircraft shall have been duly filed for recordation
with the FAA pursuant to the Federal Aviation Act;
(4) the Aircraft has been registered with the FAA
in the name of the Owner Trustee;
(5) the Lessee has authority to operate the
Aircraft; and
(6) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the
Secretary, an Assistant Secretary or other appropriate officer
of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Indenture Trustee, each certified by the Secretary, an
Assistant Secretary or other appropriate officer of the
Indenture Trustee; and
(4) a certificate signed by an authorized officer
of the Indenture Trustee, dated the Restatement Date,
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<PAGE> 17
certifying that the representations and warranties contained
herein of the Indenture Trustee are correct as though made on
and as of the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as
to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Trustee in connection with the
transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Owner Trustee, each certified by the Secretary or an
Assistant Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
(1) an incumbency certificate of the Owner
Participant as to the person or persons authorized to execute
and deliver this Agreement and each of the other documents to
be executed on behalf of the Owner Participant in connection
with the transactions
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<PAGE> 18
contemplated hereby (including, without limitation,
each of the documents referred to herein) and as to the
signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Participant or the applicable committee
thereof, certified by the Secretary or an Assistant Secretary
of the Owner Participant, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Owner Participant in connection
with the transactions contemplated hereby;
(3) a copy of the certificate of incorporation of the
Owner Participant, certified by the Secretary of State of its
state of incorporation, a copy of the by-laws of the Owner
Participant, certified by the Secretary or Assistant Secretary
of the Owner Participant, and a certificate or other evidence
from the Secretary of State of its state of incorporation,
dated as of a date reasonably near the Restatement Date, as to
its due incorporation and good standing in such state; and
(4) a certificate signed by an authorized officer of
the Owner Participant, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Owner Participant are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the Lessee a
report from Willis Corroon in substantially the form of Exhibit D attached
hereto.
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion addressed
to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews &
Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice
PresidentLegal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel
for the Lessee, in each case in form and substance satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received an opinion addressed to it from
Morris, James, Hitchens & Williams, special
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<PAGE> 19
counsel for the Owner Trustee, in form and substance satisfactory
to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from (i) Kelley
Drye & Warren LLP, special counsel for the Indenture Trustee, and (ii) Shipman &
Goodwin LLP, special counsel for the Subordination Agent and the Pass Through
Trustee, in each case in form and substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received an opinion addressed to it from (i)
Morgan, Lewis & Bockius LLP, special counsel for the Owner Participant and (ii)
in-house counsel for the Owner Participant, in each case in form and substance
satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case, special
counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity
Provider, in each case in form and substance satisfactory to the Pass Through
Trustee, the Owner Trustee and the Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma
City, Oklahoma, in form and substance satisfactory to each of them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York
counsel for the Original Head Lessee and the Parent Guarantor, in form and
substance satisfactory to each of them.
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from McCann FitzGerald, special Irish counsel for the Parent
Guarantor, in form and substance satisfactory to each of them.
(q) The Pass Through Trustee, the Owner Trustee and the
Indenture Trustee each shall have received an opinion addressed to it from
Freshfields, special English counsel for the Parent Guarantor, in form and
substance satisfactory to each of them.
(r) The Original Head Lessee, the Lessee, GPA Leasing
USA I, Inc. and the Parent Guarantor shall have entered into the
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<PAGE> 20
Underwriting Agreement and the Lessee shall have entered into each of the Pass
Through Trust Agreements, the Certificates shall have been issued and sold
pursuant to the Underwriting Agreement and the Pass Through Trust Agreements,
and the Underwriters shall have transferred to the Pass Through Trustee in
immediately available funds an amount equal to the aggregate purchase price of
the Equipment Notes to be purchased from the Owner Trustee.
(s) The Original Head Lessee and the Owner Participant shall
each have executed and delivered to the other the Second Amended and Restated
Head Lease TIA.
(t) The Sublessor and the Sublessee shall each have executed
and delivered to the other the Amended and Restated Sublease TIA.
(u) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or interpretations thereof
by appropriate regulatory authorities or any court that would make it illegal
for the Pass Through Trustee to make the payments described in Section 1(a)(ii)
or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner
Participant or any other party hereto to participate in the transactions
contemplated by this Agreement on the Restatement Date.
(v) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in connection with
the Pass Through Trustee's making of the payments described in Section 1(a)(ii)
or the Owner Trustee's or the Owner Participant's participation in the
transactions contemplated by this Agreement on the Restatement Date shall have
been duly obtained.
(w) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security interests
created by or pursuant to the Indenture that are not covered by the recording
system established by the Federal Aviation Act shall have been executed and
delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the
Owner Trustee, as the case may be, and such financing, termination, amendment
and continuation statement or statements or documents to the same purposes shall
have been duly filed in all places necessary or advisable, and any additional
Uniform Commercial Code financing, termination, amendment and continuation
statements deemed advisable by the Original Head Lessee, the Lessee, the Owner
Participant or the Indenture Trustee shall have been executed and delivered by
the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner
Trustee, as the case may be, and duly filed in all places advisable.
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<PAGE> 21
(x) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or interpretations thereof
by appropriate regulatory authorities or any court that would adversely affect
the tax consequences of the transactions contemplated by this Agreement to the
Owner Participant, the Owner Trustee or any of their respective Affiliates.
(y) The Owner Trustee shall have received a letter of credit
in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the
Lease.
(z) The Owner Participant shall have received any other
documents and evidence as the Owner Participant or its counsel may request.
Promptly following the recording of Lease Amendment No.
1, the Second Amended and Restated Lease (including Lease
Supplement No. 3) and the Second Amended and Restated Indenture
(including Trust Indenture Supplement No. 3) pursuant to the
Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City,
Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the
Indenture Trustee, the Owner Participant and the Owner Trustee an
opinion as to the due recording of Lease Amendment No. 1, the
Second Amended and Restated Lease, Lease Supplement No. 3, the
Second Amended and Restated Indenture, Trust Indenture Supplement
No. 3 and Trust Supplement No. 3. Promptly following the
execution and delivery of the Yen Deposit Charge Agreement (and
in no event later than the deadline prescribed by law), the
Parent Guarantor shall cause the prescribed particulars in
respect of the Yen Deposit Charge Agreement and the Yen Deposit
Charge Agreement itself to be delivered to the registrar of
companies in the United Kingdom and Ireland for filing.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
(i) Each of the Original Head Lessee and the Parent Guarantor
shall have received counterparts of the following documents executed by
each of the parties thereto other than the Original Head Lessee and the
Parent Guarantor:
(1) this Agreement;
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<PAGE> 22
(2) Lease Amendment No. 1, the Second Amended
and Restated Lease and Lease Supplement No.
3;
(3) the Second Amended and Restated Head Lease
TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee and such other
releases and terminations as it may
reasonably request;
(9) that certain letter agreement dated as of
the Restatement Date relating to Stipulated
Loss Values with respect to the Amended and
Restated Lease (the "SLV Letter Agreement");
and
(10) the Yen Deposit Agreement and the Yen
Deposit Charge Agreement.
(ii) Each of the Original Head Lessee and the Parent Guarantor
shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee
referred to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i),
Section 3(j), Section 3(k), Section 3(l),
Section 3(m) and Section 3(n), in each case
addressed to each of the Original Head
Lessee and the Parent Guarantor and in form
and substance satisfactory to each of them;
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
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<PAGE> 23
relating to and described in the Prospectus,
in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form
and substance reasonably satisfactory to
each of them; and
(6) the report referred to in Section 3(h)
addressed to each of the Original Head
Lessee and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent
Guarantor shall have received such other documents and evidence with
respect to each other party hereto as each of them or its counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement and the "Refunding
Agreements" (as defined in the Registration Statement), the taking of
all necessary action in connection therewith and compliance with the
conditions herein or therein set forth.
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Second Amended
and Restated Lease and Lease Supplement No.
3;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee; and
(9) the SLV Letter Agreement.
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<PAGE> 24
(ii) The Lessee shall have received originals of the following
documents:
(1) the incumbency certificate of the Original
Head Lessee and Parent Guarantor referred to
in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee
and Parent Guarantor referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j),
Section 3(k), Section 3(l), Section 3(m),
Section 3(n), Section 3(o) and Section 3(p),
in each case addressed to Lessee and in form
and substance satisfactory to Lessee; and
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to Lessee and in form
and substance reasonably satisfactory to
Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass Through Trust Agreements of the Pass Through
Trustee are correct as of the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of
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<PAGE> 25
them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary action in connection therewith and compliance with the conditions
herein set forth.
SECTION 5. Amendment and Restatement of the First Amended and
Restated Indenture. Subject to the satisfaction or waiver of the conditions
precedent set forth herein, the Owner Participant, by execution and delivery
hereof, requests, authorizes and directs the Owner Trustee to execute and
deliver the Second Amended and Restated Indenture, and the Owner Trustee and the
Indenture Trustee, by execution and delivery hereof, agree to execute and
deliver the Second Amended and Restated Indenture. Each of the Original Head
Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof,
consent to such execution and delivery of the Second Amended and Restated
Indenture. The Second Amended and Restated Indenture shall be effective as of
the Restatement Date.
SECTION 6. Amendment and Restatement of the First Amended and
Restated Lease. Subject to the satisfaction or waiver of the conditions
precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the
Parent Guarantor and the Owner Participant, by execution and delivery hereof,
consent to the assignments, delegations, and releases set forth in, and to the
amendment and restatement of the First Amended and Restated Lease effected by,
and the Owner Participant requests and instructs the Owner Trustee to execute
and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head
Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery
hereof, to execute and deliver Lease Amendment No. 1. The Second Amended and
Restated Lease shall be effective as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner Trustee,
the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect on and after the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no obligations on the parties thereto. Upon
the execution and delivery of Lease Amendment No. 1 by each of the parties
thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease
shall be terminated as and to the extent set forth herein and therein. Lease
Amendment No. 1 shall be effective as of the Restatement Date.
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<PAGE> 26
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original Head
Lessee (except as to the representation and warranty contained in Section 8(i)),
the Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has the
corporate power and authority to own or hold under lease its properties, has, or
had on the respective dates of execution thereof, the corporate power and
authority to enter into and perform its obligations under this Agreement, Lease
Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and
Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by
the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly
qualified to do business as a foreign corporation in each jurisdiction where the
failure to so qualify would have a material adverse effect on its business,
operations or condition (financial or otherwise), or on its ability to perform
its obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform Commercial
Code in effect in the State of Arizona) is located at 4000 East Sky Harbor
Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under the Lessee
Documents have been duly authorized by all necessary corporate action on the
part of the Lessee, do not require any stockholder approval, or approval or
consent of any trustee or holder of any material indebtedness or material
obligations of the Lessee, except such as have been duly obtained and are in
full force and effect, and do not contravene any law, governmental rule,
regulation, judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions of, or
constitute a default under, or result in the creation of any Lien (other than
Permitted Liens) upon the property of the Lessee under, any indenture, mortgage,
contract, lease or other agreement in each case having payment obligations in
excess of $500,000 to which the Lessee is a party or by which it may be bound or
affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee under the
Lessee Documents nor the consummation by the Lessee of any of the transactions
contemplated by the Lessee
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<PAGE> 27
Documents, requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, the
Department of Transportation, the FAA, or any other federal, state, local or
foreign governmental authority having jurisdiction, other than those which have
already been received and which the Lessee is in compliance with and (i) the
registration of the Certificates under the Securities Act of 1933, as amended
(the "Securities Act") and the securities laws of any state in which the
Certificates may be offered for sale if the laws of such state require such
action, (ii) the qualification of the Pass Through Trust Agreements under the
Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers,
exemptions, authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee required to be
obtained on or prior to the Restatement Date, which orders, permits, waivers,
exemptions, authorizations and approvals have been duly obtained and are, or
will on the Restatement Date be in full force and effect, (B) the registration
of the Aircraft pursuant to the Federal Aviation Act and (C) such consents,
approvals, notices, registrations and other actions required by the terms of the
Lessee Documents to the extent required to be given or obtained only after the
Restatement Date and (iv) the registrations and filings referred to in Section
8(i);
(e) each Lessee Document has been duly executed and delivered
by the Lessee and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, each Lessee Document constitutes, or when
executed will constitute, the legal, valid and binding obligations of the Lessee
enforceable against the Lessee in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors or lessors
generally and by general principles of equity, whether considered in a
proceeding at law or in equity, and except, in the case of the Lease, as may be
limited by applicable laws which may affect the remedies provided in the Lease,
which laws, however, do not make the remedies provided in the Lease inadequate
for the practical realization of the benefits intended to be afforded thereby;
(f) except as disclosed in the Prospectus, there are no
pending or, to its knowledge, threatened actions or proceedings before any court
or administrative agency or regulatory commission or other governmental agency
against or affecting the Lessee that are reasonably expected to materially
adversely affect the ability of Lessee to enter into or perform its obligations
under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended;
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<PAGE> 28
(h) on the Restatement Date, the Trust Estate shall be free
and clear of any and all Liens (other than Permitted Liens) created by or
through the Lessee;
(i) except for the registration of the Aircraft pursuant to
the Federal Aviation Act, the filing for recordation pursuant to the Federal
Aviation Act (with confidential financial terms redacted) of Lease Amendment No.
1, the Second Amended and Restated Lease, Lease Supplement No. 3, Trust
Supplement No. 3, the First Amended and Restated Indenture and Indenture
Supplement No. 2, and each of the other documents referred to in Annex A hereto,
all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended
financing statement with the Secretary of State of the State of Delaware with
regard to the Original Lease, the filing of UCC termination statements with
regard to the Original Head Lessee with the Secretary of State of the States of
New York, Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with respect to
the Lease, the filing of a UCC termination statement with the Secretary of State
of the State of Arizona with respect to the Sublease, and the filing of a UCC
termination statement with the Secretary of State of the State of Delaware with
respect to the Initial Sublease Assignment (as defined in the Original Lease)
all of which financing and termination statements shall have been duly effected
as of the Restatement Date (and assignments thereof and continuation statements
at periodic intervals), and other than the taking of possession by the Indenture
Trustee of the original counterparts of the Original Lease, Lease Amendment No.
1, the Second Amended and Restated Lease, and all Lease Supplements thereto (to
the extent the Lease constitutes chattel paper), and the placing of the Lease
identification required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any financing
statement under Article 9 of the UCC of the State of Delaware, New York or
Arizona) and no further action is necessary, under the laws of the United States
of America or the States of Delaware, New York and Arizona in order to perfect
the Owner Trustee's interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the Indenture Trustee
in the Owner Trustee's interest in the Aircraft and in the Lease;
(j) all obligations of the Lessee owing to the Lessor in
connection with the Lease are at least pari passu with all unsecured and
unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default but for
the requirement that notice be given or time lapse or both;
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(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an Event of Loss
with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are required to be
filed and has paid or will pay or has caused or will cause to be paid all taxes
shown to be due or payable on said returns and on any assessment received by the
Lessee, to the extent such taxes have become due and payable, except for taxes
and returns with respect thereto the nonpayment or nonfiling of which, either in
any case or in the aggregate, could have no material adverse effect on the
Lessee, its condition (financial or otherwise), business, operations or
prospects, or on its ability to perform its obligations under the Lease or which
are being diligently contested by the Lessee in good faith by appropriate
proceedings and with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all material
respects and fairly present the Lessee's financial condition as of September 30,
1996 and the results of its operations for the period covered in conformance
with GAAP (except as otherwise noted therein and with which any such change the
independent auditors of the Lessee have agreed), since September 30, 1996, there
has been no material adverse change in the Lessee's business, operations,
condition (financial or otherwise) or prospects which has not been disclosed in
writing to the Owner Participant and the Indenture Trustee and does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary,
duties or other similar Taxes then due and for which the Lessee is responsible
pursuant to the Lessee Documents, shall have been paid, other than such Taxes
which are being contested by the Lessee in good faith and by appropriate
proceedings (and for which the Lessee shall have established such reserves as
are required under GAAP) so long as such proceedings do not involve any material
danger to the sale, forfeiture or loss of the Aircraft;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations or the
Cuban Assets Control Regulations of the United States Treasury Department, 31
Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any
regulations, interpretations or rulings issued thereunder, and the Lessee is
not, and is not acting on behalf of or for the benefit of, an "Iranian Entity"
within the meaning of the Iranian Assets Control
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Regulations of the United States Treasury Department, 31 Code of Federal
Regulations, Subtitle B, Chapter V, as amended, and the transactions
contemplated by this Agreement are not prohibited by Executive Order 12170, the
above-mentioned Iranian Assets Control Regulations or any regulations,
interpretations or rulings issued under any thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made out of the
assets of any "employee benefit plan" as defined in Section 3(3) of ERISA;
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the Owner
Participant or the Indenture Trustee by the Lessee in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. There is no fact known to the Lessee (other than matters of a
general economic nature) which the Lessee has not disclosed in writing to the
Owner Participant or the Indenture Trustee which could impair its ability to
perform its obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy
Code, the Lessor as lessor of the Aircraft under the Lease, and the Indenture
Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to
the Indenture, would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to the Aircraft.
SECTION 9. Representations and Warranties. Each of the parties
below represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below) represents and
warrants that:
(1) the Indenture Trustee is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of New York, is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal
Aviation Act and the rules and regulations of the FAA
thereunder (as so defined, a "Citizen of the United States")
(without making use of a voting trust, voting powers agreement
or similar arrangement), will notify promptly all parties to
this
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Agreement if in its reasonable opinion its status as a Citizen
of the United States (without making use of a voting trust,
voting powers agreement or similar arrangement) is likely to
change and will resign as Indenture Trustee as provided in
Section 8.02 of the Indenture promptly after it obtains actual
knowledge that it has ceased to be such a Citizen of the
United States (without making use of a voting trust, voting
powers agreement or similar arrangement), and has the full
corporate power, authority and legal right under the laws of
the State of New York and the federal laws of the United
States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of this
Agreement, the Indenture, the Yen Deposit Charge Agreement and
each other Operative Document to which it is a party and to
carry out its obligations under this Agreement, the Indenture
and each other Operative Document to which it is a party;
(2) the execution and delivery by the Indenture
Trustee of this Agreement, the Indenture, Lease Amendment No.
1, the Yen Deposit Charge Agreement and each other Operative
Document to which it is a party and the performance by the
Indenture Trustee of its obligations under this Agreement, the
Indenture and each other Operative Document to which it is a
party have been duly authorized by the Indenture Trustee and
will not violate its articles of association or by-laws or the
provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(3) this Agreement constitutes, and the Indenture and
the Yen Deposit Charge Agreement, when executed and delivered
by the Indenture Trustee, will constitute, the legal, valid
and binding obligations of the Indenture Trustee enforceable
against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its
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<PAGE> 32
obligations under the Yen Deposit Charge Agreement and
the Operative Documents to which it is a party;
(5) there are no Lenders' Liens (as defined in the
Lease) on the Aircraft or any portion of the Trust Estate
created by or through the Indenture Trustee in its individual
capacity; and
(6) it has possession of the chattel paper original
counterpart of the Original Lease, the First Amended and
Restated Lease, Lease Amendment No. 1 and the Second Amended
and Restated Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties are made
solely by the Owner Trustee) and the Owner Trustee represents and warrants that:
(1) the Trust Company is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and
authority to carry on its business as now conducted, has, or
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver Trust
Supplement No. 3, has the corporate power and authority to
carry out the terms of the Trust Agreement, and each of the
Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the
authorization, execution and delivery of Trust Supplement No.
3 by the Owner Participant), the corporate power and authority
to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Equipment Notes, Lease Amendment
No. 1, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
(2) (i) each of the Trust Company and the Owner
Trustee has duly authorized, executed and delivered the Trust
Agreement and this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
3 by the Owner Participant) the Trust Agreement constitutes a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity, (ii) the Owner
Trustee has duly authorized,
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<PAGE> 33
executed and delivered this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
3 by the Owner Participant) this Agreement and the Trust
Agreement constitute, and the Indenture and the Lease, when
entered into, will constitute, a legal, valid and binding
obligation of the Owner Trustee, in its individual capacity or
as Owner Trustee and the Trust Company, as the case may be,
enforceable against it in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(3) assuming the due authorization, execution and
delivery of Trust Supplement No. 3 by the Owner Participant,
the Owner Trustee has duly authorized, and on the Restatement
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Equipment Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Equipment Note on the Restatement Date
will constitute the valid and binding obligation of the Owner
Trustee and will be entitled to the benefits and security
afforded by the Indenture in accordance with the terms of such
Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner
Trustee or the Trust Company, as the case may be, of this
Agreement, the Original Trust Agreement, Trust Supplement No.
3, the Original Indenture, the First Amended and Restated
Indenture, the Indenture, the Original Lease, the First
Amended and Restated Lease, Lease Amendment No. 1, the Lease,
the Equipment Notes or any other Operative Document to which
it is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the
compliance by it with any of the terms and provisions hereof
and thereof, (A) requires or will require any approval of its
stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or
by-laws, or contravenes or will contravene any provision of,
or constitutes or will constitute a default under, or results
or will result in any breach of, or results or will result in
the creation of any Lien (other than as permitted under the
Operative Documents) upon its property under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other
agreement or instrument to
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<PAGE> 34
which it is a party or by which it is bound, or contravenes or
will contravene any law, governmental rule or regulation of
the State of Delaware or any United States of America
governmental authority or agency governing the trust powers of
the Owner Trustee, or any judgment or order applicable to or
binding on it;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any state or local governmental
authority or agency or any State of Delaware or any United
States governmental authority or agency regulating the trust
powers of the Trust Company is required for the execution and
delivery of, or the carrying out by, the Trust Company or the
Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or by the Trust Agreement, the Indenture,
the Lease, Lease Amendment No. 1, the Equipment Notes, or any
other Operative Document to which it is a party or by which it
is bound, other than any such consent, approval, order,
authorization, registration, notice or action as has been duly
obtained, given or taken or which is described in Section
8(d);
(6) there exists no Lessor's Lien or Head Lessor's
Lien (each as defined in the Lease) (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens) attributable to
the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's
Lien (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens) attributable to the Trust Company;
(8) there are no Taxes payable by the Owner Trustee
or the Trust Company imposed by the State of Delaware or any
political subdivision thereof in connection with the
redemption of the Original Certificates or the issuance of the
Equipment Notes, or the execution and delivery by it of any of
the instruments referred to in clauses (1), (2), (3) and (4)
above, that, in each case, would not have been imposed if the
Trust Estate were not located in the State of Delaware and the
Trust Company had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner
Trustee) any or all of its duties under the Operative
Documents in, and (c) engaged in any activities unrelated to
the transactions
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<PAGE> 35
contemplated by the Operative Documents in, the State
of Delaware;
(9) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner Trustee,
either in its individual capacity or as Owner Trustee, before
any court or administrative agency which, if determined
adversely to it, would materially adversely affect the ability
of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under
any of the instruments referred to in clauses (1), (2), (3)
and (4) above;
(10) both its chief executive office, and the place
where its records concerning the Aircraft and all its
interests in, to and under all documents relating to the Trust
Estate (other than such as may be maintained and held by the
Indenture Trustee pursuant to the Indenture), are located in
Wilmington, Delaware. Owner Trustee, in its individual
capacity or as Owner Trustee, agrees that it will not change
the location of such office to a location outside of Delaware,
without prior written notice to all parties hereto; and
(11) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangements).
(c) The Owner Participant represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, has the
corporate power and authority to carry on its present business
and operations and to own or lease its properties, has, or had
on the respective dates of execution thereof, as the case may
be, the corporate power and authority to enter into and to
perform its obligations under this Agreement, the Trust
Agreement, the SLV Letter Agreement and the Second Amended and
Restated Head Lease TIA; this Agreement, the SLV Letter
Agreement and Trust Supplement No. 3 have been duly
authorized, executed and delivered by it; and this Agreement,
the Trust Agreement, the SLV Letter Agreement and the Second
Amended and Restated Head Lease TIA constitute the legal,
valid and binding obligations of the Owner Participant
enforceable against it in accordance with their respective
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or
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<PAGE> 36
other similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Second Amended and Restated Head
Lease TIA or any other Operative Document to which it is a
party nor (B) compliance by it with all of the provisions
hereof or thereof, (x) will contravene any law or order of any
court or governmental authority or agency applicable to or
binding on the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements
of the Owner Participant under applicable law), or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its
certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its
property may be bound or affected;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Second Amended and Restated Head Lease TIA
(it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee other than the laws, rules or regulations relating to
aircraft lease transactions generally or to the citizenship
requirements of the Owner Participant under the Federal
Aviation Act);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant before any court or administrative agency or
arbitrator which, if determined adversely to the Owner
Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement or
the Second Amended and Restated Head Lease TIA;
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<PAGE> 37
(5) neither the Owner Participant nor anyone
authorized by it to act on its behalf (it being understood
that in proposing, facilitating and otherwise taking any
action in connection with the refinancing contemplated hereby
and agreed to herein by the Owner Participant, the Lessee has
not acted as agent of the Owner Participant) has directly or
indirectly offered any Equipment Notes or Certificates or any
interest in and to the Trust Estate, the Trust Agreement or
any similar interest for sale to, or solicited any offer to
acquire any of the same from, more than ten Persons; the Owner
Participant's interest in the Trust Estate and the Trust
Agreement was acquired for its own account and was purchased
for investment and not with a view to any resale or
distribution thereof;
(6) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant (including for this purpose Liens
that would be Lessor's Liens but for the first proviso in the
definition of Lessor's Liens); and
(7) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangement). If at any time Owner
Participant has ceased to be, or shall have actual knowledge
that it is likely to cease to be, such a citizen, and (i) the
Aircraft shall be or would thereupon become ineligible for
registration in the name of Owner Trustee under the Federal
Aviation Act as in effect at such time (without regard to the
"based and primarily used" provisions thereof) and the
regulations then applicable thereunder, or (ii) the Aircraft
is registered in a jurisdiction other than the United States
of America, in circumstances in which the preceding clause (i)
does not apply and the Lessee or any Permitted Sublessee at
any time proposes to register the Aircraft in the United
States of America, then Owner Participant shall (at its own
expense and without any reimbursement or indemnification from
the Lessee or any Permitted Sublessee) (A) immediately either
(1) transfer in accordance with Section 10 hereof all of its
right, title and interest in and to the Trust Agreement, the
Trust Estate, this Agreement and the Second Amended and
Restated Head Lease TIA or (2) take such other action,
including, without limitation, the establishment of a voting
trust or voting powers agreement (in which case Owner
Participant shall remain the beneficial owner of the Trust
Estate), as may be necessary to prevent the deregistration of
the
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<PAGE> 38
Aircraft under the Federal Aviation Act or to maintain such
registration of the Aircraft or to make possible such
registration of the Aircraft in the United States of America
and to prevent Indenture Trustee, the Holders of the Equipment
Notes, the Lessee or any Permitted Sublessee from being
adversely affected as a result thereof and (B) indemnify the
Lessee, the Indenture Trustee, the Holders of the Equipment
Notes and any Permitted Sublessee, from and against any and
all Claims incurred or suffered as a result of Owner
Participant's failure to be such a citizen or loss of such
citizenship, including, without limitation, as a result of the
Aircraft's becoming ineligible or ceasing to remain eligible
for such registration.
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly organized,
validly existing and in good standing under the federal laws
of the United States of America, and has the full corporate
power, authority and legal right under the federal laws of the
United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Intercreditor Agreement, and
this Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement will
have been, duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement constitutes, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement, will
constitute, the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement or this Agreement, the
purchase by the Pass Through Trustee of the Equipment Notes
pursuant to this
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<PAGE> 39
Agreement, or the issuance of the Certificates pursuant to the
Pass Through Trust Agreements, contravenes any law, rule or
regulation of the State of Connecticut or any United States
governmental authority or agency regulating the Pass Through
Trustee's banking, trust or fiduciary powers or any judgment
or order applicable to or binding on the Pass Through Trustee
and does not contravene or result in any breach of, or
constitute a default under, the Pass Through Trustee's
articles of association or by-laws or any agreement or
instrument to which the Pass Through Trustee is a party or by
which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(5) assuming that the trusts created by the Pass
Through Trust Agreements will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code for
federal income tax purposes, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the acquisition, possession or ownership by
the Pass Through Trustee of any of the Equipment Notes (other
than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
prior to the exercise of remedies upon the occurrence of an
Indenture Event of Default, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the
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<PAGE> 40
transactions contemplated by any of the Pass Through Trust
Agreements), and such trusts will not be subject to any Taxes
imposed by the State of Connecticut or any political
subdivision or taxing authority thereof; upon the exercise of
remedies following the occurrence of an Indenture Event of
Default, there will be no Taxes payable by the Pass Through
Trustee imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through
Trustee of this Agreement, any of the Pass Through Trust
Agreements or the Intercreditor Agreement (other than
franchise or other Taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by
any of the Pass Through Trust Agreements), and the trusts
created by the Pass Through Trust Agreements will not be
subject to any Taxes imposed by the State of Connecticut or
any political subdivision thereof, solely because the Pass
Through Trustee maintains an office in, and administers the
trusts created by the Pass Through Trust Agreements in, the
State of Connecticut;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly
or indirectly offered any Equipment Notes for sale to any
Person or solicited any offer to acquire any Equipment Notes
from any Person, nor has the Pass Through Trustee authorized
anyone to act on its behalf to offer directly or indirectly
any Equipment Notes for sale to any Person, or to solicit any
offer to acquire any Equipment Notes from any Person; and the
Pass Through Trustee is not in default under any Pass Through
Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(e) The Subordination Agent represents and warrants
that:
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(1) the Subordination Agent is a duly organized
national banking association, validly existing and in good
standing with the Comptroller of the Currency under the laws
of the United States of America and has the full corporate
power, authority and legal right under the laws of the United
States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement and
to perform its obligations under this Agreement, the Liquidity
Facilities and the Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement will have been,
duly authorized, executed and delivered by the Subordination
Agent; this Agreement constitutes, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement, will constitute,
the legal, valid and binding obligations of the Subordination
Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Subordination Agent of each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement or
the performance by the Subordination Agent of this Agreement,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Subordination Agent and do not contravene or
result in any breach of, or constitute a default under, the
Subordination Agent's articles of association or by-laws or
any agreement or instrument to which the Subordination Agent
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement or this Agreement nor the consummation
by the Subordination Agent of any of the transactions
contemplated hereby or thereby requires the consent or
approval of, the giving of notice to,
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<PAGE> 42
the registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Subordination Agent's banking, trust or
fiduciary powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Subordination Agent
of this Agreement, any of the Liquidity Facilities or the
Intercreditor Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities) solely because
the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are
no Taxes payable by the Subordination Agent imposed by the
State of Connecticut or any political subdivision thereof in
connection with the acquisition, possession or ownership by
the Subordination Agent of any of the Equipment Notes solely
because the Subordination Agent maintains an office and
administers its trust business in the State of Connecticut
(other than franchise or other taxes based on or measured by
any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any Person
or solicited any offer to acquire any Equipment Note from any
Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any
Equipment Note for sale to any Person, or to solicit any offer
to acquire any Equipment Note from any Person; and the
Subordination
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<PAGE> 43
Agent is not in default under any Liquidity Facility;
and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Second Amended and Restated Head Lease TIA, the
Amended and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents nor (B) compliance
by it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Original
Head Lessee, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument
to which the Original Head Lessee is a party or by which it or
any of its property may be bound or affected, except where
such contravention or default would not result in any
liability to any other party hereto or have a material adverse
effect on the rights or on the remedies of the other parties
hereto or on its ability to perform its obligations hereunder
or thereunder;
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<PAGE> 44
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Original Head Lessee of this
Agreement and each of the other Original Head Lessee
Transaction Documents;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Original Head Lessee before any court
or administrative agency or arbitrator which, if determined
adversely to the Original Head Lessee, would materially
adversely affect the Original Head Lessee's ability to perform
its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease);
(6) on the Delivery Date, the Owner Trustee received
good title to the Aircraft free and clear of all Liens, except
the rights of the parties to the Japanese Financing Documents,
the rights of the Original Head Lessee under the Original
Lease, the rights of the Sublessee under the Sublease, the
Lien of the Original Indenture, the beneficial interest of the
Owner Participant in the Aircraft, and Permitted Liens under
the Original Lease;
(7) title to the Buyer Furnished Equipment for the
Aircraft has been transferred in accordance with Section 8(y)
of the Participation Agreement. As of the Restatement Date,
there are no existing Claims against Parent Guarantor or
Original Head Lessee with respect to Buyer Furnished
Equipment; and
(8) except for the registration of the Aircraft
pursuant to the Federal Aviation Act, the filing for
recordation pursuant to the Federal Aviation Act (with
confidential financial terms redacted) of Lease
Amendment No. 1, the Second Amended and Restated Lease,
Lease Supplement No. 3, Trust Supplement No. 3, the
First Amended and Restated Indenture and Indenture
Supplement No. 2, and each of the other documents
referred to in Annex A hereto, all with the FAA, the
filing of a Uniform Commercial Code ("UCC") amended
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<PAGE> 45
financing statement with the Secretary of State of the State
of Delaware with regard to the Original Lease, the filing of
UCC termination statements with regard to the Original Head
Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC
financing statement with the Secretary of State of the State
of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State
of Arizona with respect to the Sublease, and the filing of a
UCC termination statement with the Secretary of State of the
State of Delaware with respect to the Initial Sublease
Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly
effected as of the Restatement Date (and assignments thereof
and continuation statements at periodic intervals), and other
than the taking of possession by the Indenture Trustee of the
original counterparts of the Original Lease, Lease Amendment
No. 1, the Second Amended and Restated Lease, and all Lease
Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification
required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any
financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Aircraft as
against the Lessee and any third parties, or to perfect the
security interest in favor of the Indenture Trustee in the
Owner Trustee's interest in the Aircraft and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement, the Yen Deposit Agreement and the Yen Deposit
Charge Agreement (collectively, the "Parent Guarantor
Transaction Documents"); each Parent Guarantor Transaction
Document has been duly authorized, and upon the execution and
delivery thereof, will constitute, the legal, valid and
binding obligations of the Parent Guarantor enforceable
against it in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors
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<PAGE> 46
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Parent Guarantor of this Agreement and each of the other
Parent Guarantor Transaction Documents nor (B) compliance by
it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Parent
Guarantor, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its Memorandum and Articles of Association or any
indenture, mortgage, contract or other agreement or instrument
to which the Parent Guarantor is a party or by which it or any
of its property may be bound or affected, except where such
contravention or default would not result in any liability to
any other party hereto or have a material adverse effect on
the rights or on the remedies of the other parties hereto or
on its ability to perform its obligations hereunder or
thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Parent Guarantor of this
Agreement and each of the other Parent Guarantor Transaction
Documents;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement or any other Parent Guarantor
Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty in
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<PAGE> 47
Section 9(f)(8) shall be only for the benefit of Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by consolidation, merger, sale of assets or otherwise) any of
its right, title or interest in and to the Trust Estate, the Aircraft, the
Lease, this Agreement, the Trust Agreement, the Second Amended and Restated Head
Lease TIA or any other Operative Document or any proceeds therefrom; provided
that, subject to the conditions set forth below, Owner Participant may transfer
to a Transferee (as defined below) all (but not less than all) of its right
(except for such rights accruing prior to transfer), title and interest as an
entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust
Agreement, the Second Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound. Each such transfer shall be subject to the following
conditions:
(i) the Person to whom such transfer is to be made (a
"Transferee") is either (A) a bank or other financial institution with
a combined capital, surplus and undivided profits of at least
$60,000,000, or a corporation whose consolidated tangible net worth is
at least $60,000,000, exclusive of goodwill, all of the foregoing
determined in accordance with U.S. generally accepted accounting
principles, (B) any wholly-owned subsidiary of such bank, financial
institution or corporation if such bank, financial institution or
corporation furnishes to Owner Trustee, Indenture Trustee, Original
Head Lessee and Lessee an agreement or agreements of such bank,
financial institution or corporation guaranteeing such subsidiary's
obligations as Owner Participant contained in this Agreement, the Trust
Agreement, the Second Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is bound, which
guarantee shall be substantially in the form attached as Exhibit A
hereto or (C) an Affiliate or a subsidiary of Owner Participant if
Owner Participant furnishes to Owner Trustee, Indenture Trustee,
Original Head Lessee and Lessee an agreement whereby Owner Participant
will guarantee such Affiliate's or subsidiary's obligations as Owner
Participant contained in this Agreement, the Trust Agreement, the
Second Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is bound, which guarantee shall be
substantially in the form attached as Exhibit A hereto;
(ii) Owner Trustee, Indenture Trustee, Original Head
Lessee and Lessee shall have received at least 15 days' prior written
notice of such transfer specifying the name and address of any proposed
transferee and specifying the
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<PAGE> 48
facts necessary to determine whether such proposed transferee qualifies
as a "Transferee" under clause (i) above and does not violate clause
(viii) below; provided that if such Transferee is an Affiliate of Owner
Participant, such notice may be given promptly following rather than
prior to such transfer;
(iii) upon giving effect to such transfer, such Transferee
is a Citizen of the United States, and such Transferee shall deliver to
Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an
affidavit to such effect;
(iv) such Transferee has the requisite power and
authority and legal right to enter into and carry out the
transactions contemplated hereby;
(v) such Transferee enters into an agreement in
substantially the form attached as Exhibit B hereto whereby such
Transferee confirms that it shall be deemed a party to this Agreement,
the Trust Agreement, the Second Amended and Restated Head Lease TIA and
each other Operative Document to which Owner Participant is a party or
by which Owner Participant is bound, and in which the transferee shall
agree to be bound by and undertake the obligations of Owner Participant
in the Operative Documents and shall make representations and
warranties comparable to those of Owner Participant contained herein;
(vi) such transfer does not violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or create a relationship that would be in violation
thereof, or violate any provisions of the Securities Act or any other
applicable Federal, state or other law, rule or regulation;
(vii) such transfer does not and will not involve, either
directly or indirectly, the assets of any "employee benefit plan" as
defined in Section 3(3) of ERISA that would cause a violation of any
provision of ERISA or the imposition of an excise tax under the Code;
(viii) such Transferee is not an airline, a commercial air
carrier, an air freight forwarder, a freight transporter, any Person
engaged in the business of parcel transport by air, or a subsidiary or
an Affiliate thereof;
(ix) an opinion of counsel of the Transferee confirming
the matters referred to in clauses (iv) and (vi) above (with
appropriate reliance on certificates of corporate officers or public
officials as to matters of fact) and confirming that the agreement
referred to in
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<PAGE> 49
clause (v) above is the legal, valid, binding and enforceable
obligation of the Transferee and that the guarantee referred to in
clause (i)(B) or (C) above, if any, is the legal, valid, binding and
enforceable obligation of the Transferee's guarantor shall be provided,
at least 3 days prior to such transfer, to Lessee, Owner Trustee,
Original Head Lessee and Indenture Trustee, which shall be in form and
substance reasonably satisfactory to each of them; and
(x) the terms of the Operative Documents and the
Second Amended and Restated Head Lease TIA shall not be
altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Second Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Aircraft previously made by Owner Participant; and except
as the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Second Amended and Restated Head Lease TIA and each other
Operative Document to "Owner Participant" shall thereafter be deemed to include
such Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Second Amended and
Restated Head Lease TIA and under the other Operative Documents, except to the
extent expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Second Amended and Restated Head Lease TIA by or against Owner Participant which
have been made prior to the date of such transfer. The transferor Owner
Participant shall pay all expenses of each party hereto related to any such
transfer.
Owner Participant covenants and warrants that it shall not
transfer all or any portion of its interest in the Trust Estate except in
accordance with this Section 10 and that it shall not itself, or direct Owner
Trustee to, take any action in contravention of the Lessee's rights under the
Lease except in accordance with the provisions of the Lease.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions of
clause (A) of paragraph (7) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease. The Lessee
shall have no obligation to prevent any such deregistration or
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<PAGE> 50
assist in maintaining or otherwise enhancing the Aircraft's eligibility for
registration by restricting the use of the Aircraft.
SECTION 11. Re-Registration of the Aircraft. The Indenture
Trustee agrees, that if the Owner Participant consents thereto, which consent
shall not be unreasonably withheld, at any time after the Restricted Use Period,
Lessee may, in connection with effecting a Permitted Sublease elect to effect a
change in registration of the Aircraft, at Lessee's cost and expense, so long as
(a) the country of registry of the Aircraft is a country listed on Exhibit C
hereto (or such other country as the Owner Participant approves) (each, an
"Eligible Country") and (b) the following conditions are met: (i) unless the
country of registry is Taiwan, the United States of America maintains normal
diplomatic relations with the country of registry of the Aircraft, and if the
country of registry is Taiwan, the United States of America maintains diplomatic
relations at least as good as those in effect on the Restatement Date; and (ii)
the Owner Trustee, the Owner Participant and the Indenture Trustee shall have
received favorable opinions (subject to customary exceptions) addressed to each
such party, from counsel of recognized reputation qualified in the laws of the
relevant jurisdiction and reasonably acceptable to the Owner Participant to the
effect of the following and as to such other matters as the Owner Participant
may reasonably request:
(A) the Owner Trustee's ownership interest in the Aircraft and
interest in the Lease and any Permitted Sublease shall be recognized
under the laws of such Eligible Country,
(B) the obligations of Lessee, and the rights and remedies of
the Owner Trustee, under the Lease shall remain valid, binding and
(subject to customary bankruptcy and equitable remedies exceptions and
to other exceptions customary in foreign opinions generally)
enforceable under the laws of such Eligible Country (or the laws of the
jurisdiction to which the laws of such Eligible Country would refer as
the applicable governing law),
(C) after giving effect to such change in registration, the
Lien of the Indenture on the Owner Trustee's right, title and interest
in and to the Aircraft, the Lease and any Permitted Sublease shall
continue as a valid and duly perfected security interest and all
filing, recording or other action necessary to protect the same shall
have been accomplished (or, if such opinion cannot be given at the time
of such proposed change in registration because such change in
registration is not yet effective, (1) the opinion shall detail what
filing, recording or other action is necessary and (2) the Owner
Trustee and the Indenture
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<PAGE> 51
Trustee shall have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action shall
be accomplished and a supplemental opinion to that effect shall be
delivered to the Owner Trustee and the Indenture Trustee on or prior to
the effective date of such change in registration),
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other activity
of the Owner Trustee, the Owner Participant or the Indenture Trustee
(or any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such Eligible Country,
(E) there is no tort liability of the owner of an aircraft not
in possession thereof under the laws of such Eligible Country (it being
agreed that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is provided
to cover such risk),
(F) (unless Lessee shall have agreed, or pursuant to the Lease
shall have been required, to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such Eligible
Country so long as such Aircraft is registered under the laws of such
Eligible Country) the laws of such jurisdiction require fair
compensation by the government of such Eligible Country payable in
currency freely convertible into Dollars for the loss of use of such
Aircraft in the event of the requisition by such government of such
use,
(G) upon such change in registration, under the laws of such
Eligible Country, any import or export permits necessary to take the
Aircraft into or out of such Eligible Country and any foreign exchange
or other like permits or approvals necessary to allow all "basic rent",
"renewal rent" and casualty value payments provided for in such
Permitted Sublease, which are obtainable at the commencement of such
Permitted Sublease, will be in full force and effect,
(H) under the Laws of such Eligible Country, the remedies set
forth in such Permitted Sublease are effective to enable Lessee or its
assignee as sublessor to repossess, subject to compliance with
applicable Law in such Eligible Country in connection therewith, the
Aircraft following a valid termination thereof, and there is no
provision of such Laws which by its terms would prevent Lessee or its
assignee
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<PAGE> 52
as sublessor, upon compliance with the provisions of applicable Law in
such Eligible Country, from de-registering the Aircraft under the laws
of such Eligible Country, and exporting the Aircraft from such Eligible
Country, without reference to any particular time period,
(I) upon such change in registration, the resulting
jurisdiction of one or more Governmental Entities of such Eligible
Country over Lessee, Owner Trustee, Indenture Trustee, the Permitted
Sublessee, the Aircraft or the operation or operator of the Aircraft
(or over any interest in any thereof), as the case may be, and the
consummation of the transactions contemplated by the Operative
Documents after giving effect to the proposed re-registration of the
Aircraft, do not violate any provision of the Trading with the Enemy
Act of 1917, as amended, or any Executive Orders of the President of
the United States of America or any regulations of the United States
Treasury Department (including, without limitation, the Foreign Assets
Control Regulations and the Transaction Control Regulations issued
thereunder) or of any other Governmental Entity of the United States of
America issued thereunder or otherwise violate any other like law or
regulation of the United States of America, after giving effect to any
licenses, permits or approvals thereunder obtained by, or on behalf of,
Lessee, the Permitted Sublessee, Owner Trustee or Indenture Trustee,
all of which are in full force and effect as of the date of such change
in registration. Owner Trustee, Owner Participant and Indenture Trustee
shall cooperate, at Lessee's expense and as it may reasonably request,
in obtaining any such licenses, permits or approvals,
(J) to such further effect with respect to such other matters
relating to the recognition of Owner Trustee's interest in the Aircraft
and perfection of the Lien of the Indenture if it has not been
discharged pursuant to the terms thereof, as Owner Trustee, Owner
Participant or Indenture Trustee may reasonably request, and
(K) the aircraft maintenance standards of the new country of
registry shall not be materially less stringent than those of the FAA
or not materially less stringent than those of the United Kingdom Civil
Aviation Authority.
The following statements shall be true and correct at the time
of the re-registration of the Aircraft:
(a) no unindemnified tax risks or Taxes affecting Owner
Participant or Owner Trustee will result from such reregistration; and
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<PAGE> 53
(b) such re-registration shall not be in conflict with, and
all action shall have been taken as may be required by, the terms of
the Japanese Financing Documents in connection with such change in
registration.
Prior to the re-registration of the Aircraft as contemplated
by this Section 11, Lessee shall furnish to Owner Participant and Indenture
Trustee (1) an Officer's Certificate (as defined in the Indenture) stating that
(i) all conditions precedent provided for in this Agreement and the Lease
relating to the proposed re-registration of the Aircraft have been complied
with, (ii) that the re-registration is in conformity with the requirements of
this Agreement and the Lease, (iii) after giving effect to such re-registration,
no Event of Default shall have occurred and be continuing, and (iv) the
insurance required by Section 12 of the Lease is in full force and effect at the
time of such change in registration after giving effect to such change in
registration and (2) an opinion of counsel (which shall be by counsel other than
an employee of Lessee) addressed to Owner Trustee, Owner Participant and
Indenture Trustee stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
At any time during the Term of the Lease, the Owner Trustee,
Indenture Trustee and Owner Participant shall, subject to the terms and
conditions hereof, at the request and sole expense of Lessee cooperate with
Lessee to comply with all terms of Section 7(a) of the Japanese Lease. Except as
provided in this Section 11, Owner Trustee shall not cause any change in the
registration of the Aircraft pursuant to Section 7(a) of the Japanese Lease
during the Term of the Lease. Anything herein or in any other Operative Document
to the contrary notwithstanding, at no time during the term of the Japanese
Lease shall Lessee permit the Aircraft to be registered in Japan.
The Operative Documents shall be amended in a manner
reasonably satisfactory to Lessee, Owner Trustee and Indenture Trustee so as to
include such covenants as may be appropriate to establish, protect and preserve
the validity, priority and perfection of Owner Trustee's interest in the
Aircraft, Lessee's interest under the Lease and the Lien of the Indenture in
favor of Indenture Trustee.
Lessee shall pay all costs, expenses, fees and recording,
registration or any other Taxes, including the reasonable fees and expenses of
counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee,
and other charges in connection with any such change in registration.
SECTION 12. Quiet Enjoyment. Each of the Trust Company,
Owner Trustee, Owner Participant (as to itself and as to Owner Trustee),
Indenture Trustee in its individual capacity and
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as Indenture Trustee and on behalf of the Note Holders, the Pass Through Trustee
and the Subordination Agent severally covenants and agrees that during the Term,
so long as no Lease Event of Default shall have occurred and be continuing and
the Lease shall not have been declared or deemed in default, no action shall be
taken or caused to be taken by it or a Person lawfully claiming by, through or
on behalf of it to interfere with the right of Lessee or any Permitted Sublessee
to the possession, use, operation and quiet enjoyment of and other rights with
respect to the Aircraft under the Lease, and all rents, revenues, profits and
income therefrom, in accordance with the terms of the Lease; provided that the
Trust Company, Owner Trustee and Owner Participant shall not be liable for any
such interference by Indenture Trustee, Pass Through Trustee, holders of any
Equipment Notes, or any other Person claiming by, through or on behalf of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate or the Indenture Estate. Each of Trust Company,
Owner Trustee and Owner Participant severally agrees that it will promptly, at
its own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Lessor's Lien or Head
Lessor's Lien attributable to it. For all purposes of this Agreement and the
other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a
result of the nonpayment of any Tax imposed on or measured by the net income of
the Trust Estate or the trust created by the Trust Agreement that is not
indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through
Trustee and Subordination Agent severally agrees that it will promptly, at its
own expense (and without any right of
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indemnification or reimbursement from Lessee), take such action as may be
necessary duly to discharge any such Trustee's Lien attributable to it and to
make restitution to the Trust Estate and the Indenture Estate for any diminution
of the assets thereof resulting therefrom and will indemnify and hold harmless
Lessee and each Indemnitee against any claims incurred or suffered by any such
Person and any reduction in amounts payable out of, or diminution in the assets
of, the Trust Estate or the Indenture Estate resulting from any such Trustee's
Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means
any Lien or disposition of title attributable to Indenture Trustee in its
individual capacity (and not as Indenture Trustee), Pass Through Trustee in its
individual capacity (and not as Pass Through Trustee) or Subordination Agent in
its individual capacity (and not as Subordination Agent) on or in respect of (as
the case may be) the Aircraft or any other portion of the Trust Estate or the
Trust Indenture Estate arising as a result of (i) Claims against such Person not
related to its interest in the Aircraft or the administration of the Trust
Estate or the Trust Indenture Estate pursuant to the Indenture, whether under
Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or
omissions of such Person not contemplated hereunder or under the other Operative
Documents, or acts or omissions of such Person which are in violation of any of
the Operative Documents, or (iii) Taxes imposed on or Claims against such Person
which are excluded from indemnification by Lessee, or (iv) Claims against such
Person arising out of the voluntary or involuntary transfer by such Person of
all or any portion of its interest in the Aircraft, the Airframe, any Engine,
the Trust Estate, the Trust Indenture Estate or the Operative Documents (except
a Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the Original Head Lessee and Parent Guarantor
severally agrees that it will promptly, at its own expense (and without any
right of indemnification or reimbursement from Lessee), take such action as may
be necessary duly to discharge any such Sublessor's Lien attributable to it or
other Lien or disposition of title created by or through Original Head Lessee,
Parent Guarantor, or any Affiliate of either thereof which would have
constituted a Sublessor's Lien had the Sublease remained in effect and to make
restitution to the Trust Estate and the Indenture Estate for any
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diminution of the assets thereof resulting therefrom and will indemnify and hold
harmless Lessee and each Indemnitee against any claims incurred or suffered by
any such Person and any reduction in amounts payable out of, or diminution in
the assets of, the Trust Estate or the Indenture Estate resulting from any such
Sublessor's Lien attributable to it or other Lien or disposition of title
created by or through Original Head Lessee, Parent Guarantor, or any Affiliate
of either thereof which would have constituted a Sublessor's Lien had the
Sublease remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original
Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees with
Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement and (iii) not to terminate or revoke the Trust Agreement.
(b) Notwithstanding anything to the contrary in the Trust
Agreement, but subject always to the provisions of Section 14(c) hereof, Owner
Participant shall not consent to or direct a change in the situs of the Trust
Estate so long as a successor Owner Trustee meeting the requirements of the
Trust Agreement is reasonably available at the present situs of the Trust Estate
(A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have
been given 45 days' prior notice thereof and (B) if, within 45 days after notice
of such a proposed change is given to Lessee and the Original Head Lessee,
either (1) Lessee or Original Head Lessee delivers to Owner Participant and
Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which
counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee,
to the effect that such proposed change in the situs of the Trust Estate would
have an adverse effect on the rights or obligations of Lessee or Original Head
Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and
Owner Trustee (at the expense of Owner
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Participant) an opinion of counsel, which counsel shall be reasonably
satisfactory to Owner Participant and Owner Trustee, to the effect that such
proposed change in the situs of the Trust Estate would cause an increase in the
amount for which Lessee may be required to indemnify any Person pursuant to the
provisions of Section 10 of the Lease or for which Original Head Lessee is
required to indemnify any Person pursuant to the provisions of the Second
Amended and Restated Head Lease TIA, unless any and all Persons entitled to
indemnification pursuant to Section 10 of the Lease or applicable provision of
the Second Amended and Restated Head Lease TIA shall waive indemnification under
Section 10 of the Lease or applicable provision of the Second Amended and
Restated Head Lease TIA for any adverse tax or other consequences to it of such
a change in the situs of the Trust Estate, (C) unless Indenture Trustee receives
from Owner Participant an opinion of counsel, which counsel shall be reasonably
satisfactory to Indenture Trustee, to the effect that such proposed change in
the situs of the Trust Estate would not have an adverse effect on the validity
or priority of the Lien of the Indenture and that such Uniform Commercial Code
and FAA filings as are required to maintain the validity and priority of the
Lien of Indenture have been made, and (D) such change does not affect the
registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to any
Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as
a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States of America from the state in which
it is then located, the situs of the trust shall be moved and Owner Participant
will take whatever action may be requested by Lessee that is reasonably
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification with respect to such change of situs and
request of Lessee as Original Head Lessee, Owner Participant or the Indenture
Trustee may reasonably request, (B) promptly after notice thereof Owner
Participant has not notified Lessee and provided reasonable evidence of an
adverse effect on Owner Participant's rights or obligations under the Trust
Agreement, (C) Indenture Trustee shall have received an opinion of counsel
selected by Lessee, which counsel shall be reasonably satisfactory to Indenture
Trustee, to the effect that the validity and priority of the Lien of the
Indenture Estate will not be adversely affected by such action, and that such
Uniform Commercial Code and FAA filings as are required to maintain the validity
and the priority of the Lien of the Indenture have been made, (D) Owner
Participant and Indenture Trustee shall have received an opinion or opinions of
counsel selected by Owner Participant to the effect that, with customary
exceptions, (I) the trust, as thus removed, shall remain a validly established
trust, (II) any amendments to the Trust Agreement or the
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Indenture necessitated by such removal shall have been duly authorized, executed
and delivered by the parties thereto and shall constitute the legal, valid and
binding obligations of such parties, enforceable in accordance with their terms,
(III) if such removal involves the replacement of Owner Trustee, an opinion of
counsel to such successor Owner Trustee in form and substance reasonably
satisfactory to Indenture Trustee and to Owner Participant covering the matters
described in the opinion described in Section 3(j) hereof, and (IV) covering
such other matters as Owner Participant or the Indenture Trustee may reasonably
request, and (E) Lessee shall indemnify and hold harmless on an after tax basis
Owner Trustee, Owner Participant and their respective Affiliates and Indenture
Trustee against any and all reasonable and actual costs and expenses including
reasonable attorneys' fees and disbursements, registration, recording or filing
fees and other Taxes incurred by Owner Trustee, Owner Participant and their
respective Affiliates, or Indenture Trustee in connection with such change of
situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and
their respective Affiliates, and Indenture Trustee on an after tax basis from
and against any increase in Taxes borne by such Person that results from such
change in situs.
(d) Owner Trustee or any successor may resign or be removed by
Owner Participant, a successor Owner Trustee may be appointed, and a corporation
may become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that Owner
Participant has actual knowledge that Owner Trustee is not in compliance with
its covenants contained herein. No successor Owner Trustee shall be appointed
unless Lessee and Indenture Trustee shall have given written consent thereto,
which consent shall not be unreasonably withheld. Owner Participant will not
instruct Owner Trustee to terminate any Operative Document or take any action
thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Aircraft as contemplated hereby.
Lessee shall pay expenses relating to the resignation or, if requested by
Lessee, the removal of Owner Trustee, provided that the Owner Participant shall
pay expenses relating to the removal of the Owner Trustee, if such removal was
at the request of the Owner Participant.
(e) The Trust Company agrees that if at any time it shall
obtain actual knowledge that it has ceased to be or will likely cease to be a
Citizen of the United States, it will promptly resign as Owner Trustee (if and
so long as such citizenship is necessary under such Federal Aviation Act or any
other law to permit the continued registration of the Aircraft in the
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name of the Lessor or, if it is not necessary, if and so long as Owner Trustee's
citizenship would have any material adverse effect on any holder of Equipment
Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of
the successor Owner Trustee in accordance with Section 10.1 of the Trust
Agreement.
SECTION 15. Certain Retained Rights and Releases. (a)
Each of Owner Trustee, Indenture Trustee, Lessee and Owner
Participant hereby agrees to and confirms that they are bound by
the terminations, assignments, delegations, releases and
amendments set forth in or contemplated by Lease Amendment No. 1
and the Second Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head
Lessee and Parent Guarantor shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable for
all of its obligations under Sections 10 and 13 of the Sublease, with respect to
the period up to (but excluding) the Restatement Date and each of Parent
Guarantor, Original Head Lessee and Lessee shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the termination or expiration thereof (including, without
limitation, any such liability arising from and including the Restatement Date
under the Sublease in respect of the period up to (but excluding), or acts or
omissions or circumstances arising prior to (but excluding), the Restatement
Date), (ii) all rights, benefits, obligations and liabilities under the Sublease
TIA (which rights, benefits, obligations and liabilities are amended and
restated as of the Restatement Date) and (iii) Original Head Lessee and Parent
Guarantor shall remain liable to Sublessee under the Sublease and the Sublease
Guaranty for Sublessor's Liens (as therein defined); all of which rights,
benefits, obligations and liabilities shall expressly survive the termination of
the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is
agreed that (x) Original Head Lessee shall continue to be liable to the
Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens and (y) Parent Guarantor is hereby released from any and all obligations
and liabilities under the Sublease Guaranty, other than in respect of the
obligations and liabilities of the Original Head Lessee in respect of
Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner Participant
agree as among themselves that the following rights, benefits, obligations and
liabilities shall survive the termina-
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tion of the Sublease: (i) Owner Trustee, Owner Participant and the other
"Indemnitees" (as such term is defined in the Sublease) other than Original Head
Lessee and Parent Guarantor and (ii) the Lessee shall retain all rights,
benefits, obligations and liabilities under the Sublease, including that
Sublessee shall remain liable for all of its obligations under Sections 10 and
13 of the Sublease, with respect to the period up to (but excluding) the
Restatement Date and each of Lessee, Owner Trustee and Owner Participant shall
retain all rights and liabilities under any provision of the Sublease which by
the express terms thereof survives the termination thereof (including, without
limitation, any such liability arising on or after the Restatement Date under
the Sublease in respect of the period up to (but excluding), or acts or
omissions or circumstances arising prior to (but excluding) the Restatement
Date), all of which rights, benefits, obligations and liabilities shall
expressly survive the termination of the Sublease. In furtherance of the
foregoing, it is agreed by Sublessee that the indemnities contained in Sections
10 and 13 of the Sublease are expressly made for the benefit of and shall be
enforceable by each Indemnitee (as such term is defined in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA
to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent Guarantor shall, as of the Restatement Date, have no
liabilities or obligations under the "Operative Documents" (as defined in the
Original Head Lease as in effect immediately prior to the Restatement Date and
excluding the Head Lease TIA (which rights, benefits, obligations and
liabilities are amended and restated as of the Restatement Date)) and are
released from all such obligations and liabilities, except the Original Head
Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i)
shall continue to be liable to the parties hereto for the removal of any
Sublessor's Liens and (ii) (without releasing Sublessor as provided in the
Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner
Trustee, the Indenture Trustee and the Owner Participant agree as among
themselves and for the benefit of the other "Indemnitees" (as such term is
defined in the Original Head Lease) that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period up to (but excluding) the Restatement Date and under any
other provision of the Participation Agreement which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising from and including the Restatement Date under the
Participation Agreement in respect of the period up to (but excluding), or acts
or omissions or circumstances arising prior to (but excluding), the Restatement
Date) shall survive the termination of the Participation Agreement, the Original
Head Lease and the Parent Head Lease Guaranty (the
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foregoing surviving rights, benefits, obligations and liabilities of Parent
Guarantor and Original Head Lessee, are, collectively, the "Retained Head Lease
Rights and Obligations"). In furtherance of the foregoing, the parties hereto
consent and agree that the Parent Guarantor is hereby released from any and all
"Obligations" under and as defined in the Parent Head Lease Guaranty, except in
respect of the Retained Head Lease Rights and Obligations and except in respect
of the Second Amended and Restated Head Lease TIA, the "Obligations" in respect
of which shall continue in full force and effect in accordance with the Parent
Head Lease Guaranty and are hereby ratified and confirmed by the Parent
Guarantor.
(e) The Owner Participant hereby directs the Owner Trustee,
and the Owner Trustee hereby agrees for the benefit of the Owner Participant,
the Indenture Trustee, the Original Head Lessee, the Parent Guarantor, GPA
Offshore and, to the extent provided in paragraph (ii) below, Lessee, that it
shall, provided no Event of Default under the Lease shall have occurred and be
continuing and the Lease shall not have been declared or deemed in default:
(i)(A) with respect to the Japanese Financing
Documents (as defined in the Indenture) to which it is or is
made a party (or under which it has rights or obligations),
and subject to the terms and conditions thereof, comply with
all of the provisions with which it has undertaken to comply
pursuant to the Second Japanese Lease Assignment that impose
on Owner Trustee a duty or obligation, if and to the extent
not performed or complied with, or required to be performed or
complied with, by the Original Head Lessee or an Affiliate
thereof, and not take any affirmative action that is in
violation of any provisions (whether or not the Owner Trustee
is bound by such provisions) of such Japanese Financing
Documents or this Section 15, (B) observe and fulfill all
conditions to be fulfilled by it pursuant to any of the
Japanese Financing Documents in order to exercise rights under
such documents which are vested in it, and (C) except as
provided in paragraphs (iv), (v), (vi) and (vii) below and in
Section 15(f) and (h), not exercise any discretionary actions
under or with respect to the Japanese Financing Documents
except solely at the written direction or with written consent
of the Original Head Lessee or the Parent Guarantor or, if an
Event of Default under the Lease shall have occurred and be
continuing and the Lease shall have been declared or deemed to
be in default, of the Indenture Trustee (so long as the Lien
of the Indenture shall not have been discharged) or the Owner
Participant (thereafter) and the Trust Company
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shall comply with any such directions given in
accordance with the provisions of this Section 15;
(ii) not amend, supplement or otherwise modify or
waive any provision of the Japanese Financing Documents or
consent to any such amendment, supplement, modification or
waiver, or grant any consent requested under any provision
thereof, in any such case without the prior written consent of
the Original Head Lessee, the Parent Guarantor, the Owner
Participant, and (so long as the Lien of the Indenture shall
not have been discharged) the Indenture Trustee and, if any
obligation of the Lessee hereunder or under the Lease would be
increased thereby, the Lessee;
(iii) deliver promptly to the Original Head Lessee,
the Lessee and (so long as the Lien of the Indenture shall not
have been discharged) the Indenture Trustee, copies of all
notices and other documents given by the Owner Trustee or
received by it under any of the Japanese Financing Documents
and copies of all amendments, supplements and modifications
entered into from time to time to any Japanese Financing
Documents to which it is or is made a party (or under which it
possesses rights);
(iv) exercise the purchase option provided for in
Section 19 of the Japanese Lease effective (unless the
Japanese Lease has previously been terminated in accordance
with its terms) at the end of the scheduled Japanese Lease
term by giving, no later than 120 days prior to the end of
such scheduled Term, a written notice to the Japanese Lessor
of the Owner Trustee's election to exercise such purchase
option; provided that if the Owner Trustee shall fail to give
such notice to the Japanese Lessor on or prior to such 120th
day, each of the Owner Participant, the Original Head Lessee
and the Indenture Trustee may at any time thereafter cause
such purchase option to be exercised directly in the name of
and on behalf of the Owner Trustee;
(v) exercise the rights of termination provided for
in Sections 9(a), 9(b) and 9(c) and the related purchase
option provided for in Section 9(e) of the Japanese Lease,
effective as of any time when such rights of termination and
related purchase option are exercisable under said Sections
9(a), 9(b), 9(c) and 9(e), at the direction of the Original
Head Lessee (other than the end of the scheduled Japanese
Lease Term and other than as otherwise provided in this
Section 15); provided that, with respect to any right
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of termination effected pursuant to Section 9(b)(ii),
9(b)(iii), 9(b)(iv) and 9(d)(i) (for an acceleration of the
loan pursuant to subparagraphs (b), (c), (d), (e), (f) or (k)
of Section 5.1 of the Japanese Loan Agreement) of the Japanese
Lease, such right of termination and related purchase option
shall be exercisable at the direction of the Original Head
Lessee, the Parent Guarantor, the Owner Trustee or the Owner
Participant or (so long as the Lien of the Indenture shall not
have been discharged) the Indenture Trustee;
(vi) exercise the purchase options referred to in
Section 9 (upon the occurrence of a termination) and 10(a)(ii)
of the Japanese Lease (upon the occurrence of an Event of Loss
thereunder without replacement of the Airframe, under the
Lease), at the direction of the Original Head Lessee, the
Parent Guarantor, the Owner Trustee or (so long as the Lien of
the Indenture has not been discharged) the Indenture Trustee;
(vii) anything contained in this Section 15 to the
contrary notwithstanding, exercise the purchase option
referred to in Section 15(a) of the Japanese Lease, at the
direction of the Indenture Trustee (so long as the Lien of the
Indenture has not been discharged) and, if the Lien of the
Indenture shall have been discharged, the Owner Participant or
the Original Head Lessee; and
(viii) not exercise any right to terminate or revoke
any Japanese Financing Document, except as provided in this
Section 15.
(f) (i) Provided that no Event of Default under the Lease
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, any rights or claims that the Owner Trustee or the
Indenture Trustee may have against the Japanese Lessor with respect to any of
its representations, warranties and covenants under the Japanese Lease or any of
the other Japanese Financing Documents may be enforced by the Original Head
Lessee or the Parent Guarantor on behalf of the Owner Trustee or the Indenture
Trustee, directly by the Original Head Lessee in its own name or in the name of
or by the Owner Trustee or the Indenture Trustee; provided that if such rights
or claims are exercised by the Owner Trustee or the Indenture Trustee (A) the
Original Head Lessee and the Parent Guarantor shall be subrogated to any such
rights of the Owner Trustee or the Indenture Trustee to the extent of any
recovery by the Owner Trustee in respect thereof and (B) no such right or claim
shall be enforced in a manner inconsistent with the provisions of this
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Section 15 specifying the party or parties entitled to take particular actions.
(ii) Notwithstanding any other provision of this Section 15,
should any provision of the Lease (including, without limitation, Sections 6, 9
and 11 thereof) require transfer of title to, or a release of the Lien of the
Indenture on, the Aircraft, the Airframe or an Engine at a time when the
Japanese Lease is in effect, after written notice thereof to and at the request
and sole expense of the Original Head Lessee, the Owner Participant shall direct
the Owner Trustee to use its reasonable best efforts to cause the Japanese
Lessor to transfer such title pursuant to the terms of the Japanese Lease to the
Owner Trustee free and clear of all Japanese Lessor Liens.
(g) The Indenture Trustee shall not exercise any of the Owner
Trustee's rights under the Japanese Financing Documents that have been assigned
to the Indenture Trustee pursuant to the Indenture except as provided therein
and in this Section 15. The Indenture Trustee consents to the performance by the
Owner Trustee of the Owner Trustee's obligations under Sections 15(e) and 15(f)
hereof and to the Original Head Lessee's and the Parent Guarantor's rights set
forth therein.
(h) Without limiting the foregoing, the Original Head Lessee
and the Parent Guarantor hereby jointly and severally agree to procure the
performance by the Japanese Lessee of its obligation to pay to the Japanese
Lessor the Special Termination Payment (as defined in the Japanese Lease) in
full when due upon any termination of the Japanese Lease pursuant to the
provisions thereof. In furtherance thereof the Parent Guarantor has charged in
favor of the Indenture Trustee an amount equal to the amount needed to fully
satisfy the Japanese Lessee's obligation to make such Special Termination
Payment to the Japanese Lessor, and authorizes and instructs the Indenture
Trustee to exercise the rights of the Chargee under and as defined in the Yen
Deposit Charge Agreement upon any termination of the Japanese Lease and the
Special Termination Payment becoming due. The Original Head Lessee and the
Parent Guarantor do hereby confirm to and agree with the Owner Trustee and the
Indenture Trustee that (i) the Lease is and shall be deemed to be an Affiliated
Sublease as defined in the Japanese Financing Documents and for the purpose of
Section 14(j) of the Japanese Lease and (ii) upon the occurrence of an Event of
Default under the Lease and the Lease having been declared or deemed in default
and the exercise of one or more remedies under the Lease, the Indenture Trustee
(so long as the Lien of the Indenture has not been discharged) and, if the Lien
of the Indenture shall have been discharged, the Owner Trustee is hereby
authorized, in their sole and absolute discretion, to deliver the certificate
referred to in such Section 14(j) of the Japanese Lease and/or effect a
voluntary termination of the Japanese Lease pursuant to the provisions
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thereof and in connection therewith to cause the Cash Deposit to be applied to
the payment due to the Japanese Lessor thereunder. The Indenture Trustee agrees
that upon the discharge of the Lien of the Indenture it shall, if the Yen
Deposit Agreement and the Yen Deposit Charge Agreement are still in effect,
assign to the Owner Trustee its rights as Chargee under the Yen Deposit Charge
Agreement. The Owner Trustee and Indenture Trustee hereby agree to release or
cause the release to the Parent Guarantor of any amounts consisting of the Cash
Deposit or otherwise covered by the Yen Deposit Agreement or Yen Deposit Charge
Agreement in excess of the Special Termination Payment amount from time to time
and acknowledge and agree that such charges and agreements will be deemed
released upon the expiration of the Japanese Lease, or the termination thereof
and payment of the Special Termination Payment.
(i) The Lessee agrees with the Original Head Lessee, the Owner
Trustee, the Indenture Trustee, GPA Offshore and the Parent Guarantor that the
Lessee will perform all of its covenants and obligations under the Lease,
including Section 12(a) thereof, for the purposes of ensuring compliance with
corresponding obligations under the Japanese Lease.
(j) The Owner Participant hereby directs the Owner Trustee,
and the Owner Trustee hereby agrees to pay to the Parent Guarantor, after
payment to the Owner Participant of the OP SLV Amount set forth in Schedule IV
hereto, the GPA SLV Amount set forth on Schedule V hereto from all and any
amounts paid payable to the Owner Trustee or the Owner Participant upon the
occurrence of an Event of Loss.
SECTION 16. Certain Additional Obligations of the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee,
Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and
agrees for the benefit of each other that it will be bound by the terms of the
other Operative Documents to which it or its applicable trustee is a party, and
comply with and perform its agreements, covenants and indemnities set forth in
the other Operative Documents to which it or its applicable trustee is a party,
as amended, supplemented or otherwise modified from time to time as permitted
hereby.
SECTION 17. Lessee Protection of Title. Each of the Owner
Trustee and the Indenture Trustee agrees to execute and deliver such documents
or other instruments as the Lessee may reasonably request to enable the Lessee
to perform its obligations under Section 15 of the Lease for the benefit of such
Person.
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SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee,
Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and
Lessee (i) hereby irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York in New York
County, and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service
of process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John
Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its
agent for service of process, and covenants and agrees that service of process
in any suit, action or proceeding may be made upon it at the office of such
agent or such other office of Parent Guarantor or such other agent, as from time
to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner
Participant and Indenture Trustee. Original Head Lessee hereby generally
consents to service of process by registered mail, return receipt requested,
addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury,
Connecticut 06810 or such other office of Original Head Lessee as from time to
time may be designated by Original Head Lessee in writing to Owner Trustee,
Owner Participant and Indenture Trustee. Owner Participant generally consents to
service of process by registered mail, return receipt requested, addressed to it
at ____________________________________ or such other office of Owner
Participant as from time to time may be designated by Owner Participant in
writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee.
Owner Trustee generally consents to service of process by registered mail,
return receipt requested, addressed to it at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner
Trustee as from time to time may be
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<PAGE> 67
designated by Owner Trustee in writing to Owner Participant, Original Head
Lessee, Lessee and Indenture Trustee. Indenture Trustee generally consents to
service of process by registered mail, return receipt requested, addressed to it
at 450 West 33rd Street, New York, New York 10001 or such other office of
Indenture Trustee as from time to time may be designated in writing to Owner
Participant, Original Head Lessee, Owner Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has
not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the Original
Head Lessee of invoices therefor in reasonable detail prior to the Restatement
Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by
the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee,
the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the
Original Certificate Holders in connection with the transactions contemplated by
this Agreement, the other Operative Documents, the Lease, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise
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<PAGE> 68
provided therein) shall be paid on or prior to the Closing by the Original Head
Lessee, including, without limitation:
(1) the reasonable fees, expenses and disbursements
allocable to the Equipment Notes issued under the Indenture of
(A) Shipman & Goodwin LLP, special counsel for the Pass
Through Trustee and the Subordination Agent, (B) Kelley Drye &
Warren LLP, special counsel for the Indenture Trustee, (C)
Morris, James, Hitchens & Williams, special counsel for the
Owner Trustee, (D) Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma and (E) Milbank, Tweed,
Hadley & McCloy, special counsel for the Underwriters;
(2) the reasonable fees, expenses and disbursements
of Morgan, Lewis & Bockius LLP, special counsel for the Owner
Participant;
(3) the fees, expenses and disbursements of
Andrews & Kurth L.L.P. and Latham & Watkins, special
counsel for the Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the
Liquidity Provider, the Pass Through Trustee, the
Indenture Trustee, the Owner Trustee and the
Subordination Agent;
(6) the costs of filing and recording documents with
the FAA and filing Uniform Commercial Code financing
statements in the United States of America; and
(7) the reasonable fees, expenses and disbursements
of White & Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred to
in this Section 21.
(c) The Lessee agrees to pay the amounts it is
obligated to pay under Section 21(j) of the Lease.
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations and
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<PAGE> 69
warranties were made to the Liquidity Provider directly. The terms of this
Agreement shall inure to the benefit of the Liquidity Provider, its successors
and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Original Head Lessee and its successors and permitted assigns, the Parent
Guarantor and its successors and permitted assigns, the Lessee and its
successors and permitted assigns, the Pass Through Trustee and its successors as
Pass Through Trustee (and any additional trustee appointed) under any of the
Pass Through Trust Agreements, the Indenture Trustee and its successors as
Indenture Trustee (and any additional Indenture Trustee appointed) under the
Indenture, the Subordination Agent and its successors as Subordination Agent
under the Intercreditor Agreement, the Owner Trustee and its successors as Owner
Trustee under the Trust Agreement, and the Owner Participant and its successors
and permitted assigns. No purchaser or holder of any Equipment Notes shall be
deemed to be a successor or assign of any holder of the Original Certificates.
(b) Upon the release of the Aircraft from the lien of the
Indenture and the termination of the Indenture pursuant to and in accordance
with Section 10.01 thereof, each requirement in the Operative Documents that the
consent of Indenture Trustee be obtained or that the Indenture Trustee be given
notice shall be of no further force and effect.
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<PAGE> 70
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree
that this Agreement shall be effective among all such parties on
and as of the Restatement Date.
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<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:______________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA SUB I, INC.
By:______________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:______________________________
Name:
Title:
Address: GPA House
Shannon, County Clare
Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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<PAGE> 72
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner Trustee
By:______________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust
Administration
[-----------------------------]
By:______________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
THE CHASE MANHATTAN BANK,
not in its individual
capacity, except as
otherwise provided herein,
but solely as Indenture
Trustee
By:_______________________________
Name:
Title:
Address: 450 West 33rd Street
New York, New York 10001
Telephone: (212) 946-3348
Telecopier: (212) 946-8160
Attention: Corporate Trust
Department
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<PAGE> 73
FLEET NATIONAL BANK, not in
its individual capacity,
except as otherwise
provided herein, but solely
as Subordination Agent
By:______________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust
Administration
FLEET NATIONAL BANK, not in
its individual capacity,
except as otherwise
provided herein, but solely
as Pass Through Trustee
By:_______________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust
Administration
- 70 -
<PAGE> 74
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1A, dated
November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1B, dated
November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1C, dated
November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1D, dated
November 26, 1996.
<PAGE> 75
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
------ ------ ---- ---- -----
<S> <C> <C> <C> <C>
Class A $ 11,936,662 02-Jan-2006 6.85% $ 11,936,662
Class B $ 4,476,246 02-Jul-2002 6.93% $ 4,476,246
Class C $ 4,476,247 02-Jan-2002 6.86% $ 4,476,246
Class D $ 3,575,831 02-Jul-98 8.16% $ 3,575,831
</TABLE>
<PAGE> 76
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut
06115, Attn: Philip Kane, Corporate Trust Administration, Ref.
AWA, for the account of Fleet National Bank Account No. ABA
#011900445, ACCT. # 0067548290.
<PAGE> 77
SCHEDULE IV to
Refunding Agreement
OP SLV AMOUNT
[to come]
<PAGE> 78
SCHEDULE V to
Refunding Agreement
GPA SLV AMOUNT
[to come]
<PAGE> 79
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1989 BN-6]
TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-6], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, [______________________], a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1989 BN-6], dated as of November 20, 1996 among Lessee, Original Head
Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee,
Subordination Agent and Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the
benefit of Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms defined in the
Refunding Agreement are used herein as therein defined, unless otherwise defined
herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably guarantees to
Beneficiaries and their respective successors, endorsees, transferees and
assigns, the prompt and complete payment by Transferee when due (whether at the
stated maturity, by acceleration or otherwise) of, and the faithful performance
of, and compliance with, all payment obligations of Transferee under the
Refunding Agreement, the Second Amended and Restated
<PAGE> 80
Head Lease TIA and each other Operative Document to which Owner Participant is a
party and each other Operative Document to which Transferee is a party or by
which either is bound (collectively, the "Relevant Documents"), strictly in
accordance with the terms thereof and the timely performance of all other
obligations of Transferee thereunder (such payment and other obligations, the
"Obligations"), and Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) that may
be paid or incurred by Beneficiaries in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting, any or all of
the Obligations and/or enforcing any rights with respect to, or collecting
against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any other
guarantor or any other Person or received or collected by any Beneficiary from
Transferee, Guarantor, any other guarantor or any other person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of Guarantor
hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or observed by
Transferee (whether affirmative or negative in character) shall not be observed
or performed, or if any amount payable by Transferee referred to in Section 1(a)
hereof shall not be paid promptly when due and payable, Guarantor shall promptly
perform or observe or cause to be performed or observed each such Obligation or
undertaking and shall forthwith pay such amount at the place and to the person
or entity entitled thereto pursuant to the Relevant Documents regardless of
whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through
Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of
them shall have instituted any suit, action or proceeding or exhausted its
remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments made by
Guarantor hereunder or any setoff or application of funds of Guarantor by any
Beneficiary, Guarantor shall not be entitled to be subrogated to any of the
rights of any Beneficiary against Transferee or any collateral, security or
guarantee or right of set-off held by any Beneficiary for the payment of the
Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement
from Transferee in respect of payments made by Guarantor hereunder, until all
amounts and performance owing to Beneficiaries by Transferee on account of the
Obligations are paid and performed in full.
- 2 -
<PAGE> 81
4. Amendments, etc., with respect to the Obligations; Waiver of Rights.
The Guarantor shall remain fully obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor and without notice to or
further assent by the Guarantor, any demand for payment or performance of any of
the Obligations made by any Beneficiary may be rescinded by such party and any
of the Obligations continued, and the Obligations, or the liability of any other
party upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not assign,
convey or otherwise transfer to any person (a) any of its interest in Transferee
unless in connection therewith, Guarantor assigns its rights and obligations
hereunder to a guarantor which meets the requirements of Section 10 of the
Refunding Agreement; provided that nothing contained in this Section 5 shall be
construed to prohibit any merger, consolidation or other corporate restructuring
of Transferee or Guarantor so long as the resulting corporation meets the
requirements of Section 10 of the Refunding Agreement and assumes the
obligations of the corporation merged or consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives any and
all notice of the creation, renewal, extension or
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<PAGE> 82
accrual of any of the Obligations and notice of or proof of reliance by any
Beneficiary upon this Guarantee or acceptance of this Guarantee; the
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guarantee; and all dealings between the Transferee or the Guarantor
and any Beneficiary shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. The Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Transferee or the Guarantor with respect to the Obligations. The
Guarantor understands and agrees that this Guarantee shall be construed as a
continuing, absolute and unconditional guarantee of payment and performance (and
not merely of collectibility) without regard to (a) the validity, regularity or
enforceability of any Relevant Document, any of the Obligations or any
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by any Beneficiary, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) that may at any time be available to or be asserted by the
Transferee against any Beneficiary, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Transferee or the Guarantor) that
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Transferee for the Obligations, or of the Guarantor under this
Guarantee, in bankruptcy or in any other instance. When pursuing its rights and
remedies hereunder against the Guarantor, any Beneficiary may, but shall be
under no obligation to, pursue such rights and remedies as it may have against
the Transferee or any other person or entity or against any collateral security
or guarantee for the Obligations or any right of offset with respect thereto,
and any failure by any Beneficiary to pursue such other rights or remedies or to
collect any payments from the Transferee or any such other person or entity or
to realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Transferee or any such other person
or entity or any such collateral security, guarantee or right of offset, shall
not relieve the Guarantor of any liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Beneficiary against the Guarantor. This Guarantee shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms upon the Guarantor and the successors and assigns thereof,
and shall inure to the benefit of the Beneficiaries, and their respective
successors, endorsees, transferees and assigns, until all of the Obligations and
the Obligations of the Guarantor under this Agreement shall have been satisfied
by payment and performance in full. The Guarantor further agrees that, without
limiting the generality of this Guarantee, if any Beneficiary (or any assignee
thereof) shall be prevented by applicable law from exercising its remedies (or
any of them) against the Transferee under any Operative Document, such
Beneficiary (or any assignee thereof) shall be entitled to receive hereunder
from the Guarantor, upon demand
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<PAGE> 83
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Transferee or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Transferee or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made. The
Guarantor shall not commence any "case" (as defined in Title 11 of the United
States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments hereunder
shall be paid without set-off, counterclaim, deduction or withholding except as
required by law or regulation. If any payment hereunder is subject to deduction
or withholding, Guarantor shall pay an additional amount such that, after
deduction of all amounts required to be deducted or withheld, the net amount
actually received will equal the amount that would have been received had such
deduction or withholding not been required (provided that the recipients of any
payments hereunder shall not be entitled to receive any greater amount than if
Transferee had made such payment).
9. Representations and Warranties. The Guarantor hereby represents and
warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged;
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Guarantee, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the
creation or imposition of any
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<PAGE> 84
lien on any of the properties or revenues of the Guarantor
pursuant to any requirement of law or contractual obligation
of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or governmental authority and no
consent of any other person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee;
(f) no litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
against any of its properties or revenues (i) with respect to this
Guarantee or any of the transactions contemplated hereby or (ii) that
could have a material adverse effect on the business, operations,
property or financial or other condition of the Guarantor;
(g) the balance sheet of the Guarantor as at _________________
and the related statement of income and retained earnings for the
fiscal year then ended (copies of which have heretofore been furnished
to each Beneficiary) have been prepared in accordance with generally
accepted accounting principles applied consistently throughout the
period involved, are complete and correct and present fairly the
financial condition of the Guarantor as at such date and the results of
its operations for such fiscal year; since such date there has been no
material adverse change in the business, operations, property or
financial or other condition of the Guarantor; the Guarantor has no
material contingent obligation, contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment that
is not reflected in the foregoing statements or in the notes thereto;
and
(h) the Guarantor is [type of legal personality] with a net
worth of at least $60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act
(except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of
- 6 -
<PAGE> 85
any Beneficiary, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire agreement of
Guarantor with respect to the subject matter hereof and there are no promises or
representations by any Beneficiary relative to the subject matter hereof not
reflected herein.
13. Amendments and Waivers. None of the terms or provisions of this
Guarantee may be waived, amended or supplemented or otherwise modified except by
a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this Guarantee are
for convenience of reference only and not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding upon the
successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon the Guarantor
or any Beneficiary to be effective shall be in writing or by telegraph, telex or
telecopy and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or, in the case of mail,
two days after deposit in the postal system, first class postage pre-paid, or,
in the case of telegraphic notice, when sent, answerback received, addressed to
(a) in the case of the Guarantor, the address provided on the signature page
hereof, and (b) in the case of any Beneficiary, the address provided for such
party in the Refunding Agreement.
- 7 -
<PAGE> 86
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and the year first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
- 8 -
<PAGE> 87
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1989 BN-6]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-6]
("Assignment") dated as of _____________, between ______________, a ___________
corporation ("Assignor") and ________________, a __________ corporation
("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee,
Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned
below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer
by Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
[___________________], Fleet National Bank, as Subordination Agent, and The
Chase Manhattan Bank, as Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement"), (ii) the Trust Agreement
identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the
Trust Agreement), (iv) the Second Amended and Restated Head Lease TIA identified
in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture
(as defined in the Refunding Agreement) and (b) the assumption by Assignee of
the obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the meaning ascribed thereto in the Refunding Agreement.
For purposes of this Assignment, the defined term "Operative Document" shall
have the meaning ascribed thereto in the Refunding Agreement and shall be deemed
to include the Second Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned,
transferred and set over, and does hereby sell, convey, assign, transfer and set
over, unto Assignee, as of the date hereof, all of its right, title and interest
in, under and with respect to the Refunding Agreement, the Trust Agreement, the
Trust Estate, the Second Amended and Restated Head Lease TIA, the Indenture, all
of the other Operative Documents to which Assignor is a party or any other
contract, agreement, document or instrument relating to the Trust Estate by
which Assignor is bound, and any proceeds therefrom, together with all other
documents and instruments evidencing any of such right, title and interest,
except such rights of Assignor as have accrued to Assignor prior to the date
hereof (including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust
<PAGE> 88
Agreement as of a date prior to such date and the right to receive any indemnity
payment pursuant to the Refunding Agreement or the Lease with respect to events
occurring prior to such date).
3. Assumption. Assignee hereby undertakes all of the duties
and obligations of Assignor whenever accrued (other than duties and obligations
of Assignor required to be performed by it on or prior to the date hereof under
the Operative Documents to which Owner Participant is a party and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound), pursuant to the Trust Agreement
and any of the other Operative Documents by which Assignor is bound or any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound, and hereby confirms that
it shall be deemed a party to the Trust Agreement and shall be bound by each of
the other Operative Documents and each other contract, agreement, document or
other instrument relating to the Trust Estate to which Assignor is a party or by
which it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the
within assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
- 2 -
<PAGE> 89
6. Payments. Assignor hereby covenants and agrees to pay over
to Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Assignor that, under Section 2 hereof, belong to Assignee, and
Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents
that it is acquiring the Trust Estate interests and other
interests hereby assigned to it for its own account for the
purpose of investment and not with a view to the distribution or
resale of either thereof.
8. Representations and Warranties. Assignee
represents and warrants that:
(a) it has all requisite power and authority and legal right
to enter into and carry out the transactions contemplated hereby and to
carry out and perform the transactions of Owner Participant as
contemplated by the Operative Documents;
(b) on the date hereof it is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act
and the rules and regulations of the FAA thereunder;
(c) on and as of the date hereof, the representations and
warranties of Owner Participant set forth in Section 9 of the Refunding
Agreement and as set forth in any other Agreement to which Owner
Participant is a party are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of
the Refunding Agreement;
(e) Assignee or its guarantor has a net worth of not
less than $60,000,000.
9. Governing Law. This Assignment and Assumption
Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
- 3 -
<PAGE> 90
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:______________________________
Title:
[ASSIGNEE]
By:______________________________
Title:
- 4 -
<PAGE> 91
EXHIBIT C to
REFUNDING AGREEMENT
LIST OF COUNTRIES
Australia
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Luxembourg
Netherlands
New Zealand
Norway
Singapore
South Korea
Sweden
Switzerland
United Kingdom
<PAGE> 92
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 93
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1989 BN-6] No. 3 dated
November 26, 1996 (the "Trust Agreement Supplement")
between the Owner Trustee and the Owner Participant,
amending the Trust Agreement, which Trust Agreement
Supplement was filed at 12:20 p.m., C.S.T. on November
26, 1996;
(b) Second Amended and Restated Trust Indenture and
Security Agreement [GPA 1989 BN-6] dated as of November
26, 1996 (the "Amended and Restated Indenture") between
the Owner Trustee and the Indenture Trustee, amending
and restating the Original Indenture with attached
thereto Trust Agreement and Indenture Supplement No. 3
[GPA 1989 BN-6] dated November 26, 1996 (the "Indenture
Supplement"), with respect to the Aircraft, which
Amended and Restated Indenture with the Indenture
Supplement attached was filed with the FAA at 12:21
p.m., C.S.T. on November 26, 1996;
(c) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of November 26, 1996 (the "Lease
Amendment") among the Original Head Lessee, as
assignor, the Owner Trustee, as lessor, the Lessee, as
successor lessee, and the Indenture Trustee, which (i)
assigns all right, title and interest of the Original
Head Lessee in and to the Original Head Lease to the
Lessee, (ii) terminates the Sublease and (iii) releases
the Sublease Collateral Assignment, which Lease
Amendment was filed with the FAA at 12:22 p.m., C.S.T.
on November 26, 1996; and
(d) Second Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-6] dated as of December 15, 1989, amended
and restated as of October 1, 1991 and amended and
restated as of November 26, 1996 (the "Amended and
Restated Lease") between the Owner Trustee, as lessor,
and the Lessee, as successor lessee, amending and
restating the Original Head Lease with Lease Supplement
[GPA 1989 BN-6] No. 3 dated November 26, 1996 (the
"Lease Supplement") between the Owner Trustee, as
lessor, and the Lessee, as successor lessee, with
respect to the Aircraft, attached thereto, which
Amended and Restated Lease with the Lease Supplement
attached was filed with the FAA at 12:23 p.m., C.S.T.
on November 26, 1996.
- 1 -
<PAGE> 94
Trust Agreement
Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989
between [_____________________], as owner participant, and Wilmington Trust
Company, as owner trustee, as supplemented by Trust Agreement Supplement [GPA
1989 BN-6] No. 1 dated December 22, 1989 and by Trust Agreement Supplement [GPA
1989 BN- 6] No. 2 dated October 24, 1991.
Japanese Lease, Japanese Lessor and Supplemental Agreement
Lease Agreement [GPA 1989 BN-6] dated as of September 28, 1989
between FG Vision Leasing Co., Ltd. (the "Japanese Lessor"), as lessor, and Air
Tara Caymans II, Limited, as original lessee, which was recorded by the Federal
Aviation Administration on September 29, 1989 and assigned Conveyance No.
G75383, as supplemented and assigned by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Lease Supplement
No. 1 09/29/89 09/29/89 G75383
Supplemental Agree-
ment (the "Supple- as of
mental Agreement") 09/28/89 09/29/89 G75383
Lease Assignment
between Air Tara
Caymans II,
Limited, as
assignor, and
GPA Leasing USA
Sub I, Inc., as as of
assignee 09/28/89 09/29/89 G75383
</TABLE>
- 2 -
<PAGE> 95
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Lease Assignment
No. 2 between GPA
Leasing USA Sub I,
Inc., as assignor,
and Wilmington
Trust Company as
owner trustee under
Trust Agreement
[GPA 1989 BN-6]
dated as of
December 15, as of
1989, as assignee 12/15/89 04/02/90 V79846
</TABLE>
Original Indenture
Trust Indenture and Security Agreement [GPA 1989 BN-6] dated
as of December 15, 1989 between Wilmington Trust Company, as trustee under Trust
Agreement [GPA 1989 BN-6] dated as of December 15, 1989, and The Chase Manhattan
Bank, as successor by merger to Chemical Bank, formerly Manufacturers Hanover
Trust Company, as indenture trustee, which was recorded by the Federal Aviation
Administration on April 2, 1990 and assigned Conveyance No. V79847, as
supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Trust Indenture
Supplement No. 1 12/22/89 04/02/90 V79847
Amended and Restated
Trust Indenture and
Security Agreement as of
[GPA 1989 BN-6] 10/01/91 11/12/91 Z91423
Trust Indenture
Supplement No. 2
[GPA 1989 BN-6] 10/24/91 11/12/91 Z91423
</TABLE>
- 3 -
<PAGE> 96
Original Head Lease
Aircraft Lease Agreement [GPA 1989 BN-6] dated as of December
15, 1989 between Wilmington Trust Company, as trustee under Trust Agreement [GPA
1989 BN-6] dated as of December 15, 1989, as lessor, and GPA Leasing USA Sub I,
Inc., as lessee, which was recorded by the Federal Aviation Administration on
April 2, 1990 and assigned Conveyance No. V79848, as supplemented and amended by
the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Lease Supplement
[GPA 1989 BN-6]
No. 1 12/22/89 04/02/90 V79848
Amended and Restated
Aircraft Lease Agree- as of
ment [GPA 1989 BN-6] 10/01/91 11/12/91 Z91424
Lease Supplement
[GPA 1989 BN-6]
No. 2 10/24/91 11/12/91 Z91424
</TABLE>
Sublease
Aircraft Sublease Agreement [GPA 1989 BN-6] dated as of
September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and
America West Airlines, Inc., as sublessee, which was recorded by the Federal
Aviation Administration on October 12, 1990 and assigned Conveyance No. AA45592,
as supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 09/28/90 10/12/90 AA45592
Amendment No. 1 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-6] 06/25/91 07/10/91 A43607
Amendment No. 2 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-6] 08/26/91 09/17/91 C24403
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease [GPA 1989 BN-6] dated as of September
21, 1990 between GPA Leasing USA Sub I, Inc., as
- 4 -
<PAGE> 97
assignor, and Wilmington Trust Company, as trustee under Trust Agreement [GPA
1989 BN-6] dated as of December 15, 1989, as assignee, which was attached to and
recorded as one instrument with the Sublease on October 12, 1990 and assigned
Conveyance No. AA45592, as amended by Amendment No. 1 to Assignment of Sublease
[GPA 1989 BN-6] dated as of October 1, 1991, which was recorded by the Federal
Aviation Administration on November 12, 1991 and assigned Conveyance No. Z91425.
- 5 -
<PAGE> 1
EXHIBIT 4.13
REFUNDING AGREEMENT
[GPA 1989 BN-10]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA SUB I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
[____________________________],
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 77
Registration No. N631AW
Leased by America West Airlines, Inc.
<PAGE> 2
TABLE OF CONTENTS
Page
----
SECTION 1. Purchase of Equipment Notes; Refunding........................ 5
SECTION 2. Equipment Notes............................................... 8
SECTION 3. Conditions Precedent.......................................... 8
SECTION 4. Certain Conditions Precedent to the Obligations
of the Original Head Lessee and the Parent
Guarantor; Certain Conditions Precedent to
the Obligations of the Lessee; Conditions
Precedent with respect to the Pass Through
Trustee................................................. 16
SECTION 5. Amendment and Restatement of the First Amended
and Restated Indenture.................................. 19
SECTION 6. Amendment and Restatement of the First Amended
and Restated Lease...................................... 19
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc............................ 20
SECTION 8. Representations and Warranties of the Lessee.................. 20
SECTION 9. Representations and Warranties................................ 25
SECTION 10. Transfer of Owner Participant's Interest..................... 41
SECTION 11. Re-Registration of the Aircraft.............................. 44
SECTION 12. Quiet Enjoyment.............................................. 47
SECTION 13. Liens........................................................ 48
SECTION 14. Certain Additional Provisions Relating to
Original Head Lessee, Parent Guarantor, Trust
Company, Owner Trustee and Owner Participant............ 50
SECTION 15. Certain Retained Rights and Releases......................... 53
SECTION 16. Certain Additional Obligations of the Lessee,
the Owner Trustee, the Owner Participant and
the Indenture Trustee................................... 55
SECTION 17. Lessee Protection of Title................................... 55
SECTION 18. Jurisdictional and Related Matters........................... 55
SECTION 19. Limitation on Recourse....................................... 56
- i -
<PAGE> 3
Page
----
SECTION 20. Notices...................................................... 57
SECTION 21. Expenses..................................................... 57
SECTION 22. Reliance of Liquidity Provider............................... 58
SECTION 23. Miscellaneous................................................ 58
SECTION 24. Governing Law................................................ 59
SECTION 25. Effectiveness................................................ 59
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1989 BN-10]
REFUNDING AGREEMENT [GPA 1989 BN-10] (this "Agreement"), dated
as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) [_______________ __________], a
Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a
Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
four separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank, successor by merger to Manufacturers Hanover
Trust Company), a New York corporation, not in its individual capacity except as
otherwise expressly provided herein, but solely as Indenture Trustee (the
"Indenture Trustee") under the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Manufacturers Hanover Trust Company and The Mitsubishi Trust
and Banking Corporation, as Lenders (the "Lenders"), the Owner Trustee and the
Indenture Trustee entered into the Participation Agreement [GPA 1989 BN- 10],
dated as of December 19, 1989 (as amended, supplemented or otherwise modified
from time to time, the "Participation Agreement"), providing for the financing
of one Airbus A320-231 aircraft (the "Aircraft");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust Indenture and Security Agreement [GPA 1989 BN-10], dated as of
December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 [GPA 1989
BN-
<PAGE> 5
10], dated December 22, 1989 (as so supplemented, the "Original Indenture");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1989 BN-10], dated as of December 19,
1989, as supplemented by Lease Supplement [GPA 1989 BN-10] No. 1 dated December
22, 1989 (as so supplemented, the "Original Lease"), whereby, subject to the
terms and conditions set forth therein, the Owner Trustee agreed to lease to the
Original Head Lessee, and the Original Head Lessee agreed to lease from the
Owner Trustee, the Aircraft commencing on the Delivery Date (as therein
defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1989 BN-10] dated as of December 19, 1989 (the "Parent Head Lease
Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent
Guarantor guaranteed all of the obligations of the Original Head Lessee under
the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1989 BN-10], dated as of December 19, 1989, as
supplemented by Trust Agreement Supplement [GPA 1989 BN-10] No. 1 dated December
22, 1989, and as further supplemented by Trust Agreement Supplement [GPA 1989
BN- 10] No. 2 dated October 24, 1991 (as amended, supplemented or otherwise
modified to the date hereof, the "Original Trust Agreement"), pursuant to which
the Owner Trustee agreed, among other things, to hold the Trust Estate defined
in Section 1.1 thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1989 BN-10],
dated as of December 19, 1989 (as amended, supplemented or otherwise modified to
the date hereof, the "Head Lease TIA");
WHEREAS, the Original Head Lessee in its capacity as sublessor
(in such capacity, the "Sublessor") and America West Airlines, Inc. in its
capacity as sublessee (in such capacity, the "Sublessee") entered into the
Aircraft Sublease Agreement [GPA 1989 BN-10] dated as of September 21, 1990, as
supplemented by Sublease Supplement No. 1 [GPA 1989 BN-10] dated September 28,
1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989
BN-10] dated as of June 25, 1991 and Amendment No. 2 to Aircraft Sublease
Agreement [GPA 1989 BN-10] dated as of August 26, 1991 (as amended, supplemented
or
- 2 -
<PAGE> 6
otherwise modified to the date hereof, the "Sublease"), whereby, subject to the
terms and conditions set forth therein, the Sublessor agreed to sublease to the
Sublessee, and the Sublessee agreed to sublease from the Sublessor, the Aircraft
commencing on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1989
BN-10] dated as of September 21, 1990 (as amended, modified or otherwise
supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the
Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of
the Original Head Lessee under Section 21(f) of the Sublease;
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1989 BN-10], dated as of September 21, 1990
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease and Sublessee Consent and Agreement [GPA 1989 BN-10] dated as of
September 21, 1990, as amended by Amendment No. 1 to Assignment of Sublease and
Sublessee Consent and Agreement [GPA 1989 BN-10] dated as of October 1, 1991 (as
amended, modified or otherwise supplemented to the date hereof, the "Assignment
of Sublease");
WHEREAS, in connection with the Term Refunding (as defined in
the Participation Agreement), the Original Head Lessee, the Parent Guarantor,
the Owner Participant, the Owner Trustee and the Indenture Trustee entered into
Amendment No. 1 to Participation Agreement [GPA 1989 BN-10], dated as of October
1, 1991 ("PA Amendment No. 1");
WHEREAS, concurrently with the execution and delivery of PA
Amendment No. 1, the Owner Trustee and the Indenture Trustee entered into the
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10],
dated as of October 1, 1991, as supplemented by Trust Indenture Supplement No. 2
[GPA 1989 BN- 10], dated October 24, 1991 (as so amended and restated,
supplemented or otherwise modified to the date hereof, the "First Amended and
Restated Indenture");
WHEREAS, pursuant to the First Amended and Restated Indenture,
the Owner Trustee issued equipment trust certificates substantially in the form
set forth in Exhibit C thereof (the "Original Certificates") to the holders
thereof (the "Original Certificate Holders") as evidence of the indebtedness
then being made by the Owner Trustee to refinance a portion of the purchase
price of the Aircraft;
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<PAGE> 7
WHEREAS, concurrently with the execution and delivery of PA
Amendment No. 1, the Owner Trustee and the Original Head Lessee entered into the
Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10], dated as of
October 1, 1991, as supplemented by Lease Supplement [GPA 1989 BN-10] No. 2,
dated October 24, 1991 (as so amended and restated, supplemented or otherwise
modified to the date hereof, the "First Amended and Restated Lease");
WHEREAS, concurrently with the execution and delivery of PA
Amendment No. 1, the Owner Participant and the Original Head Lessee entered into
the Amended and Restated Head Lease Tax Indemnification Agreement [GPA 1989
BN-10], dated as of October 1, 1991 (as so amended and restated, supplemented
or otherwise modified to the date hereof, the "First Amended and Restated Head
Lease TIA");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will further amend and restate the First Amended and
Restated Indenture as the Second Amended and Restated Trust Indenture and
Security Agreement [GPA 1989 BN-10], dated as of the Restatement Date, as
supplemented by Trust Indenture Supplement No. 3 dated the Restatement Date (the
"Second Amended and Restated Indenture" and, the First Amended and Restated
Indenture as so amended and restated, the "Indenture"), under which Indenture
the Owner Trustee will issue secured equipment notes substantially in the form
set forth in Section 2.01 thereof (the "Equipment Notes") in four series, the
proceeds from the issuance and sale of which will be applied in part to the
redemption in full of the Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
First Amended and Restated Lease as the Second Amended and Restated Lease (as so
amended and restated, the "Lease");
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-10] No. 3
("Trust Supplement No. 3"), amending the Original Trust Agreement (as so amended
and as further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Second Amended and
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<PAGE> 8
Restated Head Lease Tax Indemnification Agreement, amending and restating the
First Amended and Restated Head Lease TIA (as so amended and restated, the
"Second Amended and Restated Head Lease TIA") and the Sublessor and the
Sublessee will enter into the Amended and Restated Sublease Tax Indemnification
Agreement amending and restating the Sublease TIA (as so amended and restated,
the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
four separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving credit agreements
(each, a "Liquidity Facility"), for the benefit of the Holders of Equipment
Notes of each of three Pass Through Trusts, with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination
Agent will enter into the Intercreditor Agreement, dated as of the Restatement
Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject
to the satisfaction or waiver of the conditions set forth herein, on November
26, 1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
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<PAGE> 9
(i) (A) the Sublessee shall pay to the Sublessor as
a payment of Supplemental Rent under the Sublease all accrued
and unpaid Rent under the Sublease up to the Restatement Date,
if any, (less any amounts for which Sublessee is indemnified
by Sublessor) and (B) the Original Head Lessee shall pay to
the Owner Trustee, as a payment of Supplemental Rent under the
Original Lease, an amount equal to the accrued and unpaid
interest on the Original Certificates to but not including the
Restatement Date plus an amount equal to all other amounts due
to the holders of the Original Certificates under the Original
Indenture and the other Operative Documents (as defined in the
Original Indenture) payable on the Restatement Date under
Section 2.16(b)(ii) of the Original Indenture;
(ii) the Pass Through Trustee for each Pass Through
Trust shall pay to the Owner Trustee the aggregate purchase
price of the Equipment Notes being issued to such Pass Through
Trustee as set forth in clause (xii) below;
(iii) the Owner Trustee (to the extent of proceeds
received under clauses (i) and (ii)) shall pay to the
Indenture Trustee for the benefit of the holders of the
Original Certificates an amount equal to (A) the unpaid
principal amount of the Original Certificates and (B) the
amounts specified in clause (i)(B) of this Section 1
(collectively, the "Aggregate Redemption Amount");
(iv) the Indenture Trustee shall disburse to the
holders of the Original Certificates the Aggregate Redemption
Amount owing to them on the Restatement Date with respect to
the Original Certificates as a redemption of the Original
Certificates;
(v) the Indenture Trustee shall receive the
Original Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee
shall enter into the Indenture (including Trust Indenture
Supplement No. 3);
(vii) the Original Head Lessee, the Sublessee, the
Owner Trustee and the Indenture Trustee shall enter into Lease
Amendment No. 1;
(viii) the Owner Participant and the Trust Company
shall enter into Trust Supplement No. 3;
(ix) the Original Head Lessee and the Owner
Participant shall enter into the Second Amended and
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<PAGE> 10
Restated Head Lease TIA and the Sublessor and the Sublessee
shall enter into the Amended and Restated Sublease TIA;
(x) the Original Head Lessee, GPA Leasing USA I,
Inc., the Parent Guarantor and the Lessee shall enter into an
agreement in form and substance reasonably satisfactory to
each, inter alia, confirming the termination of certain rights
which the Parent Guarantor has to "put" aircraft to the Lessee
and the obligation of the Lessee to accept and lease such
aircraft (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of its
affiliates and the Lessee will enter into an agreement (the
"Deed of Indemnity") pursuant to which the Parent Guarantor
and/or one or more of its affiliates, on the one hand, and the
Lessee, on the other, will indemnify each other with respect
to certain information included in the Prospectus and the
Registration Statement (as such terms are defined in the
Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xii) the Owner Trustee shall issue, pursuant to
Article II of the Indenture, to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass
Through Trusts, Equipment Notes of the maturity and aggregate
principal amount, bearing the interest rate and for the
purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust.
(b) The Owner Participant, by its execution and delivery
hereof, requests and directs the Owner Trustee to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions contemplated
herein.
(c) The closing (the "Closing") of the transactions described
in this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement
Date, or at such other place as the parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated
hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor
and the Lessee have entered into the
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<PAGE> 11
Underwriting Agreement, dated as of November 20, 1996 (the "Underwriting
Agreement"), among such Persons and Morgan Stanley & Co., Citicorp Securities,
Inc., Lehman Brothers, Inc. and Salomon Brothers Inc (collectively, the
"Underwriters"), and, subject to the terms and conditions hereof, the Lessee
will enter into each of the Pass Through Trust Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be
payable as to principal in accordance with the terms of the Indenture, and the
Equipment Notes shall provide for a fixed rate of interest per annum and shall
contain the terms and provisions provided for the Equipment Notes in the
Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Equipment Notes bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Equipment Notes in the aggregate shall be in the principal amounts set forth on
Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust
Agreements and of the other Operative Documents, all such Equipment Notes shall
be dated and authenticated as of the Restatement Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass
Through Trustee to make the payments described in Section 1(a)(ii) and the
obligations of the Owner Trustee to make the payments described in Section
1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner
Trustee, the Owner Participant and the Indenture Trustee to participate in the
transactions contemplated by this Agreement on the Restatement Date are subject
to the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent (except that paragraphs (a), (f) and (j) shall not be
conditions precedent to the obligations of the Owner Trustee hereunder,
paragraphs (g) and (l) shall not be conditions precedent to the obligations of
the Owner Participant hereunder and paragraphs (e) and (k) shall not be
conditions precedent to the obligations of the Indenture Trustee hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes
to the Indenture Trustee for authentication, and the Indenture Trustee shall
have authenticated such Equipment Notes and shall have tendered the Equipment
Notes to the Subordination Agent on behalf of the Pass Through Trustee in
accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of the
following documents and the Indenture
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<PAGE> 12
Trustee shall have received executed counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Second Amended and
Restated Lease and Lease Supplement No. 3;
(3) Trust Supplement No. 3;
(4) the Second Amended and Restated Indenture and
Trust Indenture Supplement No. 3;
(5) each of the Pass Through Trust Agreements and each
Pass Through Trust Supplement set forth in
Schedule I hereto;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the Class A, Class
B and Class C Trusts (as defined in the Intercreditor
Agreement).
(c) The Pass Through Trustee, the Indenture Trustee,
the Owner Trustee and the Owner Participant each shall have received the
following:
(1) an incumbency certificate of each of the Original
Head Lessee, the Lessee and the Parent Guarantor as to the
person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on
behalf of such Person in connection with the transactions
contemplated hereby (including, without limitation, each of
the documents referred to herein) and as to the signatures of
such person or persons;
(2) a copy of the resolutions of the board of
directors of each of the Original Head Lessee, the Lessee and
the Parent Guarantor or the applicable committee thereof,
certified by the Secretary or an Assistant Secretary of such
Person, duly authorizing the transactions contemplated hereby
and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of
such Person in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of
each of the Original Head Lessee and the Lessee, certified by
the Secretary of State of its state of incorporation, a copy
of the by-laws of each of the
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<PAGE> 13
Original Head Lessee and the Lessee, certified by the
Secretary or Assistant Secretary of such Person, and a
certificate or other evidence from the Secretary of State of
its state of incorporation, dated as of a date reasonably near
the Restatement Date, as to its due incorporation and good
standing in such state; and
(4) a copy of the Memorandum and Articles of
Association of the Parent Guarantor certified to be true and
correct by the Secretary or an Assistant Secretary of the
Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case of (1),
(5) and (6) below, a certificate signed by an authorized officer of the Lessee
and, in the case of (2), (3) and (4) below, a certificate signed by an
authorized officer of the Original Head Lessee, dated the Restatement Date,
certifying that:
(1) the Aircraft has been duly certified by the
FAA as to type and airworthiness and has a current,
valid certificate of airworthiness;
(2) the Second Aircraft FAA Bill of Sale (as defined
in the Participation Agreement), the Original Lease, the First
Amended and Restated Lease, the Original Indenture and the
First Amended and Restated Indenture have each been duly
recorded, and the Original Trust Agreement has been duly
filed, with the FAA pursuant to the sections of Title 49 of
the United States Code relating to aviation (the "Federal
Aviation Act");
(3) Lease Amendment No. 1, the Second Amended and
Restated Lease, Lease Supplement No. 3, the Second
Amended and Restated Indenture, Trust Indenture
Supplement No. 3 and Trust Supplement No. 3 covering
the Aircraft shall have been duly filed for recordation
with the FAA pursuant to the Federal Aviation Act;
(4) the Aircraft has been registered with the FAA
in the name of the Owner Trustee;
(5) the Lessee has authority to operate the
Aircraft; and
(6) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in
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<PAGE> 14
which case such representations and warranties were correct on
and as of such earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the
Secretary, an Assistant Secretary or other appropriate officer
of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Indenture Trustee, each certified by the Secretary, an
Assistant Secretary or other appropriate officer of the
Indenture Trustee; and
(4) a certificate signed by an authorized officer of
the Indenture Trustee, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Indenture Trustee are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as
to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Trustee in connection with the
transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
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<PAGE> 15
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Owner Trustee, each certified by the Secretary or an
Assistant Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
(1) an incumbency certificate of the Owner
Participant as to the person or persons authorized to execute
and deliver this Agreement and each of the other documents to
be executed on behalf of the Owner Participant in connection
with the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Participant or the applicable committee
thereof, certified by the Secretary or an Assistant Secretary
of the Owner Participant, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Owner Participant in connection
with the transactions contemplated hereby;
(3) a copy of the certificate of incorporation of the
Owner Participant, certified by the Secretary of State of its
state of incorporation, a copy of the by-laws of the Owner
Participant, certified by the Secretary or Assistant Secretary
of the Owner Participant, and a certificate or other evidence
from
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<PAGE> 16
the Secretary of State of its state of incorporation, dated as
of a date reasonably near the Restatement Date, as to its due
incorporation and good standing in such state; and
(4) a certificate signed by an authorized officer of
the Owner Participant, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Owner Participant are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the Lessee a
report from Willis Corroon in substantially the form of Exhibit D attached
hereto.
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion addressed
to it from (i) Latham & Watkins, special counsel for the Lessee, (ii) Andrews &
Kurth L.L.P., special counsel for the Lessee, (iii) the Senior Vice President-
Legal Affairs of Lessee and (iv) Lewis & Roca, special Arizona counsel for the
Lessee, in each case in form and substance satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received an opinion addressed to it from
Morris, James, Hitchens & Williams, special counsel for the Owner Trustee, in
form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from (i) Kelley
Drye & Warren LLP, special counsel for the Indenture Trustee, and (ii) Shipman &
Goodwin LLP, special counsel for the Subordination Agent and the Pass Through
Trustee, in each case in form and substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received an opinion addressed to it from (i)
Morgan, Lewis & Bockius LLP, special counsel for the Owner Participant and (ii)
in-house counsel for the Owner Participant, in each case in form and substance
satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i)
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<PAGE> 17
White & Case, special counsel for the Liquidity Provider, and (ii) in-house
counsel for the Liquidity Provider, in each case in form and substance
satisfactory to the Pass Through Trustee, the Owner Trustee and the Owner
Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Daugherty, Fowler & Peregrin, special counsel in Oklahoma
City, Oklahoma, in form and substance satisfactory to each of them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New York
counsel for the Original Head Lessee and the Parent Guarantor, in form and
substance satisfactory to each of them.
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from McCann FitzGerald, special Irish counsel for the Parent
Guarantor, in form and substance satisfactory to each of them.
(q) The Original Head Lessee, the Lessee, GPA Leasing USA I,
Inc. and the Parent Guarantor shall have entered into the Underwriting Agreement
and the Lessee shall have entered into each of the Pass Through Trust
Agreements, the Certificates shall have been issued and sold pursuant to the
Underwriting Agreement and the Pass Through Trust Agreements, and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the aggregate purchase price of the Equipment
Notes to be purchased from the Owner Trustee.
(r) The Original Head Lessee and the Owner Participant shall
each have executed and delivered to the other the Second Amended and Restated
Head Lease TIA.
(s) The Sublessor and the Sublessee shall each have executed
and delivered to the other the Amended and Restated Sublease TIA.
(t) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or interpretations thereof
by appropriate regulatory authorities or any court that would make it illegal
for the Pass Through Trustee to make the payments described in Section 1(a)(ii)
or for the Lessee, the Indenture Trustee, the Owner Trustee or the Owner
Participant or any other party hereto to participate in the transactions
contemplated by this Agreement on the Restatement Date.
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<PAGE> 18
(u) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in connection with
the Pass Through Trustee's making of the payments described in Section 1(a)(ii)
or the Owner Trustee's or the Owner Participant's participation in the
transactions contemplated by this Agreement on the Restatement Date shall have
been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security interests
created by or pursuant to the Indenture that are not covered by the recording
system established by the Federal Aviation Act shall have been executed and
delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and the
Owner Trustee, as the case may be, and such financing, termination, amendment
and continuation statement or statements or documents to the same purposes shall
have been duly filed in all places necessary or advisable, and any additional
Uniform Commercial Code financing, termination, amendment and continuation
statements deemed advisable by the Original Head Lessee, the Lessee, the Owner
Participant or the Indenture Trustee shall have been executed and delivered by
the Original Head Lessee, the Lessee, the Indenture Trustee or the Owner
Trustee, as the case may be, and duly filed in all places advisable.
(w) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or interpretations thereof
by appropriate regulatory authorities or any court that would adversely affect
the tax consequences of the transactions contemplated by this Agreement to the
Owner Participant, the Owner Trustee or any of their respective Affiliates.
(x) The Owner Trustee shall have received a letter of credit
in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the
Lease.
(y) The Owner Participant shall have received any other
documents and evidence as the Owner Participant or its counsel may request.
Promptly following the recording of Lease Amendment No. 1, the
Second Amended and Restated Lease (including Lease Supplement No. 3) and the
Second Amended and Restated Indenture (including Trust Indenture Supplement No.
3) pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Second Amended and Restated Lease, Lease Supplement
No. 3, the
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<PAGE> 19
Second Amended and Restated Indenture, Trust Indenture Supplement No. 3 and
Trust Supplement No. 3.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
(i) Each of the Original Head Lessee and the Parent Guarantor
shall have received counterparts of the following documents executed by
each of the parties thereto other than the Original Head Lessee and the
Parent Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Second Amended
and Restated Lease and Lease Supplement No.
3;
(3) the Second Amended and Restated Head Lease
TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee and such other
releases and terminations as it may
reasonably request; and
(9) that certain letter agreement dated as of
the Restatement Date relating to Stipulated
Loss Values with respect to the Amended and
Restated Lease (the "SLV Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent Guarantor
shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee
referred to in Section 3(c)(1);
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<PAGE> 20
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i),
Section 3(j), Section 3(k), Section 3(l),
Section 3(m) and Section 3(n), in each case
addressed to each of the Original Head
Lessee and the Parent Guarantor and in form
and substance satisfactory to each of them;
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form
and substance reasonably satisfactory to
each of them; and
(6) the report referred to in Section 3(h)
addressed to each of the Original Head
Lessee and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent
Guarantor shall have received such other documents and evidence with
respect to each other party hereto as each of them or its counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement and the "Refunding
Agreements" (as defined in the Registration Statement), the taking of
all necessary action in connection therewith and compliance with the
conditions herein or therein set forth.
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Second Amended
and Restated Lease and Lease Supplement No.
3;
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<PAGE> 21
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the following
documents:
(1) the incumbency certificate of the Original
Head Lessee and Parent Guarantor referred to
in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee
and Parent Guarantor referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j),
Section 3(k), Section 3(l), Section 3(m),
Section 3(n), Section 3(o) and Section 3(p),
in each case addressed to Lessee and in form
and substance satisfactory to Lessee; and
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to Lessee and in form
and substance reasonably satisfactory to
Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein and therein set forth.
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<PAGE> 22
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass Through Trust Agreements of the Pass Through
Trustee are correct as of the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary action in connection therewith and compliance with the conditions
herein set forth.
SECTION 5. Amendment and Restatement of the First Amended and
Restated Indenture. Subject to the satisfaction or waiver of the conditions
precedent set forth herein, the Owner Participant, by execution and delivery
hereof, requests, authorizes and directs the Owner Trustee to execute and
deliver the Second Amended and Restated Indenture, and the Owner Trustee and the
Indenture Trustee, by execution and delivery hereof, agree to execute and
deliver the Second Amended and Restated Indenture. Each of the Original Head
Lessee, the Parent Guarantor and the Lessee, by execution and delivery hereof,
consent to such execution and delivery of the Second Amended and Restated
Indenture. The Second Amended and Restated Indenture shall be effective as of
the Restatement Date.
SECTION 6. Amendment and Restatement of the First Amended and
Restated Lease. Subject to the satisfaction or waiver of the conditions
precedent set forth herein, the Indenture Trustee, the Pass Through Trustee, the
Parent Guarantor and the Owner Participant, by execution and delivery hereof,
consent to the assignments, delegations, and releases set forth in, and to the
amendment and restatement of the First Amended and Restated Lease effected by,
and the Owner Participant requests and instructs the Owner Trustee to execute
and deliver, Lease Amendment No. 1, and the Owner Trustee, the Original Head
Lessee, the Indenture Trustee and the Sublessee agree, by execution and delivery
hereof, to execute and deliver Lease Amendment No. 1. The Second Amended and
Restated Lease shall be effective as of the Restatement Date.
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<PAGE> 23
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner Trustee,
the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect on and after the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no obligations on the parties thereto. Upon
the execution and delivery of Lease Amendment No. 1 by each of the parties
thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease
shall be terminated as and to the extent set forth herein and therein. Lease
Amendment No. 1 shall be effective as of the Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original Head
Lessee (except as to the representation and warranty contained in Section 8(i)),
the Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has the
corporate power and authority to own or hold under lease its properties, has, or
had on the respective dates of execution thereof, the corporate power and
authority to enter into and perform its obligations under this Agreement, Lease
Amendment No. 1, the Lease, the Pass Through Trust Agreements, the Amended and
Restated Sublease TIA, the SLV Letter Agreement and any certificate delivered by
the Lessee pursuant to the foregoing (the "Lessee Documents") and is duly
qualified to do business as a foreign corporation in each jurisdiction where the
failure to so qualify would have a material adverse effect on its business,
operations or condition (financial or otherwise), or on its ability to perform
its obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform Commercial
Code in effect in the State of Arizona) is located at 4000 East Sky Harbor
Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under the Lessee
Documents have been duly authorized by all necessary corporate action on the
part of the Lessee, do not require any stockholder approval, or approval or
consent of any
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<PAGE> 24
trustee or holder of any material indebtedness or material obligations of the
Lessee, except such as have been duly obtained and are in full force and effect,
and do not contravene any law, governmental rule, regulation, judgment or order
binding on the Lessee or the certificate of incorporation or by-laws of the
Lessee, or contravene the provisions of, or constitute a default under, or
result in the creation of any Lien (other than Permitted Liens) upon the
property of the Lessee under, any indenture, mortgage, contract, lease or other
agreement in each case having payment obligations in excess of $500,000 to which
the Lessee is a party or by which it may be bound or affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee under the
Lessee Documents nor the consummation by the Lessee of any of the transactions
contemplated by the Lessee Documents, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other action in
respect of, the Department of Transportation, the FAA, or any other federal,
state, local or foreign governmental authority having jurisdiction, other than
those which have already been received and which the Lessee is in compliance
with and (i) the registration of the Certificates under the Securities Act of
1933, as amended (the "Securities Act") and the securities laws of any state in
which the Certificates may be offered for sale if the laws of such state require
such action, (ii) the qualification of the Pass Through Trust Agreements under
the Trust Indenture Act of 1939, as amended, (iii) (A) the orders, permits,
waivers, exemptions, authorizations and approvals of the regulatory authorities
having jurisdiction over the operation of the Aircraft by Lessee required to be
obtained on or prior to the Restatement Date, which orders, permits, waivers,
exemptions, authorizations and approvals have been duly obtained and are, or
will on the Restatement Date be in full force and effect, (B) the registration
of the Aircraft pursuant to the Federal Aviation Act and (C) such consents,
approvals, notices, registrations and other actions required by the terms of the
Lessee Documents to the extent required to be given or obtained only after the
Restatement Date and (iv) the registrations and filings referred to in Section
8(i);
(e) each Lessee Document has been duly executed and delivered
by the Lessee and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, each Lessee Document constitutes, or when
executed will constitute, the legal, valid and binding obligations of the Lessee
enforceable against the Lessee in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors or lessors
generally and by general principles of equity, whether considered in a
proceeding at law or in equity, and except, in the case of the
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<PAGE> 25
Lease, as may be limited by applicable laws which may affect the remedies
provided in the Lease, which laws, however, do not make the remedies provided in
the Lease inadequate for the practical realization of the benefits intended to
be afforded thereby;
(f) except as disclosed in the Prospectus, there are no
pending or, to its knowledge, threatened actions or proceedings before any court
or administrative agency or regulatory commission or other governmental agency
against or affecting the Lessee that are reasonably expected to materially
adversely affect the ability of Lessee to enter into or perform its obligations
under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be free
and clear of any and all Liens (other than Permitted Liens) created by or
through the Lessee;
(i) except for the registration of the Aircraft pursuant to
the Federal Aviation Act, the filing for recordation pursuant to the Federal
Aviation Act (with confidential financial terms redacted) of Lease Amendment No.
1, the Second Amended and Restated Lease, Lease Supplement No. 3, Trust
Supplement No. 3, the First Amended and Restated Indenture and Indenture
Supplement No. 2, and each of the other documents referred to in Annex A hereto,
all with the FAA, the filing of a Uniform Commercial Code ("UCC") amended
financing statement with the Secretary of State of the State of Delaware with
regard to the Original Lease, the filing of UCC termination statements with
regard to the Original Head Lessee with the Secretary of State of the States of
New York, Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with respect to
the Lease, the filing of a UCC termination statement with the Secretary of State
of the State of Arizona with respect to the Sublease, and the filing of a UCC
termination statement with the Secretary of State of the State of Delaware with
respect to the Initial Sublease Assignment (as defined in the Original Lease)
all of which financing and termination statements shall have been duly effected
as of the Restatement Date (and assignments thereof and continuation statements
at periodic intervals), and other than the taking of possession by the Indenture
Trustee of the original counterparts of the Original Lease, Lease Amendment No.
1, the Second Amended and Restated Lease, and all Lease Supplements thereto (to
the extent the Lease constitutes chattel paper), and the placing of the Lease
identification required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any financing
statement under Article 9 of the UCC of the State of Delaware, New York or
Arizona) and no
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<PAGE> 26
further action is necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any third parties,
or to perfect the security interest in favor of the Indenture Trustee in the
Owner Trustee's interest in the Aircraft and in the Lease;
(j) all obligations of the Lessee owing to the Lessor in
connection with the Lease are at least pari passu with all unsecured and
unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default but for
the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an Event of Loss
with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are required to be
filed and has paid or will pay or has caused or will cause to be paid all taxes
shown to be due or payable on said returns and on any assessment received by the
Lessee, to the extent such taxes have become due and payable, except for taxes
and returns with respect thereto the nonpayment or nonfiling of which, either in
any case or in the aggregate, could have no material adverse effect on the
Lessee, its condition (financial or otherwise), business, operations or
prospects, or on its ability to perform its obligations under the Lease or which
are being diligently contested by the Lessee in good faith by appropriate
proceedings and with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all material
respects and fairly present the Lessee's financial condition as of September 30,
1996 and the results of its operations for the period covered in conformance
with GAAP (except as otherwise noted therein and with which any such change the
independent auditors of the Lessee have agreed), since September 30, 1996, there
has been no material adverse change in the Lessee's business, operations,
condition (financial or otherwise) or prospects which has not been disclosed in
writing to the Owner Participant and the Indenture Trustee and does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary,
duties or other similar Taxes then due and for which
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<PAGE> 27
the Lessee is responsible pursuant to the Lessee Documents, shall have been
paid, other than such Taxes which are being contested by the Lessee in good
faith and by appropriate proceedings (and for which the Lessee shall have
established such reserves as are required under GAAP) so long as such
proceedings do not involve any material danger to the sale, forfeiture or loss
of the Aircraft;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations or the
Cuban Assets Control Regulations of the United States Treasury Department, 31
Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any
regulations, interpretations or rulings issued thereunder, and the Lessee is
not, and is not acting on behalf of or for the benefit of, an "Iranian Entity"
within the meaning of the Iranian Assets Control Regulations of the United
States Treasury Department, 31 Code of Federal Regulations, Subtitle B, Chapter
V, as amended, and the transactions contemplated by this Agreement are not
prohibited by Executive Order 12170, the above-mentioned Iranian Assets Control
Regulations or any regulations, interpretations or rulings issued under any
thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made out of the
assets of any "employee benefit plan" as defined in Section 3(3) of ERISA;
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the Owner
Participant or the Indenture Trustee by the Lessee in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. There is no fact known to the Lessee (other than matters of a
general economic nature) which the Lessee has not disclosed in writing to the
Owner Participant or the Indenture Trustee which could impair its ability to
perform its obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy
Code, the Lessor as lessor of the Aircraft under the Lease, and the Indenture
Trustee, as assignee of the Owner Trustee's rights under the Lease pursuant to
the Indenture, would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to the Aircraft.
SECTION 9. Representations and Warranties. Each of the parties
below represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and
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<PAGE> 28
warranty of the Original Head Lessee to the Lessee only) as follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below) represents and
warrants that:
(1) the Indenture Trustee is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of New York, is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal
Aviation Act and the rules and regulations of the FAA
thereunder (as so defined, a "Citizen of the United States")
(without making use of a voting trust, voting powers agreement
or similar arrangement), will notify promptly all parties to
this Agreement if in its reasonable opinion its status as a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement) is
likely to change and will resign as Indenture Trustee as
provided in Section 8.02 of the Indenture promptly after it
obtains actual knowledge that it has ceased to be such a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement), and
has the full corporate power, authority and legal right under
the laws of the State of New York and the federal laws of the
United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of this
Agreement, the Indenture and each other Operative Document to
which it is a party and to carry out its obligations under
this Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) the execution and delivery by the Indenture
Trustee of this Agreement, the Indenture, Lease Amendment No.
1 and each other Operative Document to which it is a party and
the performance by the Indenture Trustee of its obligations
under this Agreement, the Indenture and each other Operative
Document to which it is a party have been duly authorized by
the Indenture Trustee and will not violate its articles of
association or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party
or by which it is bound;
(3) this Agreement constitutes, and the Indenture,
when executed and delivered by the Indenture Trustee, will
constitute, the legal, valid and binding obligations of the
Indenture Trustee enforceable
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<PAGE> 29
against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents to which
it is a party;
(5) there are no Lenders' Liens (as defined in the
Lease) on the Aircraft or any portion of the Trust Estate
created by or through the Indenture Trustee in its individual
capacity; and
(6) it has possession of the chattel paper original
counterpart of the Original Lease, the First Amended and
Restated Lease, Lease Amendment No. 1 and the Second Amended
and Restated Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties are made
solely by the Owner Trustee) and the Owner Trustee represents and warrants that:
(1) the Trust Company is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and
authority to carry on its business as now conducted, has, or
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver Trust
Supplement No. 3, has the corporate power and authority to
carry out the terms of the Trust Agreement, and each of the
Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the
authorization, execution and delivery of Trust Supplement No.
3 by the Owner Participant), the corporate power and authority
to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Equipment Notes, Lease Amendment
No. 1, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
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<PAGE> 30
(2) (i) each of the Trust Company and the Owner
Trustee has duly authorized, executed and delivered the Trust
Agreement and this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
3 by the Owner Participant) the Trust Agreement constitutes a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity, (ii) the Owner
Trustee has duly authorized, executed and delivered this
Agreement and (assuming the due authorization, execution and
delivery of Trust Supplement No. 3 by the Owner Participant)
this Agreement and the Trust Agreement constitute, and the
Indenture and the Lease, when entered into, will constitute, a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) assuming the due authorization, execution and
delivery of Trust Supplement No. 3 by the Owner Participant,
the Owner Trustee has duly authorized, and on the Restatement
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Equipment Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Equipment Note on the Restatement Date
will constitute the valid and binding obligation of the Owner
Trustee and will be entitled to the benefits and security
afforded by the Indenture in accordance with the terms of such
Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner
Trustee or the Trust Company, as the case may be, of this
Agreement, the Original Trust Agreement, Trust Supplement No.
3, the Original Indenture, the First Amended and Restated
Indenture, the Indenture, the Original Lease, the First
Amended and Restated Lease, Lease Amendment No. 1, the Lease,
the Equipment Notes or any other Operative Document to which
it is a party, nor the consummation by it of any of the
transactions
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<PAGE> 31
contemplated hereby or thereby, nor the compliance by it with
any of the terms and provisions hereof and thereof, (A)
requires or will require any approval of its stockholders, or
approval or consent of any trustees or holders of any
indebtedness or obligations of it, or (B) violates or will
violate its articles of association or by-laws, or contravenes
or will contravene any provision of, or constitutes or will
constitute a default under, or results or will result in any
breach of, or results or will result in the creation of any
Lien (other than as permitted under the Operative Documents)
upon its property under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sale contract, bank loan
or credit agreement, license or other agreement or instrument
to which it is a party or by which it is bound, or contravenes
or will contravene any law, governmental rule or regulation of
the State of Delaware or any United States of America
governmental authority or agency governing the trust powers of
the Owner Trustee, or any judgment or order applicable to or
binding on it;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any state or local governmental
authority or agency or any State of Delaware or any United
States governmental authority or agency regulating the trust
powers of the Trust Company is required for the execution and
delivery of, or the carrying out by, the Trust Company or the
Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or by the Trust Agreement, the Indenture,
the Lease, Lease Amendment No. 1, the Equipment Notes, or any
other Operative Document to which it is a party or by which it
is bound, other than any such consent, approval, order,
authorization, registration, notice or action as has been duly
obtained, given or taken or which is described in Section
8(d);
(6) there exists no Lessor's Lien or Head Lessor's
Lien (each as defined in the Lease) (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens) attributable to
the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's
Lien (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens) attributable to the Trust Company;
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<PAGE> 32
(8) there are no Taxes payable by the Owner Trustee
or the Trust Company imposed by the State of Delaware or any
political subdivision thereof in connection with the
redemption of the Original Certificates or the issuance of the
Equipment Notes, or the execution and delivery by it of any of
the instruments referred to in clauses (1), (2), (3) and (4)
above, that, in each case, would not have been imposed if the
Trust Estate were not located in the State of Delaware and the
Trust Company had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner
Trustee) any or all of its duties under the Operative
Documents in, and (c) engaged in any activities unrelated to
the transactions contemplated by the Operative Documents in,
the State of Delaware;
(9) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner Trustee,
either in its individual capacity or as Owner Trustee, before
any court or administrative agency which, if determined
adversely to it, would materially adversely affect the ability
of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under
any of the instruments referred to in clauses (1), (2), (3)
and (4) above;
(10) both its chief executive office, and the place
where its records concerning the Aircraft and all its
interests in, to and under all documents relating to the Trust
Estate (other than such as may be maintained and held by the
Indenture Trustee pursuant to the Indenture), are located in
Wilmington, Delaware. Owner Trustee, in its individual
capacity or as Owner Trustee, agrees that it will not change
the location of such office to a location outside of Delaware,
without prior written notice to all parties hereto; and
(11) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangements).
(c) The Owner Participant represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, has the
corporate power and authority to carry on its present business
and operations and to own or lease its properties, has, or had
on the respective dates of execution thereof, as the case may
be, the
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<PAGE> 33
corporate power and authority to enter into and to perform its
obligations under this Agreement, the Trust Agreement, the SLV
Letter Agreement and the Second Amended and Restated Head
Lease TIA; this Agreement, the SLV Letter Agreement and Trust
Supplement No. 3 have been duly authorized, executed and
delivered by it; and this Agreement, the Trust Agreement, the
SLV Letter Agreement and the Second Amended and Restated Head
Lease TIA constitute the legal, valid and binding obligations
of the Owner Participant enforceable against it in accordance
with their respective terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Second Amended and Restated Head
Lease TIA or any other Operative Document to which it is a
party nor (B) compliance by it with all of the provisions
hereof or thereof, (x) will contravene any law or order of any
court or governmental authority or agency applicable to or
binding on the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements
of the Owner Participant under applicable law), or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its
certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its
property may be bound or affected;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Second Amended and Restated Head Lease TIA
(it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee other than the laws, rules or regulations
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<PAGE> 34
relating to aircraft lease transactions generally or to the
citizenship requirements of the Owner Participant under the
Federal Aviation Act);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant before any court or administrative agency or
arbitrator which, if determined adversely to the Owner
Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement or
the Second Amended and Restated Head Lease TIA;
(5) neither the Owner Participant nor anyone
authorized by it to act on its behalf (it being understood
that in proposing, facilitating and otherwise taking any
action in connection with the refinancing contemplated hereby
and agreed to herein by the Owner Participant, the Lessee has
not acted as agent of the Owner Participant) has directly or
indirectly offered any Equipment Notes or Certificates or any
interest in and to the Trust Estate, the Trust Agreement or
any similar interest for sale to, or solicited any offer to
acquire any of the same from, more than ten Persons; the Owner
Participant's interest in the Trust Estate and the Trust
Agreement was acquired for its own account and was purchased
for investment and not with a view to any resale or
distribution thereof;
(6) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant (including for this purpose Liens
that would be Lessor's Liens but for the first proviso in the
definition of Lessor's Liens); and
(7) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangement). If at any time Owner
Participant has ceased to be, or shall have actual knowledge
that it is likely to cease to be, such a citizen, and (i) the
Aircraft shall be or would thereupon become ineligible for
registration in the name of Owner Trustee under the Federal
Aviation Act as in effect at such time (without regard to the
"based and primarily used" provisions thereof) and the
regulations then applicable thereunder, or (ii) the Aircraft
is registered in a jurisdiction other than the United States
of America, in circumstances in which the preceding clause (i)
does not apply and the Lessee or
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<PAGE> 35
any Permitted Sublessee at any time proposes to register the
Aircraft in the United States of America, then Owner
Participant shall (at its own expense and without any
reimbursement or indemnification from the Lessee or any
Permitted Sublessee) (A) immediately either (1) transfer in
accordance with Section 10 hereof all of its right, title and
interest in and to the Trust Agreement, the Trust Estate, this
Agreement and the Second Amended and Restated Head Lease TIA
or (2) take such other action, including, without limitation,
the establishment of a voting trust or voting powers agreement
(in which case Owner Participant shall remain the beneficial
owner of the Trust Estate), as may be necessary to prevent the
deregistration of the Aircraft under the Federal Aviation Act
or to maintain such registration of the Aircraft or to make
possible such registration of the Aircraft in the United
States of America and to prevent Indenture Trustee, the
Holders of the Equipment Notes, the Lessee or any Permitted
Sublessee from being adversely affected as a result thereof
and (B) indemnify the Lessee, the Indenture Trustee, the
Holders of the Equipment Notes and any Permitted Sublessee,
from and against any and all Claims incurred or suffered as a
result of Owner Participant's failure to be such a citizen or
loss of such citizenship, including, without limitation, as a
result of the Aircraft's becoming ineligible or ceasing to
remain eligible for such registration.
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly organized,
validly existing and in good standing under the federal laws
of the United States of America, and has the full corporate
power, authority and legal right under the federal laws of the
United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Intercreditor Agreement, and
this Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement will
have been, duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement constitutes, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement, will
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<PAGE> 36
constitute, the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement or this Agreement, the
purchase by the Pass Through Trustee of the Equipment Notes
pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Pass Through Trustee's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Pass Through Trustee and does not contravene or
result in any breach of, or constitute a default under, the
Pass Through Trustee's articles of association or by-laws or
any agreement or instrument to which the Pass Through Trustee
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(5) assuming that the trusts created by the Pass
Through Trust Agreements will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code for
federal income tax purposes, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the acquisition, possession or ownership by
the Pass Through Trustee of any of the Equipment Notes (other
than franchise or other taxes based on or measured by any fees
or compensation
- 33 -
<PAGE> 37
received by the Pass Through Trustee for services rendered in
connection with the transactions contemplated by any of the
Pass Through Trust Agreements), and prior to the exercise of
remedies upon the occurrence of an Indenture Event of Default,
there are no Taxes payable by the Pass Through Trustee imposed
by the State of Connecticut or any political subdivision or
taxing authority thereof in connection with the execution,
delivery and performance by the Pass Through Trustee of this
Agreement, any of the Pass Through Trust Agreements or the
Intercreditor Agreement (other than franchise or other Taxes
based on or measured by any fees or compensation received by
the Pass Through Trustee for services rendered in connection
with the transactions contemplated by any of the Pass Through
Trust Agreements), and such trusts will not be subject to any
Taxes imposed by the State of Connecticut or any political
subdivision or taxing authority thereof; upon the exercise of
remedies following the occurrence of an Indenture Event of
Default, there will be no Taxes payable by the Pass Through
Trustee imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Pass Through
Trustee of this Agreement, any of the Pass Through Trust
Agreements or the Intercreditor Agreement (other than
franchise or other Taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by
any of the Pass Through Trust Agreements), and the trusts
created by the Pass Through Trust Agreements will not be
subject to any Taxes imposed by the State of Connecticut or
any political subdivision thereof, solely because the Pass
Through Trustee maintains an office in, and administers the
trusts created by the Pass Through Trust Agreements in, the
State of Connecticut;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly
or indirectly offered any Equipment Notes for sale to any
Person or solicited any offer to acquire any Equipment Notes
from any Person,
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<PAGE> 38
nor has the Pass Through Trustee authorized anyone to act on
its behalf to offer directly or indirectly any Equipment Notes
for sale to any Person, or to solicit any offer to acquire any
Equipment Notes from any Person; and the Pass Through Trustee
is not in default under any Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(e) The Subordination Agent represents and warrants
that:
(1) the Subordination Agent is a duly organized
national banking association, validly existing and in good
standing with the Comptroller of the Currency under the laws
of the United States of America and has the full corporate
power, authority and legal right under the laws of the United
States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement and
to perform its obligations under this Agreement, the Liquidity
Facilities and the Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement will have been,
duly authorized, executed and delivered by the Subordination
Agent; this Agreement constitutes, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement, will constitute,
the legal, valid and binding obligations of the Subordination
Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Subordination Agent of each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement or
the performance by the Subordination Agent of this Agreement,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the
- 35 -
<PAGE> 39
Subordination Agent's banking, trust or fiduciary powers or
any judgment or order applicable to or binding on the
Subordination Agent and do not contravene or result in any
breach of, or constitute a default under, the Subordination
Agent's articles of association or by-laws or any agreement or
instrument to which the Subordination Agent is a party or by
which it or any of its properties may be bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement or this Agreement nor the consummation
by the Subordination Agent of any of the transactions
contemplated hereby or thereby requires the consent or
approval of, the giving of notice to, the registration with,
or the taking of any other action with respect to, any State
of Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Subordination Agent
of this Agreement, any of the Liquidity Facilities or the
Intercreditor Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities) solely because
the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are
no Taxes payable by the Subordination Agent imposed by the
State of Connecticut or any political subdivision thereof in
connection with the acquisition, possession or ownership by
the Subordination Agent of any of the Equipment Notes solely
because the Subordination Agent maintains an office and
administers its trust business in the State of Connecticut
(other than franchise or other taxes based on or measured by
any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in
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<PAGE> 40
the aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any Person
or solicited any offer to acquire any Equipment Note from any
Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any
Equipment Note for sale to any Person, or to solicit any offer
to acquire any Equipment Note from any Person; and the
Subordination Agent is not in default under any Liquidity
Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Second Amended and Restated Head Lease TIA, the
Amended and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents nor (B) compliance
by it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any
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<PAGE> 41
court or governmental authority or agency applicable to or
binding on the Original Head Lessee, or (y) will contravene
the provisions of, or constitutes or has constituted or will
constitute a default under, its certificate of incorporation
or by-laws or any indenture, mortgage, contract or other
agreement or instrument to which the Original Head Lessee is a
party or by which it or any of its property may be bound or
affected, except where such contravention or default would not
result in any liability to any other party hereto or have a
material adverse effect on the rights or on the remedies of
the other parties hereto or on its ability to perform its
obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Original Head Lessee of this
Agreement and each of the other Original Head Lessee
Transaction Documents;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Original Head Lessee before any court
or administrative agency or arbitrator which, if determined
adversely to the Original Head Lessee, would materially
adversely affect the Original Head Lessee's ability to perform
its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease);
(6) on the Delivery Date, the Owner Trustee received
good title to the Aircraft free and clear of all Liens, except
the rights of the Original Head Lessee under the Original
Lease, the rights of the Sublessee under the Sublease, the
Lien of the Original Indenture, the beneficial interest of the
Owner Participant in the Aircraft, and Permitted Liens under
the Original Lease;
(7) title to the Buyer Furnished Equipment for the
Aircraft has been transferred to the Owner Trustee in
accordance with Section 8(y) of the Participation
- 38 -
<PAGE> 42
Agreement. As of the Restatement Date, there are no
existing Claims against Parent Guarantor or Original
Head Lessee with respect to Buyer Furnished Equipment;
and
(8) except for the registration of the Aircraft
pursuant to the Federal Aviation Act, the filing for
recordation pursuant to the Federal Aviation Act (with
confidential financial terms redacted) of Lease Amendment No.
1, the Second Amended and Restated Lease, Lease Supplement No.
3, Trust Supplement No. 3, the First Amended and Restated
Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all with the
FAA, the filing of a Uniform Commercial Code ("UCC") amended
financing statement with the Secretary of State of the State
of Delaware with regard to the Original Lease, the filing of
UCC termination statements with regard to the Original Head
Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC
financing statement with the Secretary of State of the State
of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State
of Arizona with respect to the Sublease, and the filing of a
UCC termination statement with the Secretary of State of the
State of Delaware with respect to the Initial Sublease
Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly
effected as of the Restatement Date (and assignments thereof
and continuation statements at periodic intervals), and other
than the taking of possession by the Indenture Trustee of the
original counterparts of the Original Lease, Lease Amendment
No. 1, the Second Amended and Restated Lease, and all Lease
Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification
required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any
financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Aircraft as
against the Lessee and any third parties, or to perfect the
security interest in favor of the Indenture Trustee in the
Owner Trustee's interest in the Aircraft and in the Lease.
(g) The Parent Guarantor represents and warrants that:
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<PAGE> 43
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement; this Agreement has been duly authorized and
constitutes the legal, valid and binding obligations of the
Parent Guarantor enforceable against it in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a
proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Parent Guarantor of this Agreement nor (B) compliance by it
with all of the provisions hereof (x) will contravene any law
or order of any court or governmental authority or agency
applicable to or binding on the Parent Guarantor, or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its Memorandum
and Articles of Association or any indenture, mortgage,
contract or other agreement or instrument to which the Parent
Guarantor is a party or by which it or any of its property may
be bound or affected, except where such contravention or
default would not result in any liability to any other party
hereto or have a material adverse effect on the rights or on
the remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Parent Guarantor of this
Agreement;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part
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<PAGE> 44
shall be free and clear of any and all Sublessor's Liens (as
defined in the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty in Section 9(f)(8) shall be only
for the benefit of Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by consolidation, merger, sale of assets or otherwise) any of
its right, title or interest in and to the Trust Estate, the Aircraft, the
Lease, this Agreement, the Trust Agreement, the Second Amended and Restated Head
Lease TIA or any other Operative Document or any proceeds therefrom; provided
that, subject to the conditions set forth below, Owner Participant may transfer
to a Transferee (as defined below) all (but not less than all) of its right
(except for such rights accruing prior to transfer), title and interest as an
entirety in and to the Trust Estate, the Aircraft, this Agreement, the Trust
Agreement, the Second Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound. Each such transfer shall be subject to the following
conditions:
(i) the Person to whom such transfer is to be made (a
"Transferee") is either (A) a bank or other financial institution with
a combined capital, surplus and undivided profits of at least
$60,000,000, or a corporation whose consolidated tangible net worth is
at least $60,000,000, exclusive of goodwill, all of the foregoing
determined in accordance with U.S. generally accepted accounting
principles, (B) any wholly-owned subsidiary of such bank, financial
institution or corporation if such bank, financial institution or
corporation furnishes to Owner Trustee, Indenture Trustee, Original
Head Lessee and Lessee an agreement or agreements of such bank,
financial institution or corporation guaranteeing such subsidiary's
obligations as Owner Participant contained in this Agreement, the Trust
Agreement, the Second Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is bound, which
guarantee shall be substantially in the form attached as Exhibit A
hereto or (C) an Affiliate or a subsidiary of Owner Participant if
Owner Participant furnishes to Owner Trustee, Indenture Trustee,
Original Head Lessee and Lessee an agreement whereby Owner Participant
will guarantee such Affiliate's or subsidiary's obligations as Owner
Participant contained in this Agreement, the Trust Agreement, the
Second Amended and Restated Head Lease TIA and each other Operative
Document to
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<PAGE> 45
which Owner Participant is bound, which guarantee shall be
substantially in the form attached as Exhibit A hereto;
(ii) Owner Trustee, Indenture Trustee, Original Head
Lessee and Lessee shall have received at least 15 days' prior written
notice of such transfer specifying the name and address of any proposed
transferee and specifying the facts necessary to determine whether such
proposed transferee qualifies as a "Transferee" under clause (i)
above and does not violate clause (viii) below; provided that if such
Transferee is an Affiliate of Owner Participant, such notice may be
given promptly following rather than prior to such transfer;
(iii) upon giving effect to such transfer, such Transferee
is a Citizen of the United States, and such Transferee shall deliver to
Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an
affidavit to such effect;
(iv) such Transferee has the requisite power and
authority and legal right to enter into and carry out the
transactions contemplated hereby;
(v) such Transferee enters into an agreement in
substantially the form attached as Exhibit B hereto whereby such
Transferee confirms that it shall be deemed a party to this Agreement,
the Trust Agreement, the Second Amended and Restated Head Lease TIA and
each other Operative Document to which Owner Participant is a party or
by which Owner Participant is bound, and in which the transferee shall
agree to be bound by and undertake the obligations of Owner Participant
in the Operative Documents and shall make representations and
warranties comparable to those of Owner Participant contained herein;
(vi) such transfer does not violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or create a relationship that would be in violation
thereof, or violate any provisions of the Securities Act or any other
applicable Federal, state or other law, rule or regulation;
(vii) such transfer does not and will not involve, either
directly or indirectly, the assets of any "employee benefit plan" as
defined in Section 3(3) of ERISA that would cause a violation of any
provision of ERISA or the imposition of an excise tax under the Code;
(viii) such Transferee is not an airline, a commercial
air carrier, an air freight forwarder, a freight trans-
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<PAGE> 46
porter, any Person engaged in the business of parcel transport by
air, or a subsidiary or an Affiliate thereof;
(ix) an opinion of counsel of the Transferee confirming
the matters referred to in clauses (iv) and (vi) above (with
appropriate reliance on certificates of corporate officers or public
officials as to matters of fact) and confirming that the agreement
referred to in clause (v) above is the legal, valid, binding and
enforceable obligation of the Transferee and that the guarantee
referred to in clause (i)(B) or (C) above, if any, is the legal, valid,
binding and enforceable obligation of the Transferee's guarantor shall
be provided, at least 3 days prior to such transfer, to Lessee, Owner
Trustee, Original Head Lessee and Indenture Trustee, which shall be in
form and substance reasonably satisfactory to each of them; and
(x) the terms of the Operative Documents and the
Second Amended and Restated Head Lease TIA shall not be
altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Second Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Aircraft previously made by Owner Participant; and except
as the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Second Amended and Restated Head Lease TIA and each other
Operative Document to "Owner Participant" shall thereafter be deemed to include
such Transferee as provided in this Section 10. No transfer shall release
Owner Participant from its obligations hereunder, under the Second Amended and
Restated Head Lease TIA and under the other Operative Documents, except to the
extent expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Second Amended and Restated Head Lease TIA by or against Owner Participant which
have been made prior to the date of such transfer. The transferor Owner
Participant shall pay all expenses of each party hereto related to any such
transfer.
Owner Participant covenants and warrants that it shall not
transfer all or any portion of its interest in the Trust Estate except in
accordance with this Section 10 and that it shall not itself, or direct Owner
Trustee to, take any action in contravention of the Lessee's rights under the
Lease except in accordance with the provisions of the Lease.
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Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions of
clause (A) of paragraph (7) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease. The Lessee
shall have no obligation to prevent any such deregistration or assist in
maintaining or otherwise enhancing the Aircraft's eligibility for registration
by restricting the use of the Aircraft.
SECTION 11. Re-Registration of the Aircraft. The Indenture
Trustee agrees, that if the Owner Participant consents thereto, which consent
shall not be unreasonably withheld, at any time after the Restricted Use Period,
Lessee may, in connection with effecting a Permitted Sublease elect to effect a
change in registration of the Aircraft, at Lessee's cost and expense, so long as
(a) the country of registry of the Aircraft is a country listed on Exhibit C
hereto (or such other country as the Owner Participant approves) (each, an
"Eligible Country") and (b) the following conditions are met: (i) unless the
country of registry is Taiwan, the United States of America maintains normal
diplomatic relations with the country of registry of the Aircraft, and if the
country of registry is Taiwan, the United States of America maintains diplomatic
relations at least as good as those in effect on the Restatement Date; and (ii)
the Owner Trustee, the Owner Participant and the Indenture Trustee shall have
received favorable opinions (subject to customary exceptions) addressed to each
such party, from counsel of recognized reputation qualified in the laws of the
relevant jurisdiction and reasonably acceptable to the Owner Participant to the
effect of the following and as to such other matters as the Owner Participant
may reasonably request:
(A) the Owner Trustee's ownership interest in the Aircraft and
interest in the Lease and any Permitted Sublease shall be recognized
under the laws of such Eligible Country,
(B) the obligations of Lessee, and the rights and remedies of
the Owner Trustee, under the Lease shall remain valid, binding and
(subject to customary bankruptcy and equitable remedies exceptions and
to other exceptions customary in foreign opinions generally)
enforceable under the laws of such Eligible Country (or the laws of the
jurisdiction to which the laws of such Eligible Country would refer as
the applicable governing law),
(C) after giving effect to such change in registration, the
Lien of the Indenture on the Owner Trustee's right, title and interest
in and to the Aircraft, the Lease and any Permitted Sublease shall
continue as a valid and
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<PAGE> 48
duly perfected security interest and all filing, recording or other
action necessary to protect the same shall have been accomplished (or,
if such opinion cannot be given at the time of such proposed change in
registration because such change in registration is not yet effective,
(1) the opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Indenture Trustee shall
have received a certificate from Lessee that all possible preparations
to accomplish such filing, recording and other action shall have been
done, and such filing, recording and other action shall be accomplished
and a supplemental opinion to that effect shall be delivered to the
Owner Trustee and the Indenture Trustee on or prior to the effective
date of such change in registration),
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other activity
of the Owner Trustee, the Owner Participant or the Indenture Trustee
(or any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such Eligible Country,
(E) there is no tort liability of the owner of an aircraft not
in possession thereof under the laws of such Eligible Country (it being
agreed that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is provided
to cover such risk),
(F) (unless Lessee shall have agreed, or pursuant to the Lease
shall have been required, to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such Eligible
Country so long as such Aircraft is registered under the laws of such
Eligible Country) the laws of such jurisdiction require fair
compensation by the government of such Eligible Country payable in
currency freely convertible into Dollars for the loss of use of such
Aircraft in the event of the requisition by such government of such
use,
(G) upon such change in registration, under the laws of such
Eligible Country, any import or export permits necessary to take the
Aircraft into or out of such Eligible Country and any foreign exchange
or other like permits or approvals necessary to allow all "basic rent",
"renewal rent" and casualty value payments provided for in such
Permitted Sublease, which are obtainable at the commencement of such
Permitted Sublease, will be in full force and effect,
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<PAGE> 49
(H) under the Laws of such Eligible Country, the remedies set
forth in such Permitted Sublease are effective to enable Lessee or its
assignee as sublessor to repossess, subject to compliance with
applicable Law in such Eligible Country in connection therewith, the
Aircraft following a valid termination thereof, and there is no
provision of such Laws which by its terms would prevent Lessee or its
assignee as sublessor, upon compliance with the provisions of
applicable Law in such Eligible Country, from de-registering the
Aircraft under the laws of such Eligible Country, and exporting the
Aircraft from such Eligible Country, without reference to any
particular time period,
(I) upon such change in registration, the resulting
jurisdiction of one or more Governmental Entities of such Eligible
Country over Lessee, Owner Trustee, Indenture Trustee, the Permitted
Sublessee, the Aircraft or the operation or operator of the Aircraft
(or over any interest in any thereof), as the case may be, and the
consummation of the transactions contemplated by the Operative
Documents after giving effect to the proposed re-registration of the
Aircraft, do not violate any provision of the Trading with the Enemy
Act of 1917, as amended, or any Executive Orders of the President of
the United States of America or any regulations of the United States
Treasury Department (including, without limitation, the Foreign Assets
Control Regulations and the Transaction Control Regulations issued
thereunder) or of any other Governmental Entity of the United States of
America issued thereunder or otherwise violate any other like law or
regulation of the United States of America, after giving effect to any
licenses, permits or approvals thereunder obtained by, or on behalf of,
Lessee, the Permitted Sublessee, Owner Trustee or Indenture Trustee,
all of which are in full force and effect as of the date of such change
in registration. Owner Trustee, Owner Participant and Indenture Trustee
shall cooperate, at Lessee's expense and as it may reasonably request,
in obtaining any such licenses, permits or approvals,
(J) to such further effect with respect to such other matters
relating to the recognition of Owner Trustee's interest in the Aircraft
and perfection of the Lien of the Indenture if it has not been
discharged pursuant to the terms thereof, as Owner Trustee, Owner
Participant or Indenture Trustee may reasonably request, and
(K) the aircraft maintenance standards of the new country of
registry shall not be materially less stringent than those of the FAA
or not materially less stringent than those of the United Kingdom Civil
Aviation Authority.
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<PAGE> 50
The following statement shall be true and correct at the time
of the re-registration of the Aircraft:
No unindemnified tax risks or Taxes affecting Owner
Participant or Owner Trustee will result from such reregistration.
Prior to the re-registration of the Aircraft as contemplated
by this Section 11, Lessee shall furnish to Owner Participant and Indenture
Trustee (1) an Officer's Certificate (as defined in the Indenture) stating that
(i) all conditions precedent provided for in this Agreement and the Lease
relating to the proposed re-registration of the Aircraft have been complied
with, (ii) that the re-registration is in conformity with the requirements of
this Agreement and the Lease, (iii) after giving effect to such re-registration,
no Event of Default shall have occurred and be continuing, and (iv) the
insurance required by Section 12 of the Lease is in full force and effect at the
time of such change in registration after giving effect to such change in
registration and (2) an opinion of counsel (which shall be by counsel other than
an employee of Lessee) addressed to Owner Trustee, Owner Participant and
Indenture Trustee stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
The Operative Documents shall be amended in a manner
reasonably satisfactory to Lessee, Owner Trustee and Indenture Trustee so as to
include such covenants as may be appropriate to establish, protect and preserve
the validity, priority and perfection of Owner Trustee's interest in the
Aircraft, Lessee's interest under the Lease and the Lien of the Indenture in
favor of Indenture Trustee.
Lessee shall pay all costs, expenses, fees and recording,
registration or any other Taxes, including the reasonable fees and expenses of
counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee,
and other charges in connection with any such change in registration.
SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming by, through or on behalf of it to interfere with the
right of Lessee or any Permitted Sublessee to the possession, use, operation and
quiet enjoyment of and other rights with respect to the Aircraft under the
Lease, and all rents, revenues, profits
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<PAGE> 51
and income therefrom, in accordance with the terms of the Lease; provided that
the Trust Company, Owner Trustee and Owner Participant shall not be liable for
any such interference by Indenture Trustee, Pass Through Trustee, holders of any
Equipment Notes, or any other Person claiming by, through or on behalf of
them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate or the Indenture Estate. Each of Trust Company,
Owner Trustee and Owner Participant severally agrees that it will promptly, at
its own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Lessor's Lien or Head
Lessor's Lien attributable to it. For all purposes of this Agreement and the
other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a
result of the nonpayment of any Tax imposed on or measured by the net income of
the Trust Estate or the trust created by the Trust Agreement that is not
indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through
Trustee and Subordination Agent severally agrees that it will promptly, at its
own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Trustee's Lien attributable to it and to make restitution to the Trust Estate
and the Indenture Estate for any diminution of the assets thereof resulting
therefrom and will indemnify and hold harmless Lessee and each Indemnitee
against any claims incurred or suffered by any such Person and any reduction in
amounts payable out of, or diminution in the assets of, the Trust Estate or the
Indenture Estate resulting from any such Trustee's Lien attributable to it. For
purposes of this paragraph, "Trustee's Lien" means any Lien
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<PAGE> 52
or disposition of title attributable to Indenture Trustee in its individual
capacity (and not as Indenture Trustee), Pass Through Trustee in its individual
capacity (and not as Pass Through Trustee) or Subordination Agent in its
individual capacity (and not as Subordination Agent) on or in respect of (as the
case may be) the Aircraft or any other portion of the Trust Estate or the Trust
Indenture Estate arising as a result of (i) Claims against such Person not
related to its interest in the Aircraft or the administration of the Trust
Estate or the Trust Indenture Estate pursuant to the Indenture, whether under
Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or
omissions of such Person not contemplated hereunder or under the other Operative
Documents, or acts or omissions of such Person which are in violation of any of
the Operative Documents, or (iii) Taxes imposed on or Claims against such Person
which are excluded from indemnification by Lessee, or (iv) Claims against such
Person arising out of the voluntary or involuntary transfer by such Person of
all or any portion of its interest in the Aircraft, the Airframe, any Engine,
the Trust Estate, the Trust Indenture Estate or the Operative Documents (except
a Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the Original Head Lessee and Parent Guarantor
severally agrees that it will promptly, at its own expense (and without any
right of indemnification or reimbursement from Lessee), take such action as may
be necessary duly to discharge any such Sublessor's Lien attributable to it or
other Lien or disposition of title created by or through Original Head Lessee,
Parent Guarantor, or any Affiliate of either thereof which would have
constituted a Sublessor's Lien had the Sublease remained in effect and to make
restitution to the Trust Estate and the Indenture Estate for any diminution of
the assets thereof resulting therefrom and will indemnify and hold harmless
Lessee and each Indemnitee against any claims incurred or suffered by any such
Person and any reduction in amounts payable out of, or diminution in the assets
of, the Trust Estate or the Indenture Estate resulting from any such Sublessor's
Lien attributable to it or other Lien or disposition of title created by or
through Original Head Lessee, Parent Guarantor, or any Affiliate of either
thereof which would have constituted a Sublessor's Lien had the Sublease
remained in effect.
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<PAGE> 53
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original
Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees with
Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement and (iii) not to terminate or revoke the Trust Agreement.
(b) Notwithstanding anything to the contrary in the Trust
Agreement, but subject always to the provisions of Section 14(c) hereof, Owner
Participant shall not consent to or direct a change in the situs of the Trust
Estate so long as a successor Owner Trustee meeting the requirements of the
Trust Agreement is reasonably available at the present situs of the Trust Estate
(A) unless the Indenture Trustee, the Original Head Lessee and Lessee shall have
been given 45 days' prior notice thereof and (B) if, within 45 days after notice
of such a proposed change is given to Lessee and the Original Head Lessee,
either (1) Lessee or Original Head Lessee delivers to Owner Participant and
Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which
counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee,
to the effect that such proposed change in the situs of the Trust Estate would
have an adverse effect on the rights or obligations of Lessee or Original Head
Lessee or (2) Lessee or Original Head Lessee delivers to Owner Participant and
Owner Trustee (at the expense of Owner Participant) an opinion of counsel, which
counsel shall be reasonably satisfactory to Owner Participant and Owner Trustee,
to the effect that such proposed change in the situs of the Trust Estate would
cause an increase in the amount for which Lessee may be required to indemnify
any Person pursuant to the provisions of Section 10 of the Lease or for which
Original Head Lessee is required to indemnify any Person pursuant to the
provisions of the Second Amended and Restated Head Lease TIA, unless any and all
Persons entitled to indemnification pursuant to Section 10 of the Lease or
applicable provision of the Second Amended and Restated Head Lease TIA shall
waive indemnification under Section
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<PAGE> 54
10 of the Lease or applicable provision of the Second Amended and Restated Head
Lease TIA for any adverse tax or other consequences to it of such a change in
the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner
Participant an opinion of counsel, which counsel shall be reasonably
satisfactory to Indenture Trustee, to the effect that such proposed change in
the situs of the Trust Estate would not have an adverse effect on the validity
or priority of the Lien of the Indenture and that such Uniform Commercial Code
and FAA filings as are required to maintain the validity and priority of the
Lien of Indenture have been made, and (D) such change does not affect the
registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to any
Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as
a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States of America from the state in which
it is then located, the situs of the trust shall be moved and Owner Participant
will take whatever action may be requested by Lessee that is reasonably
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification with respect to such change of situs and
request of Lessee as Original Head Lessee, Owner Participant or the Indenture
Trustee may reasonably request, (B) promptly after notice thereof Owner
Participant has not notified Lessee and provided reasonable evidence of an
adverse effect on Owner Participant's rights or obligations under the Trust
Agreement, (C) Indenture Trustee shall have received an opinion of counsel
selected by Lessee, which counsel shall be reasonably satisfactory to Indenture
Trustee, to the effect that the validity and priority of the Lien of the
Indenture Estate will not be adversely affected by such action, and that such
Uniform Commercial Code and FAA filings as are required to maintain the validity
and the priority of the Lien of the Indenture have been made, (D) Owner
Participant and Indenture Trustee shall have received an opinion or opinions of
counsel selected by Owner Participant to the effect that, with customary
exceptions, (I) the trust, as thus removed, shall remain a validly established
trust, (II) any amendments to the Trust Agreement or the Indenture necessitated
by such removal shall have been duly authorized, executed and delivered by the
parties thereto and shall constitute the legal, valid and binding obligations of
such parties, enforceable in accordance with their terms, (III) if such removal
involves the replacement of Owner Trustee, an opinion of counsel to such
successor Owner Trustee in form and substance reasonably satisfactory to
Indenture Trustee and to Owner Participant covering the matters described in the
opinion described in Section 3(j) hereof, and (IV) covering such other matters
as Owner Participant or the Indenture Trustee may reasonably request, and (E)
Lessee shall indemnify and hold
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harmless on an after tax basis Owner Trustee, Owner Participant and their
respective Affiliates and Indenture Trustee against any and all reasonable and
actual costs and expenses including reasonable attorneys' fees and
disbursements, registration, recording or filing fees and other Taxes incurred
by Owner Trustee, Owner Participant and their respective Affiliates, or
Indenture Trustee in connection with such change of situs and shall indemnify
and hold harmless Owner Participant, Owner Trustee and their respective
Affiliates, and Indenture Trustee on an after tax basis from and against any
increase in Taxes borne by such Person that results from such change in situs.
(d) Owner Trustee or any successor may resign or be removed by
Owner Participant, a successor Owner Trustee may be appointed, and a corporation
may become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that Owner
Participant has actual knowledge that Owner Trustee is not in compliance with
its covenants contained herein. No successor Owner Trustee shall be appointed
unless Lessee and Indenture Trustee shall have given written consent thereto,
which consent shall not be unreasonably withheld. Owner Participant will not
instruct Owner Trustee to terminate any Operative Document or take any action
thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Aircraft as contemplated hereby.
Lessee shall pay expenses relating to the resignation or, if requested by
Lessee, the removal of Owner Trustee, provided that the Owner Participant shall
pay expenses relating to the removal of the Owner Trustee, if such removal was
at the request of the Owner Participant.
(e) The Trust Company agrees that if at any time it shall
obtain actual knowledge that it has ceased to be or will likely cease to be a
Citizen of the United States, it will promptly resign as Owner Trustee (if and
so long as such citizenship is necessary under such Federal Aviation Act or any
other law to permit the continued registration of the Aircraft in the name of
the Lessor or, if it is not necessary, if and so long as Owner Trustee's
citizenship would have any material adverse effect on any holder of Equipment
Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of
the successor Owner Trustee in accordance with Section 10.1 of the Trust
Agreement.
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SECTION 15. Certain Retained Rights and Releases. (a) Each of
Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to
and confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Second Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head
Lessee and Parent Guarantor shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable for
all of its obligations under Sections 10 and 13 of the Sublease, with respect to
the period up to (but excluding) the Restatement Date and each of Parent
Guarantor, Original Head Lessee and Lessee shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the termination or expiration thereof (including, without
limitation, any such liability arising from and including the Restatement Date
under the Sublease in respect of the period up to (but excluding), or acts or
omissions or circumstances arising prior to (but excluding), the Restatement
Date), (ii) all rights, benefits, obligations and liabilities under the Sublease
TIA (which rights, benefits, obligations and liabilities are amended and
restated as of the Restatement Date) and (iii) Original Head Lessee and Parent
Guarantor shall remain liable to Sublessee under the Sublease and the Sublease
Guaranty for Sublessor's Liens (as therein defined); all of which rights,
benefits, obligations and liabilities shall expressly survive the termination of
the Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is
agreed that (x) Original Head Lessee shall continue to be liable to the
Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens and (y) Parent Guarantor is hereby released from any and all obligations
and liabilities under the Sublease Guaranty, other than in respect of the
obligations and liabilities of the Original Head Lessee in respect of
Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner Participant
agree as among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: (i) Owner Trustee,
Owner Participant and the other "Indemnitees" (as such term is defined in the
Sublease) other than Original Head Lessee and Parent Guarantor and (ii) the
Lessee shall retain all rights, benefits, obligations and liabilities under the
Sublease, including that Sublessee shall remain liable for all of its
obligations under Sections 10 and 13 of the Sublease, with respect to the period
up to (but excluding)
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<PAGE> 57
the Restatement Date and each of Lessee, Owner Trustee and Owner Participant
shall retain all rights and liabilities under any provision of the Sublease
which by the express terms thereof survives the termination thereof (including,
without limitation, any such liability arising on or after the Restatement Date
under the Sublease in respect of the period up to (but excluding), or acts or
omissions or circumstances arising prior to (but excluding) the Restatement
Date), all of which rights, benefits, obligations and liabilities shall
expressly survive the termination of the Sublease. In furtherance of the
foregoing, it is agreed by Sublessee that the indemnities contained in Sections
10 and 13 of the Sublease are expressly made for the benefit of and shall be
enforceable by each Indemnitee (as such term is defined in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA
to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent Guarantor shall, as of the Restatement Date, have no
liabilities or obligations under the "Operative Documents" (as defined in the
Original Head Lease as in effect immediately prior to the Restatement Date and
excluding the Head Lease TIA (which rights, benefits, obligations and
liabilities are amended and restated as of the Restatement Date)) and are
released from all such obligations and liabilities, except the Original Head
Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i)
shall continue to be liable to the parties hereto for the removal of any
Sublessor's Liens and (ii) (without releasing Sublessor as provided in the
Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner
Trustee, the Indenture Trustee and the Owner Participant agree as among
themselves and for the benefit of the other "Indemnitees" (as such term is
defined in the Original Head Lease) that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period up to (but excluding) the Restatement Date and under any
other provision of the Participation Agreement which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising from and including the Restatement Date under the
Participation Agreement in respect of the period up to (but excluding), or acts
or omissions or circumstances arising prior to (but excluding), the Restatement
Date) shall survive the termination of the Participation Agreement, the Original
Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights,
benefits, obligations and liabilities of Parent Guarantor and Original Head
Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In
furtherance of the foregoing, the parties hereto consent and agree that the
Parent Guarantor is hereby released from any and all "Obligations" under and as
defined in the Parent Head Lease Guaranty, except in respect of the Retained
Head Lease Rights and
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<PAGE> 58
Obligations and except in respect of the Second Amended and Restated Head Lease
TIA, the "Obligations" in respect of which shall continue in full force and
effect in accordance with the Parent Head Lease Guaranty and are hereby ratified
and confirmed by the Parent Guarantor.
SECTION 16. Certain Additional Obligations of the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee,
Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and
agrees for the benefit of each other that it will be bound by the terms of the
other Operative Documents to which it or its applicable trustee is a party, and
comply with and perform its agreements, covenants and indemnities set forth in
the other Operative Documents to which it or its applicable trustee is a party,
as amended, supplemented or otherwise modified from time to time as permitted
hereby.
SECTION 17. Lessee Protection of Title. Each of the Owner
Trustee and the Indenture Trustee agrees to execute and deliver such documents
or other instruments as the Lessee may reasonably request to enable the Lessee
to perform its obligations under Section 15 of the Lease for the benefit of such
Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee,
Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and
Lessee (i) hereby irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York in New York
County, and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service
of process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head
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<PAGE> 59
Lessee, Owner Participant and Indenture Trustee. Parent Guarantor hereby
appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John Howitt/Leigh
Ryan, located at 399 Park Avenue, New York, New York 10022, as its agent for
service of process, and covenants and agrees that service of process in any
suit, action or proceeding may be made upon it at the office of such agent or
such other office of Parent Guarantor or such other agent, as from time to time
may be designated by Parent Guarantor in writing to Owner Trustee, Owner
Participant and Indenture Trustee. Original Head Lessee hereby generally
consents to service of process by registered mail, return receipt requested,
addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury,
Connecticut 06810 or such other office of Original Head Lessee as from time to
time may be designated by Original Head Lessee in writing to Owner Trustee,
Owner Participant and Indenture Trustee. Owner Participant generally consents to
service of process by registered mail, return receipt requested, addressed to it
at _______________________________ or such other office of Owner Participant as
from time to time may be designated by Owner Participant in writing to Owner
Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner Trustee
generally consents to service of process by registered mail, return receipt
requested, addressed to it at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as from
time to time may be designated by Owner Trustee in writing to Owner Participant,
Original Head Lessee, Lessee and Indenture Trustee. Indenture Trustee generally
consents to service of process by registered mail, return receipt requested,
addressed to it at 450 West 33rd Street, New York, New York 10001 or such other
office of Indenture Trustee as from time to time may be designated in writing to
Owner Participant, Original Head Lessee, Owner Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has
not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of
Section 2.03(a) of the Indenture are hereby incorporated herein
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<PAGE> 60
by reference mutatis mutandis as fully and with the same force and effect as if
set forth in full.
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the Original
Head Lessee of invoices therefor in reasonable detail prior to the Restatement
Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by
the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee,
the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the
Original Certificate Holders in connection with the transactions contemplated by
this Agreement, the other Operative Documents, the Lease, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided therein)
shall be paid on or prior to the Closing by the Original Head Lessee, including,
without limitation:
(1) the reasonable fees, expenses and disbursements
allocable to the Equipment Notes issued under the Indenture of
(A) Shipman & Goodwin LLP, special counsel for the Pass
Through Trustee and the Subordination Agent, (B) Kelley Drye &
Warren LLP, special counsel for the Indenture Trustee, (C)
Morris, James, Hitchens & Williams, special counsel for the
Owner Trustee, (D) Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma and (E) Milbank, Tweed,
Hadley & McCloy, special counsel for the Underwriters;
(2) the reasonable fees, expenses and disbursements
of Morgan, Lewis & Bockius LLP, special counsel for the Owner
Participant;
(3) the fees, expenses and disbursements of Andrews &
Kurth L.L.P. and Latham & Watkins, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity
Provider, the Pass Through Trustee, the
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<PAGE> 61
Indenture Trustee, the Owner Trustee and the Subordination
Agent;
(6) the costs of filing and recording documents with
the FAA and filing Uniform Commercial Code financing
statements in the United States of America; and
(7) the reasonable fees, expenses and disbursements
of White & Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred to
in this Section 21.
(c) The Lessee agrees to pay the amounts it is obligated to
pay under Section 21(j) of the Lease.
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations and
warranties were made to the Liquidity Provider directly. The terms of this
Agreement shall inure to the benefit of the Liquidity Provider, its successors
and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or
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<PAGE> 62
provisions hereof. The terms of this Agreement shall be binding upon, and shall
inure to the benefit of, the Original Head Lessee and its successors and
permitted assigns, the Parent Guarantor and its successors and permitted
assigns, the Lessee and its successors and permitted assigns, the Pass Through
Trustee and its successors as Pass Through Trustee (and any additional trustee
appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee
and its successors as Indenture Trustee (and any additional Indenture Trustee
appointed) under the Indenture, the Subordination Agent and its successors as
Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement, and the Owner Participant
and its successors and permitted assigns. No purchaser or holder of any
Equipment Notes shall be deemed to be a successor or assign of any holder of the
Original Certificates.
(b) Upon the release of the Aircraft from the lien of the
Indenture and the termination of the Indenture pursuant to and in accordance
with Section 10.01 thereof, each requirement in the Operative Documents that the
consent of Indenture Trustee be obtained or that the Indenture Trustee be given
notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that this
Agreement shall be effective among all such parties on and as of the Restatement
Date.
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<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:______________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA SUB I, INC.
By:______________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:______________________________
Name:
Title:
Address: GPA House
Shannon, County Clare
Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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<PAGE> 64
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner Trustee
By:______________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust
Administration
[_________________________]
By:______________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
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<PAGE> 65
THE CHASE MANHATTAN BANK,
not in its individual
capacity, except as
otherwise provided herein,
but solely as Indenture
Trustee
By:_______________________________
Name:
Title:
Address: 450 West 33rd Street
New York, New York 10001
Telephone: (212) 946-3348
Telecopier: (212) 946-8160
Attention: Corporate Trust
Department
FLEET NATIONAL BANK, not in
its individual capacity,
except as otherwise
provided herein, but solely
as Subordination Agent
By:______________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust
Administration
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<PAGE> 66
FLEET NATIONAL BANK, not in
its individual capacity,
except as otherwise
provided herein, but solely
as Pass Through Trustee
By:_______________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust
Administration
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<PAGE> 67
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1D, dated November 26, 1996.
<PAGE> 68
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
- ------------ ----------- ----------- -------- ------------
<S> <C> <C> <C> <C>
Class A $11,936,662 02-Jan-2006 6.85% $ 11,936,662
Class B $ 4,476,246 02-Jul-2002 6.93% $ 4,476,246
Class C $ 4,476,247 02-Jan-2002 6.86% $ 4,476,246
Class D $ 3,575,831 02-Jul-98 8.16% $ 3,575,831
</TABLE>
<PAGE> 69
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn:
Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet
National Bank Account No. ABA #011900445, ACCT. # 0067548290.
<PAGE> 70
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1989 BN-10]
TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-10], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, [______________________], a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1989 BN-10], dated as of November 20, 1996 among Lessee, Original Head
Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee,
Subordination Agent and Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of
Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms defined in the Refunding
Agreement are used herein as therein defined, unless otherwise defined herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably guarantees to
Beneficiaries and their respective successors, endorsees, transferees and
assigns, the prompt and complete payment by Transferee when due (whether at the
stated maturity,
<PAGE> 71
by acceleration or otherwise) of, and the faithful performance of, and
compliance with, all payment obligations of Transferee under the Refunding
Agreement, the Second Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party and each other
Operative Document to which Transferee is a party or by which either is bound
(collectively, the "Relevant Documents"), strictly in accordance with the terms
thereof and the timely performance of all other obligations of Transferee
thereunder (such payment and other obligations, the "Obligations"), and
Guarantor further agrees to pay any and all expenses (including, without
limitation, all fees and disbursements of counsel) that may be paid or incurred
by Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any
rights with respect to, or collecting, any or all of the Obligations and/or
enforcing any rights with respect to, or collecting against, Guarantor under
this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any other
guarantor or any other Person or received or collected by any Beneficiary from
Transferee, Guarantor, any other guarantor or any other person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of Guarantor
hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or observed by
Transferee (whether affirmative or negative in character) shall not be observed
or performed, or if any amount payable by Transferee referred to in Section 1(a)
hereof shall not be paid promptly when due and payable, Guarantor shall promptly
perform or observe or cause to be performed or observed each such Obligation or
undertaking and shall forthwith pay such amount at the place and to the person
or entity entitled thereto pursuant to the Relevant Documents regardless of
whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through
Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of
them shall have instituted any suit, action or proceeding or exhausted its
remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments made by
Guarantor hereunder or any setoff or application of funds of Guarantor by any
Beneficiary, Guarantor shall not be entitled to be subrogated to any of the
rights of any Beneficiary against Transferee or any collateral, security or
guarantee or right of set-off held by any Beneficiary for the payment of the
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<PAGE> 72
Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement
from Transferee in respect of payments made by Guarantor hereunder, until all
amounts and performance owing to Beneficiaries by Transferee on account of the
Obligations are paid and performed in full.
4. Amendments, etc., with respect to the Obligations; Waiver of Rights.
The Guarantor shall remain fully obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor and without notice to or
further assent by the Guarantor, any demand for payment or performance of any of
the Obligations made by any Beneficiary may be rescinded by such party and any
of the Obligations continued, and the Obligations, or the liability of any other
party upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not assign, convey
or otherwise transfer to any person (a) any of its interest in Transferee unless
in connection therewith, Guarantor assigns its rights and obligations hereunder
to a guarantor which meets the requirements of Section 10 of the
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<PAGE> 73
Refunding Agreement; provided that nothing contained in this Section 5 shall be
construed to prohibit any merger, consolidation or other corporate restructuring
of Transferee or Guarantor so long as the resulting corporation meets the
requirements of Section 10 of the Refunding Agreement and assumes the
obligations of the corporation merged or consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by any Beneficiary upon this Guarantee or
acceptance of this Guarantee; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon this Guarantee; and all dealings
between the Transferee or the Guarantor and any Beneficiary shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Transferee or the
Guarantor with respect to the Obligations. The Guarantor understands and agrees
that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance (and not merely of
collectibility) without regard to (a) the validity, regularity or enforceability
of any Relevant Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Transferee against any Beneficiary,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Transferee or the Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of the Transferee for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Transferee or any other person or
entity or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Beneficiary to
pursue such other rights or remedies or to collect any payments from the
Transferee or any such other person or entity or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Transferee or any such other person or entity or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of any
Beneficiary against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in
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<PAGE> 74
accordance with and to the extent of its terms upon the Guarantor and the
successors and assigns thereof, and shall inure to the benefit of the
Beneficiaries, and their respective successors, endorsees, transferees and
assigns, until all of the Obligations and the Obligations of the Guarantor under
this Agreement shall have been satisfied by payment and performance in full. The
Guarantor further agrees that, without limiting the generality of this
Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by
applicable law from exercising its remedies (or any of them) against the
Transferee under any Operative Document, such Beneficiary (or any assignee
thereof) shall be entitled to receive hereunder from the Guarantor, upon demand
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Transferee or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Transferee or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made. The
Guarantor shall not commence any "case" (as defined in Title 11 of the United
States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments hereunder shall
be paid without set-off, counterclaim, deduction or withholding except as
required by law or regulation. If any payment hereunder is subject to deduction
or withholding, Guarantor shall pay an additional amount such that, after
deduction of all amounts required to be deducted or withheld, the net amount
actually received will equal the amount that would have been received had such
deduction or withholding not been required (provided that the recipients of any
payments hereunder shall not be entitled to receive any greater amount than if
Transferee had made such payment).
9. Representations and Warranties. The Guarantor hereby represents and
warrants that:
(a) the Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it operates
and to conduct the business in which it is currently engaged;
(b) the Guarantor has the corporate power and authority and the
legal right to execute and deliver, and to
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<PAGE> 75
perform its obligations under, this Guarantee, and has taken all necessary
corporate action to authorize its execution, delivery and performance of
this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding obligation
of the Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally;
(d) the execution, delivery and performance of this Guarantee will
not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the creation
or imposition of any lien on any of the properties or revenues of the
Guarantor pursuant to any requirement of law or contractual obligation of
the Guarantor;
(e) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or governmental authority and no consent of
any other person (including, without limitation, any stockholder or
creditor of the Guarantor) is required in connection with the execution,
delivery, performance, validity or enforceability of this Guarantee;
(f) no litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of
the Guarantor, threatened by or against the Guarantor or against any of
its properties or revenues (i) with respect to this Guarantee or any of
the transactions contemplated hereby or (ii) that could have a material
adverse effect on the business, operations, property or financial or other
condition of the Guarantor;
(g) the balance sheet of the Guarantor as at _________________ and
the related statement of income and retained earnings for the fiscal year
then ended (copies of which have heretofore been furnished to each
Beneficiary) have been prepared in accordance with generally accepted
accounting principles applied consistently throughout the period involved,
are complete and correct and present fairly the financial condition of the
Guarantor as at such date and the results of its operations for such
fiscal year; since such date there has been no material adverse change in
the business, operations, property or financial or other condition of the
Guarantor; the Guarantor has no material contingent obligation, contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment that is not reflected in the foregoing statements or
in the notes thereto; and
- 6 -
<PAGE> 76
(h) the Guarantor is [type of legal personality] with a net worth of
at least $60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act
(except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any
Beneficiary, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire agreement of
Guarantor with respect to the subject matter hereof and there are no promises or
representations by any Beneficiary relative to the subject matter hereof not
reflected herein.
13. Amendments and Waivers. None of the terms or provisions of this
Guarantee may be waived, amended or supplemented or otherwise modified except by
a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this Guarantee are for
convenience of reference only and not to affect the construction hereof or be
taken into consideration in the interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding upon the
successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
- 7 -
<PAGE> 77
17. Notices. All notices, requests and demands to or upon the Guarantor or
any Beneficiary to be effective shall be in writing or by telegraph, telex or
telecopy and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or, in the case of mail,
two days after deposit in the postal system, first class postage pre-paid, or,
in the case of telegraphic notice, when sent, answerback received, addressed to
(a) in the case of the Guarantor, the address provided on the signature page
hereof, and (b) in the case of any Beneficiary, the address provided for such
party in the Refunding Agreement.
- 8 -
<PAGE> 78
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly
executed and delivered by its duly authorized officer as of the day and the year
first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
- 9 -
<PAGE> 79
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1989 BN-10]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-10] ("Assignment")
dated as of _____________, between ______________, a ___________ corporation
("Assignor") and ________________, a __________ corporation ("Assignee") entered
into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee
and Lessee referred to in the Refunding Agreement mentioned below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer by
Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
[____________________], Fleet National Bank, as Subordination Agent, and The
Chase Manhattan Bank, as Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement"), (ii) the Trust Agreement
identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the
Trust Agreement), (iv) the Second Amended and Restated Head Lease TIA identified
in the Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture
(as defined in the Refunding Agreement) and (b) the assumption by Assignee of
the obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the meaning ascribed thereto in the Refunding Agreement. For purposes
of this Assignment, the defined term "Operative Document" shall have the meaning
ascribed thereto in the Refunding Agreement and shall be deemed to include the
Second Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned, transferred
and set over, and does hereby sell, convey, assign, transfer and set over, unto
Assignee, as of the date hereof, all of its right, title and interest in, under
and with respect to the Refunding Agreement, the Trust Agreement, the Trust
Estate, the Second Amended and Restated Head Lease TIA, the Indenture, all of
the other Operative Documents to which Assignor is a party or any other
contract, agreement, document or instrument relating to the Trust Estate by
which Assignor is bound, and any proceeds therefrom, together with all other
documents and instruments evidencing any of such right, title and interest,
except such
<PAGE> 80
rights of Assignor as have accrued to Assignor prior to the date hereof
(including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust Agreement as of a date prior
to such date and the right to receive any indemnity payment pursuant to the
Refunding Agreement or the Lease with respect to events occurring prior to such
date).
3. Assumption. Assignee hereby undertakes all of the duties and
obligations of Assignor whenever accrued (other than duties and obligations of
Assignor required to be performed by it on or prior to the date hereof under the
Operative Documents to which Owner Participant is a party and any of the other
Operative Documents by which Assignor is bound or any other contract, agreement,
document or other instrument relating to the Trust Estate to which Assignor is a
party or by which it is bound), pursuant to the Trust Agreement and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound, and hereby confirms that it shall
be deemed a party to the Trust Agreement and shall be bound by each of the other
Operative Documents and each other contract, agreement, document or other
instrument relating to the Trust Estate to which Assignor is a party or by which
it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the within
assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
compromise at the expense of Assignee any and all actions, suits
- 2 -
<PAGE> 81
or proceedings as to title to or interest in any of the property acquired by
Assignee; and to do all such acts and things in relation thereto at the expense
of Assignee as Assignee shall reasonably deem advisable. Assignor hereby
acknowledges that this appointment is coupled with an interest and is
irrevocable by Assignor in any manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay over to
Assignee, if and when received following the date hereof, any amounts (including
any sums payable as interest in respect thereof) paid to or for the benefit of
Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby
covenants and agrees to pay over to Assignor, if and when received following the
date hereof, any amounts (including any sums payable as interest in respect
thereof) paid to or for the benefit of Assignee that, under Section 2 hereof,
belong to Assignor.
7. Investment Purpose. Assignee hereby represents that it is
acquiring the Trust Estate interests and other interests hereby assigned to it
for its own account for the purpose of investment and not with a view to the
distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents and warrants
that:
(a) it has all requisite power and authority and legal right to
enter into and carry out the transactions contemplated hereby and to carry
out and perform the transactions of Owner Participant as contemplated by
the Operative Documents;
(b) on the date hereof it is a "citizen of the United States" within
the meaning of Section 40102(a)(15) of the Federal Aviation Act and the
rules and regulations of the FAA thereunder;
(c) on and as of the date hereof, the representations and warranties
of Owner Participant set forth in Section 9 of the Refunding Agreement and
as set forth in any other Agreement to which Owner Participant is a party
are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of the Refunding
Agreement;
(e) Assignee or its guarantor has a net worth of not less than
$60,000,000.
- 3 -
<PAGE> 82
9. Governing Law. This Assignment and Assumption Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
- 4 -
<PAGE> 83
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:___________________________________
Title:
[ASSIGNEE]
By:___________________________________
Title:
- 5 -
<PAGE> 84
EXHIBIT C to
REFUNDING AGREEMENT
LIST OF COUNTRIES
Australia
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Japan
Luxembourg
Netherlands
New Zealand
Norway
Singapore
South Korea
Sweden
Switzerland
United Kingdom
<PAGE> 85
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 86
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1989 BN-10] No. 3 dated November 26,
1996 (the "Trust Agreement Supplement") between the Owner Trustee
and the Owner Participant, amending the Trust Agreement, which Trust
Agreement Supplement was filed at 12:20 p.m., C.S.T. on November 26,
1996;
(b) Second Amended and Restated Trust Indenture and Security Agreement
[GPA 1989 BN-10] dated as of November 26, 1996 (the "Amended and
Restated Indenture") between the Owner Trustee and the Indenture
Trustee, amending and restating the Original Indenture with attached
thereto Trust Agreement and Indenture Supplement No. 3 [GPA 1989
BN-10] dated November 26, 1996 (the "Indenture Supplement") , with
respect to the Aircraft, which Amended and Restated Indenture with
the Indenture Supplement attached was filed with the FAA at 12:21
p.m., C.S.T. on November 26, 1996;
(c) Assignment and Amendment No. 1 and Sublease Termination Agreement
dated as of November 26, 1996 (the "Lease Amendment") among the
Original Head Lessee, as assignor, the Owner Trustee, as lessor, the
Lessee, as successor lessee, and the Indenture Trustee, which (i)
assigns all right, title and interest of the original Head Lessee in
and to the Original Head Lease to the Lessee, (ii) terminates the
Sublease and (iii) releases the Sublease Collateral Assignment,
which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T.
on November 26, 1996; and
(d) Second Amended and Restated Aircraft Lease Agreement [GPA 1989
BN-10] dated as of December 19, 1989, amended and restated as of
October 1, 1991 and amended and restated as of November 26, 1996
(the "Amended and Restated Lease") between the Owner Trustee, as
lessor, and the Lessee, as successor lessee, amending and restating
the Original Head Lease with Lease Supplement [GPA 1989 BN-10] No. 3
dated November 26, 1996 (the "Lease Supplement") between the Owner
Trustee, as lessor, and the Lessee, as successor lessee, with
respect to the Aircraft, attached thereto, which Amended and
Restated Lease with the Lease Supplement attached was filed with the
FAA at 12:23 p.m., C.S.T. on November 26, 1996.
<PAGE> 87
Trust Agreement
Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989 between
[____________________], as owner participant, and Wilmington Trust Company, as
owner trustee, as supplemented by Trust Agreement Supplement [GPA 1989 BN-10]
No. 1 dated December 22, 1989 and Trust Agreement Supplement [GPA 1989 BN-10]
No. 2 dated October 24, 1991.
Original Indenture
Trust Indenture and Security Agreement [GPA 1989 BN-10] dated as of
December 19, 1989 between Wilmington Trust Company, as trustee under Trust
Agreement [GPA 1989 BN-10] dated as of December 19, 1989, and The Chase
Manhattan Bank, as successor by merger to Chemical Bank, formerly Manufacturers
Hanover Trust Company, as indenture trustee, which was recorded by the Federal
Aviation Administration on December 27, 1989 and assigned Conveyance No. S86321,
as supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- --------------------------------------------
<S> <C> <C> <C>
Trust Indenture
Supplement No. 1 12/22/89 12/27/89 S86321
Amended and Restated
Trust Indenture and
Security Agreement as of
[GPA 1989 BN-10] 10/01/91 10/25/91 Q52003
Trust Indenture
Supplement No. 2
[GPA 1989 BN-10] 10/24/91 10/25/91 Q52003
</TABLE>
Original Head Lease
Aircraft Lease Agreement [GPA 1989 BN-10] dated as of December 19, 1989
between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989
BN-10] dated as of December 19, 1989, as lessor, and GPA Leasing USA Sub I,
Inc., as lessee, which was recorded by the Federal Aviation Administration on
December 27, 1989 and assigned Conveyance No. S86322, as supplemented and
amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- --------------------------------------------
<S> <C> <C> <C>
Lease Supplement
[GPA 1989 BN-10]
No. 1 12/22/89 12/27/89 S86322
</TABLE>
Amended and Restated
- 2 -
<PAGE> 88
<TABLE>
<S> <C> <C> <C>
Aircraft Lease Agree- as of
ment [GPA 1989 BN-10] 10/01/91 10/25/91 Q52004
Lease Supplement
[GPA 1989 BN-10]
No. 2 10/24/91 10/25/91 Q52004
</TABLE>
Sublease
Aircraft Sublease Agreement [GPA 1989 BN-10] dated as of September
21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and America West
Airlines, Inc., as sublessee, which was recorded by the Federal Aviation
Administration on October 2, 1990 and assigned Conveyance No. F53827, as
supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- --------------------------------------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 09/28/90 10/02/90 F53827
Amendment No. 1 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-10] 06/25/91 07/15/91 X116207
Amendment No. 2 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-10] 08/26/91 09/11/91 KK15641
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease and Sublessee Consent and Agreement [GPA 1989
BN-10] dated as of September 21, 1990 between GPA Leasing USA Sub I, Inc., as
assignor, and Wilmington Trust Company, as trustee under Trust Agreement [GPA
1989 BN-10] dated as of December 19, 1989, as assignee, which was attached to
and recorded as one instrument with the Sublease on October 2, 1990 and assigned
Conveyance No. F53827, as amended by Amendment No. 1 to Assignment of Sublease
and Sublessee Consent and Agreement [GPA 1989 BN-10] dated as of October 1,
1991, which was recorded by the Federal Aviation Administration on October 25,
1991 and assigned Conveyance No. Q52005.
- 3 -
<PAGE> 1
Exhibit 4.14
- --------------------------------------------------------------------------------
REFUNDING AGREEMENT
[GPA 1989 BN-12]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA SUB I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
[----------------------------],
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 82
Registration No. N633AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Purchase of Equipment Notes; Refunding......................... 5
SECTION 2. Equipment Notes................................................ 7
SECTION 3. Conditions Precedent........................................... 7
SECTION 4. Certain Conditions Precedent to the
Obligations of the Original Head Lessee
and the Parent Guarantor; Certain
Conditions Precedent to the Obligations
of the Lessee; Conditions Precedent
with respect to the Pass Through
Trustee...................................................... 15
SECTION 5. Amendment and Restatement of the
Original Indenture........................................... 19
SECTION 6. Amendment and Restatement of the
Original Lease............................................... 19
SECTION 7. Termination of the Participation
Agreement; Termination of Sublease,
etc.......................................................... 19
SECTION 8. Representations and Warranties of the
Lessee....................................................... 19
SECTION 9. Representations and Warranties................................. 24
SECTION 10. Transfer of Owner Participant's
Interest..................................................... 41
SECTION 11. Re-Registration of the Aircraft................................ 44
SECTION 12. Quiet Enjoyment................................................ 47
SECTION 13. Liens ......................................................... 47
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent
Guarantor, Trust Company, Owner Trustee
and Owner Participant........................................ 49
SECTION 15. Certain Retained Rights and Releases........................... 52
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 16. Certain Additional Obligations of the
Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee........................ 54
SECTION 17. Lessee Protection of Title..................................... 54
SECTION 18. Jurisdictional and Related Matters............................. 55
SECTION 19. Limitation on Recourse......................................... 56
SECTION 20. Notices .................................................... 56
SECTION 21. Expenses .................................................... 56
SECTION 22. Reliance of Liquidity Provider................................. 57
SECTION 23. Miscellaneous.................................................. 58
SECTION 24. Governing Law.................................................. 59
SECTION 25. Effectiveness.................................................. 59
</TABLE>
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1989 BN-12]
REFUNDING AGREEMENT [GPA 1989 BN-12] (this "Agreement"), dated
as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) [________________ _____________],
a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY,
a Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
four separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank, successor by merger to Manufacturers Hanover
Trust Company), a New York corporation, not in its individual capacity except as
otherwise expressly provided herein, but solely as Indenture Trustee (the
"Indenture Trustee") under the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Manufacturers Hanover Trust Company and The Mitsubishi Trust
and Banking Corporation, Grand Cayman Branch, as Lenders (collectively, the
"Lenders"), the Owner Trustee and the Indenture Trustee entered into the
Participation Agreement [GPA 1989 BN-12], dated as of December 19, 1989 (as
amended, supplemented or otherwise modified from time to time, the
"Participation Agreement"), providing for the financing of one Airbus A320-231
aircraft (the "Aircraft");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Trust Indenture and Security Agreement [GPA 1989 BN-12], dated as of
December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 dated
December
<PAGE> 5
28, 1989 (as amended, supplemented or otherwise modified to the date hereof, the
"Original Indenture"), pursuant to which the Owner Trustee issued loan
certificates substantially in the form set forth in Section 2.02 thereof (the
"Original Certificates") to the Lenders as evidence of the indebtedness then
being made by the Owner Trustee to finance a portion of the purchase price of
the Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1989 BN-12], dated as of December 19,
1989, as supplemented by Lease Supplement [GPA 1989 BN-12] No. 1 dated December
28, 1989, and as further supplemented by Lease Supplement No. 2 dated as of
December 31, 1991 (as so supplemented, the "Original Lease"), whereby, subject
to the terms and conditions set forth therein, the Owner Trustee agreed to lease
to the Original Head Lessee, and the Original Head Lessee agreed to lease from
the Owner Trustee, the Aircraft commencing on the Delivery Date (as therein
defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1989 BN-12] dated as of December 19, 1989 (the "Parent Head Lease
Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent
Guarantor guaranteed all of the obligations of the Original Head Lessee under
the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1989 BN-12], dated as of December 19, 1989, as
supplemented by Trust Agreement Supplement [GPA 1989 BN-12] No. 1 dated December
28, 1989 (as amended, supplemented or otherwise modified to the date hereof, the
"Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.1 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1989 BN-12],
dated as of December 19, 1989 (as amended, supplemented or otherwise modified to
the date hereof, the "Head Lease TIA");
WHEREAS, the Original Head Lessee in its capacity as
sublessor (in such capacity, the "Sublessor") and America West
Airlines, Inc. in its capacity as sublessee (in such capacity,
- 2 -
<PAGE> 6
the "Sublessee") entered into the Aircraft Sublease Agreement [GPA 1989 BN-12]
dated as of September 21, 1990, as supplemented by Sublease Supplement No. 1
[GPA 1989 BN-12] dated September 28, 1990, and as amended by Amendment No. 1 to
Aircraft Sublease Agreement [GPA 1989 BN-12] dated as of June 25, 1991, and as
further amended by Amendment No. 2 to Aircraft Sublease Agreement [GPA 1989
BN-12] dated as of August 26, 1991 (as amended, supplemented or otherwise
modified to the date hereof, the "Sublease"), whereby, subject to the terms and
conditions set forth therein, the Sublessor agreed to sublease to the Sublessee,
and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing
on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1989
BN-12] dated as of September 21, 1990 (as amended, modified or otherwise
supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the
Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of
the Original Head Lessee under Section 21(f) of the Sublease;
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1989 BN-12], dated as of September 21, 1990
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease [GPA 1989 BN-12] dated as of September 21, 1990 (as amended, modified
or otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will amend and restate the Original Indenture as the
First Amended and Restated Trust Indenture and Security Agreement [GPA 1989
BN-12], dated as of the Restatement Date, as supplemented by Trust Indenture
Supplement No. 2 dated the Restatement Date (the "First Amended and Restated
Indenture" and, the First Amended and Restated Indenture as so amended and
restated, the "Indenture"), under which Indenture the Owner Trustee will issue
secured equipment notes substantially in the form set forth in Section 2.01
thereof (the "Equipment Notes") in four series, the proceeds from the issuance
and sale of which will be applied in part to the prepayment in full of the
Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease
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<PAGE> 7
Amendment No. 1") containing assignments, modifications and terminations
necessary to give effect to the transactions described herein and providing,
inter alia, for the amendment and restatement in its entirety of the Original
Lease as the Amended and Restated Lease (as so amended and restated, the
"Lease");
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-12] No. 2
("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended
and as further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Amended and Restated Head Lease Tax
Indemnification Agreement, amending and restating the Head Lease TIA (as so
amended and restated, the "Amended and Restated Head Lease TIA") and the
Sublessor and the Sublessee will enter into the Amended and Restated Sublease
Tax Indemnification Agreement amending and restating the Sublease TIA (as so
amended and restated, the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
four separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving credit agreements
(each, a "Liquidity Facility"), for the benefit of the Holders of Equipment
Notes of each of three Pass Through Trusts, with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination
Agent will enter into the Intercreditor Agreement,
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<PAGE> 8
dated as of the Restatement Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject
to the satisfaction or waiver of the conditions set forth herein, on November
26, 1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as a
payment of Supplemental Rent under the Sublease all accrued and unpaid
Rent under the Sublease up to the Restatement Date, if any, (less any
amounts for which Sublessee is indemnified by Sublessor) and (B) the
Original Head Lessee shall pay to the Owner Trustee, as a payment of
Supplemental Rent under the Original Lease, an amount equal to the
accrued and unpaid interest on the Original Certificates up to but not
including the Restatement Date plus an amount (the "Prepayment Amount")
equal to all other amounts due to the holders of the Original
Certificates under the Original Indenture, the Original Certificates
and the other Operative Documents (as defined in the Original
Indenture) payable on the Restatement Date under Section 2.13 of the
Original Indenture;
(ii) the Pass Through Trustee for each Pass Through Trust
shall pay to the Owner Trustee the aggregate purchase price of the
Equipment Notes being issued to such Pass Through Trustee as set forth
in clause (xii) below;
(iii) the Owner Trustee (to the extent of proceeds received
under clauses (i) and (ii)) shall pay to the Indenture Trustee for the
benefit of the holders of the Original Certificates an amount equal to
the aggregate principal amount of the Original Certificates outstanding
on the Restatement Date, together with accrued and unpaid interest on
the Original Certificates up to but not including the Restatement Date
plus the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the holders
of the Original Certificates the amounts of
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<PAGE> 9
principal, interest, Break Funding Cost, if any, described in clause
(iii) above, owing to them on the Restatement Date with respect to the
Original Certificates as a prepayment of the Original Certificates;
(v) the Indenture Trustee shall receive the Original
Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture (including Trust Indenture Supplement No. 2);
(vii) the Original Head Lessee, the Sublessee, the Owner
Trustee and the Indenture Trustee shall enter into Lease Amendment No.
1;
(viii) the Owner Participant and the Trust Company shall
enter into Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner Participant shall
enter into the Amended and Restated Head Lease TIA and the Sublessor
and the Sublessee shall enter into the Amended and Restated Sublease
TIA;
(x) the Original Head Lessee, GPA Leasing USA I, Inc., the
Parent Guarantor and the Lessee shall enter into an agreement in form
and substance reasonably satisfactory to each, inter alia, confirming
the termination of certain rights which the Parent Guarantor has to
"put" aircraft to the Lessee and the obligation of the Lessee to accept
and lease such aircraft (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of its
affiliates and the Lessee will enter into an agreement (the "Deed of
Indemnity") pursuant to which the Parent Guarantor and/or one or more
of its affiliates, on the one hand, and the Lessee, on the other, will
indemnify each other with respect to certain information included in
the Prospectus and the Registration Statement (as such terms are
defined in the Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Equipment Notes of the
maturity and aggregate principal amount, bearing the interest rate and
for the purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust.
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<PAGE> 10
(b) The Owner Participant, by its execution and delivery
hereof, requests and directs the Owner Trustee to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions contemplated
herein.
(c) The closing (the "Closing") of the transactions described
in this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement
Date, or at such other place as the parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated
hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor
and the Lessee have entered into the Underwriting Agreement, dated as of
November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan
Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon
Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and
conditions hereof, the Lessee will enter into each of the Pass Through Trust
Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be
payable as to principal in accordance with the terms of the Indenture, and the
Equipment Notes shall provide for a fixed rate of interest per annum and shall
contain the terms and provisions provided for the Equipment Notes in the
Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Equipment Notes bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Equipment Notes in the aggregate shall be in the principal amounts set forth on
Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust
Agreements and of the other Operative Documents, all such Equipment Notes shall
be dated and authenticated as of the Restatement Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass
Through Trustee to make the payments described in Section 1(a)(ii) and the
obligations of the Owner Trustee to make the payments described in Section
1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner
Trustee, the Owner Participant and the Indenture Trustee to participate in the
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<PAGE> 11
transactions contemplated by this Agreement on the Restatement Date are subject
to the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent (except that paragraphs (a), (f) and (j) shall not be
conditions precedent to the obligations of the Owner Trustee hereunder,
paragraphs (g) and (l) shall not be conditions precedent to the obligations of
the Owner Participant hereunder and paragraphs (e) and (k) shall not be
conditions precedent to the obligations of the Indenture Trustee hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes
to the Indenture Trustee for authentication, and the Indenture Trustee
shall have authenticated such Equipment Notes and shall have tendered
the Equipment Notes to the Subordination Agent on behalf of the Pass
Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of
the following documents and the Indenture Trustee shall have received
executed counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 3;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and
Trust Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements
and each Pass Through Trust Supplement set
forth in Schedule I hereto;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the
Class A, Class B and Class C Trusts (as
defined in the Intercreditor Agreement).
(c) The Pass Through Trustee, the Indenture Trustee,
the Owner Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of each of the Original
Head Lessee, the Lessee and the Parent Guarantor as to the
person or persons authorized to execute and deliver this
Agreement and each of the
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<PAGE> 12
other documents to be executed on behalf of such Person in
connection with the transactions contemplated hereby
(including, without limitation, each of the documents referred
to herein) and as to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of each of the Original Head Lessee, the Lessee and
the Parent Guarantor or the applicable committee thereof,
certified by the Secretary or an Assistant Secretary of such
Person, duly authorizing the transactions contemplated hereby
and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of
such Person in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of
each of the Original Head Lessee and the Lessee, certified by
the Secretary of State of its state of incorporation, a copy
of the by-laws of each of the Original Head Lessee and the
Lessee, certified by the Secretary or Assistant Secretary of
such Person, and a certificate or other evidence from the
Secretary of State of its state of incorporation, dated as of
a date reasonably near the Restatement Date, as to its due
incorporation and good standing in such state; and
(4) a copy of the Memorandum and Articles of
Association of the Parent Guarantor certified to be true and
correct by the Secretary or an Assistant Secretary of the
Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case
of (1), (5) and (6) below, a certificate signed by an authorized
officer of the Lessee and, in the case of (2), (3) and (4) below, a
certificate signed by an authorized officer of the Original Head
Lessee, dated the Restatement Date, certifying that:
(1) the Aircraft has been duly certified by the
FAA as to type and airworthiness and has a current,
valid certificate of airworthiness;
(2) the Aircraft FAA Bill of Sale (as defined in
the Participation Agreement), the Original Lease
(excluding Lease Supplement No. 2) and the Original
Indenture have each been duly recorded, and the
Original Trust Agreement has been duly filed, with the
FAA pursuant to the sections of Title 49 of the United
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<PAGE> 13
States Code relating to aviation (the "Federal Aviation
Act");
(3) Lease Amendment No. 1, the Amended and
Restated Lease, Lease Supplement No. 3, the First
Amended and Restated Indenture, Trust Indenture
Supplement No. 2 and Trust Supplement No. 2 covering
the Aircraft shall have been duly filed for recordation
with the FAA pursuant to the Federal Aviation Act;
(4) the Aircraft has been registered with the FAA
in the name of the Owner Trustee;
(5) the Lessee has authority to operate the
Aircraft; and
(6) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the
Secretary, an Assistant Secretary or other appropriate officer
of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Indenture Trustee, each certified by the Secretary, an
Assistant Secretary or other appropriate officer of the
Indenture Trustee; and
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<PAGE> 14
(4) a certificate signed by an authorized officer of
the Indenture Trustee, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Indenture Trustee are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as
to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Trustee in connection with the
transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-
laws of the Owner Trustee, each certified by the
Secretary or an Assistant Secretary of the Owner
Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
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<PAGE> 15
(1) an incumbency certificate of the Owner
Participant as to the person or persons authorized to execute
and deliver this Agreement and each of the other documents to
be executed on behalf of the Owner Participant in connection
with the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Participant or the applicable authority
designated by the board of directors thereof, certified by the
Secretary or an Assistant Secretary of the Owner Participant,
duly authorizing the transactions contemplated hereby and the
execution, delivery and performance of each of the documents
required to be executed and delivered on behalf of the Owner
Participant in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of the
Owner Participant, certified by the Secretary of State of its
state of incorporation, a copy of the by-laws of the Owner
Participant, certified by the Secretary or Assistant Secretary
of the Owner Participant, and a certificate or other evidence
from the Secretary of State of its state of incorporation,
dated as of a date reasonably near the Restatement Date, as to
its due incorporation and good standing in such state; and
(4) a certificate signed by an authorized
representative of the Owner Participant, dated the Restatement
Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as
though made on and as of the Restatement Date, except to the
extent that such representations and warranties relate solely
to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the
Lessee a report from Willis Corroon in substantially the form of
Exhibit D attached hereto.
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion
addressed to it from (i) Latham & Watkins, special counsel for the
Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee,
(iii) the
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<PAGE> 16
Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca,
special Arizona counsel for the Lessee, in each case in form and
substance satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received an opinion addressed to it
from Morris, James, Hitchens & Williams, special counsel for the Owner
Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from
(i) Kelley, Drye & Warren LLP, special counsel for the Indenture
Trustee, and (ii) Shipman & Goodwin LLP, special counsel for the
Subordination Agent and the Pass Through Trustee, in each case in form
and substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received an opinion addressed to it from
(i) Hunton & Williams, special counsel for the Owner Participant and
(ii) in-house counsel for the Owner Participant, in each case in form
and substance satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case,
special counsel for the Liquidity Provider, and (ii) in-house counsel
for the Liquidity Provider, in each case in form and substance
satisfactory to the Pass Through Trustee, the Owner Trustee and the
Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma, in form and substance satisfactory
to each of them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP,
special New York counsel for the Original Head Lessee and the Parent
Guarantor, in form and substance satisfactory to each of them.
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from McCann FitzGerald, special Irish counsel
for the Parent Guarantor, in form and substance satisfactory to each of
them.
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<PAGE> 17
(q) The Original Head Lessee, the Lessee, GPA Leasing USA I,
Inc. and the Parent Guarantor shall have entered into the Underwriting
Agreement and the Lessee shall have entered into each of the Pass
Through Trust Agreements, the Certificates shall have been issued and
sold pursuant to the Underwriting Agreement and the Pass Through Trust
Agreements, and the Underwriters shall have transferred to the Pass
Through Trustee in immediately available funds an amount equal to the
aggregate purchase price of the Equipment Notes to be purchased from
the Owner Trustee.
(r) The Original Head Lessee and the Owner Participant shall
each have executed and delivered to the other the Amended and Restated
Head Lease TIA.
(s) The Sublessor and the Sublessee shall each have
executed and delivered to the other the Amended and Restated
Sublease TIA.
(t) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would make it illegal for the Pass Through Trustee to make
the payments described in Section 1(a)(ii) or for the Lessee, the
Indenture Trustee, the Owner Trustee or the Owner Participant or any
other party hereto to participate in the transactions contemplated by
this Agreement on the Restatement Date.
(u) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in
connection with the Pass Through Trustee's making of the payments
described in Section 1(a)(ii) or the Owner Trustee's or the Owner
Participant's participation in the transactions contemplated by this
Agreement on the Restatement Date shall have been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security
interests created by or pursuant to the Indenture that are not covered
by the recording system established by the Federal Aviation Act shall
have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee and the Owner Trustee, as the case may
be, and such financing, termination, amendment and continuation
statement or statements or documents to the same purposes shall have
been duly filed in all places necessary or advisable, and any
additional Uniform Commercial Code financing, termination, amendment
and continuation statements deemed advisable by the Original
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<PAGE> 18
Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee
shall have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee or the Owner Trustee, as the case may be,
and duly filed in
all places advisable.
(w) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would adversely affect the tax consequences of the
transactions contemplated by this Agreement to the Owner Participant,
the Owner Trustee or any of their respective Affiliates.
(x) The Owner Trustee shall have received a letter of credit
in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2
to the Lease.
(y) The Owner Participant shall have received any
other documents and evidence as the Owner Participant or its
counsel may request.
Promptly following the recording of Lease Amendment No. 1, the
Amended and Restated Lease (including Lease Supplement No. 3) and the First
Amended and Restated Indenture (including Trust Indenture Supplement No. 2)
pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3,
the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and
Trust Supplement No. 2.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
(i) Each of the Original Head Lessee and the Parent Guarantor
shall have received counterparts of the following documents executed by
each of the parties thereto other than the Original Head Lessee and the
Parent Guarantor:
(1) this Agreement;
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<PAGE> 19
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 3;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee and such other
releases and terminations as it may
reasonably request; and
(9) that certain letter agreement dated as of
the Restatement Date relating to Stipulated
Loss Values with respect to the Amended and
Restated Lease (the "SLV Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent Guarantor
shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee
referred to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i),
Section 3(j), Section 3(k), Section 3(l),
Section 3(m) and Section 3(n), in each case
addressed to each of the Original Head
Lessee and the Parent Guarantor and in form
and substance satisfactory to each of them;
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form
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<PAGE> 20
and substance reasonably satisfactory to each
of them; and
(6) the report referred to in Section 3(h)
addressed to each of the Original Head Lessee
and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent Guarantor
shall have received such other documents and evidence with respect to
each other party hereto as each of them or its counsel may reasonably
request in order to establish the due consummation of the transactions
contemplated by this Agreement and the "Refunding Agreements" (as
defined in the Registration Statement), the taking of all necessary
action in connection therewith and compliance with the conditions
herein or therein set forth.
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated
Lease and Lease Supplement No. 3;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination statements
relating to the Sublease executed by the Original
Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the
following documents:
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<PAGE> 21
(1) the incumbency certificate of the Original
Head Lessee and Parent Guarantor referred to
in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee
and Parent Guarantor referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j),
Section 3(k), Section 3(l), Section 3(m),
Section 3(n), Section 3(o) and Section 3(p),
in each case addressed to Lessee and in form
and substance satisfactory to Lessee; and
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to Lessee and in form
and substance reasonably satisfactory to
Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass Through Trust Agreements of the Pass Through
Trustee are correct as of the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to
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<PAGE> 22
establish the due consummation of the transactions contemplated by this
Agreement, the taking of all necessary action in connection therewith and
compliance with the conditions herein set forth.
SECTION 5. Amendment and Restatement of the Original
Indenture. Subject to the satisfaction or waiver of the conditions precedent set
forth herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the First
Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee,
by execution and delivery hereof, agree to execute and deliver the First Amended
and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor
and the Lessee, by execution and delivery hereof, consent to such execution and
delivery of the First Amended and Restated Indenture. The First Amended and
Restated Indenture shall be effective as of the Restatement Date.
SECTION 6. Amendment and Restatement of the Original Lease.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor
and the Owner Participant, by execution and delivery hereof, consent to the
assignments, delegations, and releases set forth in, and to the amendment and
restatement of the Original Lease effected by, and the Owner Participant
requests and instructs the Owner Trustee to execute and deliver, Lease Amendment
No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee
and the Sublessee agree, by execution and delivery hereof, to execute and
deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective
as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner Trustee,
the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect from and including the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no obligations on the parties thereto. Upon
the execution and delivery of Lease Amendment No. 1 by each of the parties
thereto, the Sublease, the Sublease Guaranty and the Assignment of Sublease
shall be terminated as and to the extent set forth herein and therein. Lease
Amendment No. 1 shall be effective as of the Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the
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<PAGE> 23
Restatement Date, to the Original Head Lessee (except as to the representation
and warranty contained in Section 8(i)), the Parent Guarantor (except as to the
representation and warranty contained in Section 8(i)), the Pass Through
Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and
the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has the corporate power and authority to own or hold under lease its
properties, has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and perform its
obligations under this Agreement, Lease Amendment No. 1, the Lease, the
Pass Through Trust Agreements, the Amended and Restated Sublease TIA,
the SLV Letter Agreement and any certificate delivered by the Lessee
pursuant to the foregoing (the "Lessee Documents") and is duly
qualified to do business as a foreign corporation in each jurisdiction
where the failure to so qualify would have a material adverse effect on
its business, operations or condition (financial or otherwise), or on
its ability to perform its obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under
the Lessee Documents have been duly authorized by all necessary
corporate action on the part of the Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation,
judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions
of, or constitute a default under, or result in the creation of any
Lien (other than Permitted Liens) upon the property of the Lessee
under, any indenture, mortgage, contract, lease or other agreement in
each case having payment obligations in excess of $500,000 to which the
Lessee is a party or by which it may be bound or affected;
(d) neither the execution and delivery by the Lessee
of the Lessee Documents nor the performance of the obliga-
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<PAGE> 24
tions of the Lessee under the Lessee Documents nor the consummation by
the Lessee of any of the transactions contemplated by the Lessee
Documents, requires the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in respect
of, the Department of Transportation, the FAA, or any other federal,
state, local or foreign governmental authority having jurisdiction,
other than those which have already been received and which the Lessee
is in compliance with and (i) the registration of the Certificates
under the Securities Act of 1933, as amended (the "Securities Act") and
the securities laws of any state in which the Certificates may be
offered for sale if the laws of such state require such action, (ii)
the qualification of the Pass Through Trust Agreements under the Trust
Indenture Act of 1939, as amended, (iii) (A) the orders, permits,
waivers, exemptions, authorizations and approvals of the regulatory
authorities having jurisdiction over the operation of the Aircraft by
Lessee required to be obtained on or prior to the Restatement Date,
which orders, permits, waivers, exemptions, authorizations and
approvals have been duly obtained and are, or will on the Restatement
Date be in full force and effect, (B) the registration of the Aircraft
pursuant to the Federal Aviation Act and (C) such consents, approvals,
notices, registrations and other actions required by the terms of the
Lessee Documents to the extent required to be given or obtained only
after the Restatement Date and (iv) the registrations and filings
referred to in Section 8(i);
(e) each Lessee Document has been duly executed and delivered
by the Lessee and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, each Lessee Document
constitutes, or when executed will constitute, the legal, valid and
binding obligations of the Lessee enforceable against the Lessee in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors or lessors
generally and by general principles of equity, whether considered in a
proceeding at law or in equity, and except, in the case of the Lease,
as may be limited by applicable laws which may affect the remedies
provided in the Lease, which laws, however, do not make the remedies
provided in the Lease inadequate for the practical realization of the
benefits intended to be afforded thereby;
(f) except as disclosed in the Prospectus, there are no
pending or, to its knowledge, threatened actions or proceedings before
any court or administrative agency or regulatory commission or other
governmental agency against or affecting the Lessee that are reasonably
expected to
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<PAGE> 25
materially adversely affect the ability of Lessee to enter
into or perform its obligations under the Lessee Documents;
(g) the Lessee is not an "investment company" or a
company controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be
free and clear of any and all Liens (other than Permitted
Liens) created by or through the Lessee;
(i) except for the registration of the Aircraft pursuant to
the Federal Aviation Act, the filing for recordation pursuant to the
Federal Aviation Act (with confidential financial terms redacted) of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement
No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture
and Indenture Supplement No. 2, and each of the other documents
referred to in Annex A hereto, all with the FAA, the filing of a
Uniform Commercial Code ("UCC") amended financing statement with the
Secretary of State of the State of Delaware with regard to the Original
Lease, the filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States of New
York, Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with
respect to the Lease, the filing of a UCC termination statement with
the Secretary of State of the State of Arizona with respect to the
Sublease, and the filing of a UCC termination statement with the
Secretary of State of the State of Delaware with respect to the Initial
Sublease Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly effected as
of the Restatement Date (and assignments thereof and continuation
statements at periodic intervals), and other than the taking of
possession by the Indenture Trustee of the original counterparts of the
Original Lease, Lease Amendment No. 1, the Amended and Restated Lease,
and all Lease Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification required by
Section 6(e) of the Lease, no further filing or recording of the Lease
or of any other document (including any financing statement under
Article 9 of the UCC of the State of Delaware, New York or Arizona) and
no further action is necessary, under the laws of the United States of
America or the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Aircraft as against the
Lessee and any third parties, or to perfect the security interest in
favor of the Indenture Trustee in the Owner Trustee's interest in the
Aircraft and in the Lease;
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<PAGE> 26
(j) all obligations of the Lessee owing to the Lessor in
connection with the Lease are at least pari passu with all unsecured
and unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default
but for the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an Event
of Loss with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are required
to be filed and has paid or will pay or has caused or will cause to be
paid all taxes shown to be due or payable on said returns and on any
assessment received by the Lessee, to the extent such taxes have become
due and payable, except for taxes and returns with respect thereto the
nonpayment or nonfiling of which, either in any case or in the
aggregate, could have no material adverse effect on the Lessee, its
condition (financial or otherwise), business, operations or prospects,
or on its ability to perform its obligations under the Lease or which
are being diligently contested by the Lessee in good faith by
appropriate proceedings and with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all
material respects and fairly present the Lessee's financial condition
as of September 30, 1996 and the results of its operations for the
period covered in conformance with GAAP (except as otherwise noted
therein and with which any such change the independent auditors of the
Lessee have agreed), since September 30, 1996, there has been no
material adverse change in the Lessee's business, operations, condition
(financial or otherwise) or prospects which has not been disclosed in
writing to the Owner Participant and the Indenture Trustee and does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary,
duties or other similar Taxes then due and for which the Lessee is
responsible pursuant to the Lessee Documents, shall have been paid,
other than such Taxes which are being contested by the Lessee in good
faith and by appropriate proceedings (and for which the Lessee shall
have established
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<PAGE> 27
such reserves as are required under GAAP) so long as such proceedings
or the non-payment of such Taxes do not involve any material danger to
the sale, forfeiture or loss of the Aircraft;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations or
the Cuban Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, or of any regulations, interpretations or rulings issued
thereunder, and the Lessee is not, and is not acting on behalf of or
for the benefit of, an "Iranian Entity" within the meaning of the
Iranian Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, and the transactions contemplated by this Agreement are not
prohibited by Executive Order 12170, the above-mentioned Iranian Assets
Control Regulations or any regulations, interpretations or rulings
issued under any thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made out
of the assets of any "employee benefit plan" as defined in Section 3(3)
of ERISA;
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the
Owner Participant or the Indenture Trustee by the Lessee in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to
the Lessee (other than matters of a general economic nature) which the
Lessee has not disclosed in writing to the Owner Participant or the
Indenture Trustee which could impair its ability to perform its
obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy
Code, the Lessor as lessor of the Aircraft under the Lease, and the
Indenture Trustee, as assignee of the Owner Trustee's rights under the
Lease pursuant to the Indenture, would be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect to the Aircraft.
SECTION 9. Representations and Warranties. Each of the parties
below represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the
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<PAGE> 28
Liquidity Provider (except that the representation and warranty set forth in
Section 9(f)(8) shall be a representation and warranty of the Original Head
Lessee to the Lessee only) as follows:
(a) The Indenture Trustee in its individual capacity
(and as Indenture Trustee to the extent provided in clause
(6) below) represents and warrants that:
(1) the Indenture Trustee is a corporation duly
organized, validly existing and in good standing under the
laws of the State of New York, is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal
Aviation Act and the rules and regulations of the FAA
thereunder (as so defined, a "Citizen of the United States")
(without making use of a voting trust, voting powers agreement
or similar arrangement), will notify promptly all parties to
this Agreement if in its reasonable opinion its status as a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement) is
likely to change and will resign as Indenture Trustee as
provided in Section 8.02 of the Indenture promptly after it
obtains actual knowledge that it has ceased to be such a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement), and
has the full corporate power, authority and legal right under
the laws of the State of New York and the federal laws of the
United States pertaining to its banking, trust and fiduciary
powers to execute and deliver each of this Agreement, the
Indenture and each other Operative Document to which it is a
party and to carry out its obligations under this Agreement,
the Indenture and each other Operative Document to which it is
a party;
(2) neither the execution and delivery by the
Indenture Trustee of this Agreement, the Indenture, Lease
Amendment No. 1 and each other Operative Document to which it
is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the
compliance by it with any of the terms and provisions hereof
and thereof, (A) requires or will require any approval of its
stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or
by-laws, or contravenes or will contravene any provision of,
or constitutes or will constitute a default under, or results
or will result in any breach of, or results or will result in
the creation of any Lien (other than as
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<PAGE> 29
permitted under the Operative Documents) upon its property
under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which
it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation or any
judgment or order applicable to or binding on it of any United
States governmental authority or agency governing the trust
powers of the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture,
when executed and delivered by the Indenture Trustee, will
constitute, the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents to which
it is a party;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any State of New York or any
United States of America governmental authority or agency
regulating the trust powers of the Indenture Trustee is
required for the execution and delivery of, or the carrying
out by, the Indenture Trustee of any of the transactions
contemplated hereby or by the Indenture, Lease Amendment No. 1
or any other Operative Document to which it is a party or by
which it is bound, other than any such consent, approval,
order, authorization, registration, notice or action as has
been duly obtained, given or taken;
(6) there are no Lenders' Liens (as defined in
the Lease) on the Aircraft or any portion of the Trust
Estate created by or through the Indenture Trustee in
its individual capacity; and
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<PAGE> 30
(7) it has possession of the chattel paper original
counterpart of the Original Lease, Lease Amendment No. 1 and
the Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties
are made solely by the Owner Trustee) and the Owner Trustee represents
and warrants that:
(1) the Trust Company is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and
authority to carry on its business as now conducted, has, or
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver Trust
Supplement No. 2, has the corporate power and authority to
carry out the terms of the Trust Agreement, and each of the
Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant), the corporate power and authority
to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Equipment Notes, Lease Amendment
No. 1, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
(2) (i) each of the Trust Company and the Owner
Trustee has duly authorized, executed and delivered the Trust
Agreement and this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant) the Trust Agreement constitutes a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity, (ii) the Owner
Trustee has duly authorized, executed and delivered this
Agreement and (assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant)
this Agreement and the Trust Agreement constitute, and the
Indenture and the Lease, when entered into, will constitute, a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may
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<PAGE> 31
be, enforceable against it in accordance with its terms,
except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(3) assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant,
the Owner Trustee has duly authorized, and on the Restatement
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Equipment Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Equipment Note on the Restatement Date
will constitute the valid and binding obligation of the Owner
Trustee and will be entitled to the benefits and security
afforded by the Indenture in accordance with the terms of such
Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner
Trustee or the Trust Company, as the case may be, of this
Agreement, the Original Trust Agreement, Trust Supplement No.
2, the Original Indenture, the Indenture, the Original Lease,
Lease Amendment No. 1, the Lease, the Equipment Notes, or any
other Operative Document to which it is a party, nor the
consummation by it of any of the transactions contemplated
hereby or thereby, nor the compliance by it with any of the
terms and provisions hereof and thereof, (A) requires or will
require any approval of its stockholders, or approval or
consent of any trustees or holders of any indebtedness or
obligations of it, or (B) violates or will violate its
articles of association or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute
a default under, or results or will result in any breach of,
or results or will result in the creation of any Lien (other
than as permitted under the Operative Documents) upon its
property under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which
it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation of the
State of Delaware or any United States governmental authority
or agency governing the trust powers of the Owner Trustee, or
any judgment or order applicable to or binding on it;
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<PAGE> 32
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any state or local governmental
authority or agency or any State of Delaware or any United
States of America governmental authority or agency regulating
the trust powers of the Trust Company is required for the
execution and delivery of, or the carrying out by, the Trust
Company or the Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust
Agreement, the Indenture, the Lease, Lease Amendment No. 1,
the Equipment Notes or any other Operative Document to which
it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice
or action as has been duly obtained, given or taken or which
is described in Section 8(d);
(6) there exists no Lessor's Lien or Head Lessor's
Lien (each as defined in the Lease) (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens) attributable to
the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's
Lien (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens) attributable to the Trust Company;
(8) there are no Taxes payable by the Owner Trustee
or the Trust Company imposed by the State of Delaware or any
political subdivision thereof in connection with the
prepayment of the Original Certificates or the issuance of the
Equipment Notes, or the execution and delivery by it of any of
the instruments referred to in clauses (1), (2), (3) and (4)
above, that, in each case, would not have been imposed if the
Trust Estate were not located in the State of Delaware and the
Trust Company had not (a) had its principal place of business
in, (b) performed (in its individual capacity or as Owner
Trustee) any or all of its duties under the Operative
Documents in, and (c) engaged in any activities unrelated to
the transactions contemplated by the Operative Documents in,
the State of Delaware;
(9) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner Trustee,
either in its individual capacity or as Owner Trustee, before
any court or administrative agency
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<PAGE> 33
which, if determined adversely to it, would materially
adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be,
to perform its obligations under any of the instruments
referred to in clauses (1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where
its records concerning the Aircraft and all its interests in,
to and under all documents relating to the Trust Estate (other
than such as may be maintained and held by the Indenture
Trustee pursuant to the Indenture), are located in Wilmington,
Delaware. Owner Trustee, in its individual capacity or as
Owner Trustee, agrees that it will not change the location of
such office to a location outside of Delaware, without prior
written notice to all parties hereto; and
(11) it is a Citizen of the United States (without making
use of a voting trust agreement, voting powers agreement or
similar arrangements).
(c) The Owner Participant represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to carry
on its present business and operations and to own or lease its
properties, has, or had on the respective dates of execution
thereof, as the case may be, the corporate power and authority
to enter into and to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement and
the Amended and Restated Head Lease TIA; this Agreement, the
SLV Letter Agreement and Trust Supplement No. 2 have been duly
authorized, executed and delivered by it; and, assuming the
due authorization, execution and delivery hereof and thereof
by the other parties hereto and thereto, this Agreement, the
Trust Agreement, the SLV Letter Agreement and the Amended and
Restated Head Lease TIA constitute the legal, valid and
binding obligations of the Owner Participant enforceable
against it in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
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<PAGE> 34
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Amended and Restated Head Lease TIA
or any other Operative Document to which it is a party nor (B)
compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding on
the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements
of the Owner Participant under applicable law), or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its
certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its
property may be bound or affected, except where such
contravention or default would not result in any liability to
any other party hereto or have a material adverse effect on
the rights or on the remedies of the other parties hereto or
on its ability to perform its obligations hereunder or
thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Amended and Restated Head Lease TIA (it
being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee other than the laws, rules or regulations relating to
aircraft lease transactions generally or to the citizenship
requirements of the Owner Participant under the Federal
Aviation Act);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant before any court or administrative agency or
arbitrator which, if determined adversely to the Owner
Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Trust Agreement, the
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<PAGE> 35
SLV Letter Agreement or the Amended and Restated Head
Lease TIA;
(5) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant (including for this purpose Liens
that would be Lessor's Liens but for the first proviso in the
definition of Lessor's Liens); and
(6) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangement). If at any time Owner
Participant has ceased to be, or shall have actual knowledge
that it is likely to cease to be, such a citizen, and (i) the
Aircraft shall be or would thereupon become ineligible for
registration in the name of Owner Trustee under the Federal
Aviation Act as in effect at such time (without regard to the
"based and primarily used" provisions thereof) and the
regulations then applicable thereunder, or (ii) the Aircraft
is registered in a jurisdiction other than the United States
of America, in circumstances in which the preceding clause (i)
does not apply and the Lessee or any Permitted Sublessee at
any time proposes to register the Aircraft in the United
States of America, then Owner Participant shall (at its own
expense and without any reimbursement or indemnification from
the Lessee or any Permitted Sublessee) (A) immediately either
(1) transfer in accordance with Section 10 hereof all of its
right, title and interest in and to the Trust Agreement, the
Trust Estate, this Agreement and the Amended and Restated Head
Lease TIA or (2) take such other action, including, without
limitation, the establishment of a voting trust or voting
powers agreement (in which case Owner Participant shall remain
the beneficial owner of the Trust Estate), as may be necessary
to prevent the deregistration of the Aircraft under the
Federal Aviation Act or to maintain such registration of the
Aircraft or to make possible such registration of the Aircraft
in the United States of America and to prevent Indenture
Trustee, the Holders of the Equipment Notes, the Lessee or any
Permitted Sublessee from being adversely affected as a result
thereof and (B) indemnify the Lessee, the Indenture Trustee,
the Holders of the Equipment Notes and any Permitted
Sublessee, from and against any and all Claims incurred or
suffered as a result of Owner Participant's failure to be such
a citizen or loss of such citizenship, including, without
limitation, as a
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<PAGE> 36
result of the Aircraft's becoming ineligible or ceasing
to remain eligible for such registration.
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly organized,
validly existing and in good standing under the federal laws
of the United States of America, and has the full corporate
power, authority and legal right under the federal laws of the
United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Intercreditor Agreement, and
this Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement will
have been, duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement constitutes, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement, will
constitute, the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement or this Agreement, the
purchase by the Pass Through Trustee of the Equipment Notes
pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Pass Through Trustee's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Pass Through Trustee and does not contravene or
result in any breach of, or constitute a default under, the
Pass Through Trustee's articles of association or by-laws or
any agreement or instrument
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<PAGE> 37
to which the Pass Through Trustee is a party or by which it
or any of its properties may be bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(5) assuming that the trusts created by the Pass
Through Trust Agreements will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code for
federal income tax purposes, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the acquisition, possession or ownership by
the Pass Through Trustee of any of the Equipment Notes (other
than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
prior to the exercise of remedies upon the occurrence of an
Indenture Event of Default, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
such trusts will not be subject to any Taxes imposed by the
State of Connecticut or any political subdivision or taxing
authority thereof; upon the exercise of remedies following the
occurrence of an Indenture Event of Default, there will be no
Taxes payable by the Pass Through Trustee imposed by the State
of Connecticut or any political subdivision or taxing
authority thereof
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<PAGE> 38
in connection with the execution, delivery and performance by
the Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
the trusts created by the Pass Through Trust Agreements will
not be subject to any Taxes imposed by the State of
Connecticut or any political subdivision thereof, solely
because the Pass Through Trustee maintains an office in, and
administers the trusts created by the Pass Through Trust
Agreements in, the State of Connecticut;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly
or indirectly offered any Equipment Notes for sale to any
Person or solicited any offer to acquire any Equipment Notes
from any Person, nor has the Pass Through Trustee authorized
anyone to act on its behalf to offer directly or indirectly
any Equipment Notes for sale to any Person, or to solicit any
offer to acquire any Equipment Notes from any Person; and the
Pass Through Trustee is not in default under any Pass Through
Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(e) The Subordination Agent represents and warrants that:
(1) the Subordination Agent is a duly organized
national banking association, validly existing and in good
standing with the Comptroller of the Currency under the laws
of the United States of America and has the full corporate
power, authority and legal right under the laws of the United
States of America
- 35 -
<PAGE> 39
pertaining to its banking, trust and fiduciary powers to
execute and deliver each of the Liquidity Facilities, the
Intercreditor Agreement and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities and
the Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement will have been,
duly authorized, executed and delivered by the Subordination
Agent; this Agreement constitutes, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement, will constitute,
the legal, valid and binding obligations of the Subordination
Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Subordination Agent of each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement or
the performance by the Subordination Agent of this Agreement,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Subordination Agent and do not contravene or
result in any breach of, or constitute a default under, the
Subordination Agent's articles of association or by-laws or
any agreement or instrument to which the Subordination Agent
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement or this Agreement nor the consummation
by the Subordination Agent of any of the transactions
contemplated hereby or thereby requires the consent or
approval of, the giving of notice to, the registration with,
or the taking of any other action with respect to, any State
of Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the
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<PAGE> 40
Subordination Agent's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Subordination Agent
of this Agreement, any of the Liquidity Facilities or the
Intercreditor Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities) solely because
the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are
no Taxes payable by the Subordination Agent imposed by the
State of Connecticut or any political subdivision thereof in
connection with the acquisition, possession or ownership by
the Subordination Agent of any of the Equipment Notes solely
because the Subordination Agent maintains an office and
administers its trust business in the State of Connecticut
(other than franchise or other taxes based on or measured by
any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any Person
or solicited any offer to acquire any Equipment Note from any
Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any
Equipment Note for sale to any Person, or to solicit any offer
to acquire any Equipment Note from any Person; and the
Subordination Agent is not in default under any Liquidity
Facility; and
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<PAGE> 41
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Amended and Restated Head Lease TIA, the Amended
and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents nor (B) compliance
by it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Original
Head Lessee, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument
to which the Original Head Lessee is a party or by which it or
any of its property may be bound or affected, except where
such contravention or default would not result in any
liability to any other party hereto or have a material adverse
effect on the rights or on the remedies of the other parties
hereto or on its ability to perform its obligations hereunder
or thereunder;
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<PAGE> 42
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Original Head Lessee of this
Agreement and each of the other Original Head Lessee
Transaction Documents;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Original Head Lessee before any court
or administrative agency or arbitrator which, if determined
adversely to the Original Head Lessee, would materially
adversely affect the Original Head Lessee's ability to perform
its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease);
(6) on the Delivery Date, the Owner Trustee received
good title to the Aircraft free and clear of all Liens, except
the rights of the Original Head Lessee under the Original
Lease, the rights of the Sublessee under the Sublease, the
Lien of the Original Indenture, the beneficial interest of the
Owner Participant in the Aircraft, and Permitted Liens under
the Original Lease;
(7) title to the Buyer Furnished Equipment for the
Aircraft has been transferred to the Owner Trustee in
accordance with Section 8(y) of the Participation Agreement.
As of the Restatement Date, there are no existing Claims
against Parent Guarantor or Original Head Lessee with respect
to Buyer Furnished Equipment; and
(8) except for the registration of the Aircraft
pursuant to the Federal Aviation Act, the filing for
recordation pursuant to the Federal Aviation Act (with
confidential financial terms redacted) of Lease
Amendment No. 1, the Amended and Restated Lease, Lease
Supplement No. 3, Trust Supplement No. 2, the First
Amended and Restated Indenture and Indenture Supplement
No. 2, and each of the other documents referred to in
Annex A hereto, all with the FAA, the filing of a
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<PAGE> 43
Uniform Commercial Code ("UCC") amended financing statement
with the Secretary of State of the State of Delaware with
regard to the Original Lease, the filing of UCC termination
statements with regard to the Original Head Lessee with the
Secretary of State of the States of New York, Connecticut and
Arizona, the filing of a protective UCC financing statement
with the Secretary of State of the State of Arizona with
respect to the Lease, the filing of a UCC termination
statement with the Secretary of State of the State of Arizona
with respect to the Sublease, and the filing of a UCC
termination statement with the Secretary of State of the State
of Delaware with respect to the Initial Sublease Assignment
(as defined in the Original Lease) all of which financing and
termination statements shall have been duly effected as of the
Restatement Date (and assignments thereof and continuation
statements at periodic intervals), and other than the taking
of possession by the Indenture Trustee of the original
counterparts of the Original Lease, Lease Amendment No. 1, the
Amended and Restated Lease, and all Lease Supplements thereto
(to the extent the Lease constitutes chattel paper), and the
placing of the Lease identification required by Section 6(e)
of the Lease, no further filing or recording of the Lease or
of any other document (including any financing statement under
Article 9 of the UCC of the State of Delaware, New York or
Arizona) and no further action is necessary, under the laws of
the United States of America or the States of Delaware, New
York and Arizona in order to perfect the Owner Trustee's
interest in the Aircraft as against the Lessee and any third
parties, or to perfect the security interest in favor of the
Indenture Trustee in the Owner Trustee's interest in the
Aircraft and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement; this Agreement has been duly authorized and
constitutes the legal, valid and binding obligations of the
Parent Guarantor enforceable against it in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a
proceeding at law or in equity;
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<PAGE> 44
(2) neither (A) the execution and delivery by the
Parent Guarantor of this Agreement nor (B) compliance by it
with all of the provisions hereof (x) will contravene any law
or order of any court or governmental authority or agency
applicable to or binding on the Parent Guarantor, or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its Memorandum
and Articles of Association or any indenture, mortgage,
contract or other agreement or instrument to which the Parent
Guarantor is a party or by which it or any of its property may
be bound or affected, except where such contravention or
default would not result in any liability to any other party
hereto or have a material adverse effect on the rights or on
the remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Parent Guarantor of this
Agreement;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty with respect to Section 9(f)(8)
shall be only for the benefit of the Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by operation of law, con-
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<PAGE> 45
solidation, merger, sale of assets or otherwise) any of its right, title or
interest in and to the Trust Estate, the Aircraft, the Lease, this Agreement,
the Trust Agreement, the Amended and Restated Head Lease TIA or any other
Operative Document or any proceeds therefrom or permit the transfer of any of
its stock in any transaction which has the practical effect of any of the
foregoing; provided that, and subject to the conditions set forth below, Owner
Participant may transfer to a Transferee (as defined below) all (but not less
than all) of its right (except for such rights accruing prior to transfer),
title and interest as an entirety in and to the Trust Estate, the Aircraft, this
Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by which Owner
Participant is bound. Each such transfer shall be subject to the following
conditions, and Owner Participant agrees for the express benefit of each party
hereto that any such transfer will comply with such conditions:
(i) the Person to whom such transfer is to be made (a
"Transferee") is either (A) a bank, trust company or other like
regulated financial institution with a combined capital, surplus and
undivided profits of, or a corporation with a tangible net worth of, in
either case at least $60,000,000, (B) any wholly-owned subsidiary of
such bank, trust company, financial institution or corporation if such
bank, trust company, financial institution or corporation furnishes to
Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an
agreement or agreements of such bank, financial institution or
corporation guaranteeing such subsidiary's obligations as Owner
Participant contained in this Agreement, the Trust Agreement, the
Amended and Restated Head Lease TIA and each other Operative Document
to which Owner Participant is a party or by which it is bound, which
guarantee shall be substantially in the form attached as Exhibit A
hereto or (C) a subsidiary of Owner Participant if Owner Participant
furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and
Lessee an agreement whereby Owner Participant will guarantee such
subsidiary's obligations as Owner Participant contained in this
Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA
and each other Operative Document to which Owner Participant is a party
or by which it is bound, which guarantee shall be substantially in the
form attached as Exhibit A hereto;
(ii) Owner Trustee, Indenture Trustee, Original Head Lessee
and Lessee shall have received at least 15 days' prior written notice
of such transfer specifying the name and address of any proposed
transferee and specifying the facts necessary to determine whether such
proposed trans-
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<PAGE> 46
feree qualifies as a "Transferee" under clause (i) above and does not
violate clause (viii) below; provided that if such Transferee is a
subsidiary of Owner Participant, such notice may be given promptly
following rather than prior to such transfer if such Transferee meets
the net worth requirement set forth above on its own account without a
guaranty and otherwise meets the requirements of this Section 10;
(iii) upon giving effect to such transfer, such Transferee is
a Citizen of the United States and such Transferee shall deliver to
Lessee an affidavit to such effect;
(iv) such Transferee has the requisite power and authority
and legal right to enter into and carry out the transactions
contemplated hereby;
(v) such Transferee enters into an agreement in
substantially the form attached as Exhibit B hereto whereby such
Transferee confirms that it shall be deemed a party to this Agreement,
the Trust Agreement, the Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by
which Owner Participant is bound, and in which the transferee shall
agree to be bound by and undertake the obligations of Owner Participant
in the Operative Documents and shall make representations and
warranties comparable to those of Owner Participant contained herein;
(vi) such transfer does not violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or create a relationship that would be in violation
thereof, or violate any provisions of the Securities Act or any other
applicable Federal, state or other law, rule or regulation;
(vii) such transfer does not violate any provision of ERISA
or any rules or regulations thereunder;
(viii) such Transferee is not an airline, a commercial air
carrier, an air freight forwarder, any Person engaged in the business
of parcel transport by air or a subsidiary or an Affiliate of such an
airline, a commercial air carrier, an air freight forwarder, Person
engaged in the business of parcel transport by air or other similar
Person;
(ix) an opinion of counsel of the Transferee confirming the
matters referred to in clauses (iv) and (vi) above (with appropriate
reliance on certificates of corporate officers or public officials as
to matters of fact) and confirming that the agreement referred to in
clause (v) above is the
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<PAGE> 47
legal, valid, binding and enforceable obligation of the Transferee and
that the guarantee referred to in clause (i)(B) or (C) above, if any,
is the legal, valid, binding and enforceable obligation of the
Transferee's guarantor shall be provided, at least 3 days prior to such
transfer, to Lessee, Owner Trustee, Original Head Lessee and Indenture
Trustee, which shall be in form and substance reasonably satisfactory
to each of them; and
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Aircraft previously made by Owner Participant; and except
as the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to "Owner Participant" shall thereafter be deemed to include such
Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Amended and Restated Head
Lease TIA and under the other Operative Documents, except to the extent
expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Amended and Restated Head Lease TIA by or against Owner Participant which have
accrued or been made prior to the date of such transfer. The transferor Owner
Participant shall pay the reasonable expenses of each party hereto related to
any such transfer.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions of
clause (A) of paragraph (6) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease. The Lessee
shall have no obligation to prevent any such deregistration or assist in
maintaining or otherwise enhancing the Aircraft's eligibility for registration
by restricting the use of the Aircraft.
SECTION 11. Re-Registration of the Aircraft. The Indenture
Trustee agrees, that if the Owner Participant consents thereto, which consent
shall not be unreasonably withheld, at any
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<PAGE> 48
time after the Restricted Use Period, Lessee may, in connection with effecting a
Permitted Sublease elect to effect a change in registration of the Aircraft, at
Lessee's cost and expense, so long as (a) the country of registry of the
Aircraft is a country listed on Exhibit C hereto (or such other country as the
Owner Participant approves) and (b) the following conditions are met: (i) unless
the country of registry is Taiwan, the United States of America maintains normal
diplomatic relations with the country of registry of the Aircraft, and if the
country of registry is Taiwan, the United States of America maintains diplomatic
relations at least as good as those in effect on the Restatement Date; and (ii)
the Owner Trustee, the Owner Participant and the Indenture Trustee shall have
received favorable opinions (subject to customary exceptions) addressed to each
such party, from counsel of recognized reputation qualified in the laws of the
relevant jurisdiction and reasonably acceptable to the Owner Participant to the
effect of the following and as to such other matters as the Owner Participant
may reasonably request:
(A) the Owner Trustee's ownership interest in the Aircraft and
interest in the Lease and any Permitted Sublease shall be recognized
under the laws of such jurisdiction,
(B) the obligations of Lessee, and the rights and remedies of
the Owner Trustee, under the Lease shall remain valid, binding and
(subject to customary bankruptcy and equitable remedies exceptions and
to other exceptions customary in foreign opinions generally)
enforceable under the laws of such jurisdiction (or the laws of the
jurisdiction to which the laws of such jurisdiction would refer as the
applicable governing law),
(C) after giving effect to such change in registration, the
Lien of the Indenture on the Owner Trustee's right, title and interest
in and to the Aircraft, the Lease and any Permitted Sublease shall
continue as a valid and duly perfected security interest and all
filing, recording or other action necessary to protect the same and the
Owner Trustee's ownership interest in the Aircraft shall have been
accomplished (or, if such opinion cannot be given at the time of such
proposed change in registration because such change in registration is
not yet effective, (1) the opinion shall detail what filing, recording
or other action is necessary and (2) the Owner Trustee and the
Indenture Trustee shall have received a certificate from Lessee that
all possible preparations to accomplish such filing, recording and
other action shall have been done, and such filing, recording and other
action shall be accomplished and a supplemental opinion to that effect
shall be delivered to
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the Owner Trustee and the Indenture Trustee on or prior to the
effective date of such change in registration),
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other activity
of the Owner Trustee, the Owner Participant or the Indenture Trustee
(or any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such jurisdiction,
(E) there is no tort liability of the owner of an aircraft not
in possession thereof under the laws of such jurisdiction (it being
agreed that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is provided
to cover such risk),
(F) (unless Lessee shall have agreed, or pursuant to the Lease
shall have been required, to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such
jurisdiction so long as such Aircraft is registered under the laws of
such jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in currency
freely convertible into Dollars for the loss of use of such Aircraft in
the event of the requisition by such government of such use.
In addition, as a condition precedent to any such change in registration, (i)
the insurance required by Section 12 of the Lease shall be in full force and
effect at the time of such change in registration after giving effect to such
change in registration and the Owner Trustee and the Indenture Trustee shall
have received a certificate of the type described in Section 12(f) of the Lease
and (ii) the aircraft maintenance standards of the new country of registry shall
not be materially less stringent from those of the United States of America or
not materially less stringent from those of the United Kingdom and the Owner
Trustee and the Indenture Trustee shall have received a certificate to such
effect signed by the President, any Executive Vice President or any Senior Vice
President of Lessee which certificate shall, as among the parties hereto, be
presumed to be correct as to the matters stated therein absent conclusive
evidence to the contrary. Lessee shall pay all reasonable costs, expenses, fees,
and recording and registration taxes, including the reasonable fees and expenses
of counsel to the Owner Trustee, the Owner Participant and the Indenture
Trustee, and other charges in connection with any such change in registration.
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SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming by, through or on behalf of it to interfere with the
right of Lessee or any Permitted Sublessee to the possession, use, operation and
quiet enjoyment of and other rights with respect to the Aircraft under the
Lease, and all rents, revenues, profits and income therefrom, in accordance with
the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner
Participant shall not be liable for any such interference by Indenture Trustee,
Pass Through Trustee, holders of any Equipment Notes, or any other Person
lawfully claiming by, through or on behalf of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate or the Indenture Estate. Each of Trust Company,
Owner Trustee and Owner Participant severally agrees that it will promptly, at
its own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Lessor's Lien or Head
Lessor's Lien attributable to it. For all purposes of this Agreement and the
other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a
result of the nonpayment of any Tax imposed on or measured by the net income of
the Trust Estate or the trust created by the Trust Agreement that is not
indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect
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to the Aircraft or any other portion of the Trust Estate or the Indenture
Estate. Each of Indenture Trustee, Pass Through Trustee and Subordination Agent
severally agrees that it will promptly, at its own expense (and without any
right of indemnification or reimbursement from Lessee), take such action as may
be necessary duly to discharge any such Trustee's Lien attributable to it and to
make restitution to the Trust Estate and the Indenture Estate for any diminution
of the assets thereof resulting therefrom and will indemnify and hold harmless
Lessee and each Indemnitee against any claims incurred or suffered by any such
Person and any reduction in amounts payable out of, or diminution in the assets
of, the Trust Estate or the Indenture Estate resulting from any such Trustee's
Lien attributable to it. For purposes of this paragraph, "Trustee's Lien" means
any Lien or disposition of title attributable to Indenture Trustee in its
individual capacity (and not as Indenture Trustee), Pass Through Trustee in its
individual capacity (and not as Pass Through Trustee) or Subordination Agent in
its individual capacity (and not as Subordination Agent) on or in respect of (as
the case may be) the Aircraft or any other portion of the Trust Estate or the
Trust Indenture Estate arising as a result of (i) Claims against such Person not
related to its interest in the Aircraft or the administration of the Trust
Estate or the Trust Indenture Estate pursuant to the Indenture, whether under
Section 9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or
omissions of such Person not contemplated hereunder or under the other Operative
Documents, or acts or omissions of such Person which are in violation of any of
the Operative Documents, or (iii) Taxes imposed on or Claims against such Person
which are excluded from indemnification by Lessee, or (iv) Claims against such
Person arising out of the voluntary or involuntary transfer by such Person of
all or any portion of its interest in the Aircraft, the Airframe, any Engine,
the Trust Estate, the Trust Indenture Estate or the Operative Documents (except
a Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the Original Head Lessee and Parent Guarantor
severally agrees that it will promptly, at its own expense (and without any
right of indemnification or reimbursement from Lessee), take such action as may
be necessary duly to discharge any such Sublessor's Lien
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<PAGE> 52
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
and to make restitution to the Trust Estate and the Indenture Estate for any
diminution of the assets thereof resulting therefrom and will indemnify and hold
harmless Lessee and each Indemnitee against any claims incurred or suffered by
any such Person and any reduction in amounts payable out of, or diminution in
the assets of, the Trust Estate or the Indenture Estate resulting from any such
Sublessor's Lien attributable to it or other Lien or disposition of title
created by or through Original Head Lessee, Parent Guarantor or any Affiliate of
either thereof which would have constituted a Sublessor's Lien had the Sublease
remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original
Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees with
Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement except in accordance with the terms thereof, provided that any such
amendment, supplement or modification shall not adversely affect the Lessee, and
(iii) not to terminate or revoke the Trust Agreement except in accordance with
the terms thereof, provided that any such termination or revocation shall not
adversely affect the Lessee.
(b) Notwithstanding anything to the contrary in the Trust
Agreement or Section 14(a) hereof, but subject always to the provisions of
Section 14(c) hereof, Owner Participant shall not consent to or direct a change
in the situs of the Trust Estate so long as a successor Owner Trustee meeting
the requirements of the Trust Agreement is reasonably available at the present
situs of the Trust Estate (A) unless the Indenture
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Trustee, the Original Head Lessee and Lessee shall have been given 30 days'
prior notice thereof and (B) if, within 15 days after notice of such a proposed
change is given to Lessee and the Original Head Lessee, either (1) Lessee or
Original Head Lessee delivers to Owner Participant and Owner Trustee (at the
expense of Owner Participant) an opinion of counsel, which counsel shall be
reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would have an adverse
effect on the rights or obligations of Lessee or Original Head Lessee or (2)
Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee
(at the expense of Owner Participant) an opinion of counsel, which counsel shall
be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would cause an
increase in the amount for which Lessee may be required to indemnify any Person
pursuant to the provisions of Section 10 of the Lease or for which Original Head
Lessee is required to indemnify any Person pursuant to the provisions of the
Amended and Restated Head Lease TIA, unless any and all Persons entitled to
indemnification pursuant to Section 10 of the Lease or applicable provision of
the Amended and Restated Head Lease TIA shall waive indemnification under
Section 10 of the Lease or applicable provision of the Amended and Restated Head
Lease TIA for any adverse tax or other consequences to it of such a change in
the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner
Participant an opinion of counsel, which counsel shall be reasonably
satisfactory to Indenture Trustee, to the effect that such proposed change in
the situs of the Trust Estate would not have an adverse effect on the validity
or priority of the Lien of the Indenture and that such Uniform Commercial Code
and FAA filings as are required to maintain the validity and priority of the
Lien of Indenture have been made, and (D) such change does not affect the
registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to any
Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as
a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States of America from the state in which
it is then located, the situs of the trust shall be moved and Owner Participant
will take whatever action may be requested by Lessee that is reasonably
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification with respect to such change of situs and
request of Lessee as Original Head Lessee, Owner Participant or the Indenture
Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and
the exclusions in the Amended and Restated Head Lease TIA) may reasonably
request, (B) promptly after notice thereof Owner Participant has not notified
Lessee
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and provided reasonable evidence of an adverse effect on Owner Participant's
rights or obligations under the Trust Agreement, (C) Indenture Trustee shall
have received an opinion of counsel selected by Lessee, which counsel shall be
reasonably satisfactory to Indenture Trustee, to the effect that the validity
and priority of the Lien of the Indenture Estate will not be adversely affected
by such action, and that such Uniform Commercial Code and FAA filings as are
required to maintain the validity and the priority of the Lien of the Indenture
have been made, (D) Owner Participant and Indenture Trustee shall have received
an opinion or opinions of counsel selected by Owner Participant to the effect
that, with customary exceptions, (I) the trust, as thus removed, shall remain a
validly established trust, (II) any amendments to the Trust Agreement or the
Indenture necessitated by such removal shall have been duly authorized, executed
and delivered by the parties thereto and shall constitute the legal, valid and
binding obligations of such parties, enforceable in accordance with their terms,
(III) if such removal involves the replacement of Owner Trustee, an opinion of
counsel to such successor Owner Trustee in form and substance reasonably
satisfactory to Indenture Trustee and to Owner Participant covering the matters
described in the opinion described in Section 3(j) hereof, and (IV) covering
such other matters as Owner Participant or the Indenture Trustee may reasonably
request, and (E) Lessee shall indemnify and hold harmless on an after tax basis
Owner Trustee, Owner Participant and their respective Affiliates and Indenture
Trustee against any and all reasonable and actual costs and expenses including
reasonable attorneys' fees and disbursements, registration, recording or filing
fees and other Taxes incurred by Owner Trustee, Owner Participant and their
respective Affiliates, or Indenture Trustee in connection with such change of
situs and shall indemnify and hold harmless Owner Participant, Owner Trustee and
their respective Affiliates, and Indenture Trustee on an after tax basis
(subject to the exclusions set forth in Section 10(b) of the Lease and the
Amended and Restated Sublease TIA) from and against any increase in Taxes borne
by such Person that results from such change in situs. In no event shall any
change in situs of the trust affect Original Head Lessee's rights or obligations
under the Amended and Restated Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed by
Owner Participant, a successor Owner Trustee may be appointed, and a corporation
may become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that Owner
Participant has actual knowledge that Owner Trustee is not in compliance with
its covenants contained herein. No successor Owner Trustee shall be appointed
unless Lessee and Indenture Trustee shall have given written consent thereto,
which consent
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shall not be unreasonably withheld. Owner Participant will not instruct Owner
Trustee to terminate any Operative Document or take any action thereunder in
violation of the terms thereof. Owner Participant shall not transfer any
interest in the Trust Estate except in compliance with Section 10 hereof and the
Trust Company shall not permit Owner Trustee to engage in any business other
than owning and leasing the Aircraft as contemplated hereby. Lessee shall pay
expenses on an after tax basis relating to the resignation or, if requested by
Lessee, the removal of Owner Trustee, provided that the Owner Participant shall
pay expenses relating to the removal of the Owner Trustee, if such removal was
solely at the request of the Owner Participant.
(e) The Trust Company agrees that if at any time it shall
obtain actual knowledge that it has ceased to be or will likely cease to be a
Citizen of the United States, it will promptly resign as Owner Trustee (if and
so long as such citizenship is necessary under such Federal Aviation Act or any
other law to permit the continued registration of the Aircraft in the name of
the Lessor or, if it is not necessary, if and so long as Owner Trustee's
citizenship would have any material adverse effect on any holder of Equipment
Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of
the successor Owner Trustee in accordance with Section 10.1 of the Trust
Agreement.
SECTION 15. Certain Retained Rights and Releases. (a) Each of
Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to
and confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head
Lessee and Parent Guarantor shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable for
all of its obligations under Sections 10 and 13 of the Sublease, with respect to
the period up to (but excluding) the Restatement Date and each of Parent
Guarantor, Original Head Lessee and Lessee shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the termination or expiration thereof (including, without
limitation, any such liability arising from and including the Restatement Date
under the Sublease in respect of the period up to (but excluding), or acts or
omissions or circumstances arising prior
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to (but excluding), the Restatement Date), (ii) all rights, benefits,
obligations and liabilities under the Sublease TIA (which rights, benefits,
obligations and liabilities are amended and restated as of the Restatement Date)
and (iii) Original Head Lessee and Parent Guarantor shall remain liable to
Sublessee under the Sublease and the Sublease Guaranty for Sublessor's Liens (as
therein defined); all of which rights, benefits, obligations and liabilities
shall expressly survive the termination of the Sublease and the Sublease
Guaranty. In furtherance of the foregoing, it is agreed that (x) Original Head
Lessee shall continue to be liable to the Sublessee as and to the extent
provided hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is
hereby released from any and all obligations and liabilities under the Sublease
Guaranty, other than in respect of the obligations and liabilities of the
Original Head Lessee in respect of Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner Participant
agree as among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: Lessee, and Owner
Trustee, Owner Participant and the other "Indemnitees" (as such term is defined
in the Sublease) other than Original Head Lessee and Parent Guarantor, shall
retain all rights, benefits, obligations and liabilities under the Sublease,
including that Sublessee shall remain liable for all of its obligations under
Sections 10 and 13 of the Sublease, with respect to the period up to (but
excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner
Participant shall retain all rights and liabilities under any provision of the
Sublease which by the express terms thereof survives the termination thereof
(including, without limitation, any such liability arising on or after the
Restatement Date under the Sublease in respect of the period up to (but
excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date), all of which rights, benefits, obligations
and liabilities shall expressly survive the termination of the Sublease. In
furtherance of the foregoing, it is agreed by Sublessee that the indemnities
contained in Sections 10 and 13 of the Sublease are expressly made for the
benefit of and shall be enforceable by each Indemnitee (as such term is defined
in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA
to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent Guarantor shall, as of the Restatement Date, have no
liabilities or obligations under the "Operative Documents" (as defined in the
Original Head Lease as in effect immediately prior to (but excluding) the
Restatement Date and excluding the Head Lease TIA
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(which rights, benefits, obligations and liabilities are amended and restated as
of the Restatement Date)) and are released from all such obligations and
liabilities, except the Original Head Lessee and the Parent Guarantor pursuant
to the Parent Head Lease Guaranty (i) shall continue to be liable to the parties
hereto for the removal of any Sublessor's Liens and (ii) (without releasing
Sublessor as provided in the Sublease) each of the Original Head Lessee, the
Parent Guarantor, the Owner Trustee, the Indenture Trustee and the Owner
Participant agree as among themselves and for the benefit of the other
"Indemnitees" (as such term is defined in the Original Head Lease) that all
rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of
the Participation Agreement with respect to the period up to (but excluding) the
Restatement Date and under any other provision of the Participation Agreement
which by the express terms thereof survives the termination thereof (including,
without limitation, any such liability arising from and including the
Restatement Date under the Participation Agreement in respect of the period up
to (but excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date) shall survive the termination of the
Participation Agreement, the Original Head Lease and the Parent Head Lease
Guaranty (the foregoing surviving rights, benefits, obligations and liabilities
of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained
Head Lease Rights and Obligations"). In furtherance of the foregoing, the
parties hereto consent and agree that the Parent Guarantor is hereby released
from any and all "Obligations" under and as defined in the Parent Head Lease
Guaranty, except in respect of the Retained Head Lease Rights and Obligations
and except in respect of the Amended and Restated Head Lease TIA, the
"Obligations" in respect of which shall continue in full force and effect in
accordance with the Parent Head Lease Guaranty and are hereby ratified and
confirmed by the Parent Guarantor.
SECTION 16. Certain Additional Obligations of the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee,
Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and
agrees for the benefit of each other that it will be bound by the terms of the
other Operative Documents to which it or its applicable trustee is a party, and
comply with and perform its agreements, covenants and indemnities set forth in
the other Operative Documents to which it or its applicable trustee is a party,
as amended, supplemented or otherwise modified from time to time as permitted
hereby.
SECTION 17. Lessee Protection of Title. Each of the Owner
Trustee and the Indenture Trustee agrees to execute and deliver such documents
or other instruments as the Lessee may reasonably request to enable the Lessee
to perform its obliga-
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tions under Section 15 of the Lease for the benefit of such Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee,
Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and
Lessee (i) hereby irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York in New York
County, and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service
of process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John
Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its
agent for service of process, and covenants and agrees that service of process
in any suit, action or proceeding may be made upon it at the office of such
agent or such other office of Parent Guarantor or such other agent, as from time
to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner
Participant and Indenture Trustee. Original Head Lessee hereby generally
consents to service of process by registered mail, return receipt requested,
addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury,
Connecticut 06810 or such other office of Original Head Lessee as from time to
time may be designated by Original Head Lessee in writing to Owner Trustee,
Owner Participant and Indenture Trustee. Owner Participant generally consents to
service of process by registered mail, return receipt requested, addressed to it
at ___________________________________ or such other office of Owner Participant
as from time to time may be designated by Owner Participant in writing to Owner
Trustee, Original Head Lessee, Lessee and Indenture Trustee. Owner
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Trustee generally consents to service of process by registered mail, return
receipt requested, addressed to it at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001 or such other office of Owner Trustee as
from time to time may be designated by Owner Trustee in writing to Owner
Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture
Trustee generally consents to service of process by registered mail, return
receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford,
Connecticut 06115 or such other office of Indenture Trustee as from time to time
may be designated in writing to Owner Participant, Original Head Lessee, Owner
Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has
not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the Original
Head Lessee of invoices therefor in reasonable detail prior to the Restatement
Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by
the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee,
the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the
Original Certificate Holders in connection with
- 56 -
<PAGE> 60
the transactions contemplated by this Agreement, the other Operative Documents,
the Lease, the Pass Through Trust Agreements, the Intercreditor Agreement, the
Liquidity Facilities and the Underwriting Agreement (except, in each case, as
otherwise provided therein) shall be paid on or prior to the Closing by the
Original Head Lessee, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable
to the Equipment Notes issued under the Indenture of (A) Shipman &
Goodwin LLP, special counsel for the Pass Through Trustee and the
Subordination Agent, (B) Kelley Drye & Warren LLP, special counsel for
the Indenture Trustee, (C) Morris, James, Hitchens & Williams, special
counsel for the Owner Trustee, (D) Daugherty, Fowler & Peregrin,
special counsel in Oklahoma City, Oklahoma and (E) Milbank, Tweed,
Hadley & McCloy, special counsel for the Underwriters;
(2) the reasonable fees, expenses and disbursements of
Hunton & Williams, special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Andrews &
Kurth L.L.P. and Latham & Watkins, special counsel for the Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and
the Subordination Agent;
(6) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code financing statements in the United
States of America; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred to
in this Section 21.
(c) The Lessee agrees to pay the amounts it is obligated to
pay under Section 21(j) of the Lease.
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and
- 57 -
<PAGE> 61
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly. The terms of this Agreement shall inure
to the benefit of the Liquidity Provider, its successors and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Original Head Lessee and its successors and permitted assigns, the Parent
Guarantor and its successors and permitted assigns, the Lessee and its
successors and permitted assigns, the Pass Through Trustee and its successors as
Pass Through Trustee (and any additional trustee appointed) under any of the
Pass Through Trust Agreements, the Indenture Trustee and its successors as
Indenture Trustee (and any additional Indenture Trustee appointed) under the
Indenture, the Subordination Agent and its successors as Subordination Agent
under the Intercreditor Agreement, the Owner Trustee and its successors as Owner
Trustee under the Trust Agreement, and the Owner Participant and its successors
and permitted assigns. No purchaser or holder of any Equipment Notes shall be
deemed to be a successor or assign of any holder of the Original Certificates.
(b) Upon the release of the Aircraft from the lien of the
Indenture and the termination of the Indenture pursuant to and in accordance
with Section 10.01 thereof, each requirement in the Operative Documents that the
consent of Indenture Trustee be obtained or that the Indenture Trustee be given
notice shall be of no further force and effect.
- 58 -
<PAGE> 62
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that this
Agreement shall be effective among all such parties on and as of the Restatement
Date.
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<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:_______________________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA SUB I, INC.
By:________________________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:________________________________________
Name:
Title:
Address: GPA House
Shannon, County Clare, Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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<PAGE> 64
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner Trustee
By:_________________________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust Administration
[__________________________________]
By:_________________________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
THE CHASE MANHATTAN BANK, not in its
individual capacity, except as otherwise
provided herein, but solely as Indenture
Trustee
By:_________________________________________
Name:
Title:
Address: 450 West 33rd Street
New York, New York 10001
Telephone: (212) 946-3348
Telecopier: (212) 946-8160
Attention: Corporate Trust Department
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<PAGE> 65
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Subordination Agent
By:_________________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Pass Through Trustee
By:_________________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
- 62 -
<PAGE> 66
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1D, dated November 26, 1996.
<PAGE> 67
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
- ------------ --------- -------- -------- --------
<S> <C> <C> <C> <C>
Class A $ 12,089,958 02-Jan-2009 6.85% $ 12,089,958
Class B $ 4,533,177 02-Jan-2008 6.93% $ 4,533,177
Class C $ 4,532,787 02-Jul-2004 6.86% $ 4,532,787
Class D $ 1,711,069 02-Jan-98 8.16% $ 1,711,069
</TABLE>
<PAGE> 68
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115,
Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of
Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290.
<PAGE> 69
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1989 BN-12]
TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-12], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, [________________________________], a Delaware
corporation ("Transferor"), is the Owner Participant under that certain
Refunding Agreement [GPA 1989 BN-12], dated as of November 20, 1996 among
Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass
Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified
or supplemented from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the
benefit of Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms
defined in the Refunding Agreement are used herein as therein defined, unless
otherwise defined herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably
guarantees to Beneficiaries and their respective successors, endorsees,
transferees and assigns, the prompt and complete payment by Transferee when due
(whether at the stated maturity,
<PAGE> 70
by acceleration or otherwise) of, and the faithful performance of, and
compliance with, all payment obligations of Transferee under the Refunding
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party and each other Operative Document
to which Transferee is a party or by which either is bound (collectively, the
"Relevant Documents"), strictly in accordance with the terms thereof and the
timely performance of all other obligations of Transferee thereunder (such
payment and other obligations, the "Obligations"), and Guarantor further agrees
to pay any and all expenses (including, without limitation, all fees and
disbursements of counsel) that may be paid or incurred by Beneficiaries in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any
other guarantor or any other Person or received or collected by any Beneficiary
from Transferee, Guarantor, any other guarantor or any other person by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of
Guarantor hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or
observed by Transferee (whether affirmative or negative in character) shall not
be observed or performed, or if any amount payable by Transferee referred to in
Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor
shall promptly perform or observe or cause to be performed or observed each such
Obligation or undertaking and shall forthwith pay such amount at the place and
to the person or entity entitled thereto pursuant to the Relevant Documents
regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass
Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of
any of them shall have instituted any suit, action or proceeding or exhausted
its remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments
made by Guarantor hereunder or any setoff or application of funds of Guarantor
by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of
the rights of any Beneficiary against Transferee or any collateral, security or
guarantee or
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<PAGE> 71
right of set-off held by any Beneficiary for the payment of the Obligations, nor
shall Guarantor seek or be entitled to seek any reimbursement from Transferee in
respect of payments made by Guarantor hereunder, until all amounts and
performance owing to Beneficiaries by Transferee on account of the Obligations
are paid and performed in full.
4. Amendments, etc., with respect to the Obligations; Waiver
of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without notice
to or further assent by the Guarantor, any demand for payment or performance of
any of the Obligations made by any Beneficiary may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not
assign, convey or otherwise transfer to any person (a) any of its interest in
Transferee unless in connection therewith,
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<PAGE> 72
Guarantor assigns its rights and obligations hereunder to a guarantor which
meets the requirements of Section 10 of the Refunding Agreement; provided that
nothing contained in this Section 5 shall be construed to prohibit any merger,
consolidation or other corporate restructuring of Transferee or Guarantor so
long as the resulting corporation meets the requirements of Section 10 of the
Refunding Agreement and assumes the obligations of the corporation merged or
consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guarantee or acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Transferee
or the Guarantor with respect to the Obligations. The Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance (and not merely of
collectibility) without regard to (a) the validity, regularity or enforceability
of any Relevant Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Transferee against any Beneficiary,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Transferee or the Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of the Transferee for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Transferee or any other person or
entity or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Beneficiary to
pursue such other rights or remedies or to collect any payments from the
Transferee or any such other person or entity or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Transferee or any such other person or entity or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and
- 4 -
<PAGE> 73
remedies, whether express, implied or available as a matter of law, of any
Beneficiary against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Beneficiaries, and their respective successors, endorsees, transferees
and assigns, until all of the Obligations and the Obligations of the Guarantor
under this Agreement shall have been satisfied by payment and performance in
full. The Guarantor further agrees that, without limiting the generality of this
Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by
applicable law from exercising its remedies (or any of them) against the
Transferee under any Operative Document, such Beneficiary (or any assignee
thereof) shall be entitled to receive hereunder from the Guarantor, upon demand
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any beneficiary upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made. The Guarantor shall not commence any "case" (as
defined in Title 11 of the United States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction or withholding,
and shall be made in U.S. Dollars. If any payment hereunder is subject to
deduction or withholding, Guarantor shall pay an additional amount such that,
after deduction of all amounts required to be deducted or withheld, the net
amount actually received will equal the amount that would have been received had
such deduction or withholding not been required.
9. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged;
- 5 -
<PAGE> 74
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Guarantee, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the
creation or imposition of any lien on any of the properties or revenues
of the Guarantor pursuant to any requirement of law or contractual
obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or governmental authority and no
consent of any other person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee;
(f) no litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
against any of its properties or revenues (i) with respect to this
Guarantee or any of the transactions contemplated hereby or (ii) that
could have a material adverse effect on the business, operations,
property or financial or other condition of the Guarantor;
[(g) the balance sheet of the Guarantor as at _________________ and
the related statement of income and retained earnings for the fiscal
year then ended (copies of which have heretofore been furnished to each
Beneficiary) have been prepared in accordance with generally accepted
accounting principles applied consistently throughout the period
involved, are complete and correct and present fairly the financial
condition of the Guarantor as at such date and the results of its
operations for such fiscal year; since such date there has been no
material adverse change in the business, operations, property or
financial or other condition of the Guarantor; the Guarantor has no
material contingent obligation, contingent liability or liability for
- 6 -
<PAGE> 75
taxes, long-term lease or unusual forward or long-term commitment that
is not reflected in the foregoing statements or in the notes thereto;
and]1
(h) the Guarantor is [type of legal personality] with a
[combined capital, surplus and undivided profits] [tangible net worth]
of at least $60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by
any act (except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any
Beneficiary, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire
agreement of Guarantor with respect to the subject matter hereof and there are
no promises or representations by any Beneficiary relative to the subject matter
hereof not reflected herein.
13. Amendments and Waivers. None of the terms or provisions of
this Guarantee may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this
Guarantee are for convenience of reference only and not to
- --------
1 This is not applicable if Transferee is a wholly-owned subsidiary of the
Owner Participant.
- 7 -
<PAGE> 76
affect the construction hereof or be taken into consideration in the
interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing or by
telegraph, telex or telecopy and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, two days after deposit in the postal system, first class
postage pre-paid, or, in the case of telegraphic notice, when sent, answerback
received, addressed to (a) in the case of the Guarantor, the address provided on
the signature page hereof, and (b) in the case of any Beneficiary, the address
provided for such party in the Refunding Agreement.
- 8 -
<PAGE> 77
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and the year first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
- 9 -
<PAGE> 78
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1989 BN-12]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-12]
("Assignment") dated as of _____________, between ______________, a ___________
corporation ("Assignor") and ________________, a __________ corporation
("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee,
Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned
below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer
by Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
[_______________________________], Fleet National Bank, as Subordination Agent,
and The Chase Manhattan Bank, as Indenture Trustee, as amended, modified or
supplemented from time to time (the "Refunding Agreement"), (ii) the Trust
Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as
defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA
identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the
Indenture (as defined in the Refunding Agreement) and (b) the assumption by
Assignee of the obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the meaning ascribed thereto in the Refunding Agreement.
For purposes of this Assignment, the defined term "Operative Document" shall
have the meaning ascribed thereto in the Refunding Agreement and shall be deemed
to include the Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned,
transferred and set over, and does hereby sell, convey, assign, transfer and set
over, unto Assignee, as of the date hereof, all of its right, title and interest
in, under and with respect to the Refunding Agreement, the Trust Agreement, the
Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the
other Operative Documents to which Assignor is a party or any other contract,
agreement, document or instrument relating to the Trust Estate by which Assignor
is bound, and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
<PAGE> 79
rights of Assignor as have accrued to Assignor prior to the date hereof
(including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust Agreement as of a date prior
to such date and the right to receive any indemnity payment pursuant to the
Refunding Agreement or the Lease with respect to events occurring prior to such
date).
3. Assumption. Assignee hereby undertakes all of the duties
and obligations of Assignor whenever accrued (other than duties and obligations
of Assignor required to be performed by it on or prior to the date hereof under
the Operative Documents to which Owner Participant is a party and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound), pursuant to the Trust Agreement
and any of the other Operative Documents by which Assignor is bound or any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound, and hereby confirms that
it shall be deemed a party to the Trust Agreement and shall be bound by each of
the other Operative Documents and each other contract, agreement, document or
other instrument relating to the Trust Estate to which Assignor is a party or by
which it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the
within assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
- 2 -
<PAGE> 80
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay over
to Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Assignor that, under Section 2 hereof, belong to Assignee, and
Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents that it is
acquiring the Trust Estate interests and other interests hereby assigned to it
without a view to the distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents and
warrants that:
(a) it has all requisite power and authority and legal right
to enter into and carry out the transactions contemplated hereby and to
carry out and perform the transactions of Owner Participant as
contemplated by the Operative Documents;
(b) on the date hereof it is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act
and the rules and regulations of the FAA thereunder;
(c) on and as of the date hereof, the representations and
warranties of Owner Participant set forth in Section 9 of the Refunding
Agreement and as set forth in any other Agreement to which Owner
Participant is a party are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of the
Refunding Agreement;
(e) Assignee or its guarantor has a [combined capital, surplus
and undivided profits] [tangible net worth] of not less than
$60,000,000.
- 3 -
<PAGE> 81
9. Governing Law. This Assignment and Assumption Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:____________________________________
Title:
[ASSIGNEE]
By:____________________________________
Title:
- 4 -
<PAGE> 82
EXHIBIT C to
REFUNDING AGREEMENT
LIST OF COUNTRIES
Australia
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Japan
Luxembourg
Netherlands
New Zealand
Norway
Singapore
South Korea
Sweden
Switzerland
United Kingdom
<PAGE> 83
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 84
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1989 BN-12] No. 2 dated
November 26, 1996 (the "Trust Agreement Supplement") between
the Owner Trustee and the Owner Participant, amending the
Trust Agreement, which Trust Agreement Supplement was filed
with the FAA at 12:20 p.m., C.S.T. on November 26, 1996;
(b) First Amended and Restated Trust Indenture and Security
Agreement [GPA 1989 BN-12] dated as of November 26, 1996 (the
"Amended and Restated Indenture") between the Owner Trustee
and the Indenture Trustee, amending and restating the Original
Indenture with attached thereto Trust Agreement and Indenture
Supplement No. 2 [GPA 1989 BN-12] dated November 26, 1996 (the
"Indenture Supplement"), with respect to the Aircraft, which
Amended and Restated Indenture with the Indenture Supplement
attached was filed with the FAA at 12:21 p.m., C.S.T. on
November 26, 1996;
(c) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of November 26, 1996 (the "Lease
Amendment") among the Original Head Lessee, as assignor, the
Owner Trustee, as lessor, the Lessee, as successor lessee, and
the Indenture Trustee, which (i) assigns all right, title and
interest of the Original Head Lessee in and to the Original
Head Lease to the Lessee, (ii) terminates the Sublease and
(iii) releases the Sublease Collateral Assignment, which Lease
Amendment was filed with the FAA at 12:22 p.m., C.S.T. on
November 26, 1996; and
(d) Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12]
dated as of December 19, 1989 and amended and restated as of
November 26, 1996 (the "Amended and Restated Lease") between
the Owner Trustee, as lessor, and the Lessee, as successor
lessee, amending and restating the Original Head Lease, with
Lease Supplement [GPA 1989 BN-12] No. 3 dated November 26,
1996 (the "Lease Supplement") between the Owner Trustee, as
lessor, and the Lessee, as successor lessee, with respect to
the Aircraft, attached thereto, which Amended and Restated
Lease with the Lease Supplement attached was filed with the
FAA at 12:23 p.m., C.S.T. on November 26, 1996.
Trust Agreement
Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989 between
[___________________________], formerly
<PAGE> 85
[________________________], as owner participant, and Wilmington Trust Company,
as owner trustee, as supplemented by Trust Supplement [GPA 1989 BN-12] No. 1
dated December 28, 1989.
Original Indenture
Trust Indenture and Security Agreement [GPA 1989 BN-12] dated as of
December 19, 1989 between Wilmington Trust Company, as trustee under Trust
Agreement [GPA 1989 BN-12] dated as of December 19, 1989, and The Chase
Manhattan Bank, as successor by merger to Chemical Bank, formerly Manufacturers
Hanover Trust Company, as indenture trustee, which was recorded by the Federal
Aviation Administration on January 2, 1990 and assigned Conveyance No. V78636,
as supplemented by the following described instrument:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Trust Indenture
Supplement No. 1 12/28/89 01/02/90 V78636
</TABLE>
Original Head Lease
Aircraft Lease Agreement [GPA 1989 BN-12] dated as of December 19, 1989
between Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989
BN-12] dated as of December 19, 1989, as lessor, and GPA Leasing USA Sub I,
Inc., as lessee, which was recorded by the Federal Aviation Administration on
January 2, 1990 and assigned Conveyance No. V78637, as supplemented by the
following described instrument:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Lease Supplement
[GPA 1989 BN-12]
No. 1 12/28/89 01/02/90 V78637
Lease Supplement
[GPA 1989 BN-12]
No. 2 12/31/91 (which was not filed for recordation
with the FAA)
</TABLE>
Sublease
Aircraft Sublease Agreement [GPA 1989 BN-12] dated as of
September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and
America West Airlines, Inc., as sublessee, which was recorded by the Federal
Aviation Administration on October 2, 1990 and assigned Conveyance No. E10203,
as supplemented and amended by the following described instruments:
- 2 -
<PAGE> 86
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 09/28/90 10/02/90 E10203
Amendment No. 1 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-12] 06/25/91 07/10/91 M27023
Amendment No. 2 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-12] 08/26/91 10/02/91 DD001725
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease [GPA 1989 BN-12] dated as of September
21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust
Company, as trustee under Trust Agreement [GPA 1989 BN-12] dated as of December
19, 1989, as assignee, which was attached to and recorded as one instrument with
the Sublease on October 2, 1990 and assigned Conveyance No. E10203.
- 3 -
<PAGE> 1
Exhibit 4.15
------------------------------------------------------------------------------
REFUNDING AGREEMENT
[GPA 1990 AWA-13]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA SUB I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
[---------------------------------],
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 091
Registration No. N634AW
Leased by America West Airlines, Inc.
------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
SECTION 1. Purchase of Equipment Notes; Refunding......................... 5
SECTION 2. Equipment Notes................................................ 7
SECTION 3. Conditions Precedent........................................... 7
SECTION 4. Certain Conditions Precedent to the
Obligations of the Original Head Lessee
and the Parent Guarantor; Certain
Conditions Precedent to the Obligations
of the Lessee; Conditions Precedent
with respect to the Pass Through
Trustee.................................................... 15
SECTION 5. Amendment and Restatement of the
Original Indenture......................................... 19
SECTION 6. Amendment and Restatement of the
Original Lease............................................. 19
SECTION 7. Termination of the Participation
Agreement; Termination of Sublease,
etc........................................................ 19
SECTION 8. Representations and Warranties of the
Lessee..................................................... 20
SECTION 9. Representations and Warranties................................. 25
SECTION 10. Transfer of Owner Participant's
Interest................................................... 42
SECTION 11. Re-Registration of the Aircraft............................... 45
SECTION 12. Quiet Enjoyment............................................... 47
SECTION 13. Liens......................................................... 47
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent
Guarantor, Trust Company, Owner Trustee
and Owner Participant...................................... 49
SECTION 15. Certain Retained Rights and Releases.......................... 52
- i -
<PAGE> 3
PAGE
----
SECTION 16. Certain Additional Obligations of the
Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee...................... 54
SECTION 17. Lessee Protection of Title.................................... 55
SECTION 18. Jurisdictional and Related Matters............................ 55
SECTION 19. Limitation on Recourse........................................ 56
SECTION 20. Notices....................................................... 56
SECTION 21. Expenses...................................................... 56
SECTION 22. Reliance of Liquidity Provider................................ 58
SECTION 23. Miscellaneous................................................. 58
SECTION 24. Governing Law................................................. 59
SECTION 25. Effectiveness................................................. 59
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1990 AWA-13]
REFUNDING AGREEMENT [GPA 1990 AWA-13] (this "Agreement"), dated as
of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) [______________
________________], a Delaware corporation (the "Owner Participant"), (v)
WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trust Company"),
not in its individual capacity except as otherwise expressly provided herein,
but solely as owner trustee (the "Owner Trustee") under the Trust Agreement (as
defined below), (vi) FLEET NATIONAL BANK, a national banking association, not in
its individual capacity except as otherwise expressly provided herein, but
solely as pass through trustee (in such capacity, the "Pass Through Trustee")
under each of the five separate Pass Through Trust Agreements (as defined
below), (vii) FLEET NATIONAL BANK, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the "Subordination Agent")
under the Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL
BANK (formerly known as Fleet National Bank of Connecticut, Shawmut Bank
Connecticut, National Association, and The Connecticut National Bank), a
national banking association, not in its individual capacity except as otherwise
expressly provided herein, but solely as Indenture Trustee (the "Indenture
Trustee") under the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used herein
in capitalized form shall have the meanings attributed thereto in the Indenture
(whether set forth therein or by reference to another document) as if the
Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner
Participant, Sanwa International PLC, as Lender (and predecessor in interest to
the Mitsubishi Trust and Banking Corporation, New York Branch, and The Hachijuni
Bank, Ltd., New York Branch, collectively, the "Lenders"), the Owner Trustee and
the Indenture Trustee entered into the Participation Agreement [GPA 1990
AWA-13], dated as of September 21, 1990, as amended by the Letter Agreement
dated as of July 29, 1993 (as amended, supplemented or otherwise modified from
time to time, the "Participation Agreement"), providing for the financing of one
Airbus A320-231 aircraft (the "Aircraft");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the
<PAGE> 5
Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA
1990 AWA-13], dated as of September 21, 1990, as supplemented by Trust Indenture
Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 to
Trust Indenture and Security Agreement dated March 27, 1992, and as further
amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of
July 29, 1993 (as so amended, supplemented or otherwise modified to the date
hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued
loan certificates substantially in the form set forth in Section 2.02 thereof
(the "Original Certificates") to the Lenders as evidence of the indebtedness
then being made by the Owner Trustee to finance a portion of the purchase price
of the Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1990 AWA-13], dated as of September 21,
1990, as supplemented by Lease Supplement [GPA 1990 AWA-13] No. 1 dated
September 28, 1990, and as further supplemented by Lease Supplement No. 2 dated
as of December 31, 1991 (as so supplemented, the "Original Lease"), whereby,
subject to the terms and conditions set forth therein, the Owner Trustee agreed
to lease to the Original Head Lessee, and the Original Head Lessee agreed to
lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as
therein defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1990 AWA-13] dated as of September 21, 1990 (the "Parent Head
Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the
Parent Guarantor guaranteed all of the obligations of the Original Head Lessee
under the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, as
supplemented by Trust Agreement Supplement [GPA 1990 AWA-13] No. 1 dated
September 28, 1990 (as amended, supplemented or otherwise modified to the date
hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee
agreed, among other things, to hold the Trust Estate defined in Section 1.1
thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-13],
dated as of
- 2 -
<PAGE> 6
September 21, 1990 (as amended, supplemented or otherwise modified to the date
hereof, the "Head Lease TIA");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Original Head Lessee in its capacity as sublessor
(in such capacity, the "Sublessor") and America West Airlines, Inc. in its
capacity as sublessee (in such capacity, the "Sublessee") entered into the
Aircraft Sublease Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as
supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-13] dated September 28,
1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990
AWA-13] dated as of August 26, 1991 (as amended, supplemented or otherwise
modified to the date hereof, the "Sublease"), whereby, subject to the terms and
conditions set forth therein, the Sublessor agreed to sublease to the Sublessee,
and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing
on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1990
AWA-13] dated as of September 21, 1990 (as amended, modified or otherwise
supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the
Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of
the Original Head Lessee under Section 21(f) of the Sublease;
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1990 AWA-13], dated as of September 21, 1990
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease [GPA 1990 AWA-13] dated as of September 21, 1990 (as amended, modified
or otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee and
the Indenture Trustee will amend and restate the Original Indenture as the First
Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-13],
dated as of the Restatement Date, as supplemented by Trust Indenture Supplement
No. 2 dated the Restatement Date (the "First Amended and Restated Indenture"
and, the First Amended and Restated Indenture as so amended and restated, the
"Indenture"), under which Indenture the Owner Trustee will issue secured
equipment notes substantially in the form set forth in Section 2.01 thereof (the
"Equipment Notes") in five series, the proceeds from the
- 3 -
<PAGE> 7
issuance and sale of which will be applied in part to the prepayment in full of
the Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
Original Lease as the Amended and Restated Lease (as so amended and restated,
the "Lease");
WHEREAS, at the Closing, the Owner Participant and the Owner Trustee
will enter into Trust Agreement Supplement [GPA 1990 AWA-13] No. 2 ("Trust
Supplement No. 2"), amending the Original Trust Agreement (as so amended and as
further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the Original Head
Lessee will enter into the Amended and Restated Head Lease Tax Indemnification
Agreement, amending and restating the Head Lease TIA (as so amended and
restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the
Sublessee will enter into the Amended and Restated Sublease Tax Indemnification
Agreement amending and restating the Sublease TIA (as so amended and restated,
the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of
the Pass Through Trust Supplements set forth in Schedule I hereto (collectively,
the "Pass Through Trust Agreements"), on the Restatement Date, five separate
grantor trusts (collectively, the "Pass Through Trusts" and, individually, a
"Pass Through Trust") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the Certificates
by each Pass Through Trust will be applied by the Pass Through Trustee at the
Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Equipment Notes bearing the same interest rate as the
Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the
"Liquidity Provider") will enter into three revolving
- 4 -
<PAGE> 8
credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders
of Equipment Notes of each of three Pass Through Trusts, with the Subordination
Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through
Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the
Subordination Agent will enter into the Intercreditor Agreement, dated as of the
Restatement Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination Agent
pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to
the satisfaction or waiver of the conditions set forth herein, on November 26,
1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as a payment of
Supplemental Rent under the Sublease all accrued and unpaid Rent under the
Sublease up to the Restatement Date, if any, (less any amounts for which
Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee
shall pay to the Owner Trustee, as a payment of Supplemental Rent under
the Original Lease, an amount equal to the accrued and unpaid interest on
the Original Certificates up to but not including the Restatement Date
plus an amount (the "Prepayment Amount") equal to all other amounts due to
the holders of the Original Certificates under the Original Indenture and
the other Operative Documents (as defined in the Original Indenture)
payable on the Restatement Date under Section 2.12 of the Original
Indenture;
(ii) the Pass Through Trustee for each Pass Through Trust shall pay
to the Owner Trustee the aggregate purchase price of the Equipment Notes
being issued to such Pass Through Trustee as set forth in clause (xii)
below;
(iii) the Owner Trustee (to the extent of proceeds received under
clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit
of the holders of the Original Certificates an amount equal to the
aggregate principal amount of the Original Certificates outstanding on the
Restatement Date, together with accrued and unpaid
- 5 -
<PAGE> 9
interest on the Original Certificates up to but not including the
Restatement Date plus the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the holders of the
Original Certificates the amounts of principal, interest, Break Funding
Cost, if any, described in clause (iii) above, owing to them on the
Restatement Date with respect to the Original Certificates as a prepayment
of the Original Certificates;
(v) the Indenture Trustee shall receive the Original Certificates
for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter into
the Indenture (including Trust Indenture Supplement No. 2);
(vii) the Original Head Lessee, the Sublessee, the Owner Trustee and
the Indenture Trustee shall enter into Lease Amendment No. 1;
(viii) the Owner Participant and the Trust Company shall enter into
Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner Participant shall enter
into the Amended and Restated Head Lease TIA and the Sublessor and the
Sublessee shall enter into the Amended and Restated Sublease TIA;
(x) the Original Head Lessee, GPA Leasing USA I, Inc., the Parent
Guarantor and the Lessee shall enter into an agreement in form and
substance reasonably satisfactory to each, inter alia, confirming the
termination of certain rights which the Parent Guarantor has to "put"
aircraft to the Lessee and the obligation of the Lessee to accept and
lease such aircraft (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of its affiliates and
the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant
to which the Parent Guarantor and/or one or more of its affiliates, on the
one hand, and the Lessee, on the other, will indemnify each other with
respect to certain information included in the Prospectus and the
Registration Statement (as such terms are defined in the Underwriting
Agreement) (the "Prospectus" and the "Registration Statement",
respectively); and
(xii) the Owner Trustee shall issue, pursuant to Article II of the
Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Equipment Notes of the
maturity and aggregate
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<PAGE> 10
principal amount, bearing the interest rate and for the purchase price set
forth on Schedule II hereto opposite the name of such Pass Through Trust.
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) The closing (the "Closing") of the transactions described in
this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement
Date, or at such other place as the parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated hereby, the
Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor and the
Lessee have entered into the Underwriting Agreement, dated as of November 20,
1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley &
Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc
(collectively, the "Underwriters"), and, subject to the terms and conditions
hereof, the Lessee will enter into each of the Pass Through Trust Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be payable as
to principal in accordance with the terms of the Indenture, and the Equipment
Notes shall provide for a fixed rate of interest per annum and shall contain the
terms and provisions provided for the Equipment Notes in the Indenture. The
Owner Trustee shall execute, and the Indenture Trustee shall authenticate and
deliver to the Pass Through Trustee for each Pass Through Trust, a principal
amount of Equipment Notes bearing the interest rate set forth opposite the name
of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the
aggregate shall be in the principal amounts set forth on Schedule II hereto.
Subject to the terms hereof, of the Pass Through Trust Agreements and of the
other Operative Documents, all such Equipment Notes shall be dated and
authenticated as of the Restatement Date and shall bear interest therefrom,
shall be registered in such names as shall be specified by the Subordination
Agent and shall be paid in the manner and at such places as are set forth in the
Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass Through
Trustee to make the payments described in
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<PAGE> 11
Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments
described in Section 1(a)(iii) and the obligations of each of the Pass Through
Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to
participate in the transactions contemplated by this Agreement on the
Restatement Date are subject to the fulfillment, prior to or on the Restatement
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall
not be conditions precedent to the obligations of the Indenture Trustee
hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes to the
Indenture Trustee for authentication, and the Indenture Trustee shall have
authenticated such Equipment Notes and shall have tendered the Equipment
Notes to the Subordination Agent on behalf of the Pass Through Trustee in
accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of the
following documents and the Indenture Trustee shall have received executed
counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated Lease
and Lease Supplement No. 3;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and Trust
Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements and each Pass
Through Trust Supplement set forth in Schedule I hereto;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the Class A, Class B
and Class C Trusts (as defined in the Intercreditor
Agreement).
(c) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received the following:
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<PAGE> 12
(1) an incumbency certificate of each of the Original Head
Lessee, the Lessee and the Parent Guarantor as to the person or
persons authorized to execute and deliver this Agreement and each of
the other documents to be executed on behalf of such Person in
connection with the transactions contemplated hereby (including,
without limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
each of the Original Head Lessee, the Lessee and the Parent
Guarantor or the applicable committee thereof, certified by the
Secretary or an Assistant Secretary of such Person, duly authorizing
the transactions contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed and
delivered on behalf of such Person in connection with the
transactions contemplated hereby;
(3) a copy of the certificate of incorporation of each of the
Original Head Lessee and the Lessee, certified by the Secretary of
State of its state of incorporation, a copy of the by-laws of each
of the Original Head Lessee and the Lessee, certified by the
Secretary or Assistant Secretary of such Person, and a certificate
or other evidence from the Secretary of State of its state of
incorporation, dated as of a date reasonably near the Restatement
Date, as to its due incorporation and good standing in such state;
and
(4) a copy of the Memorandum and Articles of Association of
the Parent Guarantor certified to be true and correct by the
Secretary or an Assistant Secretary of the Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case of
(1), (5) and (6) below, a certificate signed by an authorized officer of
the Lessee and, in the case of (2), (3) and (4) below, a certificate
signed by an authorized officer of the Original Head Lessee, dated the
Restatement Date, certifying that:
(1) the Aircraft has been duly certified by the FAA as to type
and airworthiness and has a current, valid certificate of
airworthiness;
(2) the Aircraft FAA Bill of Sale (as defined in the
Participation Agreement), the Original Lease
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<PAGE> 13
(excluding Lease Supplement No. 2) and the Original Indenture have
each been duly recorded, and the Original Trust Agreement has been
duly filed, with the FAA pursuant to the sections of Title 49 of the
United States Code relating to aviation (the "Federal Aviation
Act");
(3) Lease Amendment No. 1, the Amended and Restated Lease,
Lease Supplement No. 3, the First Amended and Restated Indenture,
Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering
the Aircraft shall have been duly filed for recordation with the FAA
pursuant to the Federal Aviation Act;
(4) the Aircraft has been registered with the FAA in the name
of the Owner Trustee;
(5) the Lessee has authority to operate the Aircraft; and
(6) the representations and warranties contained herein of the
Lessee are correct as of the Restatement Date, except to the extent
that such representations and warranties relate solely to an earlier
date (in which case such representations and warranties were correct
on and as of such earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on behalf
of the Indenture Trustee in connection with the transactions
contemplated hereby (including, without limitation, each of the
documents referred to herein) and as to the signatures of such
person or persons;
(2) a copy of the resolutions of the board of directors of the
Indenture Trustee, certified by the Secretary, an Assistant
Secretary or other appropriate officer of the Indenture Trustee,
duly authorizing the transactions contemplated hereby and the
execution, delivery and performance of each of the documents
required to be executed and delivered on behalf of the Indenture
Trustee in connection with the transactions contemplated hereby;
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<PAGE> 14
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary, an Assistant
Secretary or other appropriate officer of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Restatement Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Restatement
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement
and each of the other documents to be executed on behalf of the
Owner Trustee in connection with the transactions contemplated
hereby (including, without limitation, each of the documents
referred to herein) and as to the signatures of such person or
persons;
(2) a copy of the resolutions of the board of directors of the
Owner Trustee, certified by the Secretary or an Assistant Secretary
of the Owner Trustee, duly authorizing the transactions contemplated
hereby and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of the
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the Owner
Trustee, dated the Restatement Date, certifying that the
representations and warranties contained herein of the Owner Trustee
are correct as though made on and as of the Restatement Date, except
to the extent that such representations and warranties relate solely
to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
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<PAGE> 15
(g) The Pass Through Trustee, the Indenture Trustee and the Owner
Trustee each shall have received the following:
(1) an incumbency certificate of the Owner Participant as to
the person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on behalf
of the Owner Participant in connection with the transactions
contemplated hereby (including, without limitation, each of the
documents referred to herein) and as to the signatures of such
person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner Participant or the applicable authority designated by the
board of directors thereof, certified by the Secretary or an
Assistant Secretary of the Owner Participant, duly authorizing the
transactions contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed and
delivered on behalf of the Owner Participant in connection with the
transactions contemplated hereby;
(3) a copy of the certificate of incorporation of the Owner
Participant, certified by the Secretary of State of its state of
incorporation, a copy of the by-laws of the Owner Participant,
certified by the Secretary or Assistant Secretary of the Owner
Participant, and a certificate or other evidence from the Secretary
of State of its state of incorporation, dated as of a date
reasonably near the Restatement Date, as to its due incorporation
and good standing in such state; and
(4) a certificate signed by an authorized representative of
the Owner Participant, dated the Restatement Date, certifying that
the representations and warranties contained herein of the Owner
Participant are correct as though made on and as of the Restatement
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the Lessee
a report from Willis Corroon in substantially the form of Exhibit D
attached hereto.
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<PAGE> 16
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion
addressed to it from (i) Latham & Watkins, special counsel for the Lessee,
(ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the
Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca,
special Arizona counsel for the Lessee, in each case in form and substance
satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the Owner
Participant each shall have received an opinion addressed to it from
Morris, James, Hitchens & Williams, special counsel for the Owner Trustee,
in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from
Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the
Subordination Agent and the Pass Through Trustee, in each case in form and
substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the Owner
Trustee each shall have received an opinion addressed to it from (i)
Hunton & Williams, special counsel for the Owner Participant and (ii)
in-house counsel for the Owner Participant, in each case in form and
substance satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case, special
counsel for the Liquidity Provider, and (ii) in-house counsel for the
Liquidity Provider, in each case in form and substance satisfactory to the
Pass Through Trustee, the Owner Trustee and the Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Daugherty, Fowler & Peregrin, special counsel in
Oklahoma City, Oklahoma, in form and substance satisfactory to each of
them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New
York counsel for the Original Head Lessee and the Parent Guarantor, in
form and substance satisfactory to each of them.
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<PAGE> 17
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from McCann FitzGerald, special Irish counsel for the
Parent Guarantor, in form and substance satisfactory to each of them.
(q) The Original Head Lessee, the Lessee, GPA Leasing USA I, Inc.
and the Parent Guarantor shall have entered into the Underwriting
Agreement and the Lessee shall have entered into each of the Pass Through
Trust Agreements, the Certificates shall have been issued and sold
pursuant to the Underwriting Agreement and the Pass Through Trust
Agreements, and the Underwriters shall have transferred to the Pass
Through Trustee in immediately available funds an amount equal to the
aggregate purchase price of the Equipment Notes to be purchased from the
Owner Trustee.
(r) The Original Head Lessee and the Owner Participant shall each
have executed and delivered to the other the Amended and Restated Head
Lease TIA.
(s) The Sublessor and the Sublessee shall each have executed and
delivered to the other the Amended and Restated Sublease TIA.
(t) No change shall have occurred after the date of this Agreement
in applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal
for the Pass Through Trustee to make the payments described in Section
1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or
the Owner Participant or any other party hereto to participate in the
transactions contemplated by this Agreement on the Restatement Date.
(u) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in connection
with the Pass Through Trustee's making of the payments described in
Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's
participation in the transactions contemplated by this Agreement on the
Restatement Date shall have been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment and
continuation statement or statements covering all of the security
interests created by or pursuant to the Indenture that are not covered by
the recording system established by the Federal Aviation Act shall have
been executed and delivered by the Original Head Lessee, the Lessee, the
Indenture Trustee and the Owner Trustee, as the
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<PAGE> 18
case may be, and such financing, termination, amendment and continuation
statement or statements or documents to the same purposes shall have been
duly filed in all places necessary or advisable, and any additional
Uniform Commercial Code financing, termination, amendment and continuation
statements deemed advisable by the Original Head Lessee, the Lessee, the
Owner Participant or the Indenture Trustee shall have been executed and
delivered by the Original Head Lessee, the Lessee, the Indenture Trustee
or the Owner Trustee, as the case may be, and duly filed in all places
advisable.
(w) No change shall have occurred after the date of this Agreement
in applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would adversely
affect the tax consequences of the transactions contemplated by this
Agreement to the Owner Participant, the Owner Trustee or any of their
respective Affiliates.
(x) The Owner Trustee shall have received a letter of credit in the
amount of $1,000,000 from the Lessee in the form of Exhibit D-2 to the
Lease.
(y) The Owner Participant shall have received any other documents
and evidence as the Owner Participant or its counsel may request.
Promptly following the recording of Lease Amendment No. 1, the
Amended and Restated Lease (including Lease Supplement No. 3) and the First
Amended and Restated Indenture (including Trust Indenture Supplement No. 2)
pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3,
the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and
Trust Supplement No. 2.
SECTION 4. Certain Conditions Precedent to the Obligations of the
Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to
the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
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<PAGE> 19
(i) Each of the Original Head Lessee and the Parent Guarantor shall
have received counterparts of the following documents executed by each of
the parties thereto other than the Original Head Lessee and the Parent
Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated Lease
and Lease Supplement No. 3;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination statements relating
to the Original Head Lease executed by the Owner Trustee
and/or the Indenture Trustee and such other releases and
terminations as it may reasonably request; and
(9) that certain letter agreement dated as of the
Restatement Date relating to Stipulated Loss Values with
respect to the Amended and Restated Lease (the "SLV
Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent Guarantor shall
have received originals of the following documents:
(1) the incumbency certificate of the Lessee referred to in
Section 3(c)(1);
(2) the resolutions of the Lessee referred to in Section
3(c)(2);
(3) the documents referred to in Section 3(e), Section 3(f)
and Section 3(g);
(4) the opinions referred to in Section 3(i), Section 3(j),
Section 3(k), Section 3(l), Section 3(m) and Section
3(n), in each case addressed to each of the Original
Head Lessee and the Parent Guarantor and in form and
substance satisfactory to each of them;
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<PAGE> 20
(5) the opinions of Paul, Hastings, Janofsky & Walker LLP
and Milbank, Tweed, Hadley & McCloy with respect to
certain matters relating to and described in the
Prospectus, in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form and
substance reasonably satisfactory to each of them; and
(6) the report referred to in Section 3(h) addressed to each
of the Original Head Lessee and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent Guarantor shall
have received such other documents and evidence with respect to each other
party hereto as each of them or its counsel may reasonably request in
order to establish the due consummation of the transactions contemplated
by this Agreement and the "Refunding Agreements" (as defined in the
Registration Statement), the taking of all necessary action in connection
therewith and compliance with the conditions herein or therein set forth.
(b) The obligations of the Lessee to make the payment described in
Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by
this Agreement on the Restatement Date, and to execute and deliver each of the
Pass Through Trust Agreements are subject to the fulfillment, prior to or on the
Restatement Date, of the following conditions precedent:
(i) The Lessee shall have received counterparts of the following
documents executed by each of the parties thereto other than Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated Lease
and Lease Supplement No. 3;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
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<PAGE> 21
(8) Uniform Commercial Code termination statements relating
to the Sublease executed by the Original Head Lessee;
and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the
following documents:
(1) the incumbency certificate of the Original Head Lessee
and Parent Guarantor referred to in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee and Parent
Guarantor referred to in Section 3(c)(2);
(3) the documents referred to in Section 3(e), Section 3(f)
and Section 3(g);
(4) the opinions referred to in Section 3(j), Section 3(k),
Section 3(l), Section 3(m), Section 3(n), Section 3(o)
and Section 3(p), in each case addressed to Lessee and
in form and substance satisfactory to Lessee; and
(5) the opinions of Paul, Hastings, Janofsky & Walker LLP
and Milbank, Tweed, Hadley & McCloy with respect to
certain matters relating to and described in the
Prospectus, in each case addressed to Lessee and in form
and substance reasonably satisfactory to Lessee.
(iii) The Lessee shall have received such other documents and evidence
with respect to each other party hereto as Lessee or its counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement and the "Refunding Agreements"
(as defined in the Registration Statement), the taking of all necessary
action in connection therewith and compliance with the conditions herein
and therein set forth.
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass
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<PAGE> 22
Through Trust Agreements of the Pass Through Trustee are correct as of the
Restatement Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date), (ii) an opinion
addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass
Through Trustee, in form and substance satisfactory to each of them, and (iii)
such other documents and evidence with respect to the Pass Through Trustee as it
may reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement, the taking of all necessary action
in connection therewith and compliance with the conditions herein set forth.
SECTION 5. Amendment and Restatement of the Original Indenture.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the First
Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee,
by execution and delivery hereof, agree to execute and deliver the First Amended
and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor
and the Lessee, by execution and delivery hereof, consent to such execution and
delivery of the First Amended and Restated Indenture. The First Amended and
Restated Indenture shall be effective as of the Restatement Date.
SECTION 6. Amendment and Restatement of the Original Lease. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner
Participant, by execution and delivery hereof, consent to the assignments,
delegations, and releases set forth in, and to the amendment and restatement of
the Original Lease effected by, and the Owner Participant requests and instructs
the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner
Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee
agree, by execution and delivery hereof, to execute and deliver Lease Amendment
No. 1. The Amended and Restated Lease shall be effective as of the Restatement
Date.
SECTION 7. Termination of the Participation Agreement; Termination
of Sublease, etc. Subject to the satisfaction or waiver of the conditions
precedent set forth herein, the Owner Participant, the Owner Trustee, the
Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect from and including the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no
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<PAGE> 23
obligations on the parties thereto. Upon the execution and delivery of Lease
Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease
Guaranty and the Assignment of Sublease shall be terminated as and to the extent
set forth herein and therein. Lease Amendment No. 1 shall be effective as of the
Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The Lessee
represents and warrants, as of the Restatement Date, to the Original Head Lessee
(except as to the representation and warranty contained in Section 8(i)), the
Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, has the
corporate power and authority to own or hold under lease its properties,
has, or had on the respective dates of execution thereof, the corporate
power and authority to enter into and perform its obligations under this
Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust
Agreements, the Amended and Restated Sublease TIA, the SLV Letter
Agreement and any certificate delivered by the Lessee pursuant to the
foregoing (the "Lessee Documents") and is duly qualified to do business as
a foreign corporation in each jurisdiction where the failure to so qualify
would have a material adverse effect on its business, operations or
condition (financial or otherwise), or on its ability to perform its
obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000 East
Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee Documents
and the performance of the obligations of the Lessee under the Lessee
Documents have been duly authorized by all necessary corporate action on
the part of the Lessee, do not require any stockholder approval, or
approval or consent of any trustee or holder of any material indebtedness
or material obligations of the Lessee, except such as have been duly
obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation, judgment or order binding on the Lessee or
the certificate of incorporation or by-laws of the Lessee, or contravene
the provisions of, or constitute a default under,
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or result in the creation of any Lien (other than Permitted Liens) upon
the property of the Lessee under, any indenture, mortgage, contract, lease
or other agreement in each case having payment obligations in excess of
$500,000 to which the Lessee is a party or by which it may be bound or
affected;
(d) neither the execution and delivery by the Lessee of the Lessee
Documents nor the performance of the obligations of the Lessee under the
Lessee Documents nor the consummation by the Lessee of any of the
transactions contemplated by the Lessee Documents, requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action in respect of, the Department of Transportation, the
FAA, or any other federal, state, local or foreign governmental authority
having jurisdiction, other than those which have already been received and
which the Lessee is in compliance with and (i) the registration of the
Certificates under the Securities Act of 1933, as amended (the "Securities
Act") and the securities laws of any state in which the Certificates may
be offered for sale if the laws of such state require such action, (ii)
the qualification of the Pass Through Trust Agreements under the Trust
Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers,
exemptions, authorizations and approvals of the regulatory authorities
having jurisdiction over the operation of the Aircraft by Lessee required
to be obtained on or prior to the Restatement Date, which orders, permits,
waivers, exemptions, authorizations and approvals have been duly obtained
and are, or will on the Restatement Date be in full force and effect, (B)
the registration of the Aircraft pursuant to the Federal Aviation Act and
(C) such consents, approvals, notices, registrations and other actions
required by the terms of the Lessee Documents to the extent required to be
given or obtained only after the Restatement Date and (iv) the
registrations and filings referred to in Section 8(i);
(e) each Lessee Document has been duly executed and delivered by the
Lessee and, assuming the due authorization, execution and delivery thereof
by the other parties thereto, each Lessee Document constitutes, or when
executed will constitute, the legal, valid and binding obligations of the
Lessee enforceable against the Lessee in accordance with their respective
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors or lessors generally and by general principles of
equity, whether considered in a proceeding at law or in equity, and
except, in the case of the Lease, as may be limited by applicable laws
which may affect the remedies provided in
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the Lease, which laws, however, do not make the remedies provided in the
Lease inadequate for the practical realization of the benefits intended to
be afforded thereby;
(f) except as disclosed in the Prospectus, there are no pending or,
to its knowledge, threatened actions or proceedings before any court or
administrative agency or regulatory commission or other governmental
agency against or affecting the Lessee that are reasonably expected to
materially adversely affect the ability of Lessee to enter into or perform
its obligations under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be free and
clear of any and all Liens (other than Permitted Liens) created by or
through the Lessee;
(i) except for the registration of the Aircraft pursuant to the
Federal Aviation Act, the filing for recordation pursuant to the Federal
Aviation Act (with confidential financial terms redacted) of Lease
Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3,
Trust Supplement No. 2, the First Amended and Restated Indenture and
Indenture Supplement No. 2, and each of the other documents referred to in
Annex A hereto, all with the FAA, the filing of a Uniform Commercial Code
("UCC") amended financing statement with the Secretary of State of the
State of Delaware with regard to the Original Lease, the filing of UCC
termination statements with regard to the Original Head Lessee with the
Secretary of State of the States of New York, Connecticut and Arizona, the
filing of a protective UCC financing statement with the Secretary of State
of the State of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State of Arizona
with respect to the Sublease, and the filing of a UCC termination
statement with the Secretary of State of the State of Delaware with
respect to the Initial Sublease Assignment (as defined in the Original
Lease) all of which financing and termination statements shall have been
duly effected as of the Restatement Date (and assignments thereof and
continuation statements at periodic intervals), and other than the taking
of possession by the Indenture Trustee of the original counterparts of the
Original Lease, Lease Amendment No. 1, the Amended and Restated Lease, and
all Lease Supplements thereto (to the extent the Lease constitutes chattel
paper), and the placing of the Lease identification required by Section
6(e) of the Lease, no further filing or recording of the Lease or of any
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<PAGE> 26
other document (including any financing statement under Article 9 of the
UCC of the State of Delaware, New York or Arizona) and no further action
is necessary, under the laws of the United States of America or the States
of Delaware, New York and Arizona in order to perfect the Owner Trustee's
interest in the Aircraft as against the Lessee and any third parties, or
to perfect the security interest in favor of the Indenture Trustee in the
Owner Trustee's interest in the Aircraft and in the Lease;
(j) all obligations of the Lessee owing to the Lessor in connection
with the Lease are at least pari passu with all unsecured and
unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes a
Lease Event of Default or would constitute a Lease Event of Default but
for the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes an
Event of Loss (as defined in the Lease) or would constitute an Event of
Loss with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will cause
to be filed, all federal and state tax returns which are required to be
filed and has paid or will pay or has caused or will cause to be paid all
taxes shown to be due or payable on said returns and on any assessment
received by the Lessee, to the extent such taxes have become due and
payable, except for taxes and returns with respect thereto the nonpayment
or nonfiling of which, either in any case or in the aggregate, could have
no material adverse effect on the Lessee, its condition (financial or
otherwise), business, operations or prospects, or on its ability to
perform its obligations under the Lease or which are being diligently
contested by the Lessee in good faith by appropriate proceedings and with
appropriate reserves;
(n) the financial statements together with the notes related thereto
contained in the Registration Statement are complete in all material
respects and fairly present the Lessee's financial condition as of
September 30, 1996 and the results of its operations for the period
covered in conformance with GAAP (except as otherwise noted therein and
with which any such change the independent auditors of the Lessee have
agreed), since September 30, 1996, there has been no material adverse
change in the Lessee's business, operations, condition (financial or
otherwise) or prospects which has not been disclosed in writing to the
Owner Participant and the Indenture Trustee and does not contain
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<PAGE> 27
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary, duties or
other similar Taxes then due and for which the Lessee is responsible
pursuant to the Lessee Documents, shall have been paid, other than such
Taxes which are being contested by the Lessee in good faith and by
appropriate proceedings (and for which the Lessee shall have established
such reserves as are required under GAAP) so long as such proceedings or
the non-payment of such Taxes do not involve any material danger to the
sale, forfeiture or loss of the Aircraft;
(p) the Lessee is not a "national" of any designated foreign country
within the meaning of the Foreign Assets Control Regulations or the Cuban
Assets Control Regulations of the United States Treasury Department, 31
Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any
regulations, interpretations or rulings issued thereunder, and the Lessee
is not, and is not acting on behalf of or for the benefit of, an "Iranian
Entity" within the meaning of the Iranian Assets Control Regulations of
the United States Treasury Department, 31 Code of Federal Regulations,
Subtitle B, Chapter V, as amended, and the transactions contemplated by
this Agreement are not prohibited by Executive Order 12170, the
above-mentioned Iranian Assets Control Regulations or any regulations,
interpretations or rulings issued under any thereof;
(q) no part of the Rent or other payments made by the Lessee under
the Lease or under the other Operative Documents will be made out of the
assets of any "employee benefit plan" as defined in Section 3(3) of ERISA;
(r) no representation or warranty of the Lessee contained in any
Lessee Document or other information in writing furnished to the Owner
Participant or the Indenture Trustee by the Lessee in connection herewith
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein
or therein not misleading. There is no fact known to the Lessee (other
than matters of a general economic nature) which the Lessee has not
disclosed in writing to the Owner Participant or the Indenture Trustee
which could impair its ability to perform its obligations under the Lessee
Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy Code,
the Lessor as lessor of the Aircraft under
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<PAGE> 28
the Lease, and the Indenture Trustee, as assignee of the Owner Trustee's
rights under the Lease pursuant to the Indenture, would be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the
Aircraft.
SECTION 9. Representations and Warranties. Each of the parties below
represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below) represents
and warrants that:
(1) the Indenture Trustee is a banking association duly
organized, validly existing and in good standing under the federal
laws of the United States of America, is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal Aviation
Act and the rules and regulations of the FAA thereunder (as so
defined, a "Citizen of the United States") (without making use of a
voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without making
use of a voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as Indenture
Trustee as provided in Section 8.02 of the Indenture promptly after
it obtains actual knowledge that it has ceased to be such a Citizen
of the United States (without making use of a voting trust, voting
powers agreement or similar arrangement), and has the full corporate
power, authority and legal right under the laws of the State of
Connecticut and the federal laws of the United States pertaining to
its banking, trust and fiduciary powers to execute and deliver each
of this Agreement, the Indenture and each other Operative Document
to which it is a party and to carry out its obligations under this
Agreement, the Indenture and each other Operative Document to which
it is a party;
(2) neither the execution and delivery by the Indenture
Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and
each other Operative Document to which it is a party, nor the
consummation by it of any of the transactions contemplated hereby or
thereby, nor the compliance by it with any of the terms and
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<PAGE> 29
provisions hereof and thereof, (A) requires or will require any
approval of its stockholders, or approval or consent of any trustees
or holders of any indebtedness or obligations of it, or (B) violates
or will violate its articles of association or by-laws, or
contravenes or will contravene any provision of, or constitutes or
will constitute a default under, or results or will result in any
breach of, or results or will result in the creation of any Lien
(other than as permitted under the Operative Documents) upon its
property under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit agreement,
license or other agreement or instrument to which it is a party or
by which it is bound, or contravenes or will contravene any law,
governmental rule or regulation or any judgment or order applicable
to or binding on it of any United States governmental authority or
agency governing the trust powers of the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture, when
executed and delivered by the Indenture Trustee, will constitute,
the legal, valid and binding obligations of the Indenture Trustee
enforceable against it in accordance with their respective terms,
except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(4) there are no pending or, to its knowledge, threatened
actions or proceedings against the Indenture Trustee, either in its
individual capacity or as Indenture Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Indenture Trustee, in
its individual capacity or as Indenture Trustee, as the case may be,
to perform its obligations under the Operative Documents to which it
is a party;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any State of Connecticut or any United States of America
governmental authority or agency regulating the trust powers of the
Indenture Trustee is required for the execution and delivery of, or
the carrying out by, the Indenture Trustee of any of the
transactions contemplated hereby or by the Indenture, Lease
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<PAGE> 30
Amendment No. 1 or any other Operative Document to which it is a
party or by which it is bound, other than any such consent,
approval, order, authorization, registration, notice or action as
has been duly obtained, given or taken;
(6) there are no Lenders' Liens (as defined in the Lease) on
the Aircraft or any portion of the Trust Estate created by or
through the Indenture Trustee in its individual capacity; and
(7) it has possession of the chattel paper original
counterpart of the Original Lease, Lease Amendment No. 1 and the
Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties are
made solely by the Owner Trustee) and the Owner Trustee represents and
warrants that:
(1) the Trust Company is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, has full corporate power and authority to carry on its
business as now conducted, has, or had on the respective dates of
execution thereof, the corporate power and authority to execute and
deliver Trust Supplement No. 2, has the corporate power and
authority to carry out the terms of the Trust Agreement, and each of
the Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the authorization,
execution and delivery of Trust Supplement No. 2 by the Owner
Participant), the corporate power and authority to execute and
deliver and to carry out the terms of this Agreement, the Indenture,
the Equipment Notes, Lease Amendment No. 1, the Lease and each other
Operative Document (other than the Trust Agreement) to which it is a
party;
(2) (i) each of the Trust Company and the Owner Trustee has
duly authorized, executed and delivered the Trust Agreement and this
Agreement and (assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant) the
Trust Agreement constitutes a legal, valid and binding obligation of
the Owner Trustee, in its individual capacity or as Owner Trustee
and the Trust Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of
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<PAGE> 31
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity, (ii) the Owner
Trustee has duly authorized, executed and delivered this Agreement
and (assuming the due authorization, execution and delivery of Trust
Supplement No. 2 by the Owner Participant) this Agreement and the
Trust Agreement constitute, and the Indenture and the Lease, when
entered into, will constitute, a legal, valid and binding obligation
of the Owner Trustee, in its individual capacity or as Owner Trustee
and the Trust Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at
law or in equity;
(3) assuming the due authorization, execution and delivery of
Trust Supplement No. 2 by the Owner Participant, the Owner Trustee
has duly authorized, and on the Restatement Date shall have duly
issued, executed and delivered to the Indenture Trustee for
authentication, the Equipment Notes pursuant to the terms and
provisions hereof and of the Indenture, and each Equipment Note on
the Restatement Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the benefits
and security afforded by the Indenture in accordance with the terms
of such Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner Trustee or
the Trust Company, as the case may be, of this Agreement, the
Original Trust Agreement, Trust Supplement No. 2, the Original
Indenture, the Indenture, the Original Lease, Lease Amendment No. 1,
the Lease, the Equipment Notes, or any other Operative Document to
which it is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the compliance by
it with any of the terms and provisions hereof and thereof, (A)
requires or will require any approval of its stockholders, or
approval or consent of any trustees or holders of any indebtedness
or obligations of it, or (B) violates or will violate its articles
of association or by-laws, or contravenes or will contravene any
provision of, or constitutes or will constitute a default under, or
results or will result in any breach of, or results or will result
in the creation of any Lien (other than as permitted under the
Operative Documents) upon its property under, any indenture,
mortgage, chattel
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<PAGE> 32
mortgage, deed of trust, conditional sale contract, bank loan or
credit agreement, license or other agreement or instrument to which
it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation of the State of
Delaware or any United States governmental authority or agency
governing the trust powers of the Owner Trustee, or any judgment or
order applicable to or binding on it;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any state or local governmental authority or agency or
any State of Delaware or any United States of America governmental
authority or agency regulating the trust powers of the Trust Company
is required for the execution and delivery of, or the carrying out
by, the Trust Company or the Owner Trustee, as the case may be, of
any of the transactions contemplated hereby or by the Trust
Agreement, the Indenture, the Lease, Lease Amendment No. 1, the
Equipment Notes or any other Operative Document to which it is a
party or by which it is bound, other than any such consent,
approval, order, authorization, registration, notice or action as
has been duly obtained, given or taken or which is described in
Section 8(d);
(6) there exists no Lessor's Lien or Head Lessor's Lien (each
as defined in the Lease) (including for this purpose Liens that
would be Lessor's Liens but for the first proviso in the definition
of Lessor's Liens) attributable to the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's Lien
(including for this purpose Liens that would be Lessor's Liens but
for the first proviso in the definition of Lessor's Liens)
attributable to the Trust Company;
(8) there are no Taxes payable by the Owner Trustee or the
Trust Company imposed by the State of Delaware or any political
subdivision thereof in connection with the prepayment of the
Original Certificates or the issuance of the Equipment Notes, or the
execution and delivery by it of any of the instruments referred to
in clauses (1), (2), (3) and (4) above, that, in each case, would
not have been imposed if the Trust Estate were not located in the
State of Delaware and the Trust Company had not (a) had its
principal place of business in, (b) performed (in its individual
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capacity or as Owner Trustee) any or all of its duties under the
Operative Documents in, and (c) engaged in any activities unrelated
to the transactions contemplated by the Operative Documents in, the
State of Delaware;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to
perform its obligations under any of the instruments referred to in
clauses (1), (2), (3) and (4) above;
(10) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and
under all documents relating to the Trust Estate (other than such as
may be maintained and held by the Indenture Trustee pursuant to the
Indenture), are located in Wilmington, Delaware. Owner Trustee, in
its individual capacity or as Owner Trustee, agrees that it will not
change the location of such office to a location outside of
Delaware, without prior written notice to all parties hereto; and
(11) it is a Citizen of the United States (without making use of
a voting trust agreement, voting powers agreement or similar
arrangements).
(c) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties, has, or
had on the respective dates of execution thereof, as the case may
be, the corporate power and authority to enter into and to perform
its obligations under this Agreement, the Trust Agreement, the SLV
Letter Agreement and the Amended and Restated Head Lease TIA; this
Agreement, the SLV Letter Agreement and Trust Supplement No. 2 have
been duly authorized, executed and delivered by it; and, assuming
the due authorization, execution and delivery hereof and thereof by
the other parties hereto and thereto, this Agreement, the Trust
Agreement, the SLV Letter
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<PAGE> 34
Agreement and the Amended and Restated Head Lease TIA constitute the
legal, valid and binding obligations of the Owner Participant
enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or
in equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the Trust Agreement, the SLV Letter
Agreement, the Amended and Restated Head Lease TIA or any other
Operative Document to which it is a party nor (B) compliance by it
with all of the provisions hereof or thereof, (x) will contravene
any law or order of any court or governmental authority or agency
applicable to or binding on the Owner Participant (it being
understood that no representation or warranty is made with respect
to laws, rules or regulations relating to aviation or to the nature
of the equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements of the
Owner Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute
a default under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to
which the Owner Participant is a party or by which it or any of its
property may be bound or affected, except where such contravention
or default would not result in any liability to any other party
hereto or have a material adverse effect on the rights or on the
remedies of the other parties hereto or on its ability to perform
its obligations hereunder or thereunder;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body (other than as required by the Federal Aviation Act or the
regulations promulgated thereunder) is or was required, as the case
may be, for the due execution, delivery or performance by it of this
Agreement, the Trust Agreement and the Amended and Restated Head
Lease TIA (it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to aviation
or to the nature of the equipment owned by the Owner Trustee other
than the laws, rules or regulations relating to aircraft lease
transactions generally or to the
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<PAGE> 35
citizenship requirements of the Owner Participant under the Federal
Aviation Act);
(4) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Participant before any
court or administrative agency or arbitrator which, if determined
adversely to the Owner Participant, would materially adversely
affect the Owner Participant's ability to perform its obligations
under this Agreement, the Trust Agreement, the SLV Letter Agreement
or the Amended and Restated Head Lease TIA;
(5) on the Restatement Date, the Trust Estate shall be free of
Lessor's Liens and Head Lessor's Liens attributable to the Owner
Participant (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens); and
(6) it is a Citizen of the United States (without making use
of a voting trust agreement, voting powers agreement or similar
arrangement). If at any time Owner Participant has ceased to be, or
shall have actual knowledge that it is likely to cease to be, such a
citizen, and (i) the Aircraft shall be or would thereupon become
ineligible for registration in the name of Owner Trustee under the
Federal Aviation Act as in effect at such time (without regard to
the "based and primarily used" provisions thereof) and the
regulations then applicable thereunder, or (ii) the Aircraft is
registered in a jurisdiction other than the United States of
America, in circumstances in which the preceding clause (i) does not
apply and the Lessee or any Permitted Sublessee at any time proposes
to register the Aircraft in the United States of America, then Owner
Participant shall (at its own expense and without any reimbursement
or indemnification from the Lessee or any Permitted Sublessee) (A)
immediately either (1) transfer in accordance with Section 10 hereof
all of its right, title and interest in and to the Trust Agreement,
the Trust Estate, this Agreement and the Amended and Restated Head
Lease TIA or (2) take such other action, including, without
limitation, the establishment of a voting trust or voting powers
agreement (in which case Owner Participant shall remain the
beneficial owner of the Trust Estate), as may be necessary to
prevent the deregistration of the Aircraft under the Federal
Aviation Act or to maintain such registration of the Aircraft or to
make possible such registration of the Aircraft in the United States
of
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<PAGE> 36
America and to prevent Indenture Trustee, the Holders of the
Equipment Notes, the Lessee or any Permitted Sublessee from being
adversely affected as a result thereof and (B) indemnify the Lessee,
the Indenture Trustee, the Holders of the Equipment Notes and any
Permitted Sublessee, from and against any and all Claims incurred or
suffered as a result of Owner Participant's failure to be such a
citizen or loss of such citizenship, including, without limitation,
as a result of the Aircraft's becoming ineligible or ceasing to
remain eligible for such registration.
(d) The Pass Through Trustee represents, warrants and covenants
that:
(1) the Pass Through Trustee is duly organized, validly
existing and in good standing under the federal laws of the United
States of America, and has the full corporate power, authority and
legal right under the federal laws of the United States of America
pertaining to its banking, trust and fiduciary powers to execute and
deliver each of the Pass Through Trust Agreements, the Intercreditor
Agreement, and this Agreement and to perform its obligations under
this Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and delivered
by the Pass Through Trustee, each of the Pass Through Trust
Agreements and the Intercreditor Agreement will have been, duly
authorized, executed and delivered by the Pass Through Trustee; this
Agreement constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements and the
Intercreditor Agreement, will constitute, the legal, valid and
binding obligations of the Pass Through Trustee enforceable against
it in accordance with their respective terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered in
a proceeding at law or in equity;
(3) none of the execution, delivery and performance by the
Pass Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, the purchase by the
Pass Through Trustee of the Equipment Notes pursuant to this
Agreement, or the issuance of the Certificates pursuant to the Pass
Through Trust Agreements, contravenes any
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<PAGE> 37
law, rule or regulation of the State of Connecticut or any United
States governmental authority or agency regulating the Pass Through
Trustee's banking, trust or fiduciary powers or any judgment or
order applicable to or binding on the Pass Through Trustee and does
not contravene or result in any breach of, or constitute a default
under, the Pass Through Trustee's articles of association or by-laws
or any agreement or instrument to which the Pass Through Trustee is
a party or by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement or this Agreement, nor the consummation by
the Pass Through Trustee of any of the transactions contemplated
hereby or thereby, requires the consent or approval of, the giving
of notice to, the registration with, or the taking of any other
action with respect to, any State of Connecticut governmental
authority or agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary
powers;
(5) assuming that the trusts created by the Pass Through Trust
Agreements will not be taxable as corporations, but, rather, each
will be characterized as a grantor trust under subpart E, Part I of
Subchapter J of the Code for federal income tax purposes, there are
no Taxes payable by the Pass Through Trustee imposed by the State of
Connecticut or any political subdivision or taxing authority thereof
in connection with the acquisition, possession or ownership by the
Pass Through Trustee of any of the Equipment Notes (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by any of
the Pass Through Trust Agreements), and prior to the exercise of
remedies upon the occurrence of an Indenture Event of Default, there
are no Taxes payable by the Pass Through Trustee imposed by the
State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Pass Through Trustee of this Agreement, any of
the Pass Through Trust Agreements or the Intercreditor Agreement
(other than franchise or other Taxes based on or measured by any
fees or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions contemplated
by any of
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<PAGE> 38
the Pass Through Trust Agreements), and such trusts will not be
subject to any Taxes imposed by the State of Connecticut or any
political subdivision or taxing authority thereof; upon the exercise
of remedies following the occurrence of an Indenture Event of
Default, there will be no Taxes payable by the Pass Through Trustee
imposed by the State of Connecticut or any political subdivision or
taxing authority thereof in connection with the execution, delivery
and performance by the Pass Through Trustee of this Agreement, any
of the Pass Through Trust Agreements or the Intercreditor Agreement
(other than franchise or other Taxes based on or measured by any
fees or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions contemplated
by any of the Pass Through Trust Agreements), and the trusts created
by the Pass Through Trust Agreements will not be subject to any
Taxes imposed by the State of Connecticut or any political
subdivision thereof, solely because the Pass Through Trustee
maintains an office in, and administers the trusts created by the
Pass Through Trust Agreements in, the State of Connecticut;
(6) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of
the Pass Through Trustee to perform its obligations under this
Agreement, the Intercreditor Agreement or any Pass Through Trust
Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Equipment Notes for sale to any Person or
solicited any offer to acquire any Equipment Notes from any Person,
nor has the Pass Through Trustee authorized anyone to act on its
behalf to offer directly or indirectly any Equipment Notes for sale
to any Person, or to solicit any offer to acquire any Equipment
Notes from any Person; and the Pass Through Trustee is not in
default under any Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, the Underwriters or the Lessee.
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<PAGE> 39
(e) The Subordination Agent represents and warrants that:
(1) the Subordination Agent is a duly organized national
banking association, validly existing and in good standing with the
Comptroller of the Currency under the laws of the United States of
America and has the full corporate power, authority and legal right
under the laws of the United States of America pertaining to its
banking, trust and fiduciary powers to execute and deliver each of
the Liquidity Facilities, the Intercreditor Agreement and this
Agreement and to perform its obligations under this Agreement, the
Liquidity Facilities and the Intercreditor Agreement;
(2) this Agreement has been, and when executed and delivered
by the Subordination Agent, each of the Liquidity Facilities and the
Intercreditor Agreement will have been, duly authorized, executed
and delivered by the Subordination Agent; this Agreement
constitutes, and when executed and delivered by the Subordination
Agent, each of the Liquidity Facilities and the Intercreditor
Agreement, will constitute, the legal, valid and binding obligations
of the Subordination Agent enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at
law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement and this Agreement or the performance by the
Subordination Agent of this Agreement, contravenes any law, rule or
regulation of the State of Connecticut or any United States
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Subordination Agent and do not
contravene or result in any breach of, or constitute a default
under, the Subordination Agent's articles of association or by-laws
or any agreement or instrument to which the Subordination Agent is a
party or by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Subordination
Agent of any of the Liquidity Facilities,
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<PAGE> 40
the Intercreditor Agreement or this Agreement nor the consummation
by the Subordination Agent of any of the transactions contemplated
hereby or thereby requires the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action
with respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency regulating
the Subordination Agent's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent
imposed by the State of Connecticut or any political subdivision or
taxing authority thereof in connection with the execution, delivery
and performance by the Subordination Agent of this Agreement, any of
the Liquidity Facilities or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services
rendered in connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities) solely
because the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are no
Taxes payable by the Subordination Agent imposed by the State of
Connecticut or any political subdivision thereof in connection with
the acquisition, possession or ownership by the Subordination Agent
of any of the Equipment Notes solely because the Subordination Agent
maintains an office and administers its trust business in the State
of Connecticut (other than franchise or other taxes based on or
measured by any fees or compensation received by the Subordination
Agent for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the Liquidity
Facilities);
(6) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of
the Subordination Agent to perform its obligations under this
Agreement, the Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or indirectly
offered any Equipment Note for sale to any Person or solicited any
offer to acquire any Equipment Note from any Person, nor has the
Subordination Agent
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<PAGE> 41
authorized anyone to act on its behalf to offer directly or
indirectly any Equipment Note for sale to any Person, or to solicit
any offer to acquire any Equipment Note from any Person; and the
Subordination Agent is not in default under any Liquidity Facility;
and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, the Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the State of Connecticut and has the
corporate power and authority to carry on its present business and
operations and to own or lease its properties, has the corporate
power and authority to enter into and to perform its obligations
under this Agreement, Lease Amendment No. 1, the Amended and
Restated Head Lease TIA, the Amended and Restated Sublease TIA and
the SLV Letter Agreement (collectively, the "Original Head Lessee
Transaction Documents"); each Original Head Lessee Transaction
Document has been duly authorized, and upon the execution and
delivery thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it in
accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the Original
Head Lessee of this Agreement and each of the other Original Head
Lessee Transaction Documents nor (B) compliance by it with all of
the provisions hereof or thereof, (x) will contravene any law or
order of any court or governmental authority or agency applicable to
or binding on the Original Head Lessee, or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute
a default under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to
which the Original Head Lessee is a party or by which it or any of
its property may be bound or affected, except where such
contravention or default
- 38 -
<PAGE> 42
would not result in any liability to any other party hereto or have
a material adverse effect on the rights or on the remedies of the
other parties hereto or on its ability to perform its obligations
hereunder or thereunder;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body (other than as required by the Federal Aviation Act or the
regulations promulgated thereunder) is or was required, as the case
may be, for the due execution, delivery or performance by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents;
(4) except as set forth in the Parent Guarantor's most recent
Form 20-F filed with the Commission, there are no pending or, to its
knowledge, threatened actions or proceedings against the Original
Head Lessee before any court or administrative agency or arbitrator
which, if determined adversely to the Original Head Lessee, would
materially adversely affect the Original Head Lessee's ability to
perform its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the Aircraft,
the Airframe, each Engine and each Part shall be free and clear of
any and all Sublessor's Liens (as defined in the Sublease);
(6) on the Delivery Date, the Owner Trustee received good
title to the Aircraft free and clear of all Liens, except the rights
of the Original Head Lessee under the Original Lease, the rights of
the Sublessee under the Sublease, the Lien of the Original
Indenture, the beneficial interest of the Owner Participant in the
Aircraft, and Permitted Liens under the Original Lease;
(7) title to the Buyer Furnished Equipment for the Aircraft
has been transferred to the Owner Trustee in accordance with Section
8(y) of the Participation Agreement. As of the Restatement Date,
there are no existing Claims against Parent Guarantor or Original
Head Lessee with respect to Buyer Furnished Equipment; and
(8) except for the registration of the Aircraft pursuant to
the Federal Aviation Act, the filing for recordation pursuant to the
Federal Aviation Act (with
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<PAGE> 43
confidential financial terms redacted) of Lease Amendment No. 1, the
Amended and Restated Lease, Lease Supplement No. 3, Trust Supplement
No. 2, the First Amended and Restated Indenture and Indenture
Supplement No. 2, and each of the other documents referred to in
Annex A hereto, all with the FAA, the filing of a Uniform Commercial
Code ("UCC") amended financing statement with the Secretary of State
of the State of Delaware with regard to the Original Lease, the
filing of UCC termination statements with regard to the Original
Head Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with
respect to the Lease, the filing of a UCC termination statement with
the Secretary of State of the State of Arizona with respect to the
Sublease, and the filing of a UCC termination statement with the
Secretary of State of the State of Delaware with respect to the
Initial Sublease Assignment (as defined in the Original Lease) all
of which financing and termination statements shall have been duly
effected as of the Restatement Date (and assignments thereof and
continuation statements at periodic intervals), and other than the
taking of possession by the Indenture Trustee of the original
counterparts of the Original Lease, Lease Amendment No. 1, the
Amended and Restated Lease, and all Lease Supplements thereto (to
the extent the Lease constitutes chattel paper), and the placing of
the Lease identification required by Section 6(e) of the Lease, no
further filing or recording of the Lease or of any other document
(including any financing statement under Article 9 of the UCC of the
State of Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or the
States of Delaware, New York and Arizona in order to perfect the
Owner Trustee's interest in the Aircraft as against the Lessee and
any third parties, or to perfect the security interest in favor of
the Indenture Trustee in the Owner Trustee's interest in the
Aircraft and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under the laws
of Ireland and has the corporate power and authority to enter into
and to perform its obligations under this Agreement; this Agreement
has been duly authorized and constitutes the legal, valid and
binding obligations of the Parent Guarantor enforceable against it
in accordance with its terms,
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<PAGE> 44
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or
in equity;
(2) neither (A) the execution and delivery by the Parent
Guarantor of this Agreement nor (B) compliance by it with all of the
provisions hereof (x) will contravene any law or order of any court
or governmental authority or agency applicable to or binding on the
Parent Guarantor, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default under,
its Memorandum and Articles of Association or any indenture,
mortgage, contract or other agreement or instrument to which the
Parent Guarantor is a party or by which it or any of its property
may be bound or affected, except where such contravention or default
would not result in any liability to any other party hereto or have
a material adverse effect on the rights or on the remedies of the
other parties hereto or on its ability to perform its obligations
hereunder or thereunder;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body (other than as required by the Federal Aviation Act or the
regulations promulgated thereunder) is or was required, as the case
may be, for the due execution, delivery or performance by the Parent
Guarantor of this Agreement;
(4) except as set forth in the Parent Guarantor's most recent
Form 20-F filed with the Commission, there are no pending or, to its
knowledge, threatened actions or proceedings against the Parent
Guarantor before any court or administrative agency or arbitrator
which, if determined adversely to the Parent Guarantor, would
materially adversely affect the Parent Guarantor's ability to
perform its obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the Aircraft,
the Airframe, each Engine and each Part shall be free and clear of
any and all Sublessor's Liens (as defined in the Sublease); and
(6) The representations and warranties of the Original Head
Lessee contained in this Agreement are true and correct in all
respects on the date made (provided that the representation and
warranty with
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<PAGE> 45
respect to Section 9(f)(8) shall be only for the benefit of the
Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by operation of law, consolidation, merger, sale of assets or
otherwise) any of its right, title or interest in and to the Trust Estate, the
Aircraft, the Lease, this Agreement, the Trust Agreement, the Amended and
Restated Head Lease TIA or any other Operative Document or any proceeds
therefrom or permit the transfer of any of its stock in any transaction which
has the practical effect of any of the foregoing; provided that, and subject to
the conditions set forth below, Owner Participant may transfer to a Transferee
(as defined below) all (but not less than all) of its right (except for such
rights accruing prior to transfer), title and interest as an entirety in and to
the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Amended
and Restated Head Lease TIA and each other Operative Document to which Owner
Participant is a party or by which Owner Participant is bound. Each such
transfer shall be subject to the following conditions, and Owner Participant
agrees for the express benefit of each party hereto that any such transfer will
comply with such conditions:
(i) the Person to whom such transfer is to be made (a "Transferee")
is either (A) a bank, trust company or other like regulated financial
institution with a combined capital, surplus and undivided profits of, or
a corporation with a tangible net worth of, in either case at least
$60,000,000, (B) any wholly-owned subsidiary of such bank, trust company,
financial institution or corporation if such bank, trust company,
financial institution or corporation furnishes to Owner Trustee, Indenture
Trustee, Original Head Lessee and Lessee an agreement or agreements of
such bank, financial institution or corporation guaranteeing such
subsidiary's obligations as Owner Participant contained in this Agreement,
the Trust Agreement, the Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by which
it is bound, which guarantee shall be substantially in the form attached
as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner
Participant furnishes to Owner Trustee, Indenture Trustee, Original Head
Lessee and Lessee an agreement whereby Owner Participant will guarantee
such subsidiary's obligations as Owner Participant contained in this
Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA
and each other Operative Document to which Owner Participant is a party or
by which it is bound, which guarantee shall be substantially in the form
attached as Exhibit A hereto;
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<PAGE> 46
(ii) Owner Trustee, Indenture Trustee, Original Head Lessee and
Lessee shall have received at least 15 days' prior written notice of such
transfer specifying the name and address of any proposed transferee and
specifying the facts necessary to determine whether such proposed
transferee qualifies as a "Transferee" under clause (i) above and does not
violate clause (viii) below; provided that if such Transferee is a
subsidiary of Owner Participant, such notice may be given promptly
following rather than prior to such transfer if such Transferee meets the
net worth requirement set forth above on its own account without a
guaranty and otherwise meets the requirements of this Section 10;
(iii) upon giving effect to such transfer, such Transferee is a
Citizen of the United States and such Transferee shall deliver to Lessee
an affidavit to such effect;
(iv) such Transferee has the requisite power and authority and legal
right to enter into and carry out the transactions contemplated hereby;
(v) such Transferee enters into an agreement in substantially the
form attached as Exhibit B hereto whereby such Transferee confirms that it
shall be deemed a party to this Agreement, the Trust Agreement, the
Amended and Restated Head Lease TIA and each other Operative Document to
which Owner Participant is a party or by which Owner Participant is bound,
and in which the transferee shall agree to be bound by and undertake the
obligations of Owner Participant in the Operative Documents and shall make
representations and warranties comparable to those of Owner Participant
contained herein;
(vi) such transfer does not violate any provision of the Federal
Aviation Act or any rules or regulations promulgated thereunder, or create
a relationship that would be in violation thereof, or violate any
provisions of the Securities Act or any other applicable Federal, state or
other law, rule or regulation;
(vii) such transfer does not violate any provision of ERISA or any
rules or regulations thereunder;
(viii) such Transferee is not an airline, a commercial air carrier, an
air freight forwarder, any Person engaged in the business of parcel
transport by air or a subsidiary or an Affiliate of such an airline, a
commercial air carrier, an air freight forwarder, Person engaged in the
business of parcel transport by air or other similar Person;
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<PAGE> 47
(ix) an opinion of counsel of the Transferee confirming the matters
referred to in clauses (iv) and (vi) above (with appropriate reliance on
certificates of corporate officers or public officials as to matters of
fact) and confirming that the agreement referred to in clause (v) above is
the legal, valid, binding and enforceable obligation of the Transferee and
that the guarantee referred to in clause (i)(B) or (C) above, if any, is
the legal, valid, binding and enforceable obligation of the Transferee's
guarantor shall be provided, at least 3 days prior to such transfer, to
Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which
shall be in form and substance reasonably satisfactory to each of them;
and
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Aircraft previously made by Owner Participant; and except
as the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to "Owner Participant" shall thereafter be deemed to include such
Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Amended and Restated Head
Lease TIA and under the other Operative Documents, except to the extent
expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Amended and Restated Head Lease TIA by or against Owner Participant which have
accrued or been made prior to the date of such transfer. The transferor Owner
Participant shall pay the reasonable expenses of each party hereto related to
any such transfer.
Each party hereto agrees, upon the request of Owner Participant, to
use reasonable efforts to cooperate at no cost or expense to it with Owner
Participant in complying with its obligations under the provisions of clause (A)
of paragraph (6) of Section 9(c), provided that such cooperation shall not be
subject to the indemnity in Section 13 of the Lease. The Lessee shall have no
obligation to prevent any such deregistration or assist in maintaining or
otherwise enhancing the Aircraft's
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<PAGE> 48
eligibility for registration by restricting the use of the Aircraft.
SECTION 11. Re-Registration of the Aircraft. The Indenture Trustee
agrees, that if the Owner Participant consents thereto, which consent shall not
be unreasonably withheld, at any time after the Restricted Use Period, Lessee
may, in connection with effecting a Permitted Sublease elect to effect a change
in registration of the Aircraft, at Lessee's cost and expense, so long as (a)
the country of registry of the Aircraft is a country listed on Exhibit C hereto
(or such other country as the Owner Participant approves) and (b) the following
conditions are met: (i) unless the country of registry is Taiwan, the United
States of America maintains normal diplomatic relations with the country of
registry of the Aircraft, and if the country of registry is Taiwan, the United
States of America maintains diplomatic relations at least as good as those in
effect on the Restatement Date; and (ii) the Owner Trustee, the Owner
Participant and the Indenture Trustee shall have received favorable opinions
(subject to customary exceptions) addressed to each such party, from counsel of
recognized reputation qualified in the laws of the relevant jurisdiction and
reasonably acceptable to the Owner Participant to the effect of the following
and as to such other matters as the Owner Participant may reasonably request:
(A) the Owner Trustee's ownership interest in the Aircraft and
interest in the Lease and any Permitted Sublease shall be recognized under
the laws of such jurisdiction,
(B) the obligations of Lessee, and the rights and remedies of the
Owner Trustee, under the Lease shall remain valid, binding and (subject to
customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable under the
laws of such jurisdiction (or the laws of the jurisdiction to which the
laws of such jurisdiction would refer as the applicable governing law),
(C) after giving effect to such change in registration, the Lien of
the Indenture on the Owner Trustee's right, title and interest in and to
the Aircraft, the Lease and any Permitted Sublease shall continue as a
valid and duly perfected security interest and all filing, recording or
other action necessary to protect the same and the Owner Trustee's
ownership interest in the Aircraft shall have been accomplished (or, if
such opinion cannot be given at the time of such proposed change in
registration because such change in registration is not yet effective, (1)
the opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Indenture
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<PAGE> 49
Trustee shall have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action shall
have been done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be delivered
to the Owner Trustee and the Indenture Trustee on or prior to the
effective date of such change in registration),
(D) it is not necessary, solely as a consequence of such change in
registration and without giving effect to any other activity of the Owner
Trustee, the Owner Participant or the Indenture Trustee (or any Affiliate
thereof), as the case may be, for the Owner Trustee, the Owner Participant
or the Indenture Trustee to qualify to do business in such jurisdiction,
(E) there is no tort liability of the owner of an aircraft not in
possession thereof under the laws of such jurisdiction (it being agreed
that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is provided to
cover such risk),
(F) (unless Lessee shall have agreed, or pursuant to the Lease shall
have been required, to provide insurance covering the risk of requisition
of use of such Aircraft by the government of such jurisdiction so long as
such Aircraft is registered under the laws of such jurisdiction) the laws
of such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for the
loss of use of such Aircraft in the event of the requisition by such
government of such use.
In addition, as a condition precedent to any such change in registration, (i)
the insurance required by Section 12 of the Lease shall be in full force and
effect at the time of such change in registration after giving effect to such
change in registration and the Owner Trustee and the Indenture Trustee shall
have received a certificate of the type described in Section 12(f) of the Lease
and (ii) the aircraft maintenance standards of the new country of registry shall
not be materially less stringent from those of the United States of America or
not materially less stringent from those of the United Kingdom and the Owner
Trustee and the Indenture Trustee shall have received a certificate to such
effect signed by the President, any Executive Vice President or any Senior Vice
President of Lessee which certificate shall, as among the parties hereto, be
presumed to be correct as to the matters stated therein absent conclusive
evidence to the contrary. Lessee shall pay all reasonable costs,
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<PAGE> 50
expenses, fees, and recording and registration taxes, including the reasonable
fees and expenses of counsel to the Owner Trustee, the Owner Participant and the
Indenture Trustee, and other charges in connection with any such change in
registration.
SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming by, through or on behalf of it to interfere with the
right of Lessee or any Permitted Sublessee to the possession, use, operation and
quiet enjoyment of and other rights with respect to the Aircraft under the
Lease, and all rents, revenues, profits and income therefrom, in accordance with
the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner
Participant shall not be liable for any such interference by Indenture Trustee,
Pass Through Trustee, holders of any Equipment Notes, or any other Person
lawfully claiming by, through or on behalf of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee and
Owner Participant severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and
Owner Participant severally agrees that it will promptly, at its own expense
(and without any right of indemnification or reimbursement from Lessee), take
such action as may be necessary duly to discharge any such Lessor's Lien or Head
Lessor's Lien attributable to it and to make restitution to the Trust Estate and
the Indenture Estate for any diminution of the assets thereof resulting
therefrom and will indemnify and hold harmless Lessee and each Indemnitee
against any claims incurred or suffered by any such Person and any reduction in
amounts payable out of, or diminution in the assets of, the Trust Estate or the
Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien
attributable to it. For all purposes of this Agreement and the other Operative
Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the
nonpayment of any Tax imposed on or measured by the net income of the Trust
Estate or the trust created by the Trust Agreement that is not indemnifiable by
Lessee or Original Head Lessee shall be deemed to be attributable to Owner
Participant, and Owner Participant shall be responsible for all Lessor's Liens
attributable to Owner Participant and Owner Trustee.
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Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through
Trustee and Subordination Agent severally agrees that it will promptly, at its
own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Trustee's Lien attributable to it and to make restitution to the Trust Estate
and the Indenture Estate for any diminution of the assets thereof resulting
therefrom and will indemnify and hold harmless Lessee and each Indemnitee
against any claims incurred or suffered by any such Person and any reduction in
amounts payable out of, or diminution in the assets of, the Trust Estate or the
Indenture Estate resulting from any such Trustee's Lien attributable to it. For
purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee), Pass Through Trustee in its individual capacity (and not as
Pass Through Trustee) or Subordination Agent in its individual capacity (and not
as Subordination Agent) on or in respect of (as the case may be) the Aircraft or
any other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against such Person not related to its interest in the
Aircraft or the administration of the Trust Estate or the Trust Indenture Estate
pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform
Commercial Code or otherwise, (ii) acts or omissions of such Person not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of such Person which are in violation of any of the Operative
Documents, or (iii) Taxes imposed on or Claims against such Person which are
excluded from indemnification by Lessee, or (iv) Claims against such Person
arising out of the voluntary or involuntary transfer by such Person of all or
any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust
Estate, the Trust Indenture Estate or the Operative Documents (except a Claim
resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly and
severally covenants and agrees with each other party hereto that it shall not
cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the
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Original Head Lessee and Parent Guarantor severally agrees that it will
promptly, at its own expense (and without any right of indemnification or
reimbursement from Lessee), take such action as may be necessary duly to
discharge any such Sublessor's Lien attributable to it or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect and to make restitution to
the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Sublessor's Lien
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect.
In no event will Lessee be liable for any Claims resulting from,
pertaining to, arising from, or related to the granting, creation or existence
of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien
(including, without limitation, Claims against Lessor and Original Head Lessee
with respect to Buyer Furnished Equipment) or other Lien or disposition of title
created by or through Original Head Lessee, Parent Guarantor or any Affiliate of
either thereof which would have constituted a Sublessor's Lien had the Sublease
remained in effect.
The Parent Guarantor covenants and agrees that it shall cause the
Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original Head
Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant.
(a) Each of Owner Participant and Trust Company hereby agrees with Lessee and
Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not
to amend, supplement, or otherwise modify the Trust Agreement except in
accordance with the terms thereof, provided that any such amendment, supplement
or modification shall not adversely affect the Lessee, and (iii) not to
terminate or revoke the Trust Agreement except in accordance with the terms
thereof, provided that any such termination or revocation shall not adversely
affect the Lessee.
(b) Notwithstanding anything to the contrary in the Trust Agreement
or Section 14(a) hereof, but subject always to the provisions of Section 14(c)
hereof, Owner Participant shall
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not consent to or direct a change in the situs of the Trust Estate so long as a
successor Owner Trustee meeting the requirements of the Trust Agreement is
reasonably available at the present situs of the Trust Estate (A) unless the
Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30
days' prior notice thereof and (B) if, within 15 days after notice of such a
proposed change is given to Lessee and the Original Head Lessee, either (1)
Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee
(at the expense of Owner Participant) an opinion of counsel, which counsel shall
be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would have an adverse
effect on the rights or obligations of Lessee or Original Head Lessee or (2)
Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee
(at the expense of Owner Participant) an opinion of counsel, which counsel shall
be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would cause an
increase in the amount for which Lessee may be required to indemnify any Person
pursuant to the provisions of Section 10 of the Lease or for which Original Head
Lessee is required to indemnify any Person pursuant to the provisions of the
Amended and Restated Head Lease TIA, unless any and all Persons entitled to
indemnification pursuant to Section 10 of the Lease or applicable provision of
the Amended and Restated Head Lease TIA shall waive indemnification under
Section 10 of the Lease or applicable provision of the Amended and Restated Head
Lease TIA for any adverse tax or other consequences to it of such a change in
the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner
Participant an opinion of counsel, which counsel shall be reasonably
satisfactory to Indenture Trustee, to the effect that such proposed change in
the situs of the Trust Estate would not have an adverse effect on the validity
or priority of the Lien of the Indenture and that such Uniform Commercial Code
and FAA filings as are required to maintain the validity and priority of the
Lien of Indenture have been made, and (D) such change does not affect the
registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust Estate
has become, or in Lessee's good faith opinion will become, subject to any Taxes
for which it is indemnified pursuant to Section 10 of the Lease and if, as a
consequence thereof, Lessee should request that the situs of the trust be moved
to another state in the United States of America from the state in which it is
then located, the situs of the trust shall be moved and Owner Participant will
take whatever action may be requested by Lessee that is reasonably necessary to
accomplish such removal; provided that (A) Lessee shall provide such additional
tax indemnification with respect to such change of situs and request of Lessee
as Original Head Lessee, Owner Participant or
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the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of
the Lease and the exclusions in the Amended and Restated Head Lease TIA) may
reasonably request, (B) promptly after notice thereof Owner Participant has not
notified Lessee and provided reasonable evidence of an adverse effect on Owner
Participant's rights or obligations under the Trust Agreement, (C) Indenture
Trustee shall have received an opinion of counsel selected by Lessee, which
counsel shall be reasonably satisfactory to Indenture Trustee, to the effect
that the validity and priority of the Lien of the Indenture Estate will not be
adversely affected by such action, and that such Uniform Commercial Code and FAA
filings as are required to maintain the validity and the priority of the Lien of
the Indenture have been made, (D) Owner Participant and Indenture Trustee shall
have received an opinion or opinions of counsel selected by Owner Participant to
the effect that, with customary exceptions, (I) the trust, as thus removed,
shall remain a validly established trust, (II) any amendments to the Trust
Agreement or the Indenture necessitated by such removal shall have been duly
authorized, executed and delivered by the parties thereto and shall constitute
the legal, valid and binding obligations of such parties, enforceable in
accordance with their terms, (III) if such removal involves the replacement of
Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and
substance reasonably satisfactory to Indenture Trustee and to Owner Participant
covering the matters described in the opinion described in Section 3(j) hereof,
and (IV) covering such other matters as Owner Participant or the Indenture
Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless
on an after tax basis Owner Trustee, Owner Participant and their respective
Affiliates and Indenture Trustee against any and all reasonable and actual costs
and expenses including reasonable attorneys' fees and disbursements,
registration, recording or filing fees and other Taxes incurred by Owner
Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee
in connection with such change of situs and shall indemnify and hold harmless
Owner Participant, Owner Trustee and their respective Affiliates, and Indenture
Trustee on an after tax basis (subject to the exclusions set forth in Section
10(b) of the Lease and the Amended and Restated Sublease TIA) from and against
any increase in Taxes borne by such Person that results from such change in
situs. In no event shall any change in situs of the trust affect Original Head
Lessee's rights or obligations under the Amended and Restated Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed by Owner
Participant, a successor Owner Trustee may be appointed, and a corporation may
become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that
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Owner Participant has actual knowledge that Owner Trustee is not in compliance
with its covenants contained herein. No successor Owner Trustee shall be
appointed unless Lessee and Indenture Trustee shall have given written consent
thereto, which consent shall not be unreasonably withheld. Owner Participant
will not instruct Owner Trustee to terminate any Operative Document or take any
action thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Aircraft as contemplated hereby.
Lessee shall pay expenses on an after tax basis relating to the resignation or,
if requested by Lessee, the removal of Owner Trustee, provided that the Owner
Participant shall pay expenses relating to the removal of the Owner Trustee, if
such removal was solely at the request of the Owner Participant.
(e) The Trust Company agrees that if at any time it shall obtain
actual knowledge that it has ceased to be or will likely cease to be a Citizen
of the United States, it will promptly resign as Owner Trustee (if and so long
as such citizenship is necessary under such Federal Aviation Act or any other
law to permit the continued registration of the Aircraft in the name of the
Lessor or, if it is not necessary, if and so long as Owner Trustee's citizenship
would have any material adverse effect on any holder of Equipment Notes, the
Lessee or any Permitted Sublessee), effective upon the appointment of the
successor Owner Trustee in accordance with Section 10.1 of the Trust Agreement.
SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner
Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and
confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee agree
as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head
Lessee and Parent Guarantor shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable for
all of its obligations under Sections 10 and 13 of the Sublease, with respect to
the period up to (but excluding) the Restatement Date and each of Parent
Guarantor, Original Head Lessee and Lessee shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the
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termination or expiration thereof (including, without limitation, any such
liability arising from and including the Restatement Date under the Sublease in
respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), (ii) all
rights, benefits, obligations and liabilities under the Sublease TIA (which
rights, benefits, obligations and liabilities are amended and restated as of the
Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall
remain liable to Sublessee under the Sublease and the Sublease Guaranty for
Sublessor's Liens (as therein defined); all of which rights, benefits,
obligations and liabilities shall expressly survive the termination of the
Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is
agreed that (x) Original Head Lessee shall continue to be liable to the
Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens and (y) Parent Guarantor is hereby released from any and all obligations
and liabilities under the Sublease Guaranty, other than in respect of the
obligations and liabilities of the Original Head Lessee in respect of
Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner Participant agree as
among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: Lessee, and Owner
Trustee, Owner Participant and the other "Indemnitees" (as such term is defined
in the Sublease) other than Original Head Lessee and Parent Guarantor, shall
retain all rights, benefits, obligations and liabilities under the Sublease,
including that Sublessee shall remain liable for all of its obligations under
Sections 10 and 13 of the Sublease, with respect to the period up to (but
excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner
Participant shall retain all rights and liabilities under any provision of the
Sublease which by the express terms thereof survives the termination thereof
(including, without limitation, any such liability arising on or after the
Restatement Date under the Sublease in respect of the period up to (but
excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date), all of which rights, benefits, obligations
and liabilities shall expressly survive the termination of the Sublease. In
furtherance of the foregoing, it is agreed by Sublessee that the indemnities
contained in Sections 10 and 13 of the Sublease are expressly made for the
benefit of and shall be enforceable by each Indemnitee (as such term is defined
in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA to the
extent provided in Section 15(b) and (c) hereof, it is expressly understood and
agreed by each of the parties hereto that the Original Head Lessee and the
Parent
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Guarantor shall, as of the Restatement Date, have no liabilities or obligations
under the "Operative Documents" (as defined in the Original Head Lease as in
effect immediately prior to (but excluding) the Restatement Date and excluding
the Head Lease TIA (which rights, benefits, obligations and liabilities are
amended and restated as of the Restatement Date)) and are released from all such
obligations and liabilities, except the Original Head Lessee and the Parent
Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be
liable to the parties hereto for the removal of any Sublessor's Liens and (ii)
(without releasing Sublessor as provided in the Sublease) each of the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and
the Owner Participant agree as among themselves and for the benefit of the other
"Indemnitees" (as such term is defined in the Original Head Lease) that all
rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of
the Participation Agreement with respect to the period up to (but excluding) the
Restatement Date and under any other provision of the Participation Agreement
which by the express terms thereof survives the termination thereof (including,
without limitation, any such liability arising from and including the
Restatement Date under the Participation Agreement in respect of the period up
to (but excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date) shall survive the termination of the
Participation Agreement, the Original Head Lease and the Parent Head Lease
Guaranty (the foregoing surviving rights, benefits, obligations and liabilities
of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained
Head Lease Rights and Obligations"). In furtherance of the foregoing, the
parties hereto consent and agree that the Parent Guarantor is hereby released
from any and all "Obligations" under and as defined in the Parent Head Lease
Guaranty, except in respect of the Retained Head Lease Rights and Obligations
and except in respect of the Amended and Restated Head Lease TIA, the
"Obligations" in respect of which shall continue in full force and effect in
accordance with the Parent Head Lease Guaranty and are hereby ratified and
confirmed by the Parent Guarantor.
SECTION 16. Certain Additional Obligations of the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner
Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for
the benefit of each other that it will be bound by the terms of the other
Operative Documents to which it or its applicable trustee is a party, and comply
with and perform its agreements, covenants and indemnities set forth in the
other Operative Documents to which it or its applicable trustee is a party, as
amended, supplemented or otherwise modified from time to time as permitted
hereby.
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SECTION 17. Lessee Protection of Title. Each of the Owner Trustee
and the Indenture Trustee agrees to execute and deliver such documents or other
instruments as the Lessee may reasonably request to enable the Lessee to perform
its obligations under Section 15 of the Lease for the benefit of such Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust
Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee
(i) hereby irrevocably submits for itself and its property to the nonexclusive
jurisdiction of the courts of the State of New York in New York County, and to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service of
process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John
Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its
agent for service of process, and covenants and agrees that service of process
in any suit, action or proceeding may be made upon it at the office of such
agent or such other office of Parent Guarantor or such other agent, as from time
to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner
Participant and Indenture Trustee. Original Head Lessee hereby generally
consents to service of process by registered mail, return receipt requested,
addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury,
Connecticut 06810 or such other office of Original Head Lessee as from time to
time may be designated by Original Head Lessee in writing to Owner Trustee,
Owner Participant and Indenture Trustee. Owner Participant generally consents to
service of process by registered mail, return receipt requested,
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addressed to it at _____________________________ or such other office of Owner
Participant as from time to time may be designated by Owner Participant in
writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee.
Owner Trustee generally consents to service of process by registered mail,
return receipt requested, addressed to it at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner
Trustee as from time to time may be designated by Owner Trustee in writing to
Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture
Trustee generally consents to service of process by registered mail, return
receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford,
Connecticut 06115 or such other office of Indenture Trustee as from time to time
may be designated in writing to Owner Participant, Original Head Lessee, Owner
Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has not
been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
SECTION 20. Notices. Unless otherwise specifically provided herein,
all notices required or permitted by the terms of this Agreement shall be in
English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the Original Head
Lessee of invoices therefor in reasonable detail prior to the Restatement Date,
all of the reasonable out-of-
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pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the
Owner Participant, the Pass Through Trustee, the Subordination Agent, the
Liquidity Provider, the Indenture Trustee and the Original Certificate Holders
in connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Lease, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement
(except, in each case, as otherwise provided therein) shall be paid on or prior
to the Closing by the Original Head Lessee, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable to the
Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP,
special counsel for the Pass Through Trustee, the Subordination Agent and
the Indenture Trustee, (B) Morris, James, Hitchens & Williams, special
counsel for the Owner Trustee, (C) Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma and (D) Milbank, Tweed, Hadley &
McCloy, special counsel for the Underwriters;
(2) the reasonable fees, expenses and disbursements of Hunton &
Williams, special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Andrews & Kurth L.L.P.
and Latham & Watkins, special counsel for the Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the
Subordination Agent;
(6) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code financing statements in the United States
of America; and
(7) the reasonable fees, expenses and disbursements of White & Case,
special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this Section
21 and the agreements referred to herein are not consummated, the Original Head
Lessee shall bear and pay all costs, expenses and fees referred to in this
Section 21.
(c) The Lessee agrees to pay the amounts it is obligated to pay
under Section 21(j) of the Lease.
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SECTION 22. Reliance of Liquidity Provider. Each of the parties
hereto agrees and acknowledges that the Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly. The terms of this Agreement shall inure
to the benefit of the Liquidity Provider, its successors and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Original Head Lessee and its successors and permitted assigns, the Parent
Guarantor and its successors and permitted assigns, the Lessee and its
successors and permitted assigns, the Pass Through Trustee and its successors as
Pass Through Trustee (and any additional trustee appointed) under any of the
Pass Through Trust Agreements, the Indenture Trustee and its successors as
Indenture Trustee (and any additional Indenture Trustee appointed) under the
Indenture, the Subordination Agent and its successors as Subordination Agent
under the Intercreditor Agreement, the Owner Trustee and its successors as Owner
Trustee under the Trust Agreement, and the Owner Participant and its successors
and permitted assigns. No purchaser or holder of any Equipment Notes shall be
deemed to be a successor or assign of any holder of the Original Certificates.
(b) Upon the release of the Aircraft from the lien of the Indenture
and the termination of the Indenture pursuant to
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and in accordance with Section 10.01 thereof, each requirement in the Operative
Documents that the consent of Indenture Trustee be obtained or that the
Indenture Trustee be given notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee that the
Lessee can rely on the options, elections, determinations, consents, approvals,
waivers and notices given, exercised or made by the Owner Trustee under the
Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of
the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that this
Agreement shall be effective among all such parties on and as of the Restatement
Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers there unto duly authorized as of
the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:_______________________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA SUB I, INC.
By:_______________________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:_______________________________________
Name:
Title:
Address: GPA House
Shannon, County Clare, Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
- 60 -
<PAGE> 64
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner Trustee
By:_______________________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust Administration
[_______________________________]
By:_______________________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Indenture Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
- 61 -
<PAGE> 65
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Subordination Agent
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Pass Through Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
- 62 -
<PAGE> 66
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1D, dated November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1E, dated November 26, 1996.
<PAGE> 67
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
- ------------ ----------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Class A $11,897,518 02-Jan-2009 6.85% $11,897,518
Class B $ 4,413,774 02-Jul-2005 6.93% $ 4,413,774
Class C $ 4,552,621 02-Jan-2002 6.86% $ 4,552,621
Class D $ 4,249,113 02-Jan-2002 8.16% $ 4,249,113
Class E $ 2,541,597 02-Jul-2002 10.50% $ 2,541,597
</TABLE>
<PAGE> 68
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn:
Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet
National Bank Account No. ABA #011900445, ACCT. # 0067548290.
<PAGE> 69
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1990 AWA-13]
TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-13], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, [______________________], a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1990 AWA-13], dated as of November 20, 1996 among Lessee, Original Head
Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee,
Subordination Agent and Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of
Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms defined in the
Refunding Agreement are used herein as therein defined, unless otherwise defined
herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably guarantees to
Beneficiaries and their respective successors, endorsees, transferees and
assigns, the prompt and complete payment by Transferee when due (whether at the
stated maturity,
<PAGE> 70
by acceleration or otherwise) of, and the faithful performance of, and
compliance with, all payment obligations of Transferee under the Refunding
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party and each other Operative Document
to which Transferee is a party or by which either is bound (collectively, the
"Relevant Documents"), strictly in accordance with the terms thereof and the
timely performance of all other obligations of Transferee thereunder (such
payment and other obligations, the "Obligations"), and Guarantor further agrees
to pay any and all expenses (including, without limitation, all fees and
disbursements of counsel) that may be paid or incurred by Beneficiaries in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any other
guarantor or any other Person or received or collected by any Beneficiary from
Transferee, Guarantor, any other guarantor or any other person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of Guarantor
hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or observed by
Transferee (whether affirmative or negative in character) shall not be observed
or performed, or if any amount payable by Transferee referred to in Section 1(a)
hereof shall not be paid promptly when due and payable, Guarantor shall promptly
perform or observe or cause to be performed or observed each such Obligation or
undertaking and shall forthwith pay such amount at the place and to the person
or entity entitled thereto pursuant to the Relevant Documents regardless of
whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through
Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of
them shall have instituted any suit, action or proceeding or exhausted its
remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments made by
Guarantor hereunder or any setoff or application of funds of Guarantor by any
Beneficiary, Guarantor shall not be entitled to be subrogated to any of the
rights of any Beneficiary against Transferee or any collateral, security or
guarantee or
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<PAGE> 71
right of set-off held by any Beneficiary for the payment of the Obligations, nor
shall Guarantor seek or be entitled to seek any reimbursement from Transferee in
respect of payments made by Guarantor hereunder, until all amounts and
performance owing to Beneficiaries by Transferee on account of the Obligations
are paid and performed in full.
4. Amendments, etc., with respect to the Obligations; Waiver of
Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without notice
to or further assent by the Guarantor, any demand for payment or performance of
any of the Obligations made by any Beneficiary may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not assign,
convey or otherwise transfer to any person (a) any of its interest in Transferee
unless in connection therewith,
- 3 -
<PAGE> 72
Guarantor assigns its rights and obligations hereunder to a guarantor which
meets the requirements of Section 10 of the Refunding Agreement; provided that
nothing contained in this Section 5 shall be construed to prohibit any merger,
consolidation or other corporate restructuring of Transferee or Guarantor so
long as the resulting corporation meets the requirements of Section 10 of the
Refunding Agreement and assumes the obligations of the corporation merged or
consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guarantee or acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Transferee
or the Guarantor with respect to the Obligations. The Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance (and not merely of
collectibility) without regard to (a) the validity, regularity or enforceability
of any Relevant Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Transferee against any Beneficiary,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Transferee or the Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of the Transferee for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Transferee or any other person or
entity or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Beneficiary to
pursue such other rights or remedies or to collect any payments from the
Transferee or any such other person or entity or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Transferee or any such other person or entity or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and
- 4 -
<PAGE> 73
remedies, whether express, implied or available as a matter of law, of any
Beneficiary against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Beneficiaries, and their respective successors, endorsees, transferees
and assigns, until all of the Obligations and the Obligations of the Guarantor
under this Agreement shall have been satisfied by payment and performance in
full. The Guarantor further agrees that, without limiting the generality of this
Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by
applicable law from exercising its remedies (or any of them) against the
Transferee under any Operative Document, such Beneficiary (or any assignee
thereof) shall be entitled to receive hereunder from the Guarantor, upon demand
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or returned
by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Transferee or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Transferee or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made. The
Guarantor shall not commence any "case" (as defined in Title 11 of the United
States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments hereunder
shall be paid without set-off, counterclaim, deduction or withholding, and shall
be made in U.S. Dollars. If any payment hereunder is subject to deduction or
withholding, Guarantor shall pay an additional amount such that, after deduction
of all amounts required to be deducted or withheld, the net amount actually
received will equal the amount that would have been received had such deduction
or withholding not been required.
9. Representations and Warranties. The Guarantor hereby represents
and warrants that:
(a) the Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it operates
and to conduct the business in which it is currently engaged;
- 5 -
<PAGE> 74
(b) the Guarantor has the corporate power and authority and the
legal right to execute and deliver, and to perform its obligations under,
this Guarantee, and has taken all necessary corporate action to authorize
its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding obligation
of the Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally;
(d) the execution, delivery and performance of this Guarantee will
not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the creation
or imposition of any lien on any of the properties or revenues of the
Guarantor pursuant to any requirement of law or contractual obligation of
the Guarantor;
(e) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or governmental authority and no consent of
any other person (including, without limitation, any stockholder or
creditor of the Guarantor) is required in connection with the execution,
delivery, performance, validity or enforceability of this Guarantee;
(f) no litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of
the Guarantor, threatened by or against the Guarantor or against any of
its properties or revenues (i) with respect to this Guarantee or any of
the transactions contemplated hereby or (ii) that could have a material
adverse effect on the business, operations, property or financial or other
condition of the Guarantor;
[(g) the balance sheet of the Guarantor as at _________________ and
the related statement of income and retained earnings for the fiscal year
then ended (copies of which have heretofore been furnished to each
Beneficiary) have been prepared in accordance with generally accepted
accounting principles applied consistently throughout the period involved,
are complete and correct and present fairly the financial condition of the
Guarantor as at such date and the results of its operations for such
fiscal year; since such date there has been no material adverse change in
the business, operations, property or financial or other condition of the
Guarantor; the Guarantor has no material contingent obligation, contingent
liability or liability for
- 6 -
<PAGE> 75
taxes, long-term lease or unusual forward or long-term commitment that is
not reflected in the foregoing statements or in the notes thereto; and](1)
(h) the Guarantor is [type of legal personality] with a [combined
capital, surplus and undivided profits] [tangible net worth] of at least
$60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act
(except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any
Beneficiary, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire agreement of
Guarantor with respect to the subject matter hereof and there are no promises or
representations by any Beneficiary relative to the subject matter hereof not
reflected herein.
13. Amendments and Waivers. None of the terms or provisions of this
Guarantee may be waived, amended or supplemented or otherwise modified except by
a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this Guarantee
are for convenience of reference only and not to
- --------
(1) This representation is not applicable if Transferee is a
wholly-owned subsidiary of the Owner Participant.
- 7 -
<PAGE> 76
affect the construction hereof or be taken into consideration in the
interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding upon the
successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing or by
telegraph, telex or telecopy and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, two days after deposit in the postal system, first class
postage pre-paid, or, in the case of telegraphic notice, when sent, answerback
received, addressed to (a) in the case of the Guarantor, the address provided on
the signature page hereof, and (b) in the case of any Beneficiary, the address
provided for such party in the Refunding Agreement.
- 8 -
<PAGE> 77
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered by its duly authorized officer as of the day and the
year first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
- 9 -
<PAGE> 78
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1990 AWA-13]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-13] ("Assignment")
dated as of _____________, between ______________, a ___________ corporation
("Assignor") and ________________, a __________ corporation ("Assignee") entered
into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee
and Lessee referred to in the Refunding Agreement mentioned below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer by
Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
[_______________________________], Fleet National Bank, as Subordination Agent,
and Fleet National Bank, as Indenture Trustee, as amended, modified or
supplemented from time to time (the "Refunding Agreement"), (ii) the Trust
Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as
defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA
identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the
Indenture (as defined in the Refunding Agreement) and (b) the assumption by
Assignee of the obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the meaning ascribed thereto in the Refunding Agreement. For purposes
of this Assignment, the defined term "Operative Document" shall have the meaning
ascribed thereto in the Refunding Agreement and shall be deemed to include the
Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned, transferred
and set over, and does hereby sell, convey, assign, transfer and set over, unto
Assignee, as of the date hereof, all of its right, title and interest in, under
and with respect to the Refunding Agreement, the Trust Agreement, the Trust
Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other
Operative Documents to which Assignor is a party or any other contract,
agreement, document or instrument relating to the Trust Estate by which Assignor
is bound, and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
<PAGE> 79
rights of Assignor as have accrued to Assignor prior to the date hereof
(including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust Agreement as of a date prior
to such date and the right to receive any indemnity payment pursuant to the
Refunding Agreement or the Lease with respect to events occurring prior to such
date).
3. Assumption. Assignee hereby undertakes all of the duties and
obligations of Assignor whenever accrued (other than duties and obligations of
Assignor required to be performed by it on or prior to the date hereof under the
Operative Documents to which Owner Participant is a party and any of the other
Operative Documents by which Assignor is bound or any other contract, agreement,
document or other instrument relating to the Trust Estate to which Assignor is a
party or by which it is bound), pursuant to the Trust Agreement and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound, and hereby confirms that it shall
be deemed a party to the Trust Agreement and shall be bound by each of the other
Operative Documents and each other contract, agreement, document or other
instrument relating to the Trust Estate to which Assignor is a party or by which
it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the within
assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
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<PAGE> 80
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay over to
Assignee, if and when received following the date hereof, any amounts (including
any sums payable as interest in respect thereof) paid to or for the benefit of
Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby
covenants and agrees to pay over to Assignor, if and when received following the
date hereof, any amounts (including any sums payable as interest in respect
thereof) paid to or for the benefit of Assignee that, under Section 2 hereof,
belong to Assignor.
7. Investment Purpose. Assignee hereby represents that it is
acquiring the Trust Estate interests and other interests hereby assigned to it
without a view to the distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents and
warrants that:
(a) it has all requisite power and authority and legal right to
enter into and carry out the transactions contemplated hereby and to carry
out and perform the transactions of Owner Participant as contemplated by
the Operative Documents;
(b) on the date hereof it is a "citizen of the United States" within
the meaning of Section 40102(a)(15) of the Federal Aviation Act and the
rules and regulations of the FAA thereunder;
(c) on and as of the date hereof, the representations and warranties
of Owner Participant set forth in Section 9 of the Refunding Agreement and
as set forth in any other Agreement to which Owner Participant is a party
are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of the Refunding
Agreement;
(e) Assignee or its guarantor has a [combined capital, surplus and
undivided profits] [tangible net worth] of not less than $60,000,000.
- 3 -
<PAGE> 81
9. Governing Law. This Assignment and Assumption Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:___________________________________
Title:
[ASSIGNEE]
By:___________________________________
Title:
- 4 -
<PAGE> 82
EXHIBIT C to
REFUNDING AGREEMENT
LIST OF COUNTRIES
Australia
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Japan
Luxembourg
Netherlands
New Zealand
Norway
Singapore
South Korea
Sweden
Switzerland
United Kingdom
<PAGE> 83
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 84
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1990 AWA-13] No. 2 dated November
26, 1996 (the "Trust Agreement Supplement") between the Owner
Trustee and the Owner Participant, amending the Trust Agreement,
which Trust Agreement Supplement was filed with the FAA at 12:20
p.m., C.S.T. on November 26, 1996;
(b) First Amended and Restated Trust Indenture and Security Agreement
[GPA 1990 AWA-13] dated as of November 26, 1996 (the "Amended and
Restated Indenture") between the Owner Trustee and the Indenture
Trustee, amending and restating the Original Indenture with attached
thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1990
AWA-13] dated November 26, 1996 (the "Indenture Supplement"), with
respect to the Aircraft, which Amended and Restated Indenture with
the Indenture Supplement attached was filed with the FAA at 12:21
p.m., C.S.T. on November 26, 1996;
(c) Assignment and Amendment No. 1 and Sublease Termination Agreement
dated as of November 26, 1996 (the "Lease Amendment") among the
Original Head Lessee, as assignor, the Owner Trustee, as lessor, the
Lessee, as successor lessee, and the Indenture Trustee, which (i)
assigns all right, title and interest of the Original Head Lessee in
and to the Original Head Lease to the Lessee, (ii) terminates the
Sublease and (iii) releases the Sublease Collateral Assignment,
which Lease Amendment was filed with the FAA at 12:22 p.m., C.S.T.
on November 26, 1996; and
(d) Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13]
dated as of September 21, 1990 and amended and restated as of
November 26, 1996 (the "Amended and Restated Lease") between the
Owner Trustee, as lessor, and the Lessee, as successor lessee,
amending and restating the Original Head Lease, with Lease
Supplement [GPA 1990 AWA-13] No. 3 dated November 26, 1996 (the
"Lease Supplement") between the Owner Trustee, as lessor, and the
Lessee, as successor lessee, with respect to the Aircraft, attached
thereto, which Amended and Restated Lease with the Lease Supplement
attached was filed with the FAA at 12:23 p.m., C.S.T. on November
26, 1996.
Trust Agreement
Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990
between [__________________________], formerly
<PAGE> 85
[________________________], as owner participant, and Wilmington Trust Company,
as owner trustee, as supplemented by Trust Agreement Supplement [GPA 1990
AWA-13] No. 1 dated September 28, 1990.
Original Indenture
Trust Indenture and Security Agreement [GPA 1990 AWA- 13] dated as
of September 21, 1990 between Wilmington Trust Company, as trustee under Trust
Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, and Fleet National
Bank (formerly known as Fleet National Bank of Connecticut, Shawmut Bank
Connecticut, National Association, and The Connecticut National Bank), as
indenture trustee, which was recorded by the Federal Aviation Administration on
October 1, 1990 and assigned Conveyance No. E10187, as supplemented and amended
by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- ------------------------------------------
<S> <C> <C> <C>
Trust Indenture
Supplement No. 1 09/28/90 10/01/90 E10187
Amendment No. 1 to
Trust Indenture and
Security Agreement
[GPA 1990 AWA-13] 03/27/92 05/18/92 EE003014
Amendment No. 2 to
Trust Indenture and
Security Agreement as of
[GPA 1990 AWA-13] 07/29/93 08/04/93 F59673
</TABLE>
- 2 -
<PAGE> 86
Original Head Lease
Aircraft Lease Agreement [GPA 1990 AWA-13] dated as of September 21,
1990 between Wilmington Trust Company, as trustee under Trust Agreement [GPA
1990 AWA-13] dated as of September 21, 1990, as lessor, and GPA Leasing USA Sub
I, Inc., as lessee, which was recorded by the Federal Aviation Administration on
October 1, 1990 and assigned Conveyance No. E10188, as supplemented by the
following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- ------------------------------------------
<S> <C> <C>
Lease Supplement
[GPA 1990 AWA-13]
No. 1 09/28/90 10/01/90 E10188
Lease Supplement
[GPA 1990 AWA-13]
No. 2 12/31/91 (which was not filed for
recordation with the FAA)
</TABLE>
Sublease
Aircraft Sublease Agreement [GPA 1990 AWA-13] dated as of September
21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and America West
Airlines, Inc., as sublessee, which was recorded by the Federal Aviation
Administration on October 1, 1990 and assigned Conveyance No. E10189, as
supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- ------------------------------------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 09/28/90 10/01/90 E10189
Amendment No. 1 to
Aircraft Sublease
Agreement [GPA 1990 as of
AWA-13] 08/26/91 09/11/91 261228
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease [GPA 1990 AWA-13] dated as of September 21,
1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust
Company, as trustee under Trust Agreement [GPA 1990 AWA-13] dated as of
September 21, 1990, as assignee, which was attached to and recorded as one
instrument with the Sublease on October 1, 1990 and assigned Conveyance No.
E10189.
- 3 -
<PAGE> 1
Exhibit 4.16
- --------------------------------------------------------------------------------
REFUNDING AGREEMENT
[GPA 1990 AWA-14]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA SUB I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
----------------------------,
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 092
Registration No. N635AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
SECTION 1. Purchase of Equipment Notes; Refunding.......................... 5
SECTION 2. Equipment Notes................................................. 7
SECTION 3. Conditions Precedent............................................ 7
SECTION 4. Certain Conditions Precedent to the
Obligations of the Original Head Lessee
and the Parent Guarantor; Certain
Conditions Precedent to the Obligations
of the Lessee; Conditions Precedent
with respect to the Pass Through
Trustee.............................................. 15
SECTION 5. Amendment and Restatement of the
Original Indenture................................... 19
SECTION 6. Amendment and Restatement of the
Original Lease....................................... 19
SECTION 7. Termination of the Participation
Agreement; Termination of Sublease,
etc.................................................. 19
SECTION 8. Representations and Warranties of the
Lessee............................................... 20
SECTION 9. Representations and Warranties.................................. 25
SECTION 10. Transfer of Owner Participant's
Interest............................................. 42
SECTION 11. Re-Registration of the Aircraft................................. 45
SECTION 12. Quiet Enjoyment................................................. 47
SECTION 13. Liens ..................................................... 47
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent
Guarantor, Trust Company, Owner Trustee
and Owner Participant................................ 49
SECTION 15. Certain Retained Rights and Releases............................ 52
- i -
<PAGE> 3
PAGE
SECTION 16. Certain Additional Obligations of the
Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee................ 54
SECTION 17. Lessee Protection of Title...................................... 55
SECTION 18. Jurisdictional and Related Matters.............................. 55
SECTION 19. Limitation on Recourse.......................................... 56
SECTION 20. Notices ........................................................ 56
SECTION 21. Expenses ....................................................... 56
SECTION 22. Reliance of Liquidity Provider.................................. 58
SECTION 23. Miscellaneous................................................... 58
SECTION 24. Governing Law................................................... 59
SECTION 25. Effectiveness................................................... 59
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1990 AWA-14]
REFUNDING AGREEMENT [GPA 1990 AWA-14] (this "Agreement"),
dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) ________________________, a
Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a
Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
five separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank), a national banking
association, not in its individual capacity except as otherwise expressly
provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under
the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Sanwa International PLC, as Lender (and predecessor in
interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and
The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the
Owner Trustee and the Indenture Trustee entered into the Participation Agreement
[GPA 1990 AWA-14], dated as of September 21, 1990, as amended by the Letter
Agreement dated as of July 29, 1993 (as amended, supplemented or otherwise
modified from time to time, the "Participation Agreement"), providing for the
financing of one Airbus A320-231 aircraft (the "Aircraft");
WHEREAS, concurrently with the execution and delivery
of the Participation Agreement, the Owner Trustee and the
<PAGE> 5
Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA
1990 AWA-14], dated as of September 21, 1990, as supplemented by Trust Indenture
Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 to
Trust Indenture and Security Agreement dated March 27, 1992, and as further
amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of
July 29, 1993 (as so amended, supplemented or otherwise modified to the date
hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued
loan certificates substantially in the form set forth in Section 2.02 thereof
(the "Original Certificates") to the Lenders as evidence of the indebtedness
then being made by the Owner Trustee to finance a portion of the purchase price
of the Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1990 AWA-14], dated as of September 21,
1990, as supplemented by Lease Supplement [GPA 1990 AWA-14] No. 1 dated
September 28, 1990, and as further supplemented by Lease Supplement No. 2 dated
as of December 31, 1991 (as so supplemented, the "Original Lease"), whereby,
subject to the terms and conditions set forth therein, the Owner Trustee agreed
to lease to the Original Head Lessee, and the Original Head Lessee agreed to
lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as
therein defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1990 AWA-14] dated as of September 21, 1990 (the "Parent Head
Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the
Parent Guarantor guaranteed all of the obligations of the Original Head Lessee
under the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1990 AWA-14], dated as of September 21, 1990, as
supplemented by Trust Agreement Supplement [GPA 1990 AWA-14] No. 1 dated
September 28, 1990 (as amended, supplemented or otherwise modified to the date
hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee
agreed, among other things, to hold the Trust Estate defined in Section 1.1
thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-14],
dated as of
- 2 -
<PAGE> 6
September 21, 1990 (as amended, supplemented or otherwise modified to the date
hereof, the "Head Lease TIA");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Original Head Lessee in its capacity as sublessor
(in such capacity, the "Sublessor") and America West Airlines, Inc. in its
capacity as sublessee (in such capacity, the "Sublessee") entered into the
Aircraft Sublease Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as
supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-14] dated September 28,
1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990
AWA-14] dated as of August 26, 1991 (as amended, supplemented or otherwise
modified to the date hereof, the "Sublease"), whereby, subject to the terms and
conditions set forth therein, the Sublessor agreed to sublease to the Sublessee,
and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing
on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1990
AWA-14] dated as of September 21, 1990 (as amended, modified or otherwise
supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the
Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of
the Original Head Lessee under Section 21(f) of the Sublease;
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1990 AWA-14], dated as of September 21, 1990
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease [GPA 1990 AWA-14] dated as of September 21, 1990 (as amended, modified
or otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will amend and restate the Original Indenture as the
First Amended and Restated Trust Indenture and Security Agreement [GPA 1990
AWA-14], dated as of the Restatement Date, as supplemented by Trust Indenture
Supplement No. 2 dated the Restatement Date (the "First Amended and Restated
Indenture" and, the First Amended and Restated Indenture as so amended and
restated, the "Indenture"), under which Indenture the Owner Trustee will issue
secured equipment notes substantially in the form set forth in Section 2.01
thereof (the "Equipment Notes") in five series, the proceeds from the
- 3 -
<PAGE> 7
issuance and sale of which will be applied in part to the prepayment in full of
the Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
Original Lease as the Amended and Restated Lease (as so amended and restated,
the "Lease");
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1990 AWA-14] No. 2
("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended
and as further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Amended and Restated Head Lease Tax
Indemnification Agreement, amending and restating the Head Lease TIA (as so
amended and restated, the "Amended and Restated Head Lease TIA") and the
Sublessor and the Sublessee will enter into the Amended and Restated Sublease
Tax Indemnification Agreement amending and restating the Sublease TIA (as so
amended and restated, the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
five separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving
- 4 -
<PAGE> 8
credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders
of Equipment Notes of each of three Pass Through Trusts, with the Subordination
Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through
Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the
Subordination Agent will enter into the Intercreditor Agreement, dated as of the
Restatement Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject
to the satisfaction or waiver of the conditions set forth herein, on November
26, 1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as a
payment of Supplemental Rent under the Sublease all accrued and unpaid
Rent under the Sublease up to the Restatement Date, if any, (less any
amounts for which Sublessee is indemnified by Sublessor) and (B) the
Original Head Lessee shall pay to the Owner Trustee, as a payment of
Supplemental Rent under the Original Lease, an amount equal to the
accrued and unpaid interest on the Original Certificates up to but not
including the Restatement Date plus an amount (the "Prepayment Amount")
equal to all other amounts due to the holders of the Original
Certificates under the Original Indenture and the other Operative
Documents (as defined in the Original Indenture) payable on the
Restatement Date under Section 2.12 of the Original Indenture;
(ii) the Pass Through Trustee for each Pass Through Trust
shall pay to the Owner Trustee the aggregate purchase price of the
Equipment Notes being issued to such Pass Through Trustee as set forth
in clause (xii) below;
(iii) the Owner Trustee (to the extent of proceeds received
under clauses (i) and (ii)) shall pay to the Indenture Trustee for the
benefit of the holders of the Original Certificates an amount equal to
the aggregate principal amount of the Original Certificates outstanding
on the Restatement Date, together with accrued and unpaid
- 5 -
<PAGE> 9
interest on the Original Certificates up to but not including the
Restatement Date plus the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the holders of
the Original Certificates the amounts of principal, interest, Break
Funding Cost, if any, described in clause (iii) above, owing to them on
the Restatement Date with respect to the Original Certificates as a
prepayment of the Original Certificates;
(v) the Indenture Trustee shall receive the Original
Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture (including Trust Indenture Supplement No. 2);
(vii) the Original Head Lessee, the Sublessee, the Owner
Trustee and the Indenture Trustee shall enter into Lease Amendment No.
1;
(viii) the Owner Participant and the Trust Company shall
enter into Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner Participant
shall enter into the Amended and Restated Head Lease TIA and the
Sublessor and the Sublessee shall enter into the Amended and Restated
Sublease TIA;
(x) the Original Head Lessee, GPA Leasing USA I, Inc., the
Parent Guarantor and the Lessee shall enter into an agreement in form
and substance reasonably satisfactory to each, inter alia, confirming
the termination of certain rights which the Parent Guarantor has to
"put" aircraft to the Lessee and the obligation of the Lessee to accept
and lease such aircraft (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of its
affiliates and the Lessee will enter into an agreement (the "Deed of
Indemnity") pursuant to which the Parent Guarantor and/or one or more
of its affiliates, on the one hand, and the Lessee, on the other, will
indemnify each other with respect to certain information included in
the Prospectus and the Registration Statement (as such terms are
defined in the Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xii) the Owner Trustee shall issue, pursuant to Article II
of the Indenture, to the Subordination Agent on behalf of the Pass
Through Trustee for each of the Pass Through Trusts, Equipment Notes of
the maturity and aggregate
- 6 -
<PAGE> 10
principal amount, bearing the interest rate and for the purchase price
set forth on Schedule II hereto opposite the name of such Pass Through
Trust.
(b) The Owner Participant, by its execution and delivery
hereof, requests and directs the Owner Trustee to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions contemplated
herein.
(c) The closing (the "Closing") of the transactions described
in this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement
Date, or at such other
place as the parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated
hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor
and the Lessee have entered into the Underwriting Agreement, dated as of
November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan
Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon
Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and
conditions hereof, the Lessee will enter into each of the Pass Through Trust
Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be
payable as to principal in accordance with the terms of the Indenture, and the
Equipment Notes shall provide for a fixed rate of interest per annum and shall
contain the terms and provisions provided for the Equipment Notes in the
Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Equipment Notes bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Equipment Notes in the aggregate shall be in the principal amounts set forth on
Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust
Agreements and of the other Operative Documents, all such Equipment Notes shall
be dated and authenticated as of the Restatement Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass
Through Trustee to make the payments described in
- 7 -
<PAGE> 11
Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments
described in Section 1(a)(iii) and the obligations of each of the Pass Through
Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to
participate in the transactions contemplated by this Agreement on the
Restatement Date are subject to the fulfillment, prior to or on the Restatement
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall
not be conditions precedent to the obligations of the Indenture Trustee
hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes
to the Indenture Trustee for authentication, and the Indenture Trustee
shall have authenticated such Equipment Notes and shall have tendered
the Equipment Notes to the Subordination Agent on behalf of the Pass
Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of
the following documents and the Indenture Trustee shall have received
executed counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated
Lease and Lease Supplement No. 3;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and
Trust Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements and
each Pass Through Trust Supplement set forth
in Schedule I hereto;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the
Class A, Class B and Class C Trusts (as
defined in the Intercreditor Agreement).
(c) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received the
following:
- 8 -
<PAGE> 12
(1) an incumbency certificate of each of the Original
Head Lessee, the Lessee and the Parent Guarantor as to the
person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on
behalf of such Person in connection with the transactions
contemplated hereby (including, without limitation, each of
the documents referred to herein) and as to the signatures of
such person or persons;
(2) a copy of the resolutions of the board of
directors of each of the Original Head Lessee, the Lessee and
the Parent Guarantor or the applicable committee thereof,
certified by the Secretary or an Assistant Secretary of such
Person, duly authorizing the transactions contemplated hereby
and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of
such Person in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of
each of the Original Head Lessee and the Lessee, certified by
the Secretary of State of its state of incorporation, a copy
of the by-laws of each of the Original Head Lessee and the
Lessee, certified by the Secretary or Assistant Secretary of
such Person, and a certificate or other evidence from the
Secretary of State of its state of incorporation, dated as of
a date reasonably near the Restatement Date, as to its due
incorporation and good standing in such state; and
(4) a copy of the Memorandum and Articles of
Association of the Parent Guarantor certified to be true and
correct by the Secretary or an Assistant Secretary of the
Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case
of (1), (5) and (6) below, a certificate signed by an authorized
officer of the Lessee and, in the case of (2), (3) and (4) below, a
certificate signed by an authorized officer of the Original Head
Lessee, dated the Restatement Date, certifying that:
(1) the Aircraft has been duly certified by the FAA
as to type and airworthiness and has a current, valid
certificate of airworthiness;
(2) the Aircraft FAA Bill of Sale (as defined in the
Participation Agreement), the Original Lease
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<PAGE> 13
(excluding Lease Supplement No. 2) and the Original
Indenture have each been duly recorded, and the
Original Trust Agreement has been duly filed, with the
FAA pursuant to the sections of Title 49 of the United
States Code relating to aviation (the "Federal Aviation
Act");
(3) Lease Amendment No. 1, the Amended and Restated
Lease, Lease Supplement No. 3, the First Amended and Restated
Indenture, Trust Indenture Supplement No. 2 and Trust
Supplement No. 2 covering the Aircraft shall have been duly
filed for recordation with the FAA pursuant to the Federal
Aviation Act;
(4) the Aircraft has been registered with the FAA in
the name of the Owner Trustee;
(5) the Lessee has authority to operate the Aircraft;
and
(6) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the
Secretary, an Assistant Secretary or other appropriate officer
of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
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<PAGE> 14
(3) a copy of the articles of association and by-laws
of the Indenture Trustee, each certified by the Secretary, an
Assistant Secretary or other appropriate officer of the
Indenture Trustee; and
(4) a certificate signed by an authorized officer of
the Indenture Trustee, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Indenture Trustee are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as
to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Trustee in connection with the
transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by- laws
of the Owner Trustee, each certified by the Secretary or an
Assistant Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
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<PAGE> 15
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
(1) an incumbency certificate of the Owner Participant as
to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Participant in connection with the
transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors
of the Owner Participant or the applicable authority
designated by the board of directors thereof, certified by the
Secretary or an Assistant Secretary of the Owner Participant,
duly authorizing the transactions contemplated hereby and the
execution, delivery and performance of each of the documents
required to be executed and delivered on behalf of the Owner
Participant in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of the
Owner Participant, certified by the Secretary of State of its
state of incorporation, a copy of the by-laws of the Owner
Participant, certified by the Secretary or Assistant Secretary
of the Owner Participant, and a certificate or other evidence
from the Secretary of State of its state of incorporation,
dated as of a date reasonably near the Restatement Date, as to
its due incorporation and good standing in such state; and
(4) a certificate signed by an authorized representative
of the Owner Participant, dated the Restatement Date,
certifying that the representations and warranties contained
herein of the Owner Participant are correct as though made on
and as of the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the
Owner Trustee and the Owner Participant each shall have received from
the Lessee a report from Willis Corroon in substantially the form of
Exhibit D attached hereto.
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<PAGE> 16
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion
addressed to it from (i) Latham & Watkins, special counsel for the
Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee,
(iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis
& Roca, special Arizona counsel for the Lessee, in each case in form
and substance satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received an opinion addressed to it
from Morris, James, Hitchens & Williams, special counsel for the Owner
Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from
Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the
Subordination Agent and the Pass Through Trustee, in each case in form
and substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received an opinion addressed to it from
(i) Hunton & Williams, special counsel for the Owner Participant and
(ii) in-house counsel for the Owner Participant, in each case in form
and substance satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case,
special counsel for the Liquidity Provider, and (ii) in-house counsel
for the Liquidity Provider, in each case in form and substance
satisfactory to the Pass Through Trustee, the Owner Trustee and the
Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma, in form and substance satisfactory
to each of them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP,
special New York counsel for the Original Head Lessee and the Parent
Guarantor, in form and substance satisfactory to each of them.
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<PAGE> 17
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from McCann FitzGerald, special Irish counsel
for the Parent Guarantor, in form and substance satisfactory to each of
them.
(q) The Original Head Lessee, the Lessee, GPA Leasing USA I,
Inc. and the Parent Guarantor shall have entered into the Underwriting
Agreement and the Lessee shall have entered into each of the Pass
Through Trust Agreements, the Certificates shall have been issued and
sold pursuant to the Underwriting Agreement and the Pass Through Trust
Agreements, and the Underwriters shall have transferred to the Pass
Through Trustee in immediately available funds an amount equal to the
aggregate purchase price of the Equipment Notes to be purchased from
the Owner Trustee.
(r) The Original Head Lessee and the Owner Participant shall
each have executed and delivered to the other the Amended and Restated
Head Lease TIA.
(s) The Sublessor and the Sublessee shall each have executed
and delivered to the other the Amended and Restated Sublease TIA.
(t) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would make it illegal for the Pass Through Trustee to make
the payments described in Section 1(a)(ii) or for the Lessee, the
Indenture Trustee, the Owner Trustee or the Owner Participant or any
other party hereto to participate in the transactions contemplated by
this Agreement on the Restatement Date.
(u) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in
connection with the Pass Through Trustee's making of the payments
described in Section 1(a)(ii) or the Owner Trustee's or the Owner
Participant's participation in the transactions contemplated by this
Agreement on the Restatement Date shall have been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security
interests created by or pursuant to the Indenture that are not covered
by the recording system established by the Federal Aviation Act shall
have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee and the Owner Trustee, as the
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<PAGE> 18
case may be, and such financing, termination, amendment and
continuation statement or statements or documents to the same purposes
shall have been duly filed in all places necessary or advisable, and
any additional Uniform Commercial Code financing, termination,
amendment and continuation statements deemed advisable by the Original
Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee
shall have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee or the Owner Trustee, as the case may be,
and duly filed in all places advisable.
(w) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would adversely affect the tax consequences of the
transactions contemplated by this Agreement to the Owner Participant,
the Owner Trustee or any of their respective Affiliates.
(x) The Owner Trustee shall have received a letter of credit
in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2
to the Lease.
(y) The Owner Participant shall have received any other
documents and evidence as the Owner Participant or its counsel may
request.
Promptly following the recording of Lease Amendment No. 1, the
Amended and Restated Lease (including Lease Supplement No. 3) and the First
Amended and Restated Indenture (including Trust Indenture Supplement No. 2)
pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3,
the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and
Trust Supplement No. 2.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
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<PAGE> 19
(i) Each of the Original Head Lessee and the Parent Guarantor
shall have received counterparts of the following documents executed by
each of the parties thereto other than the Original Head Lessee and the
Parent Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 3;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee and such other
releases and terminations as it may
reasonably request; and
(9) that certain letter agreement dated as of
the Restatement Date relating to Stipulated
Loss Values with respect to the Amended and
Restated Lease (the "SLV Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent Guarantor
shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee
referred to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i),
Section 3(j), Section 3(k), Section 3(l),
Section 3(m) and Section 3(n), in each case
addressed to each of the Original Head
Lessee and the Parent Guarantor and in form
and substance satisfactory to each of them;
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<PAGE> 20
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form
and substance reasonably satisfactory to
each of them; and
(6) the report referred to in Section 3(h)
addressed to each of the Original Head Lessee
and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent
Guarantor shall have received such other documents and evidence with
respect to each other party hereto as each of them or its counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement and the "Refunding
Agreements" (as defined in the Registration Statement), the taking of
all necessary action in connection therewith and compliance with the
conditions herein or therein set forth.
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 3;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
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<PAGE> 21
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the
following documents:
(1) the incumbency certificate of the Original
Head Lessee and Parent Guarantor referred to
in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee
and Parent Guarantor referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j),
Section 3(k), Section 3(l), Section 3(m),
Section 3(n), Section 3(o) and Section 3(p),
in each case addressed to Lessee and in form
and substance satisfactory to Lessee; and
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to Lessee and in form
and substance reasonably satisfactory to
Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the
Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the
Owner Participant, the Owner Trustee and the Indenture Trustee to participate in
the transactions contemplated hereby is subject to the receipt by each of them
of (i) a certificate signed by an authorized officer of the Pass Through
Trustee, dated the Restatement Date, certifying that the representations and
warranties contained herein and in the Pass
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<PAGE> 22
Through Trust Agreements of the Pass Through Trustee are correct as of the
Restatement Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date), (ii) an opinion
addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass
Through Trustee, in form and substance satisfactory to each of them, and (iii)
such other documents and evidence with respect to the Pass Through Trustee as it
may reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement, the taking of all necessary action
in connection therewith and compliance with the conditions herein set forth.
SECTION 5. Amendment and Restatement of the Original
Indenture. Subject to the satisfaction or waiver of the conditions precedent set
forth herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the First
Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee,
by execution and delivery hereof, agree to execute and deliver the First Amended
and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor
and the Lessee, by execution and delivery hereof, consent to such execution and
delivery of the First Amended and Restated Indenture. The First Amended and
Restated Indenture shall be effective as of the Restatement Date.
SECTION 6. Amendment and Restatement of the Original Lease.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor
and the Owner Participant, by execution and delivery hereof, consent to the
assignments, delegations, and releases set forth in, and to the amendment and
restatement of the Original Lease effected by, and the Owner Participant
requests and instructs the Owner Trustee to execute and deliver, Lease Amendment
No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee
and the Sublessee agree, by execution and delivery hereof, to execute and
deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective
as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner Trustee,
the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect from and including the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no
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<PAGE> 23
obligations on the parties thereto. Upon the execution and delivery of Lease
Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease
Guaranty and the Assignment of Sublease shall be terminated as and to the extent
set forth herein and therein. Lease Amendment No. 1 shall be effective as of the
Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original Head
Lessee (except as to the representation and warranty contained in Section 8(i)),
the Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has the corporate power and authority to own or hold under lease its
properties, has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and perform its
obligations under this Agreement, Lease Amendment No. 1, the Lease, the
Pass Through Trust Agreements, the Amended and Restated Sublease TIA,
the SLV Letter Agreement and any certificate delivered by the Lessee
pursuant to the foregoing (the "Lessee Documents") and is duly
qualified to do business as a foreign corporation in each jurisdiction
where the failure to so qualify would have a material adverse effect on
its business, operations or condition (financial or otherwise), or on
its ability to perform its obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under
the Lessee Documents have been duly authorized by all necessary
corporate action on the part of the Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation,
judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions
of, or constitute a default under,
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<PAGE> 24
or result in the creation of any Lien (other than Permitted Liens) upon
the property of the Lessee under, any indenture, mortgage, contract,
lease or other agreement in each case having payment obligations in
excess of $500,000 to which the Lessee is a party or by which it may be
bound or affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee
under the Lessee Documents nor the consummation by the Lessee of any of
the transactions contemplated by the Lessee Documents, requires the
consent or approval of, the giving of notice to, the registration with,
or the taking of any other action in respect of, the Department of
Transportation, the FAA, or any other federal, state, local or foreign
governmental authority having jurisdiction, other than those which have
already been received and which the Lessee is in compliance with and
(i) the registration of the Certificates under the Securities Act of
1933, as amended (the "Securities Act") and the securities laws of any
state in which the Certificates may be offered for sale if the laws of
such state require such action, (ii) the qualification of the Pass
Through Trust Agreements under the Trust Indenture Act of 1939, as
amended, (iii) (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee required to
be obtained on or prior to the Restatement Date, which orders, permits,
waivers, exemptions, authorizations and approvals have been duly
obtained and are, or will on the Restatement Date be in full force and
effect, (B) the registration of the Aircraft pursuant to the Federal
Aviation Act and (C) such consents, approvals, notices, registrations
and other actions required by the terms of the Lessee Documents to the
extent required to be given or obtained only after the Restatement Date
and (iv) the registrations and filings referred to in Section 8(i);
(e) each Lessee Document has been duly executed and delivered
by the Lessee and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, each Lessee Document
constitutes, or when executed will constitute, the legal, valid and
binding obligations of the Lessee enforceable against the Lessee in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors or lessors
generally and by general principles of equity, whether considered in a
proceeding at law or in equity, and except, in the case of the Lease,
as may be limited by applicable laws which may affect the remedies
provided in
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<PAGE> 25
the Lease, which laws, however, do not make the remedies provided in
the Lease inadequate for the practical realization of the benefits
intended to be afforded thereby;
(f) except as disclosed in the Prospectus, there are no
pending or, to its knowledge, threatened actions or proceedings before
any court or administrative agency or regulatory commission or other
governmental agency against or affecting the Lessee that are reasonably
expected to materially adversely affect the ability of Lessee to enter
into or perform its obligations under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be free
and clear of any and all Liens (other than Permitted Liens) created by
or through the Lessee;
(i) except for the registration of the Aircraft pursuant to
the Federal Aviation Act, the filing for recordation pursuant to the
Federal Aviation Act (with confidential financial terms redacted) of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement
No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture
and Indenture Supplement No. 2, and each of the other documents
referred to in Annex A hereto, all with the FAA, the filing of a
Uniform Commercial Code ("UCC") amended financing statement with the
Secretary of State of the State of Delaware with regard to the Original
Lease, the filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States of New
York, Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with
respect to the Lease, the filing of a UCC termination statement with
the Secretary of State of the State of Arizona with respect to the
Sublease, and the filing of a UCC termination statement with the
Secretary of State of the State of Delaware with respect to the Initial
Sublease Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly effected as
of the Restatement Date (and assignments thereof and continuation
statements at periodic intervals), and other than the taking of
possession by the Indenture Trustee of the original counterparts of the
Original Lease, Lease Amendment No. 1, the Amended and Restated Lease,
and all Lease Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification required by
Section 6(e) of the Lease, no further filing or recording of the Lease
or of any
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<PAGE> 26
other document (including any financing statement under Article 9 of
the UCC of the State of Delaware, New York or Arizona) and no further
action is necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to perfect the
Owner Trustee's interest in the Aircraft as against the Lessee and any
third parties, or to perfect the security interest in favor of the
Indenture Trustee in the Owner Trustee's interest in the Aircraft and
in the Lease;
(j) all obligations of the Lessee owing to the Lessor in
connection with the Lease are at least pari passu with all unsecured
and unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default
but for the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an Event
of Loss with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are required
to be filed and has paid or will pay or has caused or will cause to be
paid all taxes shown to be due or payable on said returns and on any
assessment received by the Lessee, to the extent such taxes have become
due and payable, except for taxes and returns with respect thereto the
nonpayment or nonfiling of which, either in any case or in the
aggregate, could have no material adverse effect on the Lessee, its
condition (financial or otherwise), business, operations or prospects,
or on its ability to perform its obligations under the Lease or which
are being diligently contested by the Lessee in good faith by
appropriate proceedings and with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all
material respects and fairly present the Lessee's financial condition
as of September 30, 1996 and the results of its operations for the
period covered in conformance with GAAP (except as otherwise noted
therein and with which any such change the independent auditors of the
Lessee have agreed), since September 30, 1996, there has been no
material adverse change in the Lessee's business, operations, condition
(financial or otherwise) or prospects which has not been disclosed in
writing to the Owner Participant and the Indenture Trustee and does not
contain
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any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary,
duties or other similar Taxes then due and for which the Lessee is
responsible pursuant to the Lessee Documents, shall have been paid,
other than such Taxes which are being contested by the Lessee in good
faith and by appropriate proceedings (and for which the Lessee shall
have established such reserves as are required under GAAP) so long as
such proceedings or the non-payment of such Taxes do not involve any
material danger to the sale, forfeiture or loss of the Aircraft;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations or
the Cuban Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, or of any regulations, interpretations or rulings issued
thereunder, and the Lessee is not, and is not acting on behalf of or
for the benefit of, an "Iranian Entity" within the meaning of the
Iranian Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, and the transactions contemplated by this Agreement are not
prohibited by Executive Order 12170, the above-mentioned Iranian Assets
Control Regulations or any regulations, interpretations or rulings
issued under any thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made out
of the assets of any "employee benefit plan" as defined in Section 3(3)
of ERISA;
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the
Owner Participant or the Indenture Trustee by the Lessee in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to
the Lessee (other than matters of a general economic nature) which the
Lessee has not disclosed in writing to the Owner Participant or the
Indenture Trustee which could impair its ability to perform its
obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy
Code, the Lessor as lessor of the Aircraft under
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<PAGE> 28
the Lease, and the Indenture Trustee, as assignee of the Owner
Trustee's rights under the Lease pursuant to the Indenture, would be
entitled to the benefits of Section 1110 of the Bankruptcy Code with
respect to the Aircraft.
SECTION 9. Representations and Warranties. Each of the parties
below represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below)
represents and warrants that:
(1) the Indenture Trustee is a banking association duly
organized, validly existing and in good standing under the
federal laws of the United States of America, is a "citizen of
the United States" as defined in Section 40102(a)(15) of the
Federal Aviation Act and the rules and regulations of the FAA
thereunder (as so defined, a "Citizen of the United States")
(without making use of a voting trust, voting powers agreement
or similar arrangement), will notify promptly all parties to
this Agreement if in its reasonable opinion its status as a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement) is
likely to change and will resign as Indenture Trustee as
provided in Section 8.02 of the Indenture promptly after it
obtains actual knowledge that it has ceased to be such a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement), and
has the full corporate power, authority and legal right under
the laws of the State of Connecticut and the federal laws of
the United States pertaining to its banking, trust and
fiduciary powers to execute and deliver each of this
Agreement, the Indenture and each other Operative Document to
which it is a party and to carry out its obligations under
this Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) neither the execution and delivery by the Indenture
Trustee of this Agreement, the Indenture, Lease Amendment No.
1 and each other Operative Document to which it is a party,
nor the consummation by it of any of the transactions
contemplated hereby or thereby, nor the compliance by it with
any of the terms and
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<PAGE> 29
provisions hereof and thereof, (A) requires or will require
any approval of its stockholders, or approval or consent of
any trustees or holders of any indebtedness or obligations of
it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene any
provision of, or constitutes or will constitute a default
under, or results or will result in any breach of, or results
or will result in the creation of any Lien (other than as
permitted under the Operative Documents) upon its property
under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which
it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation or any
judgment or order applicable to or binding on it of any United
States governmental authority or agency governing the trust
powers of the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture,
when executed and delivered by the Indenture Trustee, will
constitute, the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents to which
it is a party;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any State of Connecticut or any
United States of America governmental authority or agency
regulating the trust powers of the Indenture Trustee is
required for the execution and delivery of, or the carrying
out by, the Indenture Trustee of any of the transactions
contemplated hereby or by the Indenture, Lease
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<PAGE> 30
Amendment No. 1 or any other Operative Document to
which it is a party or by which it is bound, other than
any such consent, approval, order, authorization,
registration, notice or action as has been duly
obtained, given or taken;
(6) there are no Lenders' Liens (as defined in the Lease)
on the Aircraft or any portion of the Trust Estate created by
or through the Indenture Trustee in its individual capacity;
and
(7) it has possession of the chattel paper original
counterpart of the Original Lease, Lease Amendment No. 1 and
the Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties
are made solely by the Owner Trustee) and the Owner Trustee represents
and warrants that:
(1) the Trust Company is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and
authority to carry on its business as now conducted, has, or
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver Trust
Supplement No. 2, has the corporate power and authority to
carry out the terms of the Trust Agreement, and each of the
Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant), the corporate power and authority
to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Equipment Notes, Lease Amendment
No. 1, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
(2) (i) each of the Trust Company and the Owner Trustee
has duly authorized, executed and delivered the Trust
Agreement and this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant) the Trust Agreement constitutes a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of
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<PAGE> 31
creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, (ii)
the Owner Trustee has duly authorized, executed and delivered
this Agreement and (assuming the due authorization, execution
and delivery of Trust Supplement No. 2 by the Owner
Participant) this Agreement and the Trust Agreement
constitute, and the Indenture and the Lease, when entered
into, will constitute, a legal, valid and binding obligation
of the Owner Trustee, in its individual capacity or as Owner
Trustee and the Trust Company, as the case may be, enforceable
against it in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(3) assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant,
the Owner Trustee has duly authorized, and on the Restatement
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Equipment Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Equipment Note on the Restatement Date
will constitute the valid and binding obligation of the Owner
Trustee and will be entitled to the benefits and security
afforded by the Indenture in accordance with the terms of such
Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner
Trustee or the Trust Company, as the case may be, of this
Agreement, the Original Trust Agreement, Trust Supplement No.
2, the Original Indenture, the Indenture, the Original Lease,
Lease Amendment No. 1, the Lease, the Equipment Notes, or any
other Operative Document to which it is a party, nor the
consummation by it of any of the transactions contemplated
hereby or thereby, nor the compliance by it with any of the
terms and provisions hereof and thereof, (A) requires or will
require any approval of its stockholders, or approval or
consent of any trustees or holders of any indebtedness or
obligations of it, or (B) violates or will violate its
articles of association or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute
a default under, or results or will result in any breach of,
or results or will result in the creation of any Lien (other
than as permitted under the Operative Documents) upon its
property under, any indenture, mortgage, chattel
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<PAGE> 32
mortgage, deed of trust, conditional sale contract, bank loan
or credit agreement, license or other agreement or instrument
to which it is a party or by which it is bound, or contravenes
or will contravene any law, governmental rule or regulation of
the State of Delaware or any United States governmental
authority or agency governing the trust powers of the Owner
Trustee, or any judgment or order applicable to or binding on
it;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any state or local governmental
authority or agency or any State of Delaware or any United
States of America governmental authority or agency regulating
the trust powers of the Trust Company is required for the
execution and delivery of, or the carrying out by, the Trust
Company or the Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust
Agreement, the Indenture, the Lease, Lease Amendment No. 1,
the Equipment Notes or any other Operative Document to which
it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice
or action as has been duly obtained, given or taken or which
is described in Section 8(d);
(6) there exists no Lessor's Lien or Head Lessor's
Lien (each as defined in the Lease) (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens) attributable to
the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's
Lien (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens) attributable to the Trust Company;
(8) there are no Taxes payable by the Owner Trustee
or the Trust Company imposed by the State of Delaware or any
political subdivision thereof in connection with the
prepayment of the Original Certificates or the issuance of the
Equipment Notes, or the execution and delivery by it of any of
the instruments referred to in clauses (1), (2), (3) and (4)
above, that, in each case, would not have been imposed if the
Trust Estate were not located in the State of Delaware and the
Trust Company had not (a) had its principal place of business
in, (b) performed (in its individual
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<PAGE> 33
capacity or as Owner Trustee) any or all of its duties under
the Operative Documents in, and (c) engaged in any activities
unrelated to the transactions contemplated by the Operative
Documents in, the State of Delaware;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in
its individual capacity or as Owner Trustee, before any court
or administrative agency which, if determined adversely to it,
would materially adversely affect the ability of the Owner
Trustee, in its individual capacity or as Owner Trustee, as
the case may be, to perform its obligations under any of the
instruments referred to in clauses (1), (2), (3) and (4)
above;
(10) both its chief executive office, and the place where
its records concerning the Aircraft and all its interests in,
to and under all documents relating to the Trust Estate (other
than such as may be maintained and held by the Indenture
Trustee pursuant to the Indenture), are located in Wilmington,
Delaware. Owner Trustee, in its individual capacity or as
Owner Trustee, agrees that it will not change the location of
such office to a location outside of Delaware, without prior
written notice to all parties hereto; and
(11) it is a Citizen of the United States (without making
use of a voting trust agreement, voting powers agreement or
similar arrangements).
(c) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to carry
on its present business and operations and to own or lease its
properties, has, or had on the respective dates of execution
thereof, as the case may be, the corporate power and authority
to enter into and to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement and
the Amended and Restated Head Lease TIA; this Agreement, the
SLV Letter Agreement and Trust Supplement No. 2 have been duly
authorized, executed and delivered by it; and, assuming the
due authorization, execution and delivery hereof and thereof
by the other parties hereto and thereto, this Agreement, the
Trust Agreement, the SLV Letter
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<PAGE> 34
Agreement and the Amended and Restated Head Lease TIA
constitute the legal, valid and binding obligations of the
Owner Participant enforceable against it in accordance with
their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Amended and Restated Head Lease TIA
or any other Operative Document to which it is a party nor (B)
compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding on
the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements
of the Owner Participant under applicable law), or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its
certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its
property may be bound or affected, except where such
contravention or default would not result in any liability to
any other party hereto or have a material adverse effect on
the rights or on the remedies of the other parties hereto or
on its ability to perform its obligations hereunder or
thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Amended and Restated Head Lease TIA (it
being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee other than the laws, rules or regulations relating to
aircraft lease transactions generally or to the
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<PAGE> 35
citizenship requirements of the Owner Participant under
the Federal Aviation Act);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant before any court or administrative agency or
arbitrator which, if determined adversely to the Owner
Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement or
the Amended and Restated Head Lease TIA;
(5) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant (including for this purpose Liens
that would be Lessor's Liens but for the first proviso in the
definition of Lessor's Liens); and
(6) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangement). If at any time Owner
Participant has ceased to be, or shall have actual knowledge
that it is likely to cease to be, such a citizen, and (i) the
Aircraft shall be or would thereupon become ineligible for
registration in the name of Owner Trustee under the Federal
Aviation Act as in effect at such time (without regard to the
"based and primarily used" provisions thereof) and the
regulations then applicable thereunder, or (ii) the Aircraft
is registered in a jurisdiction other than the United States
of America, in circumstances in which the preceding clause (i)
does not apply and the Lessee or any Permitted Sublessee at
any time proposes to register the Aircraft in the United
States of America, then Owner Participant shall (at its own
expense and without any reimbursement or indemnification from
the Lessee or any Permitted Sublessee) (A) immediately either
(1) transfer in accordance with Section 10 hereof all of its
right, title and interest in and to the Trust Agreement, the
Trust Estate, this Agreement and the Amended and Restated Head
Lease TIA or (2) take such other action, including, without
limitation, the establishment of a voting trust or voting
powers agreement (in which case Owner Participant shall remain
the beneficial owner of the Trust Estate), as may be necessary
to prevent the deregistration of the Aircraft under the
Federal Aviation Act or to maintain such registration of the
Aircraft or to make possible such registration of the Aircraft
in the United States of
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<PAGE> 36
America and to prevent Indenture Trustee, the Holders of the
Equipment Notes, the Lessee or any Permitted Sublessee from
being adversely affected as a result thereof and (B) indemnify
the Lessee, the Indenture Trustee, the Holders of the
Equipment Notes and any Permitted Sublessee, from and against
any and all Claims incurred or suffered as a result of Owner
Participant's failure to be such a citizen or loss of such
citizenship, including, without limitation, as a result of the
Aircraft's becoming ineligible or ceasing to remain eligible
for such registration.
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly organized, validly
existing and in good standing under the federal laws of the
United States of America, and has the full corporate power,
authority and legal right under the federal laws of the United
States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Intercreditor Agreement, and
this Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement will
have been, duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement constitutes, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement, will
constitute, the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance by
the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement or this Agreement, the
purchase by the Pass Through Trustee of the Equipment Notes
pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements,
contravenes any
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<PAGE> 37
law, rule or regulation of the State of Connecticut or any
United States governmental authority or agency regulating the
Pass Through Trustee's banking, trust or fiduciary powers or
any judgment or order applicable to or binding on the Pass
Through Trustee and does not contravene or result in any
breach of, or constitute a default under, the Pass Through
Trustee's articles of association or by-laws or any agreement
or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(5) assuming that the trusts created by the Pass
Through Trust Agreements will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code for
federal income tax purposes, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the acquisition, possession or ownership by
the Pass Through Trustee of any of the Equipment Notes (other
than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
prior to the exercise of remedies upon the occurrence of an
Indenture Event of Default, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of
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<PAGE> 38
the Pass Through Trust Agreements), and such trusts will not
be subject to any Taxes imposed by the State of Connecticut or
any political subdivision or taxing authority thereof; upon
the exercise of remedies following the occurrence of an
Indenture Event of Default, there will be no Taxes payable by
the Pass Through Trustee imposed by the State of Connecticut
or any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
the trusts created by the Pass Through Trust Agreements will
not be subject to any Taxes imposed by the State of
Connecticut or any political subdivision thereof, solely
because the Pass Through Trustee maintains an office in, and
administers the trusts created by the Pass Through Trust
Agreements in, the State of Connecticut;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly
or indirectly offered any Equipment Notes for sale to any
Person or solicited any offer to acquire any Equipment Notes
from any Person, nor has the Pass Through Trustee authorized
anyone to act on its behalf to offer directly or indirectly
any Equipment Notes for sale to any Person, or to solicit any
offer to acquire any Equipment Notes from any Person; and the
Pass Through Trustee is not in default under any Pass Through
Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
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<PAGE> 39
(e) The Subordination Agent represents and warrants
that:
(1) the Subordination Agent is a duly organized national
banking association, validly existing and in good standing
with the Comptroller of the Currency under the laws of the
United States of America and has the full corporate power,
authority and legal right under the laws of the United States
of America pertaining to its banking, trust and fiduciary
powers to execute and deliver each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement and
to perform its obligations under this Agreement, the Liquidity
Facilities and the Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement will have been,
duly authorized, executed and delivered by the Subordination
Agent; this Agreement constitutes, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement, will constitute,
the legal, valid and binding obligations of the Subordination
Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance by
the Subordination Agent of each of the Liquidity Facilities,
the Intercreditor Agreement and this Agreement or the
performance by the Subordination Agent of this Agreement,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Subordination Agent and do not contravene or
result in any breach of, or constitute a default under, the
Subordination Agent's articles of association or by-laws or
any agreement or instrument to which the Subordination Agent
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities,
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<PAGE> 40
the Intercreditor Agreement or this Agreement nor the
consummation by the Subordination Agent of any of the
transactions contemplated hereby or thereby requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Subordination Agent's banking, trust or
fiduciary powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Subordination Agent
of this Agreement, any of the Liquidity Facilities or the
Intercreditor Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities) solely because
the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are
no Taxes payable by the Subordination Agent imposed by the
State of Connecticut or any political subdivision thereof in
connection with the acquisition, possession or ownership by
the Subordination Agent of any of the Equipment Notes solely
because the Subordination Agent maintains an office and
administers its trust business in the State of Connecticut
(other than franchise or other taxes based on or measured by
any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any Person
or solicited any offer to acquire any Equipment Note from any
Person, nor has the Subordination Agent
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authorized anyone to act on its behalf to offer directly or
indirectly any Equipment Note for sale to any Person, or to
solicit any offer to acquire any Equipment Note from any
Person; and the Subordination Agent is not in default under
any Liquidity Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the
Owner Participant, the Owner Trustee, the Underwriters or the
Lessee.
(f) The Original Head Lessee represents and warrants
that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the State of Connecticut and has
the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Amended and Restated Head Lease TIA, the Amended
and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents nor (B) compliance
by it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Original
Head Lessee, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument
to which the Original Head Lessee is a party or by which it or
any of its property may be bound or affected, except where
such contravention or default
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<PAGE> 42
would not result in any liability to any other party hereto or
have a material adverse effect on the rights or on the
remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by, and
no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Original Head Lessee of this
Agreement and each of the other Original Head Lessee
Transaction Documents;
(4) except as set forth in the Parent Guarantor's most
recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Original Head Lessee before any court
or administrative agency or arbitrator which, if determined
adversely to the Original Head Lessee, would materially
adversely affect the Original Head Lessee's ability to perform
its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease);
(6) on the Delivery Date, the Owner Trustee received good
title to the Aircraft free and clear of all Liens, except the
rights of the Original Head Lessee under the Original Lease,
the rights of the Sublessee under the Sublease, the Lien of
the Original Indenture, the beneficial interest of the Owner
Participant in the Aircraft, and Permitted Liens under the
Original Lease;
(7) title to the Buyer Furnished Equipment for the
Aircraft has been transferred to the Owner Trustee in
accordance with Section 8(y) of the Participation Agreement.
As of the Restatement Date, there are no existing Claims
against Parent Guarantor or Original Head Lessee with respect
to Buyer Furnished Equipment; and
(8) except for the registration of the Aircraft pursuant
to the Federal Aviation Act, the filing for recordation
pursuant to the Federal Aviation Act (with
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<PAGE> 43
confidential financial terms redacted) of Lease Amendment No.
1, the Amended and Restated Lease, Lease Supplement No. 3,
Trust Supplement No. 2, the First Amended and Restated
Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all with the
FAA, the filing of a Uniform Commercial Code ("UCC") amended
financing statement with the Secretary of State of the State
of Delaware with regard to the Original Lease, the filing of
UCC termination statements with regard to the Original Head
Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC
financing statement with the Secretary of State of the State
of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State
of Arizona with respect to the Sublease, and the filing of a
UCC termination statement with the Secretary of State of the
State of Delaware with respect to the Initial Sublease
Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly
effected as of the Restatement Date (and assignments thereof
and continuation statements at periodic intervals), and other
than the taking of possession by the Indenture Trustee of the
original counterparts of the Original Lease, Lease Amendment
No. 1, the Amended and Restated Lease, and all Lease
Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification
required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any
financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Aircraft as
against the Lessee and any third parties, or to perfect the
security interest in favor of the Indenture Trustee in the
Owner Trustee's interest in the Aircraft and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under the
laws of Ireland and has the corporate power and authority to
enter into and to perform its obligations under this
Agreement; this Agreement has been duly authorized and
constitutes the legal, valid and binding obligations of the
Parent Guarantor enforceable against it in accordance with its
terms,
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<PAGE> 44
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(2) neither (A) the execution and delivery by the
Parent Guarantor of this Agreement nor (B) compliance by it
with all of the provisions hereof (x) will contravene any law
or order of any court or governmental authority or agency
applicable to or binding on the Parent Guarantor, or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its Memorandum
and Articles of Association or any indenture, mortgage,
contract or other agreement or instrument to which the Parent
Guarantor is a party or by which it or any of its property may
be bound or affected, except where such contravention or
default would not result in any liability to any other party
hereto or have a material adverse effect on the rights or on
the remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Parent Guarantor of this
Agreement;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty with
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<PAGE> 45
respect to Section 9(f)(8) shall be only for the benefit of
the Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by operation of law, consolidation, merger, sale of assets or
otherwise) any of its right, title or interest in and to the Trust Estate, the
Aircraft, the Lease, this Agreement, the Trust Agreement, the Amended and
Restated Head Lease TIA or any other Operative Document or any proceeds
therefrom or permit the transfer of any of its stock in any transaction which
has the practical effect of any of the foregoing; provided that, and subject to
the conditions set forth below, Owner Participant may transfer to a Transferee
(as defined below) all (but not less than all) of its right (except for such
rights accruing prior to transfer), title and interest as an entirety in and to
the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Amended
and Restated Head Lease TIA and each other Operative Document to which Owner
Participant is a party or by which Owner Participant is bound. Each such
transfer shall be subject to the following conditions, and Owner Participant
agrees for the express benefit of each party hereto that any such transfer will
comply with such conditions:
(i) the Person to whom such transfer is to be made (a
"Transferee") is either (A) a bank, trust company or other like
regulated financial institution with a combined capital, surplus and
undivided profits of, or a corporation with a tangible net worth of, in
either case at least $60,000,000, (B) any wholly-owned subsidiary of
such bank, trust company, financial institution or corporation if such
bank, trust company, financial institution or corporation furnishes to
Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an
agreement or agreements of such bank, financial institution or
corporation guaranteeing such subsidiary's obligations as Owner
Participant contained in this Agreement, the Trust Agreement, the
Amended and Restated Head Lease TIA and each other Operative Document
to which Owner Participant is a party or by which it is bound, which
guarantee shall be substantially in the form attached as Exhibit A
hereto or (C) a subsidiary of Owner Participant if Owner Participant
furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and
Lessee an agreement whereby Owner Participant will guarantee such
subsidiary's obligations as Owner Participant contained in this
Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA
and each other Operative Document to which Owner Participant is a party
or by which it is bound, which guarantee shall be substantially in the
form attached as Exhibit A hereto;
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<PAGE> 46
(ii) Owner Trustee, Indenture Trustee, Original Head Lessee
and Lessee shall have received at least 15 days' prior written notice
of such transfer specifying the name and address of any proposed
transferee and specifying the facts necessary to determine whether such
proposed transferee qualifies as a "Transferee" under clause (i) above
and does not violate clause (viii) below; provided that if such
Transferee is a subsidiary of Owner Participant, such notice may be
given promptly following rather than prior to such transfer if such
Transferee meets the net worth requirement set forth above on its own
account without a guaranty and otherwise meets the requirements of this
Section 10;
(iii) upon giving effect to such transfer, such Transferee
is a Citizen of the United States and such Transferee shall deliver to
Lessee an affidavit to such effect;
(iv) such Transferee has the requisite power and authority
and legal right to enter into and carry out the transactions
contemplated hereby;
(v) such Transferee enters into an agreement in
substantially the form attached as Exhibit B hereto whereby such
Transferee confirms that it shall be deemed a party to this Agreement,
the Trust Agreement, the Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by
which Owner Participant is bound, and in which the transferee shall
agree to be bound by and undertake the obligations of Owner Participant
in the Operative Documents and shall make representations and
warranties comparable to those of Owner Participant contained herein;
(vi) such transfer does not violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or create a relationship that would be in violation
thereof, or violate any provisions of the Securities Act or any other
applicable Federal, state or other law, rule or regulation;
(vii) such transfer does not violate any provision of
ERISA or any rules or regulations thereunder;
(viii) such Transferee is not an airline, a commercial air
carrier, an air freight forwarder, any Person engaged in the business
of parcel transport by air or a subsidiary or an Affiliate of such an
airline, a commercial air carrier, an air freight forwarder, Person
engaged in the business of parcel transport by air or other similar
Person;
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<PAGE> 47
(ix) an opinion of counsel of the Transferee confirming the
matters referred to in clauses (iv) and (vi) above (with appropriate
reliance on certificates of corporate officers or public officials as
to matters of fact) and confirming that the agreement referred to in
clause (v) above is the legal, valid, binding and enforceable
obligation of the Transferee and that the guarantee referred to in
clause (i)(B) or (C) above, if any, is the legal, valid, binding and
enforceable obligation of the Transferee's guarantor shall be provided,
at least 3 days prior to such transfer, to Lessee, Owner Trustee,
Original Head Lessee and Indenture Trustee, which shall be in form and
substance reasonably satisfactory to each of them; and
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Aircraft previously made by Owner Participant; and except
as the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to "Owner Participant" shall thereafter be deemed to include such
Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Amended and Restated Head
Lease TIA and under the other Operative Documents, except to the extent
expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Amended and Restated Head Lease TIA by or against Owner Participant which have
accrued or been made prior to the date of such transfer. The transferor Owner
Participant shall pay the reasonable expenses of each party hereto related to
any such transfer.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions of
clause (A) of paragraph (6) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease. The Lessee
shall have no obligation to prevent any such deregistration or assist in
maintaining or otherwise enhancing the Aircraft's
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<PAGE> 48
eligibility for registration by restricting the use of the Aircraft.
SECTION 11. Re-Registration of the Aircraft. The Indenture
Trustee agrees, that if the Owner Participant consents thereto, which consent
shall not be unreasonably withheld, at any time after the Restricted Use Period,
Lessee may, in connection with effecting a Permitted Sublease elect to effect a
change in registration of the Aircraft, at Lessee's cost and expense, so long as
(a) the country of registry of the Aircraft is a country listed on Exhibit C
hereto (or such other country as the Owner Participant approves) and (b) the
following conditions are met: (i) unless the country of registry is Taiwan, the
United States of America maintains normal diplomatic relations with the country
of registry of the Aircraft, and if the country of registry is Taiwan, the
United States of America maintains diplomatic relations at least as good as
those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner
Participant and the Indenture Trustee shall have received favorable opinions
(subject to customary exceptions) addressed to each such party, from counsel of
recognized reputation qualified in the laws of the relevant jurisdiction and
reasonably acceptable to the Owner Participant to the effect of the following
and as to such other matters as the Owner Participant may reasonably request:
(A) the Owner Trustee's ownership interest in the Aircraft and
interest in the Lease and any Permitted Sublease shall be recognized
under the laws of such jurisdiction,
(B) the obligations of Lessee, and the rights and remedies of
the Owner Trustee, under the Lease shall remain valid, binding and
(subject to customary bankruptcy and equitable remedies exceptions and
to other exceptions customary in foreign opinions generally)
enforceable under the laws of such jurisdiction (or the laws of the
jurisdiction to which the laws of such jurisdiction would refer as the
applicable governing law),
(C) after giving effect to such change in registration, the
Lien of the Indenture on the Owner Trustee's right, title and interest
in and to the Aircraft, the Lease and any Permitted Sublease shall
continue as a valid and duly perfected security interest and all
filing, recording or other action necessary to protect the same and the
Owner Trustee's ownership interest in the Aircraft shall have been
accomplished (or, if such opinion cannot be given at the time of such
proposed change in registration because such change in registration is
not yet effective, (1) the opinion shall detail what filing, recording
or other action is necessary and (2) the Owner Trustee and the
Indenture
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<PAGE> 49
Trustee shall have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action shall
be accomplished and a supplemental opinion to that effect shall be
delivered to the Owner Trustee and the Indenture Trustee on or prior to
the effective date of such change in registration),
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other activity
of the Owner Trustee, the Owner Participant or the Indenture Trustee
(or any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such jurisdiction,
(E) there is no tort liability of the owner of an aircraft not
in possession thereof under the laws of such jurisdiction (it being
agreed that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is provided
to cover such risk),
(F) (unless Lessee shall have agreed, or pursuant to the Lease
shall have been required, to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such
jurisdiction so long as such Aircraft is registered under the laws of
such jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in currency
freely convertible into Dollars for the loss of use of such Aircraft in
the event of the requisition by such government of such use.
In addition, as a condition precedent to any such change in registration, (i)
the insurance required by Section 12 of the Lease shall be in full force and
effect at the time of such change in registration after giving effect to such
change in registration and the Owner Trustee and the Indenture Trustee shall
have received a certificate of the type described in Section 12(f) of the Lease
and (ii) the aircraft maintenance standards of the new country of registry shall
not be materially less stringent from those of the United States of America or
not materially less stringent from those of the United Kingdom and the Owner
Trustee and the Indenture Trustee shall have received a certificate to such
effect signed by the President, any Executive Vice President or any Senior Vice
President of Lessee which certificate shall, as among the parties hereto, be
presumed to be correct as to the matters stated therein absent conclusive
evidence to the contrary. Lessee shall pay all reasonable costs,
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expenses, fees, and recording and registration taxes, including the reasonable
fees and expenses of counsel to the Owner Trustee, the Owner Participant and the
Indenture Trustee, and other charges in connection with any such change in
registration.
SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming by, through or on behalf of it to interfere with the
right of Lessee or any Permitted Sublessee to the possession, use, operation and
quiet enjoyment of and other rights with respect to the Aircraft under the
Lease, and all rents, revenues, profits and income therefrom, in accordance with
the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner
Participant shall not be liable for any such interference by Indenture Trustee,
Pass Through Trustee, holders of any Equipment Notes, or any other Person
lawfully claiming by, through or on behalf of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate or the Indenture Estate. Each of Trust Company,
Owner Trustee and Owner Participant severally agrees that it will promptly, at
its own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Lessor's Lien or Head
Lessor's Lien attributable to it. For all purposes of this Agreement and the
other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a
result of the nonpayment of any Tax imposed on or measured by the net income of
the Trust Estate or the trust created by the Trust Agreement that is not
indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
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Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through
Trustee and Subordination Agent severally agrees that it will promptly, at its
own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Trustee's Lien attributable to it and to make restitution to the Trust Estate
and the Indenture Estate for any diminution of the assets thereof resulting
therefrom and will indemnify and hold harmless Lessee and each Indemnitee
against any claims incurred or suffered by any such Person and any reduction in
amounts payable out of, or diminution in the assets of, the Trust Estate or the
Indenture Estate resulting from any such Trustee's Lien attributable to it. For
purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee), Pass Through Trustee in its individual capacity (and not as
Pass Through Trustee) or Subordination Agent in its individual capacity (and not
as Subordination Agent) on or in respect of (as the case may be) the Aircraft or
any other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against such Person not related to its interest in the
Aircraft or the administration of the Trust Estate or the Trust Indenture Estate
pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform
Commercial Code or otherwise, (ii) acts or omissions of such Person not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of such Person which are in violation of any of the Operative
Documents, or (iii) Taxes imposed on or Claims against such Person which are
excluded from indemnification by Lessee, or (iv) Claims against such Person
arising out of the voluntary or involuntary transfer by such Person of all or
any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust
Estate, the Trust Indenture Estate or the Operative Documents (except a Claim
resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the
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Original Head Lessee and Parent Guarantor severally agrees that it will
promptly, at its own expense (and without any right of indemnification or
reimbursement from Lessee), take such action as may be necessary duly to
discharge any such Sublessor's Lien attributable to it or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect and to make restitution to
the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Sublessor's Lien
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original
Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees with
Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement except in accordance with the terms thereof, provided that any such
amendment, supplement or modification shall not adversely affect the Lessee, and
(iii) not to terminate or revoke the Trust Agreement except in accordance with
the terms thereof, provided that any such termination or revocation shall not
adversely affect the Lessee.
(b) Notwithstanding anything to the contrary in the Trust
Agreement or Section 14(a) hereof, but subject always to the provisions of
Section 14(c) hereof, Owner Participant shall
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<PAGE> 53
not consent to or direct a change in the situs of the Trust Estate so long as a
successor Owner Trustee meeting the requirements of the Trust Agreement is
reasonably available at the present situs of the Trust Estate (A) unless the
Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30
days' prior notice thereof and (B) if, within 15 days after notice of such a
proposed change is given to Lessee and the Original Head Lessee, either (1)
Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee
(at the expense of Owner Participant) an opinion of counsel, which counsel shall
be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would have an adverse
effect on the rights or obligations of Lessee or Original Head Lessee or (2)
Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee
(at the expense of Owner Participant) an opinion of counsel, which counsel shall
be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would cause an
increase in the amount for which Lessee may be required to indemnify any Person
pursuant to the provisions of Section 10 of the Lease or for which Original Head
Lessee is required to indemnify any Person pursuant to the provisions of the
Amended and Restated Head Lease TIA, unless any and all Persons entitled to
indemnification pursuant to Section 10 of the Lease or applicable provision of
the Amended and Restated Head Lease TIA shall waive indemnification under
Section 10 of the Lease or applicable provision of the Amended and Restated Head
Lease TIA for any adverse tax or other consequences to it of such a change in
the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner
Participant an opinion of counsel, which counsel shall be reasonably
satisfactory to Indenture Trustee, to the effect that such proposed change in
the situs of the Trust Estate would not have an adverse effect on the validity
or priority of the Lien of the Indenture and that such Uniform Commercial Code
and FAA filings as are required to maintain the validity and priority of the
Lien of Indenture have been made, and (D) such change does not affect the
registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to any
Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as
a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States of America from the state in which
it is then located, the situs of the trust shall be moved and Owner Participant
will take whatever action may be requested by Lessee that is reasonably
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification with respect to such change of situs and
request of Lessee as Original Head Lessee, Owner Participant or
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<PAGE> 54
the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of
the Lease and the exclusions in the Amended and Restated Head Lease TIA) may
reasonably request, (B) promptly after notice thereof Owner Participant has not
notified Lessee and provided reasonable evidence of an adverse effect on Owner
Participant's rights or obligations under the Trust Agreement, (C) Indenture
Trustee shall have received an opinion of counsel selected by Lessee, which
counsel shall be reasonably satisfactory to Indenture Trustee, to the effect
that the validity and priority of the Lien of the Indenture Estate will not be
adversely affected by such action, and that such Uniform Commercial Code and FAA
filings as are required to maintain the validity and the priority of the Lien of
the Indenture have been made, (D) Owner Participant and Indenture Trustee shall
have received an opinion or opinions of counsel selected by Owner Participant to
the effect that, with customary exceptions, (I) the trust, as thus removed,
shall remain a validly established trust, (II) any amendments to the Trust
Agreement or the Indenture necessitated by such removal shall have been duly
authorized, executed and delivered by the parties thereto and shall constitute
the legal, valid and binding obligations of such parties, enforceable in
accordance with their terms, (III) if such removal involves the replacement of
Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and
substance reasonably satisfactory to Indenture Trustee and to Owner Participant
covering the matters described in the opinion described in Section 3(j) hereof,
and (IV) covering such other matters as Owner Participant or the Indenture
Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless
on an after tax basis Owner Trustee, Owner Participant and their respective
Affiliates and Indenture Trustee against any and all reasonable and actual costs
and expenses including reasonable attorneys' fees and disbursements,
registration, recording or filing fees and other Taxes incurred by Owner
Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee
in connection with such change of situs and shall indemnify and hold harmless
Owner Participant, Owner Trustee and their respective Affiliates, and Indenture
Trustee on an after tax basis (subject to the exclusions set forth in Section
10(b) of the Lease and the Amended and Restated Sublease TIA) from and against
any increase in Taxes borne by such Person that results from such change in
situs. In no event shall any change in situs of the trust affect Original Head
Lessee's rights or obligations under the Amended and Restated Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed by
Owner Participant, a successor Owner Trustee may be appointed, and a corporation
may become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that
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<PAGE> 55
Owner Participant has actual knowledge that Owner Trustee is not in compliance
with its covenants contained herein. No successor Owner Trustee shall be
appointed unless Lessee and Indenture Trustee shall have given written consent
thereto, which consent shall not be unreasonably withheld. Owner Participant
will not instruct Owner Trustee to terminate any Operative Document or take any
action thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Aircraft as contemplated hereby.
Lessee shall pay expenses on an after tax basis relating to the resignation or,
if requested by Lessee, the removal of Owner Trustee, provided that the Owner
Participant shall pay expenses relating to the removal of the Owner Trustee, if
such removal was solely at the request of the Owner Participant.
(e) The Trust Company agrees that if at any time it shall
obtain actual knowledge that it has ceased to be or will likely cease to be a
Citizen of the United States, it will promptly resign as Owner Trustee (if and
so long as such citizenship is necessary under such Federal Aviation Act or any
other law to permit the continued registration of the Aircraft in the name of
the Lessor or, if it is not necessary, if and so long as Owner Trustee's
citizenship would have any material adverse effect on any holder of Equipment
Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of
the successor Owner Trustee in accordance with Section 10.1 of the Trust
Agreement.
SECTION 15. Certain Retained Rights and Releases. (a) Each of
Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to
and confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head
Lessee and Parent Guarantor shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable for
all of its obligations under Sections 10 and 13 of the Sublease, with respect to
the period up to (but excluding) the Restatement Date and each of Parent
Guarantor, Original Head Lessee and Lessee shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the
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<PAGE> 56
termination or expiration thereof (including, without limitation, any such
liability arising from and including the Restatement Date under the Sublease in
respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), (ii) all
rights, benefits, obligations and liabilities under the Sublease TIA (which
rights, benefits, obligations and liabilities are amended and restated as of the
Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall
remain liable to Sublessee under the Sublease and the Sublease Guaranty for
Sublessor's Liens (as therein defined); all of which rights, benefits,
obligations and liabilities shall expressly survive the termination of the
Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is
agreed that (x) Original Head Lessee shall continue to be liable to the
Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens and (y) Parent Guarantor is hereby released from any and all obligations
and liabilities under the Sublease Guaranty, other than in respect of the
obligations and liabilities of the Original Head Lessee in respect of
Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner Participant
agree as among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: Lessee, and Owner
Trustee, Owner Participant and the other "Indemnitees" (as such term is defined
in the Sublease) other than Original Head Lessee and Parent Guarantor, shall
retain all rights, benefits, obligations and liabilities under the Sublease,
including that Sublessee shall remain liable for all of its obligations under
Sections 10 and 13 of the Sublease, with respect to the period up to (but
excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner
Participant shall retain all rights and liabilities under any provision of the
Sublease which by the express terms thereof survives the termination thereof
(including, without limitation, any such liability arising on or after the
Restatement Date under the Sublease in respect of the period up to (but
excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date), all of which rights, benefits, obligations
and liabilities shall expressly survive the termination of the Sublease. In
furtherance of the foregoing, it is agreed by Sublessee that the indemnities
contained in Sections 10 and 13 of the Sublease are expressly made for the
benefit of and shall be enforceable by each Indemnitee (as such term is defined
in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA
to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent
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<PAGE> 57
Guarantor shall, as of the Restatement Date, have no liabilities or obligations
under the "Operative Documents" (as defined in the Original Head Lease as in
effect immediately prior to (but excluding) the Restatement Date and excluding
the Head Lease TIA (which rights, benefits, obligations and liabilities are
amended and restated as of the Restatement Date)) and are released from all such
obligations and liabilities, except the Original Head Lessee and the Parent
Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be
liable to the parties hereto for the removal of any Sublessor's Liens and (ii)
(without releasing Sublessor as provided in the Sublease) each of the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and
the Owner Participant agree as among themselves and for the benefit of the other
"Indemnitees" (as such term is defined in the Original Head Lease) that all
rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of
the Participation Agreement with respect to the period up to (but excluding) the
Restatement Date and under any other provision of the Participation Agreement
which by the express terms thereof survives the termination thereof (including,
without limitation, any such liability arising from and including the
Restatement Date under the Participation Agreement in respect of the period up
to (but excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date) shall survive the termination of the
Participation Agreement, the Original Head Lease and the Parent Head Lease
Guaranty (the foregoing surviving rights, benefits, obligations and liabilities
of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained
Head Lease Rights and Obligations"). In furtherance of the foregoing, the
parties hereto consent and agree that the Parent Guarantor is hereby released
from any and all "Obligations" under and as defined in the Parent Head Lease
Guaranty, except in respect of the Retained Head Lease Rights and Obligations
and except in respect of the Amended and Restated Head Lease TIA, the
"Obligations" in respect of which shall continue in full force and effect in
accordance with the Parent Head Lease Guaranty and are hereby ratified and
confirmed by the Parent Guarantor.
SECTION 16. Certain Additional Obligations of the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee,
Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and
agrees for the benefit of each other that it will be bound by the terms of the
other Operative Documents to which it or its applicable trustee is a party, and
comply with and perform its agreements, covenants and indemnities set forth in
the other Operative Documents to which it or its applicable trustee is a party,
as amended, supplemented or otherwise modified from time to time as permitted
hereby.
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<PAGE> 58
SECTION 17. Lessee Protection of Title. Each of the Owner
Trustee and the Indenture Trustee agrees to execute and deliver such documents
or other instruments as the Lessee may reasonably request to enable the Lessee
to perform its obligations under Section 15 of the Lease for the benefit of such
Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee,
Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and
Lessee (i) hereby irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York in New York
County, and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service
of process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John
Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its
agent for service of process, and covenants and agrees that service of process
in any suit, action or proceeding may be made upon it at the office of such
agent or such other office of Parent Guarantor or such other agent, as from time
to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner
Participant and Indenture Trustee. Original Head Lessee hereby generally
consents to service of process by registered mail, return receipt requested,
addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury,
Connecticut 06810 or such other office of Original Head Lessee as from time to
time may be designated by Original Head Lessee in writing to Owner Trustee,
Owner Participant and Indenture Trustee. Owner Participant generally consents to
service of process by registered mail, return receipt requested,
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<PAGE> 59
addressed to it at ________________________________ or such other office of
Owner Participant as from time to time may be designated by Owner Participant in
writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee.
Owner Trustee generally consents to service of process by registered mail,
return receipt requested, addressed to it at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner
Trustee as from time to time may be designated by Owner Trustee in writing to
Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture
Trustee generally consents to service of process by registered mail, return
receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford,
Connecticut 06115 or such other office of Indenture Trustee as from time to time
may be designated in writing to Owner Participant, Original Head Lessee, Owner
Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has
not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the
Original Head Lessee of invoices therefor in reasonable detail
prior to the Restatement Date, all of the reasonable out-of-
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<PAGE> 60
pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the
Owner Participant, the Pass Through Trustee, the Subordination Agent, the
Liquidity Provider, the Indenture Trustee and the Original Certificate Holders
in connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Lease, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement
(except, in each case, as otherwise provided therein) shall be paid on or prior
to the Closing by the Original Head Lessee, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable
to the Equipment Notes issued under the Indenture of (A) Shipman &
Goodwin LLP, special counsel for the Pass Through Trustee, the
Subordination Agent and the Indenture Trustee, (B) Morris, James,
Hitchens & Williams, special counsel for the Owner Trustee, (C)
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City,
Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for
the Underwriters;
(2) the reasonable fees, expenses and disbursements of
Hunton & Williams, special counsel for the Owner
Participant;
(3) the fees, expenses and disbursements of Andrews & Kurth
L.L.P. and Latham & Watkins, special counsel for the Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and
the Subordination Agent;
(6) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code financing statements in the United
States of America; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred to
in this Section 21.
(c) The Lessee agrees to pay the amounts it is obligated to
pay under Section 21(j) of the Lease.
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<PAGE> 61
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations and
warranties were made to the Liquidity Provider directly. The terms of this
Agreement shall inure to the benefit of the Liquidity Provider, its successors
and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Original Head Lessee and its successors and permitted assigns, the Parent
Guarantor and its successors and permitted assigns, the Lessee and its
successors and permitted assigns, the Pass Through Trustee and its successors as
Pass Through Trustee (and any additional trustee appointed) under any of the
Pass Through Trust Agreements, the Indenture Trustee and its successors as
Indenture Trustee (and any additional Indenture Trustee appointed) under the
Indenture, the Subordination Agent and its successors as Subordination Agent
under the Intercreditor Agreement, the Owner Trustee and its successors as Owner
Trustee under the Trust Agreement, and the Owner Participant and its successors
and permitted assigns. No purchaser or holder of any Equipment Notes shall be
deemed to be a successor or assign of any holder of the Original Certificates.
(b) Upon the release of the Aircraft from the lien of the
Indenture and the termination of the Indenture pursuant to
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<PAGE> 62
and in accordance with Section 10.01 thereof, each requirement in the Operative
Documents that the consent of Indenture Trustee be obtained or that the
Indenture Trustee be given notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree
that this Agreement shall be effective among all such parties on
and as of the Restatement Date.
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<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:_______________________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA SUB I, INC.
By:_______________________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:_______________________________________
Name:
Title:
Address: GPA House
Shannon, County Clare, Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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<PAGE> 64
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner Trustee
By:_______________________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust Administration
[_________________________________________]
By:_______________________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided herein,
but solely as Indenture Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 65
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Subordination Agent
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Pass Through Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 66
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1A, dated
November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1B, dated
November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1C, dated
November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1D, dated
November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1E, dated
November 26, 1996.
<PAGE> 67
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
- ------------ --------- -------- -------- --------
<S> <C> <C> <C> <C>
Class A $ 11,897,518 02-Jan-2009 6.85% $ 11,897,518
Class B $ 4,413,774 02-Jul-2005 6.93% $ 4,413,774
Class C $ 4,552,621 02-Jan-2002 6.86% $ 4,552,621
Class D $ 4,249,113 02-Jan-2002 8.16% $ 4,249,113
Class E $ 2,541,597 02-Jul-2002 10.50% $ 2,541,597
</TABLE>
<PAGE> 68
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115,
Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of
Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290.
<PAGE> 69
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1990 AWA-14]
TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-14], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, ____________________________, a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1990 AWA-14], dated as of November 20, 1996 among Lessee, Original Head
Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee,
Subordination Agent and Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the
benefit of Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms
defined in the Refunding Agreement are used herein as therein
defined, unless otherwise defined herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably
guarantees to Beneficiaries and their respective successors, endorsees,
transferees and assigns, the prompt and complete payment by Transferee when due
(whether at the stated maturity,
<PAGE> 70
by acceleration or otherwise) of, and the faithful performance of, and
compliance with, all payment obligations of Transferee under the Refunding
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party and each other Operative Document
to which Transferee is a party or by which either is bound (collectively, the
"Relevant Documents"), strictly in accordance with the terms thereof and the
timely performance of all other obligations of Transferee thereunder (such
payment and other obligations, the "Obligations"), and Guarantor further agrees
to pay any and all expenses (including, without limitation, all fees and
disbursements of counsel) that may be paid or incurred by Beneficiaries in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any
other guarantor or any other Person or received or collected by any Beneficiary
from Transferee, Guarantor, any other guarantor or any other person by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of
Guarantor hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or
observed by Transferee (whether affirmative or negative in character) shall not
be observed or performed, or if any amount payable by Transferee referred to in
Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor
shall promptly perform or observe or cause to be performed or observed each such
Obligation or undertaking and shall forthwith pay such amount at the place and
to the person or entity entitled thereto pursuant to the Relevant Documents
regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass
Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of
any of them shall have instituted any suit, action or proceeding or exhausted
its remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments
made by Guarantor hereunder or any setoff or application of funds of Guarantor
by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of
the rights of any Beneficiary against Transferee or any collateral, security or
guarantee or
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<PAGE> 71
right of set-off held by any Beneficiary for the payment of the Obligations, nor
shall Guarantor seek or be entitled to seek any reimbursement from Transferee in
respect of payments made by Guarantor hereunder, until all amounts and
performance owing to Beneficiaries by Transferee on account of the Obligations
are paid and performed in full.
4. Amendments, etc., with respect to the Obligations; Waiver
of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without notice
to or further assent by the Guarantor, any demand for payment or performance of
any of the Obligations made by any Beneficiary may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not
assign, convey or otherwise transfer to any person (a) any of its interest in
Transferee unless in connection therewith,
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<PAGE> 72
Guarantor assigns its rights and obligations hereunder to a guarantor which
meets the requirements of Section 10 of the Refunding Agreement; provided that
nothing contained in this Section 5 shall be construed to prohibit any merger,
consolidation or other corporate restructuring of Transferee or Guarantor so
long as the resulting corporation meets the requirements of Section 10 of the
Refunding Agreement and assumes the obligations of the corporation merged or
consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guarantee or acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Transferee
or the Guarantor with respect to the Obligations. The Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance (and not merely of
collectibility) without regard to (a) the validity, regularity or enforceability
of any Relevant Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Transferee against any Beneficiary,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Transferee or the Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of the Transferee for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Transferee or any other person or
entity or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Beneficiary to
pursue such other rights or remedies or to collect any payments from the
Transferee or any such other person or entity or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Transferee or any such other person or entity or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and
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<PAGE> 73
remedies, whether express, implied or available as a matter of law, of any
Beneficiary against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Beneficiaries, and their respective successors, endorsees, transferees
and assigns, until all of the Obligations and the Obligations of the Guarantor
under this Agreement shall have been satisfied by payment and performance in
full. The Guarantor further agrees that, without limiting the generality of this
Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by
applicable law from exercising its remedies (or any of them) against the
Transferee under any Operative Document, such Beneficiary (or any assignee
thereof) shall be entitled to receive hereunder from the Guarantor, upon demand
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any beneficiary upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made. The Guarantor shall not commence any "case" (as
defined in Title 11 of the United States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction or withholding,
and shall be made in U.S. Dollars. If any payment hereunder is subject to
deduction or withholding, Guarantor shall pay an additional amount such that,
after deduction of all amounts required to be deducted or withheld, the net
amount actually received will equal the amount that would have been received had
such deduction or withholding not been required.
9. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged;
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<PAGE> 74
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Guarantee, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the
creation or imposition of any lien on any of the properties or revenues
of the Guarantor pursuant to any requirement of law or contractual
obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or governmental authority and no
consent of any other person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee;
(f) no litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
against any of its properties or revenues (i) with respect to this
Guarantee or any of the transactions contemplated hereby or (ii) that
could have a material adverse effect on the business, operations,
property or financial or other condition of the Guarantor;
[(g) the balance sheet of the Guarantor as at
_________________ and the related statement of income and retained
earnings for the fiscal year then ended (copies of which have
heretofore been furnished to each Beneficiary) have been prepared in
accordance with generally accepted accounting principles applied
consistently throughout the period involved, are complete and correct
and present fairly the financial condition of the Guarantor as at such
date and the results of its operations for such fiscal year; since such
date there has been no material adverse change in the business,
operations, property or financial or other condition of the Guarantor;
the Guarantor has no material contingent obligation, contingent
liability or liability for
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<PAGE> 75
taxes, long-term lease or unusual forward or long-term commitment that
is not reflected in the foregoing statements or in the notes thereto;
and] (1)
(h) the Guarantor is [type of legal personality] with a
[combined capital, surplus and undivided profits] [tangible net worth]
of at least $60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by
any act (except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any
Beneficiary, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire
agreement of Guarantor with respect to the subject matter hereof and there are
no promises or representations by any Beneficiary relative to the subject matter
hereof not reflected herein.
13. Amendments and Waivers. None of the terms or provisions of
this Guarantee may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this
Guarantee are for convenience of reference only and not to
- --------
(1) This representation is not applicable if Transferee is a wholly-owned
subsidiary of the Owner Participant.
- 7 -
<PAGE> 76
affect the construction hereof or be taken into consideration in the
interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing or by
telegraph, telex or telecopy and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, two days after deposit in the postal system, first class
postage pre-paid, or, in the case of telegraphic notice, when sent, answerback
received, addressed to (a) in the case of the Guarantor, the address provided on
the signature page hereof, and (b) in the case of any Beneficiary, the address
provided for such party in the Refunding Agreement.
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<PAGE> 77
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and the year first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
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<PAGE> 78
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1990 AWA-14]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-14]
("Assignment") dated as of _____________, between ______________, a ___________
corporation ("Assignor") and ________________, a __________ corporation
("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee,
Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned
below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer
by Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
_________________________, Fleet National Bank, as Subordination Agent, and
Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement"), (ii) the Trust Agreement
identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the
Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the
Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as
defined in the Refunding Agreement) and (b) the assumption by Assignee of the
obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the meaning ascribed thereto in the Refunding Agreement.
For purposes of this Assignment, the defined term "Operative Document" shall
have the meaning ascribed thereto in the Refunding Agreement and shall be deemed
to include the Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned,
transferred and set over, and does hereby sell, convey, assign, transfer and set
over, unto Assignee, as of the date hereof, all of its right, title and interest
in, under and with respect to the Refunding Agreement, the Trust Agreement, the
Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the
other Operative Documents to which Assignor is a party or any other contract,
agreement, document or instrument relating to the Trust Estate by which Assignor
is bound, and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
<PAGE> 79
rights of Assignor as have accrued to Assignor prior to the date hereof
(including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust Agreement as of a date prior
to such date and the right to receive any indemnity payment pursuant to the
Refunding Agreement or the Lease with respect to events occurring prior to such
date).
3. Assumption. Assignee hereby undertakes all of the duties
and obligations of Assignor whenever accrued (other than duties and obligations
of Assignor required to be performed by it on or prior to the date hereof under
the Operative Documents to which Owner Participant is a party and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound), pursuant to the Trust Agreement
and any of the other Operative Documents by which Assignor is bound or any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound, and hereby confirms that
it shall be deemed a party to the Trust Agreement and shall be bound by each of
the other Operative Documents and each other contract, agreement, document or
other instrument relating to the Trust Estate to which Assignor is a party or by
which it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the
within assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
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<PAGE> 80
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay over
to Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Assignor that, under Section 2 hereof, belong to Assignee, and
Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents
that it is acquiring the Trust Estate interests and other
interests hereby assigned to it without a view to the
distribution or resale of either thereof.
8. Representations and Warranties. Assignee repre-
sents and warrants that:
(a) it has all requisite power and authority and legal right
to enter into and carry out the transactions contemplated hereby and to
carry out and perform the transactions of Owner Participant as
contemplated by the Operative Documents;
(b) on the date hereof it is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act
and the rules and regulations of the FAA thereunder;
(c) on and as of the date hereof, the representations and
warranties of Owner Participant set forth in Section 9 of the Refunding
Agreement and as set forth in any other Agreement to which Owner
Participant is a party are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of
the Refunding Agreement;
(e) Assignee or its guarantor has a [combined capital, surplus
and undivided profits] [tangible net worth] of not less than
$60,000,000.
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<PAGE> 81
9. Governing Law. This Assignment and Assumption
Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:_____________________________________
Title:
[ASSIGNEE]
By:_____________________________________
Title:
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<PAGE> 82
EXHIBIT C to
REFUNDING AGREEMENT
LIST OF COUNTRIES
Australia
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Japan
Luxembourg
Netherlands
New Zealand
Norway
Singapore
South Korea
Sweden
Switzerland
United Kingdom
<PAGE> 83
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 84
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1990 AWA-14] No. 2 dated
November 26, 1996 (the "Trust Agreement Supplement") between
the Owner Trustee and the Owner Participant, amending the
Trust Agreement, which Trust Agreement Supplement was filed
with the FAA at 12:20 p.m., C.S.T. on November 26, 1996;
(b) First Amended and Restated Trust Indenture and Security
Agreement [GPA 1990 AWA-14] dated as of November 26,
1996 (the "Amended and Restated Indenture") between the
Owner Trustee and the Indenture Trustee, amending and
restating the Original Indenture with attached thereto
Trust Agreement and Indenture Supplement No. 2 [GPA
1990 AWA-14] dated November 26, 1996 (the "Indenture
Supplement"), with respect to the Aircraft, which
Amended and Restated Indenture with the Indenture
Supplement attached was filed with the FAA at 12:21
p.m., C.S.T. on November 26, 1996;
(c) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of November 26, 1996 (the "Lease
Amendment") among the Original Head Lessee, as
assignor, the Owner Trustee, as lessor, the Lessee, as
successor lessee, and the Indenture Trustee, which (i)
assigns all right, title and interest of the Original
Head Lessee in and to the Original Head Lease to the
Lessee, (ii) terminates the Sublease and (iii) releases
the Sublease Collateral Assignment, which Lease
Amendment was filed with the FAA at 12:22 p.m., C.S.T.
on November 26, 1996; and
(d) Amended and Restated Aircraft Lease Agreement [GPA 1990
AWA-14] dated as of September 21, 1990 and amended and
restated as of November 26, 1996 (the "Amended and
Restated Lease") between the Owner Trustee, as lessor,
and the Lessee, as successor lessee, amending and
restating the Original Head Lease, with Lease
Supplement [GPA 1990 AWA-14] No. 3 dated November 26,
1996 (the "Lease Supplement") between the Owner
Trustee, as lessor, and the Lessee, as successor
lessee, with respect to the Aircraft, attached thereto,
which Amended and Restated Lease with the Lease
Supplement attached was filed with the FAA at 12:23
p.m., C.S.T. on November 26, 1996.
Trust Agreement
Trust Agreement [GPA 1990 AWA-14] dated as of September 21,
1990 between ________________________, as owner participant,
<PAGE> 85
and Wilmington Trust Company, as owner trustee, as supplemented by Trust
Agreement Supplement [GPA 1990 AWA-14] No. 1 dated September 28, 1990.
Original Indenture
Trust Indenture and Security Agreement [GPA 1990 AWA- 14]
dated as of September 21, 1990 between Wilmington Trust Company, as trustee
under Trust Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, and
Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut, National Association, and The Connecticut National
Bank), as indenture trustee, which was recorded by the Federal Aviation
Administration on September 28, 1990 and assigned Conveyance No. E10184, as
supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Trust Indenture
Supplement No. 1 09/28/90 09/28/90 E10184
Amendment No. 1 to
Trust Indenture and
Security Agreement
[GPA 1990 AWA-14] 03/27/92 05/18/92 EE003011
Amendment No. 2 to
Trust Indenture and
Security Agreement as of
[GPA 1990 AWA-14] 07/29/93 08/04/93 F59674
</TABLE>
Original Head Lease
Aircraft Lease Agreement [GPA 1990 AWA-14] dated as of
September 21, 1990 between Wilmington Trust Company, as trustee under Trust
Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as lessor, and GPA
Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation
Administration on September 28, 1990 and assigned Conveyance No. E10185, as
supplemented by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Lease Supplement
(GPA 1990 AWA-14]
No. 1 09/28/90 09/28/90 E10185
Lease Supplement
[GPA 1990 AWA-14]
No. 2 12/31/91 (which was not filed for
recordation with the FAA)
</TABLE>
- 2 -
<PAGE> 86
Sublease
Aircraft Sublease Agreement (GPA 1990 AWA-14] dated as of
September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and
America West Airlines, Inc., as sublessee, which was recorded by the Federal
Aviation Administration on September 28, 1990 and assigned Conveyance No.
E10186, as supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 09/28/90 09/28/90 E10186
Amendment No. 1 to
Aircraft Sublease
Agreement [GPA 1990 as of
AWA-14] 08/26/91 09/11/91 DD001626
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease [GPA 1990 AWA-14] dated as of September
21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust
Company, as trustee under Trust Agreement [GPA 1990 AWA-14] dated as of
September 21, 1990, as assignee, which was attached to and recorded as one
instrument with the Sublease on September 28, 1990 and assigned Conveyance No.
E10186.
- 3 -
<PAGE> 1
Exhibit 4.17
- --------------------------------------------------------------------------------
REFUNDING AGREEMENT
[GPA 1990 AWA-15]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA SUB I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
---------------------------------,
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 098
Registration No. N636AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
PAGE
----
<S> <C> <C>
SECTION 1. Purchase of Equipment Notes; Refunding.............................................................. 5
SECTION 2. Equipment Notes..................................................................................... 7
SECTION 3. Conditions Precedent................................................................................ 7
SECTION 4. Certain Conditions Precedent to the
Obligations of the Original Head Lessee
and the Parent Guarantor; Certain
Conditions Precedent to the Obligations
of the Lessee; Conditions Precedent
with respect to the Pass Through
Trustee.................................................................................. 15
SECTION 5. Amendment and Restatement of the
Original Indenture....................................................................... 19
SECTION 6. Amendment and Restatement of the
Original Lease........................................................................... 19
SECTION 7. Termination of the Participation
Agreement; Termination of Sublease,
etc...................................................................................... 19
SECTION 8. Representations and Warranties of the
Lessee................................................................................... 20
SECTION 9. Representations and Warranties...................................................................... 25
SECTION 10. Transfer of Owner Participant's
Interest................................................................................. 42
SECTION 11. Re-Registration of the Aircraft..................................................................... 45
SECTION 12. Quiet Enjoyment..................................................................................... 47
SECTION 13. Liens ......................................................................................... 47
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent
Guarantor, Trust Company, Owner Trustee
and Owner Participant.................................................................... 49
SECTION 15. Certain Retained Rights and Releases................................................................ 52
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 16. Certain Additional Obligations of the
Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee.................................................... 54
SECTION 17. Lessee Protection of Title.......................................................................... 55
SECTION 18. Jurisdictional and Related Matters.................................................................. 55
SECTION 19. Limitation on Recourse.............................................................................. 56
SECTION 20. Notices ......................................................................................... 56
SECTION 21. Expenses ......................................................................................... 56
SECTION 22. Reliance of Liquidity Provider...................................................................... 58
SECTION 23. Miscellaneous....................................................................................... 58
SECTION 24. Governing Law....................................................................................... 59
SECTION 25. Effectiveness....................................................................................... 59
</TABLE>
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1990 AWA-15]
REFUNDING AGREEMENT [GPA 1990 AWA-15] (this "Agreement"),
dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) _________________________, a
Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a
Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
five separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank), a national banking
association, not in its individual capacity except as otherwise expressly
provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under
the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Sanwa International PLC, as Lender (and predecessor in
interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and
The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the
Owner Trustee and the Indenture Trustee entered into the Participation Agreement
[GPA 1990 AWA-15], dated as of September 21, 1990, as amended by the Letter
Agreement dated as of July 29, 1993 (as amended, supplemented or otherwise
modified from time to time, the "Participation Agreement"), providing for the
financing of one Airbus A320-231 aircraft (the "Aircraft");
WHEREAS, concurrently with the execution and delivery
of the Participation Agreement, the Owner Trustee and the
<PAGE> 5
Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA
1990 AWA-15], dated as of September 21, 1990, as supplemented by Trust Indenture
Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 to
Trust Indenture and Security Agreement dated March 27, 1992, and as further
amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of
July 29, 1993 (as so amended, supplemented or otherwise modified to the date
hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued
loan certificates substantially in the form set forth in Section 2.02 thereof
(the "Original Certificates") to the Lenders as evidence of the indebtedness
then being made by the Owner Trustee to finance a portion of the purchase price
of the Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1990 AWA-15], dated as of September 21,
1990, as supplemented by Lease Supplement [GPA 1990 AWA-15] No. 1 dated
September 28, 1990, and as further supplemented by Lease Supplement No. 2 dated
as of December 31, 1991 (as so supplemented, the "Original Lease"), whereby,
subject to the terms and conditions set forth therein, the Owner Trustee agreed
to lease to the Original Head Lessee, and the Original Head Lessee agreed to
lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as
therein defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1990 AWA-15] dated as of September 21, 1990 (the "Parent Head
Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the
Parent Guarantor guaranteed all of the obligations of the Original Head Lessee
under the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, as
supplemented by Trust Agreement Supplement [GPA 1990 AWA-15] No. 1 dated
September 28, 1990 (as amended, supplemented or otherwise modified to the date
hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee
agreed, among other things, to hold the Trust Estate defined in Section 1.1
thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-15],
dated as of
- 2 -
<PAGE> 6
September 21, 1990 (as amended, supplemented or otherwise modified to the date
hereof, the "Head Lease TIA");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Original Head Lessee in its capacity as sublessor
(in such capacity, the "Sublessor") and America West Airlines, Inc. in its
capacity as sublessee (in such capacity, the "Sublessee") entered into the
Aircraft Sublease Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as
supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-15] dated September 28,
1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990
AWA-15] dated as of August 26, 1991 (as amended, supplemented or otherwise
modified to the date hereof, the "Sublease"), whereby, subject to the terms and
conditions set forth therein, the Sublessor agreed to sublease to the Sublessee,
and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing
on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1990
AWA-15] dated as of September 21, 1990 (as amended, modified or otherwise
supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the
Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of
the Original Head Lessee under Section 21(f) of the Sublease;
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1990 AWA-15], dated as of September 21, 1990
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease [GPA 1990 AWA-15] dated as of September 21, 1990 (as amended, modified
or otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will amend and restate the Original Indenture as the
First Amended and Restated Trust Indenture and Security Agreement [GPA 1990
AWA-15], dated as of the Restatement Date, as supplemented by Trust Indenture
Supplement No. 2 dated the Restatement Date (the "First Amended and Restated
Indenture" and, the First Amended and Restated Indenture as so amended and
restated, the "Indenture"), under which Indenture the Owner Trustee will issue
secured equipment notes substantially in the form set forth in Section 2.01
thereof (the "Equipment Notes") in five series, the proceeds from the
- 3 -
<PAGE> 7
issuance and sale of which will be applied in part to the prepayment in full of
the Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
Original Lease as the Amended and Restated Lease (as so amended and restated,
the "Lease");
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1990 AWA-15] No. 2
("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended
and as further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Amended and Restated Head Lease Tax
Indemnification Agreement, amending and restating the Head Lease TIA (as so
amended and restated, the "Amended and Restated Head Lease TIA") and the
Sublessor and the Sublessee will enter into the Amended and Restated Sublease
Tax Indemnification Agreement amending and restating the Sublease TIA (as so
amended and restated, the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
five separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving
- 4 -
<PAGE> 8
credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders
of Equipment Notes of each of three Pass Through Trusts, with the Subordination
Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through
Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the
Subordination Agent will enter into the Intercreditor Agreement, dated as of the
Restatement Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject
to the satisfaction or waiver of the conditions set forth herein, on November
26, 1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as a
payment of Supplemental Rent under the Sublease all accrued and unpaid
Rent under the Sublease up to the Restatement Date, if any, (less any
amounts for which Sublessee is indemnified by Sublessor) and (B) the
Original Head Lessee shall pay to the Owner Trustee, as a payment of
Supplemental Rent under the Original Lease, an amount equal to the
accrued and unpaid interest on the Original Certificates up to but not
including the Restatement Date plus an amount (the "Prepayment Amount")
equal to all other amounts due to the holders of the Original
Certificates under the Original Indenture and the other Operative
Documents (as defined in the Original Indenture) payable on the
Restatement Date under Section 2.12 of the Original Indenture;
(ii) the Pass Through Trustee for each Pass Through Trust
shall pay to the Owner Trustee the aggregate purchase price of the
Equipment Notes being issued to such Pass Through Trustee as set forth
in clause (xii) below;
(iii) the Owner Trustee (to the extent of proceeds received
under clauses (i) and (ii)) shall pay to the Indenture Trustee for the
benefit of the holders of the Original Certificates an amount equal to
the aggregate principal amount of the Original Certificates outstanding
on the Restatement Date, together with accrued and unpaid
- 5 -
<PAGE> 9
interest on the Original Certificates up to but not
including the Restatement Date plus the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the holders of
the Original Certificates the amounts of principal, interest, Break
Funding Cost, if any, described in clause (iii) above, owing to them on
the Restatement Date with respect to the Original Certificates as a
prepayment of the Original Certificates;
(v) the Indenture Trustee shall receive the Original
Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture (including Trust Indenture Supplement No. 2);
(vii) the Original Head Lessee, the Sublessee, the Owner
Trustee and the Indenture Trustee shall enter into Lease Amendment No.
1;
(viii) the Owner Participant and the Trust Company shall
enter into Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner Participant shall
enter into the Amended and Restated Head Lease TIA and the Sublessor
and the Sublessee shall enter into the Amended and Restated Sublease
TIA;
(x) the Original Head Lessee, GPA Leasing USA I, Inc., the
Parent Guarantor and the Lessee shall enter into an agreement in form
and substance reasonably satisfactory to each, inter alia, confirming
the termination of certain rights which the Parent Guarantor has to
"put" aircraft to the Lessee and the obligation of the Lessee to accept
and lease such aircraft (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of its
affiliates and the Lessee will enter into an agreement (the "Deed of
Indemnity") pursuant to which the Parent Guarantor and/or one or more
of its affiliates, on the one hand, and the Lessee, on the other, will
indemnify each other with respect to certain information included in
the Prospectus and the Registration Statement (as such terms are
defined in the Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Equipment Notes of the
maturity and aggregate
- 6 -
<PAGE> 10
principal amount, bearing the interest rate and for the purchase price
set forth on Schedule II hereto opposite the name of such Pass Through
Trust.
(b) The Owner Participant, by its execution and delivery
hereof, requests and directs the Owner Trustee to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions contemplated
herein.
(c) The closing (the "Closing") of the transactions described
in this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement
Date, or at such other place as the parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated
hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor
and the Lessee have entered into the Underwriting Agreement, dated as of
November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan
Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon
Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and
conditions hereof, the Lessee will enter into each of the Pass Through Trust
Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be
payable as to principal in accordance with the terms of the Indenture, and the
Equipment Notes shall provide for a fixed rate of interest per annum and shall
contain the terms and provisions provided for the Equipment Notes in the
Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Equipment Notes bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Equipment Notes in the aggregate shall be in the principal amounts set forth on
Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust
Agreements and of the other Operative Documents, all such Equipment Notes shall
be dated and authenticated as of the Restatement Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligations of
the Pass Through Trustee to make the payments described in
- 7 -
<PAGE> 11
Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments
described in Section 1(a)(iii) and the obligations of each of the Pass Through
Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to
participate in the transactions contemplated by this Agreement on the
Restatement Date are subject to the fulfillment, prior to or on the Restatement
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall
not be conditions precedent to the obligations of the Indenture Trustee
hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes
to the Indenture Trustee for authentication, and the Indenture Trustee
shall have authenticated such Equipment Notes and shall have tendered
the Equipment Notes to the Subordination Agent on behalf of the Pass
Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of
the following documents and the Indenture Trustee shall have received
executed counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 3;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and
Trust Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements
and each Pass Through Trust Supplement set
forth in Schedule I hereto;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the
Class A, Class B and Class C Trusts (as
defined in the Intercreditor Agreement).
(c) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received the
following:
- 8 -
<PAGE> 12
(1) an incumbency certificate of each of the Original
Head Lessee, the Lessee and the Parent Guarantor as to the
person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on
behalf of such Person in connection with the transactions
contemplated hereby (including, without limitation, each of
the documents referred to herein) and as to the signatures of
such person or persons;
(2) a copy of the resolutions of the board of
directors of each of the Original Head Lessee, the Lessee and
the Parent Guarantor or the applicable committee thereof,
certified by the Secretary or an Assistant Secretary of such
Person, duly authorizing the transactions contemplated hereby
and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of
such Person in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of
each of the Original Head Lessee and the Lessee, certified by
the Secretary of State of its state of incorporation, a copy
of the by-laws of each of the Original Head Lessee and the
Lessee, certified by the Secretary or Assistant Secretary of
such Person, and a certificate or other evidence from the
Secretary of State of its state of incorporation, dated as of
a date reasonably near the Restatement Date, as to its due
incorporation and good standing in such state; and
(4) a copy of the Memorandum and Articles of
Association of the Parent Guarantor certified to be true and
correct by the Secretary or an Assistant Secretary of the
Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case
of (1), (5) and (6) below, a certificate signed by an authorized
officer of the Lessee and, in the case of (2), (3) and (4) below, a
certificate signed by an authorized officer of the Original Head
Lessee, dated the Restatement Date, certifying that:
(1) the Aircraft has been duly certified by the FAA
as to type and airworthiness and has a current, valid
certificate of airworthiness;
(2) the Aircraft FAA Bill of Sale (as defined in the
Participation Agreement), the Original Lease
- 9 -
<PAGE> 13
(excluding Lease Supplement No. 2) and the Original
Indenture have each been duly recorded, and the
Original Trust Agreement has been duly filed, with the
FAA pursuant to the sections of Title 49 of the United
States Code relating to aviation (the "Federal Aviation
Act");
(3) Lease Amendment No. 1, the Amended and Restated
Lease, Lease Supplement No. 3, the First Amended and Restated
Indenture, Trust Indenture Supplement No. 2 and Trust
Supplement No. 2 covering the Aircraft shall have been duly
filed for recordation with the FAA pursuant to the Federal
Aviation Act;
(4) the Aircraft has been registered with the FAA in
the name of the Owner Trustee;
(5) the Lessee has authority to operate the Aircraft;
and
(6) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the
Secretary, an Assistant Secretary or other appropriate officer
of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
- 10 -
<PAGE> 14
(3) a copy of the articles of association and by-laws
of the Indenture Trustee, each certified by the Secretary, an
Assistant Secretary or other appropriate officer of the
Indenture Trustee; and
(4) a certificate signed by an authorized officer of
the Indenture Trustee, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Indenture Trustee are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as
to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Trustee in connection with the
transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-
laws of the Owner Trustee, each certified by the Secretary or
an Assistant Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
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<PAGE> 15
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
(1) an incumbency certificate of the Owner
Participant as to the person or persons authorized to execute
and deliver this Agreement and each of the other documents to
be executed on behalf of the Owner Participant in connection
with the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Participant or the applicable authority
designated by the board of directors thereof, certified by the
Secretary or an Assistant Secretary of the Owner Participant,
duly authorizing the transactions contemplated hereby and the
execution, delivery and performance of each of the documents
required to be executed and delivered on behalf of the Owner
Participant in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of the
Owner Participant, certified by the Secretary of State of its
state of incorporation, a copy of the by-laws of the Owner
Participant, certified by the Secretary or Assistant Secretary
of the Owner Participant, and a certificate or other evidence
from the Secretary of State of its state of incorporation,
dated as of a date reasonably near the Restatement Date, as to
its due incorporation and good standing in such state; and
(4) a certificate signed by an authorized
representative of the Owner Participant, dated the Restatement
Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as
though made on and as of the Restatement Date, except to the
extent that such representations and warranties relate solely
to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the
Lessee a report from Willis Corroon in substantially the form of
Exhibit D attached hereto.
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<PAGE> 16
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion
addressed to it from (i) Latham & Watkins, special counsel for the
Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee,
(iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis
& Roca, special Arizona counsel for the Lessee, in each case in form
and substance satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received an opinion addressed to it
from Morris, James, Hitchens & Williams, special counsel for the Owner
Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from
Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the
Subordination Agent and the Pass Through Trustee, in each case in form
and substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received an opinion addressed to it from
(i) Hunton & Williams, special counsel for the Owner Participant and
(ii) in-house counsel for the Owner Participant, in each case in form
and substance satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case,
special counsel for the Liquidity Provider, and (ii) in-house counsel
for the Liquidity Provider, in each case in form and substance
satisfactory to the Pass Through Trustee, the Owner Trustee and the
Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma, in form and substance satisfactory
to each of them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP,
special New York counsel for the Original Head Lessee and the Parent
Guarantor, in form and substance satisfactory to each of them.
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<PAGE> 17
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from McCann FitzGerald, special Irish counsel
for the Parent Guarantor, in form and substance satisfactory to each of
them.
(q) The Original Head Lessee, the Lessee, GPA Leasing USA I,
Inc. and the Parent Guarantor shall have entered into the Underwriting
Agreement and the Lessee shall have entered into each of the Pass
Through Trust Agreements, the Certificates shall have been issued and
sold pursuant to the Underwriting Agreement and the Pass Through Trust
Agreements, and the Underwriters shall have transferred to the Pass
Through Trustee in immediately available funds an amount equal to the
aggregate purchase price of the Equipment Notes to be purchased from
the Owner Trustee.
(r) The Original Head Lessee and the Owner Participant shall
each have executed and delivered to the other the Amended and Restated
Head Lease TIA.
(s) The Sublessor and the Sublessee shall each have
executed and delivered to the other the Amended and Restated
Sublease TIA.
(t) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would make it illegal for the Pass Through Trustee to make
the payments described in Section 1(a)(ii) or for the Lessee, the
Indenture Trustee, the Owner Trustee or the Owner Participant or any
other party hereto to participate in the transactions contemplated by
this Agreement on the Restatement Date.
(u) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in
connection with the Pass Through Trustee's making of the payments
described in Section 1(a)(ii) or the Owner Trustee's or the Owner
Participant's participation in the transactions contemplated by this
Agreement on the Restatement Date shall have been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security
interests created by or pursuant to the Indenture that are not covered
by the recording system established by the Federal Aviation Act shall
have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee and the Owner Trustee, as the
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<PAGE> 18
case may be, and such financing, termination, amendment and
continuation statement or statements or documents to the same purposes
shall have been duly filed in all places necessary or advisable, and
any additional Uniform Commercial Code financing, termination,
amendment and continuation statements deemed advisable by the Original
Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee
shall have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee or the Owner Trustee, as the case may be,
and duly filed in all places advisable.
(w) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would adversely affect the tax consequences of the
transactions contemplated by this Agreement to the Owner Participant,
the Owner Trustee or any of their respective Affiliates.
(x) The Owner Trustee shall have received a letter of credit
in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2
to the Lease.
(y) The Owner Participant shall have received any other
documents and evidence as the Owner Participant or its counsel may
request.
Promptly following the recording of Lease Amendment
No. 1, the Amended and Restated Lease (including Lease Supplement
No. 3) and the First Amended and Restated Indenture (including
Trust Indenture Supplement No. 2) pursuant to the Federal
Aviation Act, the Original Head Lessee will cause Daugherty,
Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture
Trustee, the Owner Participant and the Owner Trustee an opinion
as to the due recording of Lease Amendment No. 1, the Amended and
Restated Lease, Lease Supplement No. 3, the First Amended and
Restated Indenture, Trust Indenture Supplement No. 2 and Trust
Supplement No. 2.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
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<PAGE> 19
(i) Each of the Original Head Lessee and the Parent Guarantor
shall have received counterparts of the following documents executed by
each of the parties thereto other than the Original Head Lessee and the
Parent Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 3;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee and such other
releases and terminations as it may
reasonably request; and
(9) that certain letter agreement dated as of
the Restatement Date relating to Stipulated
Loss Values with respect to the Amended and
Restated Lease (the "SLV Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent Guarantor
shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee
referred to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i),
Section 3(j), Section 3(k), Section 3(l),
Section 3(m) and Section 3(n), in each case
addressed to each of the Original Head
Lessee and the Parent Guarantor and in form
and substance satisfactory to each of them;
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<PAGE> 20
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form
and substance reasonably satisfactory to
each of them; and
(6) the report referred to in Section 3(h)
addressed to each of the Original Head
Lessee and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent Guarantor
shall have received such other documents and evidence with respect to
each other party hereto as each of them or its counsel may reasonably
request in order to establish the due consummation of the transactions
contemplated by this Agreement and the "Refunding Agreements" (as
defined in the Registration Statement), the taking of all necessary
action in connection therewith and compliance with the conditions
herein or therein set forth.
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 3;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
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<PAGE> 21
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the
following documents:
(1) the incumbency certificate of the Original
Head Lessee and Parent Guarantor referred to
in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee
and Parent Guarantor referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j),
Section 3(k), Section 3(l), Section 3(m),
Section 3(n), Section 3(o) and Section 3(p),
in each case addressed to Lessee and in form
and substance satisfactory to Lessee; and
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to Lessee and in form
and substance reasonably satisfactory to
Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass
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<PAGE> 22
Through Trust Agreements of the Pass Through Trustee are correct as of the
Restatement Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date), (ii) an opinion
addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass
Through Trustee, in form and substance satisfactory to each of them, and (iii)
such other documents and evidence with respect to the Pass Through Trustee as it
may reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement, the taking of all necessary action
in connection therewith and compliance with the conditions herein set forth.
SECTION 5. Amendment and Restatement of the Original
Indenture. Subject to the satisfaction or waiver of the conditions precedent set
forth herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the First
Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee,
by execution and delivery hereof, agree to execute and deliver the First Amended
and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor
and the Lessee, by execution and delivery hereof, consent to such execution and
delivery of the First Amended and Restated Indenture. The First Amended and
Restated Indenture shall be effective as of the Restatement Date.
SECTION 6. Amendment and Restatement of the Original Lease.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor
and the Owner Participant, by execution and delivery hereof, consent to the
assignments, delegations, and releases set forth in, and to the amendment and
restatement of the Original Lease effected by, and the Owner Participant
requests and instructs the Owner Trustee to execute and deliver, Lease Amendment
No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee
and the Sublessee agree, by execution and delivery hereof, to execute and
deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective
as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner Trustee,
the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect from and including the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no
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<PAGE> 23
obligations on the parties thereto. Upon the execution and
delivery of Lease Amendment No. 1 by each of the parties thereto,
the Sublease, the Sublease Guaranty and the Assignment of
Sublease shall be terminated as and to the extent set forth
herein and therein. Lease Amendment No. 1 shall be effective as
of the Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original Head
Lessee (except as to the representation and warranty contained in Section 8(i)),
the Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has the corporate power and authority to own or hold under lease its
properties, has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and perform its
obligations under this Agreement, Lease Amendment No. 1, the Lease, the
Pass Through Trust Agreements, the Amended and Restated Sublease TIA,
the SLV Letter Agreement and any certificate delivered by the Lessee
pursuant to the foregoing (the "Lessee Documents") and is duly
qualified to do business as a foreign corporation in each jurisdiction
where the failure to so qualify would have a material adverse effect on
its business, operations or condition (financial or otherwise), or on
its ability to perform its obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under
the Lessee Documents have been duly authorized by all necessary
corporate action on the part of the Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation,
judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions
of, or constitute a default under,
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<PAGE> 24
or result in the creation of any Lien (other than Permitted Liens) upon
the property of the Lessee under, any indenture, mortgage, contract,
lease or other agreement in each case having payment obligations in
excess of $500,000 to which the Lessee is a party or by which it may be
bound or affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee
under the Lessee Documents nor the consummation by the Lessee of any of
the transactions contemplated by the Lessee Documents, requires the
consent or approval of, the giving of notice to, the registration with,
or the taking of any other action in respect of, the Department of
Transportation, the FAA, or any other federal, state, local or foreign
governmental authority having jurisdiction, other than those which have
already been received and which the Lessee is in compliance with and
(i) the registration of the Certificates under the Securities Act of
1933, as amended (the "Securities Act") and the securities laws of any
state in which the Certificates may be offered for sale if the laws of
such state require such action, (ii) the qualification of the Pass
Through Trust Agreements under the Trust Indenture Act of 1939, as
amended, (iii) (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee required to
be obtained on or prior to the Restatement Date, which orders, permits,
waivers, exemptions, authorizations and approvals have been duly
obtained and are, or will on the Restatement Date be in full force and
effect, (B) the registration of the Aircraft pursuant to the Federal
Aviation Act and (C) such consents, approvals, notices, registrations
and other actions required by the terms of the Lessee Documents to the
extent required to be given or obtained only after the Restatement Date
and (iv) the registrations and filings referred to in Section 8(i);
(e) each Lessee Document has been duly executed and delivered
by the Lessee and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, each Lessee Document
constitutes, or when executed will constitute, the legal, valid and
binding obligations of the Lessee enforceable against the Lessee in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors or lessors
generally and by general principles of equity, whether considered in a
proceeding at law or in equity, and except, in the case of the Lease,
as may be limited by applicable laws which may affect the remedies
provided in
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<PAGE> 25
the Lease, which laws, however, do not make the remedies provided in
the Lease inadequate for the practical realization of the benefits
intended to be afforded thereby;
(f) except as disclosed in the Prospectus, there are no
pending or, to its knowledge, threatened actions or proceedings before
any court or administrative agency or regulatory commission or other
governmental agency against or affecting the Lessee that are reasonably
expected to materially adversely affect the ability of Lessee to enter
into or perform its obligations under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be free
and clear of any and all Liens (other than Permitted Liens) created by
or through the Lessee;
(i) except for the registration of the Aircraft pursuant to
the Federal Aviation Act, the filing for recordation pursuant to the
Federal Aviation Act (with confidential financial terms redacted) of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement
No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture
and Indenture Supplement No. 2, and each of the other documents
referred to in Annex A hereto, all with the FAA, the filing of a
Uniform Commercial Code ("UCC") amended financing statement with the
Secretary of State of the State of Delaware with regard to the Original
Lease, the filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States of New
York, Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with
respect to the Lease, the filing of a UCC termination statement with
the Secretary of State of the State of Arizona with respect to the
Sublease, and the filing of a UCC termination statement with the
Secretary of State of the State of Delaware with respect to the Initial
Sublease Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly effected as
of the Restatement Date (and assignments thereof and continuation
statements at periodic intervals), and other than the taking of
possession by the Indenture Trustee of the original counterparts of the
Original Lease, Lease Amendment No. 1, the Amended and Restated Lease,
and all Lease Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification required by
Section 6(e) of the Lease, no further filing or recording of the Lease
or of any
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<PAGE> 26
other document (including any financing statement under Article 9 of
the UCC of the State of Delaware, New York or Arizona) and no further
action is necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to perfect the
Owner Trustee's interest in the Aircraft as against the Lessee and any
third parties, or to perfect the security interest in favor of the
Indenture Trustee in the Owner Trustee's interest in the Aircraft and
in the Lease;
(j) all obligations of the Lessee owing to the Lessor in
connection with the Lease are at least pari passu with all unsecured
and unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default
but for the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an Event
of Loss with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are required
to be filed and has paid or will pay or has caused or will cause to be
paid all taxes shown to be due or payable on said returns and on any
assessment received by the Lessee, to the extent such taxes have become
due and payable, except for taxes and returns with respect thereto the
nonpayment or nonfiling of which, either in any case or in the
aggregate, could have no material adverse effect on the Lessee, its
condition (financial or otherwise), business, operations or prospects,
or on its ability to perform its obligations under the Lease or which
are being diligently contested by the Lessee in good faith by
appropriate proceedings and with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all
material respects and fairly present the Lessee's financial condition
as of September 30, 1996 and the results of its operations for the
period covered in conformance with GAAP (except as otherwise noted
therein and with which any such change the independent auditors of the
Lessee have agreed), since September 30, 1996, there has been no
material adverse change in the Lessee's business, operations, condition
(financial or otherwise) or prospects which has not been disclosed in
writing to the Owner Participant and the Indenture Trustee and does not
contain
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<PAGE> 27
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not
misleading;
(o) on the Restatement Date, all sales, use, documentary,
duties or other similar Taxes then due and for which the Lessee is
responsible pursuant to the Lessee Documents, shall have been paid,
other than such Taxes which are being contested by the Lessee in good
faith and by appropriate proceedings (and for which the Lessee shall
have established such reserves as are required under GAAP) so long as
such proceedings or the non-payment of such Taxes do not involve any
material danger to the sale, forfeiture or loss of the Aircraft;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations or
the Cuban Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, or of any regulations, interpretations or rulings issued
thereunder, and the Lessee is not, and is not acting on behalf of or
for the benefit of, an "Iranian Entity" within the meaning of the
Iranian Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, and the transactions contemplated by this Agreement are not
prohibited by Executive Order 12170, the above-mentioned Iranian Assets
Control Regulations or any regulations, interpretations or rulings
issued under any thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made out
of the assets of any "employee benefit plan" as defined in Section 3(3)
of ERISA;
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the
Owner Participant or the Indenture Trustee by the Lessee in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to
the Lessee (other than matters of a general economic nature) which the
Lessee has not disclosed in writing to the Owner Participant or the
Indenture Trustee which could impair its ability to perform its
obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy
Code, the Lessor as lessor of the Aircraft under
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<PAGE> 28
the Lease, and the Indenture Trustee, as assignee of the Owner
Trustee's rights under the Lease pursuant to the Indenture, would be
entitled to the benefits of Section 1110 of the Bankruptcy Code with
respect to the Aircraft.
SECTION 9. Representations and Warranties. Each of the parties
below represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below)
represents and warrants that:
(1) the Indenture Trustee is a banking association
duly organized, validly existing and in good standing under
the federal laws of the United States of America, is a
"citizen of the United States" as defined in Section
40102(a)(15) of the Federal Aviation Act and the rules and
regulations of the FAA thereunder (as so defined, a "Citizen
of the United States") (without making use of a voting trust,
voting powers agreement or similar arrangement), will notify
promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without
making use of a voting trust, voting powers agreement or
similar arrangement) is likely to change and will resign as
Indenture Trustee as provided in Section 8.02 of the Indenture
promptly after it obtains actual knowledge that it has ceased
to be such a Citizen of the United States (without making use
of a voting trust, voting powers agreement or similar
arrangement), and has the full corporate power, authority and
legal right under the laws of the State of Connecticut and the
federal laws of the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver each of this
Agreement, the Indenture and each other Operative Document to
which it is a party and to carry out its obligations under
this Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) neither the execution and delivery by the
Indenture Trustee of this Agreement, the Indenture, Lease
Amendment No. 1 and each other Operative Document to which it
is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the
compliance by it with any of the terms and
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provisions hereof and thereof, (A) requires or will require
any approval of its stockholders, or approval or consent of
any trustees or holders of any indebtedness or obligations of
it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene any
provision of, or constitutes or will constitute a default
under, or results or will result in any breach of, or results
or will result in the creation of any Lien (other than as
permitted under the Operative Documents) upon its property
under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which
it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation or any
judgment or order applicable to or binding on it of any United
States governmental authority or agency governing the trust
powers of the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture,
when executed and delivered by the Indenture Trustee, will
constitute, the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents to which
it is a party;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any State of Connecticut or any
United States of America governmental authority or agency
regulating the trust powers of the Indenture Trustee is
required for the execution and delivery of, or the carrying
out by, the Indenture Trustee of any of the transactions
contemplated hereby or by the Indenture, Lease
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<PAGE> 30
Amendment No. 1 or any other Operative Document to
which it is a party or by which it is bound, other than
any such consent, approval, order, authorization,
registration, notice or action as has been duly
obtained, given or taken;
(6) there are no Lenders' Liens (as defined in the
Lease) on the Aircraft or any portion of the Trust Estate
created by or through the Indenture Trustee in its individual
capacity; and
(7) it has possession of the chattel paper original
counterpart of the Original Lease, Lease Amendment No. 1 and
the Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties
are made solely by the Owner Trustee) and the Owner Trustee represents
and warrants that:
(1) the Trust Company is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and
authority to carry on its business as now conducted, has, or
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver Trust
Supplement No. 2, has the corporate power and authority to
carry out the terms of the Trust Agreement, and each of the
Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant), the corporate power and authority
to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Equipment Notes, Lease Amendment
No. 1, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
(2) (i) each of the Trust Company and the Owner
Trustee has duly authorized, executed and delivered the Trust
Agreement and this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant) the Trust Agreement constitutes a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of
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<PAGE> 31
creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, (ii)
the Owner Trustee has duly authorized, executed and delivered
this Agreement and (assuming the due authorization, execution
and delivery of Trust Supplement No. 2 by the Owner
Participant) this Agreement and the Trust Agreement
constitute, and the Indenture and the Lease, when entered
into, will constitute, a legal, valid and binding obligation
of the Owner Trustee, in its individual capacity or as Owner
Trustee and the Trust Company, as the case may be, enforceable
against it in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(3) assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant,
the Owner Trustee has duly authorized, and on the Restatement
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Equipment Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Equipment Note on the Restatement Date
will constitute the valid and binding obligation of the Owner
Trustee and will be entitled to the benefits and security
afforded by the Indenture in accordance with the terms of such
Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner
Trustee or the Trust Company, as the case may be, of this
Agreement, the Original Trust Agreement, Trust Supplement No.
2, the Original Indenture, the Indenture, the Original Lease,
Lease Amendment No. 1, the Lease, the Equipment Notes, or any
other Operative Document to which it is a party, nor the
consummation by it of any of the transactions contemplated
hereby or thereby, nor the compliance by it with any of the
terms and provisions hereof and thereof, (A) requires or will
require any approval of its stockholders, or approval or
consent of any trustees or holders of any indebtedness or
obligations of it, or (B) violates or will violate its
articles of association or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute
a default under, or results or will result in any breach of,
or results or will result in the creation of any Lien (other
than as permitted under the Operative Documents) upon its
property under, any indenture, mortgage, chattel
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<PAGE> 32
mortgage, deed of trust, conditional sale contract, bank loan
or credit agreement, license or other agreement or instrument
to which it is a party or by which it is bound, or contravenes
or will contravene any law, governmental rule or regulation of
the State of Delaware or any United States governmental
authority or agency governing the trust powers of the Owner
Trustee, or any judgment or order applicable to or binding on
it;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any state or local governmental
authority or agency or any State of Delaware or any United
States of America governmental authority or agency regulating
the trust powers of the Trust Company is required for the
execution and delivery of, or the carrying out by, the Trust
Company or the Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust
Agreement, the Indenture, the Lease, Lease Amendment No. 1,
the Equipment Notes or any other Operative Document to which
it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice
or action as has been duly obtained, given or taken or which
is described in Section 8(d);
(6) there exists no Lessor's Lien or Head Lessor's
Lien (each as defined in the Lease) (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens) attributable to
the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's
Lien (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens) attributable to the Trust Company;
(8) there are no Taxes payable by the Owner Trustee
or the Trust Company imposed by the State of Delaware or any
political subdivision thereof in connection with the
prepayment of the Original Certificates or the issuance of the
Equipment Notes, or the execution and delivery by it of any of
the instruments referred to in clauses (1), (2), (3) and (4)
above, that, in each case, would not have been imposed if the
Trust Estate were not located in the State of Delaware and the
Trust Company had not (a) had its principal place of business
in, (b) performed (in its individual
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<PAGE> 33
capacity or as Owner Trustee) any or all of its duties under
the Operative Documents in, and (c) engaged in any activities
unrelated to the transactions contemplated by the Operative
Documents in, the State of Delaware;
(9) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner Trustee,
either in its individual capacity or as Owner Trustee, before
any court or administrative agency which, if determined
adversely to it, would materially adversely affect the ability
of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under
any of the instruments referred to in clauses (1), (2), (3)
and (4) above;
(10) both its chief executive office, and the place where
its records concerning the Aircraft and all its interests in,
to and under all documents relating to the Trust Estate (other
than such as may be maintained and held by the Indenture
Trustee pursuant to the Indenture), are located in Wilmington,
Delaware. Owner Trustee, in its individual capacity or as
Owner Trustee, agrees that it will not change the location of
such office to a location outside of Delaware, without prior
written notice to all parties hereto; and
(11) it is a Citizen of the United States (without making
use of a voting trust agreement, voting powers agreement or
similar arrangements).
(c) The Owner Participant represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to carry
on its present business and operations and to own or lease its
properties, has, or had on the respective dates of execution
thereof, as the case may be, the corporate power and authority
to enter into and to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement and
the Amended and Restated Head Lease TIA; this Agreement, the
SLV Letter Agreement and Trust Supplement No. 2 have been duly
authorized, executed and delivered by it; and, assuming the
due authorization, execution and delivery hereof and thereof
by the other parties hereto and thereto, this Agreement, the
Trust Agreement, the SLV Letter
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<PAGE> 34
Agreement and the Amended and Restated Head Lease TIA
constitute the legal, valid and binding obligations of the
Owner Participant enforceable against it in accordance with
their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Amended and Restated Head Lease TIA
or any other Operative Document to which it is a party nor (B)
compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding on
the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements
of the Owner Participant under applicable law), or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its
certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its
property may be bound or affected, except where such
contravention or default would not result in any liability to
any other party hereto or have a material adverse effect on
the rights or on the remedies of the other parties hereto or
on its ability to perform its obligations hereunder or
thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Amended and Restated Head Lease TIA (it
being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee other than the laws, rules or regulations relating to
aircraft lease transactions generally or to the
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<PAGE> 35
citizenship requirements of the Owner Participant under
the Federal Aviation Act);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant before any court or administrative agency or
arbitrator which, if determined adversely to the Owner
Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement or
the Amended and Restated Head Lease TIA;
(5) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant (including for this purpose Liens
that would be Lessor's Liens but for the first proviso in the
definition of Lessor's Liens); and
(6) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangement). If at any time Owner
Participant has ceased to be, or shall have actual knowledge
that it is likely to cease to be, such a citizen, and (i) the
Aircraft shall be or would thereupon become ineligible for
registration in the name of Owner Trustee under the Federal
Aviation Act as in effect at such time (without regard to the
"based and primarily used" provisions thereof) and the
regulations then applicable thereunder, or (ii) the Aircraft
is registered in a jurisdiction other than the United States
of America, in circumstances in which the preceding clause (i)
does not apply and the Lessee or any Permitted Sublessee at
any time proposes to register the Aircraft in the United
States of America, then Owner Participant shall (at its own
expense and without any reimbursement or indemnification from
the Lessee or any Permitted Sublessee) (A) immediately either
(1) transfer in accordance with Section 10 hereof all of its
right, title and interest in and to the Trust Agreement, the
Trust Estate, this Agreement and the Amended and Restated Head
Lease TIA or (2) take such other action, including, without
limitation, the establishment of a voting trust or voting
powers agreement (in which case Owner Participant shall remain
the beneficial owner of the Trust Estate), as may be necessary
to prevent the deregistration of the Aircraft under the
Federal Aviation Act or to maintain such registration of the
Aircraft or to make possible such registration of the Aircraft
in the United States of
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<PAGE> 36
America and to prevent Indenture Trustee, the Holders of the
Equipment Notes, the Lessee or any Permitted Sublessee from
being adversely affected as a result thereof and (B) indemnify
the Lessee, the Indenture Trustee, the Holders of the
Equipment Notes and any Permitted Sublessee, from and against
any and all Claims incurred or suffered as a result of Owner
Participant's failure to be such a citizen or loss of such
citizenship, including, without limitation, as a result of the
Aircraft's becoming ineligible or ceasing to remain eligible
for such registration.
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly organized,
validly existing and in good standing under the federal laws
of the United States of America, and has the full corporate
power, authority and legal right under the federal laws of the
United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Intercreditor Agreement, and
this Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement will
have been, duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement constitutes, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement, will
constitute, the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement or this Agreement, the
purchase by the Pass Through Trustee of the Equipment Notes
pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements,
contravenes any
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<PAGE> 37
law, rule or regulation of the State of Connecticut or any
United States governmental authority or agency regulating the
Pass Through Trustee's banking, trust or fiduciary powers or
any judgment or order applicable to or binding on the Pass
Through Trustee and does not contravene or result in any
breach of, or constitute a default under, the Pass Through
Trustee's articles of association or by-laws or any agreement
or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(5) assuming that the trusts created by the Pass
Through Trust Agreements will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code for
federal income tax purposes, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the acquisition, possession or ownership by
the Pass Through Trustee of any of the Equipment Notes (other
than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
prior to the exercise of remedies upon the occurrence of an
Indenture Event of Default, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of
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<PAGE> 38
the Pass Through Trust Agreements), and such trusts will not
be subject to any Taxes imposed by the State of Connecticut or
any political subdivision or taxing authority thereof; upon
the exercise of remedies following the occurrence of an
Indenture Event of Default, there will be no Taxes payable by
the Pass Through Trustee imposed by the State of Connecticut
or any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
the trusts created by the Pass Through Trust Agreements will
not be subject to any Taxes imposed by the State of
Connecticut or any political subdivision thereof, solely
because the Pass Through Trustee maintains an office in, and
administers the trusts created by the Pass Through Trust
Agreements in, the State of Connecticut;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly
or indirectly offered any Equipment Notes for sale to any
Person or solicited any offer to acquire any Equipment Notes
from any Person, nor has the Pass Through Trustee authorized
anyone to act on its behalf to offer directly or indirectly
any Equipment Notes for sale to any Person, or to solicit any
offer to acquire any Equipment Notes from any Person; and the
Pass Through Trustee is not in default under any Pass Through
Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
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<PAGE> 39
(e) The Subordination Agent represents and warrants
that:
(1) the Subordination Agent is a duly organized
national banking association, validly existing and in good
standing with the Comptroller of the Currency under the laws
of the United States of America and has the full corporate
power, authority and legal right under the laws of the United
States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement and
to perform its obligations under this Agreement, the Liquidity
Facilities and the Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement will have been,
duly authorized, executed and delivered by the Subordination
Agent; this Agreement constitutes, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement, will constitute,
the legal, valid and binding obligations of the Subordination
Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Subordination Agent of each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement or
the performance by the Subordination Agent of this Agreement,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Subordination Agent and do not contravene or
result in any breach of, or constitute a default under, the
Subordination Agent's articles of association or by-laws or
any agreement or instrument to which the Subordination Agent
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities,
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<PAGE> 40
the Intercreditor Agreement or this Agreement nor the
consummation by the Subordination Agent of any of the
transactions contemplated hereby or thereby requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Subordination Agent's banking, trust or
fiduciary powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Subordination Agent
of this Agreement, any of the Liquidity Facilities or the
Intercreditor Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities) solely because
the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are
no Taxes payable by the Subordination Agent imposed by the
State of Connecticut or any political subdivision thereof in
connection with the acquisition, possession or ownership by
the Subordination Agent of any of the Equipment Notes solely
because the Subordination Agent maintains an office and
administers its trust business in the State of Connecticut
(other than franchise or other taxes based on or measured by
any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any Person
or solicited any offer to acquire any Equipment Note from any
Person, nor has the Subordination Agent
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<PAGE> 41
authorized anyone to act on its behalf to offer directly or
indirectly any Equipment Note for sale to any Person, or to
solicit any offer to acquire any Equipment Note from any
Person; and the Subordination Agent is not in default under
any Liquidity Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Amended and Restated Head Lease TIA, the Amended
and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents nor (B) compliance
by it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Original
Head Lessee, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument
to which the Original Head Lessee is a party or by which it or
any of its property may be bound or affected, except where
such contravention or default
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<PAGE> 42
would not result in any liability to any other party hereto or
have a material adverse effect on the rights or on the
remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Original Head Lessee of this
Agreement and each of the other Original Head Lessee
Transaction Documents;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Original Head Lessee before any court
or administrative agency or arbitrator which, if determined
adversely to the Original Head Lessee, would materially
adversely affect the Original Head Lessee's ability to perform
its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease);
(6) on the Delivery Date, the Owner Trustee received
good title to the Aircraft free and clear of all Liens, except
the rights of the Original Head Lessee under the Original
Lease, the rights of the Sublessee under the Sublease, the
Lien of the Original Indenture, the beneficial interest of the
Owner Participant in the Aircraft, and Permitted Liens under
the Original Lease;
(7) title to the Buyer Furnished Equipment for the
Aircraft has been transferred to the Owner Trustee in
accordance with Section 8(y) of the Participation Agreement.
As of the Restatement Date, there are no existing Claims
against Parent Guarantor or Original Head Lessee with respect
to Buyer Furnished Equipment; and
(8) except for the registration of the Aircraft
pursuant to the Federal Aviation Act, the filing for
recordation pursuant to the Federal Aviation Act (with
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confidential financial terms redacted) of Lease Amendment No.
1, the Amended and Restated Lease, Lease Supplement No. 3,
Trust Supplement No. 2, the First Amended and Restated
Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all with the
FAA, the filing of a Uniform Commercial Code ("UCC") amended
financing statement with the Secretary of State of the State
of Delaware with regard to the Original Lease, the filing of
UCC termination statements with regard to the Original Head
Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC
financing statement with the Secretary of State of the State
of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State
of Arizona with respect to the Sublease, and the filing of a
UCC termination statement with the Secretary of State of the
State of Delaware with respect to the Initial Sublease
Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly
effected as of the Restatement Date (and assignments thereof
and continuation statements at periodic intervals), and other
than the taking of possession by the Indenture Trustee of the
original counterparts of the Original Lease, Lease Amendment
No. 1, the Amended and Restated Lease, and all Lease
Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification
required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any
financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Aircraft as
against the Lessee and any third parties, or to perfect the
security interest in favor of the Indenture Trustee in the
Owner Trustee's interest in the Aircraft and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement; this Agreement has been duly authorized and
constitutes the legal, valid and binding obligations of the
Parent Guarantor enforceable against it in accordance with its
terms,
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<PAGE> 44
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(2) neither (A) the execution and delivery by the
Parent Guarantor of this Agreement nor (B) compliance by it
with all of the provisions hereof (x) will contravene any law
or order of any court or governmental authority or agency
applicable to or binding on the Parent Guarantor, or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its Memorandum
and Articles of Association or any indenture, mortgage,
contract or other agreement or instrument to which the Parent
Guarantor is a party or by which it or any of its property may
be bound or affected, except where such contravention or
default would not result in any liability to any other party
hereto or have a material adverse effect on the rights or on
the remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Parent Guarantor of this
Agreement;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty with
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<PAGE> 45
respect to Section 9(f)(8) shall be only for the
benefit of the Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by operation of law, consolidation, merger, sale of assets or
otherwise) any of its right, title or interest in and to the Trust Estate, the
Aircraft, the Lease, this Agreement, the Trust Agreement, the Amended and
Restated Head Lease TIA or any other Operative Document or any proceeds
therefrom or permit the transfer of any of its stock in any transaction which
has the practical effect of any of the foregoing; provided that, and subject to
the conditions set forth below, Owner Participant may transfer to a Transferee
(as defined below) all (but not less than all) of its right (except for such
rights accruing prior to transfer), title and interest as an entirety in and to
the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Amended
and Restated Head Lease TIA and each other Operative Document to which Owner
Participant is a party or by which Owner Participant is bound. Each such
transfer shall be subject to the following conditions, and Owner Participant
agrees for the express benefit of each party hereto that any such transfer will
comply with such conditions:
(i) the Person to whom such transfer is to be made (a
"Transferee") is either (A) a bank, trust company or other like
regulated financial institution with a combined capital, surplus and
undivided profits of, or a corporation with a tangible net worth of, in
either case at least $60,000,000, (B) any wholly-owned subsidiary of
such bank, trust company, financial institution or corporation if such
bank, trust company, financial institution or corporation furnishes to
Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an
agreement or agreements of such bank, financial institution or
corporation guaranteeing such subsidiary's obligations as Owner
Participant contained in this Agreement, the Trust Agreement, the
Amended and Restated Head Lease TIA and each other Operative Document
to which Owner Participant is a party or by which it is bound, which
guarantee shall be substantially in the form attached as Exhibit A
hereto or (C) a subsidiary of Owner Participant if Owner Participant
furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and
Lessee an agreement whereby Owner Participant will guarantee such
subsidiary's obligations as Owner Participant contained in this
Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA
and each other Operative Document to which Owner Participant is a party
or by which it is bound, which guarantee shall be substantially in the
form attached as Exhibit A hereto;
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<PAGE> 46
(ii) Owner Trustee, Indenture Trustee, Original Head Lessee
and Lessee shall have received at least 15 days' prior written notice
of such transfer specifying the name and address of any proposed
transferee and specifying the facts necessary to determine whether such
proposed transferee qualifies as a "Transferee" under clause (i) above
and does not violate clause (viii) below; provided that if such
Transferee is a subsidiary of Owner Participant, such notice may be
given promptly following rather than prior to such transfer if such
Transferee meets the net worth requirement set forth above on its own
account without a guaranty and otherwise meets the requirements of this
Section 10;
(iii) upon giving effect to such transfer, such Transferee is
a Citizen of the United States and such Transferee shall deliver to
Lessee an affidavit to such effect;
(iv) such Transferee has the requisite power and authority
and legal right to enter into and carry out the transactions
contemplated hereby;
(v) such Transferee enters into an agreement in
substantially the form attached as Exhibit B hereto whereby such
Transferee confirms that it shall be deemed a party to this Agreement,
the Trust Agreement, the Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by
which Owner Participant is bound, and in which the transferee shall
agree to be bound by and undertake the obligations of Owner Participant
in the Operative Documents and shall make representations and
warranties comparable to those of Owner Participant contained herein;
(vi) such transfer does not violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or create a relationship that would be in violation
thereof, or violate any provisions of the Securities Act or any other
applicable Federal, state or other law, rule or regulation;
(vii) such transfer does not violate any provision of
ERISA or any rules or regulations thereunder;
(viii) such Transferee is not an airline, a commercial air
carrier, an air freight forwarder, any Person engaged in the business
of parcel transport by air or a subsidiary or an Affiliate of such an
airline, a commercial air carrier, an air freight forwarder, Person
engaged in the business of parcel transport by air or other similar
Person;
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<PAGE> 47
(ix) an opinion of counsel of the Transferee confirming the
matters referred to in clauses (iv) and (vi) above (with appropriate
reliance on certificates of corporate officers or public officials as
to matters of fact) and confirming that the agreement referred to in
clause (v) above is the legal, valid, binding and enforceable
obligation of the Transferee and that the guarantee referred to in
clause (i)(B) or (C) above, if any, is the legal, valid, binding and
enforceable obligation of the Transferee's guarantor shall be provided,
at least 3 days prior to such transfer, to Lessee, Owner Trustee,
Original Head Lessee and Indenture Trustee, which shall be in form and
substance reasonably satisfactory to each of them; and
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Aircraft previously made by Owner Participant; and except
as the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to "Owner Participant" shall thereafter be deemed to include such
Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Amended and Restated Head
Lease TIA and under the other Operative Documents, except to the extent
expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Amended and Restated Head Lease TIA by or against Owner Participant which have
accrued or been made prior to the date of such transfer. The transferor Owner
Participant shall pay the reasonable expenses of each party hereto related to
any such transfer.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions of
clause (A) of paragraph (6) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease. The Lessee
shall have no obligation to prevent any such deregistration or assist in
maintaining or otherwise enhancing the Aircraft's
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<PAGE> 48
eligibility for registration by restricting the use of the
Aircraft.
SECTION 11. Re-Registration of the Aircraft. The Indenture
Trustee agrees, that if the Owner Participant consents thereto, which consent
shall not be unreasonably withheld, at any time after the Restricted Use Period,
Lessee may, in connection with effecting a Permitted Sublease elect to effect a
change in registration of the Aircraft, at Lessee's cost and expense, so long as
(a) the country of registry of the Aircraft is a country listed on Exhibit C
hereto (or such other country as the Owner Participant approves) and (b) the
following conditions are met: (i) unless the country of registry is Taiwan, the
United States of America maintains normal diplomatic relations with the country
of registry of the Aircraft, and if the country of registry is Taiwan, the
United States of America maintains diplomatic relations at least as good as
those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner
Participant and the Indenture Trustee shall have received favorable opinions
(subject to customary exceptions) addressed to each such party, from counsel of
recognized reputation qualified in the laws of the relevant jurisdiction and
reasonably acceptable to the Owner Participant to the effect of the following
and as to such other matters as the Owner Participant may reasonably request:
(A) the Owner Trustee's ownership interest in the Aircraft and
interest in the Lease and any Permitted Sublease shall be recognized
under the laws of such jurisdiction,
(B) the obligations of Lessee, and the rights and remedies of
the Owner Trustee, under the Lease shall remain valid, binding and
(subject to customary bankruptcy and equitable remedies exceptions and
to other exceptions customary in foreign opinions generally)
enforceable under the laws of such jurisdiction (or the laws of the
jurisdiction to which the laws of such jurisdiction would refer as the
applicable governing law),
(C) after giving effect to such change in registration, the
Lien of the Indenture on the Owner Trustee's right, title and interest
in and to the Aircraft, the Lease and any Permitted Sublease shall
continue as a valid and duly perfected security interest and all
filing, recording or other action necessary to protect the same and the
Owner Trustee's ownership interest in the Aircraft shall have been
accomplished (or, if such opinion cannot be given at the time of such
proposed change in registration because such change in registration is
not yet effective, (1) the opinion shall detail what filing, recording
or other action is necessary and (2) the Owner Trustee and the
Indenture
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<PAGE> 49
Trustee shall have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action shall
be accomplished and a supplemental opinion to that effect shall be
delivered to the Owner Trustee and the Indenture Trustee on or prior to
the effective date of such change in registration),
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other activity
of the Owner Trustee, the Owner Participant or the Indenture Trustee
(or any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such jurisdiction,
(E) there is no tort liability of the owner of an aircraft not
in possession thereof under the laws of such jurisdiction (it being
agreed that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is provided
to cover such risk),
(F) (unless Lessee shall have agreed, or pursuant to the Lease
shall have been required, to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such
jurisdiction so long as such Aircraft is registered under the laws of
such jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in currency
freely convertible into Dollars for the loss of use of such Aircraft in
the event of the requisition by such government of such use.
In addition, as a condition precedent to any such change in registration, (i)
the insurance required by Section 12 of the Lease shall be in full force and
effect at the time of such change in registration after giving effect to such
change in registration and the Owner Trustee and the Indenture Trustee shall
have received a certificate of the type described in Section 12(f) of the Lease
and (ii) the aircraft maintenance standards of the new country of registry shall
not be materially less stringent from those of the United States of America or
not materially less stringent from those of the United Kingdom and the Owner
Trustee and the Indenture Trustee shall have received a certificate to such
effect signed by the President, any Executive Vice President or any Senior Vice
President of Lessee which certificate shall, as among the parties hereto, be
presumed to be correct as to the matters stated therein absent conclusive
evidence to the contrary. Lessee shall pay all reasonable costs,
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<PAGE> 50
expenses, fees, and recording and registration taxes, including the reasonable
fees and expenses of counsel to the Owner Trustee, the Owner Participant and the
Indenture Trustee, and other charges in connection with any such change in
registration.
SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming by, through or on behalf of it to interfere with the
right of Lessee or any Permitted Sublessee to the possession, use, operation and
quiet enjoyment of and other rights with respect to the Aircraft under the
Lease, and all rents, revenues, profits and income therefrom, in accordance with
the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner
Participant shall not be liable for any such interference by Indenture Trustee,
Pass Through Trustee, holders of any Equipment Notes, or any other Person
lawfully claiming by, through or on behalf of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate or the Indenture Estate. Each of Trust Company,
Owner Trustee and Owner Participant severally agrees that it will promptly, at
its own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Lessor's Lien or Head
Lessor's Lien attributable to it. For all purposes of this Agreement and the
other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a
result of the nonpayment of any Tax imposed on or measured by the net income of
the Trust Estate or the trust created by the Trust Agreement that is not
indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
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Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through
Trustee and Subordination Agent severally agrees that it will promptly, at its
own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Trustee's Lien attributable to it and to make restitution to the Trust Estate
and the Indenture Estate for any diminution of the assets thereof resulting
therefrom and will indemnify and hold harmless Lessee and each Indemnitee
against any claims incurred or suffered by any such Person and any reduction in
amounts payable out of, or diminution in the assets of, the Trust Estate or the
Indenture Estate resulting from any such Trustee's Lien attributable to it. For
purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee), Pass Through Trustee in its individual capacity (and not as
Pass Through Trustee) or Subordination Agent in its individual capacity (and not
as Subordination Agent) on or in respect of (as the case may be) the Aircraft or
any other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against such Person not related to its interest in the
Aircraft or the administration of the Trust Estate or the Trust Indenture Estate
pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform
Commercial Code or otherwise, (ii) acts or omissions of such Person not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of such Person which are in violation of any of the Operative
Documents, or (iii) Taxes imposed on or Claims against such Person which are
excluded from indemnification by Lessee, or (iv) Claims against such Person
arising out of the voluntary or involuntary transfer by such Person of all or
any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust
Estate, the Trust Indenture Estate or the Operative Documents (except a Claim
resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the
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<PAGE> 52
Original Head Lessee and Parent Guarantor severally agrees that it will
promptly, at its own expense (and without any right of indemnification or
reimbursement from Lessee), take such action as may be necessary duly to
discharge any such Sublessor's Lien attributable to it or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect and to make restitution to
the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Sublessor's Lien
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original
Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees with
Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement except in accordance with the terms thereof, provided that any such
amendment, supplement or modification shall not adversely affect the Lessee, and
(iii) not to terminate or revoke the Trust Agreement except in accordance with
the terms thereof, provided that any such termination or revocation shall not
adversely affect the Lessee.
(b) Notwithstanding anything to the contrary in the Trust
Agreement or Section 14(a) hereof, but subject always to the provisions of
Section 14(c) hereof, Owner Participant shall
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not consent to or direct a change in the situs of the Trust Estate so long as a
successor Owner Trustee meeting the requirements of the Trust Agreement is
reasonably available at the present situs of the Trust Estate (A) unless the
Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30
days' prior notice thereof and (B) if, within 15 days after notice of such a
proposed change is given to Lessee and the Original Head Lessee, either (1)
Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee
(at the expense of Owner Participant) an opinion of counsel, which counsel shall
be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would have an adverse
effect on the rights or obligations of Lessee or Original Head Lessee or (2)
Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee
(at the expense of Owner Participant) an opinion of counsel, which counsel shall
be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would cause an
increase in the amount for which Lessee may be required to indemnify any Person
pursuant to the provisions of Section 10 of the Lease or for which Original Head
Lessee is required to indemnify any Person pursuant to the provisions of the
Amended and Restated Head Lease TIA, unless any and all Persons entitled to
indemnification pursuant to Section 10 of the Lease or applicable provision of
the Amended and Restated Head Lease TIA shall waive indemnification under
Section 10 of the Lease or applicable provision of the Amended and Restated Head
Lease TIA for any adverse tax or other consequences to it of such a change in
the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner
Participant an opinion of counsel, which counsel shall be reasonably
satisfactory to Indenture Trustee, to the effect that such proposed change in
the situs of the Trust Estate would not have an adverse effect on the validity
or priority of the Lien of the Indenture and that such Uniform Commercial Code
and FAA filings as are required to maintain the validity and priority of the
Lien of Indenture have been made, and (D) such change does not affect the
registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to any
Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as
a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States of America from the state in which
it is then located, the situs of the trust shall be moved and Owner Participant
will take whatever action may be requested by Lessee that is reasonably
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification with respect to such change of situs and
request of Lessee as Original Head Lessee, Owner Participant or
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<PAGE> 54
the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of
the Lease and the exclusions in the Amended and Restated Head Lease TIA) may
reasonably request, (B) promptly after notice thereof Owner Participant has not
notified Lessee and provided reasonable evidence of an adverse effect on Owner
Participant's rights or obligations under the Trust Agreement, (C) Indenture
Trustee shall have received an opinion of counsel selected by Lessee, which
counsel shall be reasonably satisfactory to Indenture Trustee, to the effect
that the validity and priority of the Lien of the Indenture Estate will not be
adversely affected by such action, and that such Uniform Commercial Code and FAA
filings as are required to maintain the validity and the priority of the Lien of
the Indenture have been made, (D) Owner Participant and Indenture Trustee shall
have received an opinion or opinions of counsel selected by Owner Participant to
the effect that, with customary exceptions, (I) the trust, as thus removed,
shall remain a validly established trust, (II) any amendments to the Trust
Agreement or the Indenture necessitated by such removal shall have been duly
authorized, executed and delivered by the parties thereto and shall constitute
the legal, valid and binding obligations of such parties, enforceable in
accordance with their terms, (III) if such removal involves the replacement of
Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and
substance reasonably satisfactory to Indenture Trustee and to Owner Participant
covering the matters described in the opinion described in Section 3(j) hereof,
and (IV) covering such other matters as Owner Participant or the Indenture
Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless
on an after tax basis Owner Trustee, Owner Participant and their respective
Affiliates and Indenture Trustee against any and all reasonable and actual costs
and expenses including reasonable attorneys' fees and disbursements,
registration, recording or filing fees and other Taxes incurred by Owner
Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee
in connection with such change of situs and shall indemnify and hold harmless
Owner Participant, Owner Trustee and their respective Affiliates, and Indenture
Trustee on an after tax basis (subject to the exclusions set forth in Section
10(b) of the Lease and the Amended and Restated Sublease TIA) from and against
any increase in Taxes borne by such Person that results from such change in
situs. In no event shall any change in situs of the trust affect Original Head
Lessee's rights or obligations under the Amended and Restated Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed by
Owner Participant, a successor Owner Trustee may be appointed, and a corporation
may become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that
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<PAGE> 55
Owner Participant has actual knowledge that Owner Trustee is not in compliance
with its covenants contained herein. No successor Owner Trustee shall be
appointed unless Lessee and Indenture Trustee shall have given written consent
thereto, which consent shall not be unreasonably withheld. Owner Participant
will not instruct Owner Trustee to terminate any Operative Document or take any
action thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Aircraft as contemplated hereby.
Lessee shall pay expenses on an after tax basis relating to the resignation or,
if requested by Lessee, the removal of Owner Trustee, provided that the Owner
Participant shall pay expenses relating to the removal of the Owner Trustee, if
such removal was solely at the request of the Owner Participant.
(e) The Trust Company agrees that if at any time it shall
obtain actual knowledge that it has ceased to be or will likely cease to be a
Citizen of the United States, it will promptly resign as Owner Trustee (if and
so long as such citizenship is necessary under such Federal Aviation Act or any
other law to permit the continued registration of the Aircraft in the name of
the Lessor or, if it is not necessary, if and so long as Owner Trustee's
citizenship would have any material adverse effect on any holder of Equipment
Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of
the successor Owner Trustee in accordance with Section 10.1 of the Trust
Agreement.
SECTION 15. Certain Retained Rights and Releases. (a) Each of
Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to
and confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head
Lessee and Parent Guarantor shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable for
all of its obligations under Sections 10 and 13 of the Sublease, with respect to
the period up to (but excluding) the Restatement Date and each of Parent
Guarantor, Original Head Lessee and Lessee shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the
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<PAGE> 56
termination or expiration thereof (including, without limitation, any such
liability arising from and including the Restatement Date under the Sublease in
respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), (ii) all
rights, benefits, obligations and liabilities under the Sublease TIA (which
rights, benefits, obligations and liabilities are amended and restated as of the
Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall
remain liable to Sublessee under the Sublease and the Sublease Guaranty for
Sublessor's Liens (as therein defined); all of which rights, benefits,
obligations and liabilities shall expressly survive the termination of the
Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is
agreed that (x) Original Head Lessee shall continue to be liable to the
Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens and (y) Parent Guarantor is hereby released from any and all obligations
and liabilities under the Sublease Guaranty, other than in respect of the
obligations and liabilities of the Original Head Lessee in respect of
Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner Participant
agree as among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: Lessee, and Owner
Trustee, Owner Participant and the other "Indemnitees" (as such term is defined
in the Sublease) other than Original Head Lessee and Parent Guarantor, shall
retain all rights, benefits, obligations and liabilities under the Sublease,
including that Sublessee shall remain liable for all of its obligations under
Sections 10 and 13 of the Sublease, with respect to the period up to (but
excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner
Participant shall retain all rights and liabilities under any provision of the
Sublease which by the express terms thereof survives the termination thereof
(including, without limitation, any such liability arising on or after the
Restatement Date under the Sublease in respect of the period up to (but
excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date), all of which rights, benefits, obligations
and liabilities shall expressly survive the termination of the Sublease. In
furtherance of the foregoing, it is agreed by Sublessee that the indemnities
contained in Sections 10 and 13 of the Sublease are expressly made for the
benefit of and shall be enforceable by each Indemnitee (as such term is defined
in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA
to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent
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<PAGE> 57
Guarantor shall, as of the Restatement Date, have no liabilities or obligations
under the "Operative Documents" (as defined in the Original Head Lease as in
effect immediately prior to (but excluding) the Restatement Date and excluding
the Head Lease TIA (which rights, benefits, obligations and liabilities are
amended and restated as of the Restatement Date)) and are released from all such
obligations and liabilities, except the Original Head Lessee and the Parent
Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be
liable to the parties hereto for the removal of any Sublessor's Liens and (ii)
(without releasing Sublessor as provided in the Sublease) each of the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and
the Owner Participant agree as among themselves and for the benefit of the other
"Indemnitees" (as such term is defined in the Original Head Lease) that all
rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of
the Participation Agreement with respect to the period up to (but excluding) the
Restatement Date and under any other provision of the Participation Agreement
which by the express terms thereof survives the termination thereof (including,
without limitation, any such liability arising from and including the
Restatement Date under the Participation Agreement in respect of the period up
to (but excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date) shall survive the termination of the
Participation Agreement, the Original Head Lease and the Parent Head Lease
Guaranty (the foregoing surviving rights, benefits, obligations and liabilities
of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained
Head Lease Rights and Obligations"). In furtherance of the foregoing, the
parties hereto consent and agree that the Parent Guarantor is hereby released
from any and all "Obligations" under and as defined in the Parent Head Lease
Guaranty, except in respect of the Retained Head Lease Rights and Obligations
and except in respect of the Amended and Restated Head Lease TIA, the
"Obligations" in respect of which shall continue in full force and effect in
accordance with the Parent Head Lease Guaranty and are hereby ratified and
confirmed by the Parent Guarantor.
SECTION 16. Certain Additional Obligations of the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee,
Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and
agrees for the benefit of each other that it will be bound by the terms of the
other Operative Documents to which it or its applicable trustee is a party, and
comply with and perform its agreements, covenants and indemnities set forth in
the other Operative Documents to which it or its applicable trustee is a party,
as amended, supplemented or otherwise modified from time to time as permitted
hereby.
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<PAGE> 58
SECTION 17. Lessee Protection of Title. Each of the Owner
Trustee and the Indenture Trustee agrees to execute and deliver such documents
or other instruments as the Lessee may reasonably request to enable the Lessee
to perform its obligations under Section 15 of the Lease for the benefit of such
Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee,
Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and
Lessee (i) hereby irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York in New York
County, and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service
of process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John
Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its
agent for service of process, and covenants and agrees that service of process
in any suit, action or proceeding may be made upon it at the office of such
agent or such other office of Parent Guarantor or such other agent, as from time
to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner
Participant and Indenture Trustee. Original Head Lessee hereby generally
consents to service of process by registered mail, return receipt requested,
addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury,
Connecticut 06810 or such other office of Original Head Lessee as from time to
time may be designated by Original Head Lessee in writing to Owner Trustee,
Owner Participant and Indenture Trustee. Owner Participant generally consents to
service of process by registered mail, return receipt requested,
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<PAGE> 59
addressed to it at ____________________________________ or such other office of
Owner Participant as from time to time may be designated by Owner Participant in
writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee.
Owner Trustee generally consents to service of process by registered mail,
return receipt requested, addressed to it at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner
Trustee as from time to time may be designated by Owner Trustee in writing to
Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture
Trustee generally consents to service of process by registered mail, return
receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford,
Connecticut 06115 or such other office of Indenture Trustee as from time to time
may be designated in writing to Owner Participant, Original Head Lessee, Owner
Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has
not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the
Original Head Lessee of invoices therefor in reasonable detail
prior to the Restatement Date, all of the reasonable out-of-
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<PAGE> 60
pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the
Owner Participant, the Pass Through Trustee, the Subordination Agent, the
Liquidity Provider, the Indenture Trustee and the Original Certificate Holders
in connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Lease, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement
(except, in each case, as otherwise provided therein) shall be paid on or prior
to the Closing by the Original Head Lessee, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable
to the Equipment Notes issued under the Indenture of (A) Shipman &
Goodwin LLP, special counsel for the Pass Through Trustee, the
Subordination Agent and the Indenture Trustee, (B) Morris, James,
Hitchens & Williams, special counsel for the Owner Trustee, (C)
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City,
Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for
the Underwriters;
(2) the reasonable fees, expenses and disbursements of
Hunton & Williams, special counsel for the Owner
Participant;
(3) the fees, expenses and disbursements of Andrews &
Kurth L.L.P. and Latham & Watkins, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and
the Subordination Agent;
(6) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code financing statements in the United
States of America; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred to
in this Section 21.
(c) The Lessee agrees to pay the amounts it is obligated to
pay under Section 21(j) of the Lease.
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<PAGE> 61
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations and
warranties were made to the Liquidity Provider directly. The terms of this
Agreement shall inure to the benefit of the Liquidity Provider, its successors
and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Original Head Lessee and its successors and permitted assigns, the Parent
Guarantor and its successors and permitted assigns, the Lessee and its
successors and permitted assigns, the Pass Through Trustee and its successors as
Pass Through Trustee (and any additional trustee appointed) under any of the
Pass Through Trust Agreements, the Indenture Trustee and its successors as
Indenture Trustee (and any additional Indenture Trustee appointed) under the
Indenture, the Subordination Agent and its successors as Subordination Agent
under the Intercreditor Agreement, the Owner Trustee and its successors as Owner
Trustee under the Trust Agreement, and the Owner Participant and its successors
and permitted assigns. No purchaser or holder of any Equipment Notes shall be
deemed to be a successor or assign of any holder of the Original Certificates.
(b) Upon the release of the Aircraft from the lien of the
Indenture and the termination of the Indenture pursuant to
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<PAGE> 62
and in accordance with Section 10.01 thereof, each requirement in the Operative
Documents that the consent of Indenture Trustee be obtained or that the
Indenture Trustee be given notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree
that this Agreement shall be effective among all such parties on
and as of the Restatement Date.
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<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:_______________________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA SUB I, INC.
By:_______________________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:_______________________________________
Name:
Title:
Address: GPA House
Shannon, County Clare, Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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<PAGE> 64
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner Trustee
By:_______________________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust Administration
[--------------------------------]
By:_______________________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise
provided herein, but solely as Indenture Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 65
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Subordination Agent
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Pass Through Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 66
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1A, dated
November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1B, dated
November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1C, dated
November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1D, dated
November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1E, dated
November 26, 1996.
<PAGE> 67
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
------ ------ ---- ---- -----
<S> <C> <C> <C> <C> <C>
Class A $ 11,897,518 02-Jan-2009 6.85% $ 11,897,518
Class B $ 4,413,774 02-Jul-2005 6.93% $ 4,413,774
Class C $ 4,552,621 02-Jan-2002 6.86% $ 4,552,621
Class D $ 4,249,113 02-Jan-2002 8.16% $ 4,249,113
Class E $ 2,541,597 02-Jul-2002 10.50% $ 2,541,597
</TABLE>
<PAGE> 68
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut
06115, Attn: Philip Kane, Corporate Trust Administration, Ref.
AWA, for the account of Fleet National Bank Account No. ABA
#011900445, ACCT. # 0067548290.
<PAGE> 69
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1990 AWA-15]
TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-15], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, ___________________________, a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1990 AWA-15], dated as of November 20, 1996 among Lessee, Original Head
Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee,
Subordination Agent and Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the
benefit of Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms
defined in the Refunding Agreement are used herein as therein
defined, unless otherwise defined herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably
guarantees to Beneficiaries and their respective successors, endorsees,
transferees and assigns, the prompt and complete payment by Transferee when due
(whether at the stated maturity,
<PAGE> 70
by acceleration or otherwise) of, and the faithful performance of, and
compliance with, all payment obligations of Transferee under the Refunding
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party and each other Operative Document
to which Transferee is a party or by which either is bound (collectively, the
"Relevant Documents"), strictly in accordance with the terms thereof and the
timely performance of all other obligations of Transferee thereunder (such
payment and other obligations, the "Obligations"), and Guarantor further agrees
to pay any and all expenses (including, without limitation, all fees and
disbursements of counsel) that may be paid or incurred by Beneficiaries in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any
other guarantor or any other Person or received or collected by any Beneficiary
from Transferee, Guarantor, any other guarantor or any other person by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of
Guarantor hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or
observed by Transferee (whether affirmative or negative in character) shall not
be observed or performed, or if any amount payable by Transferee referred to in
Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor
shall promptly perform or observe or cause to be performed or observed each such
Obligation or undertaking and shall forthwith pay such amount at the place and
to the person or entity entitled thereto pursuant to the Relevant Documents
regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass
Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of
any of them shall have instituted any suit, action or proceeding or exhausted
its remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or
payments made by Guarantor hereunder or any setoff or application
of funds of Guarantor by any Beneficiary, Guarantor shall not be
entitled to be subrogated to any of the rights of any Beneficiary
against Transferee or any collateral, security or guarantee or
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<PAGE> 71
right of set-off held by any Beneficiary for the payment of the Obligations, nor
shall Guarantor seek or be entitled to seek any reimbursement from Transferee in
respect of payments made by Guarantor hereunder, until all amounts and
performance owing to Beneficiaries by Transferee on account of the Obligations
are paid and performed in full.
4. Amendments, etc., with respect to the Obligations;
Waiver of Rights. The Guarantor shall remain fully obligated hereunder
notwithstanding that, without any reservation of rights against the Guarantor
and without notice to or further assent by the Guarantor, any demand for payment
or performance of any of the Obligations made by any Beneficiary may be
rescinded by such party and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
any Beneficiary and any Relevant Document and/or any collateral security
document or other guarantee or document in connection therewith, may be amended,
modified, supplemented or terminated, in whole or in part, as the parties
thereto may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by any beneficiary for the payment
or performance of the Obligations may be sold, exchanged, waived, surrendered or
released. No beneficiary shall have any obligation to protect, secure, perfect
or insure any lien at any time held by it as security for the Obligations or for
this Guarantee or any property subject thereto. When making any demand hereunder
against the Guarantor, a Beneficiary may, but shall be under no obligation to,
make a similar demand on the Transferee or any other guarantor, and any failure
by a Beneficiary to make any such demand or to collect any payments from the
Transferee or any such other guarantor or any release of the Transferee or such
other guarantor shall not relieve the Guarantor of its obligations or
liabilities hereunder, and shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of any Beneficiary against the
Guarantor. For purposes hereof, "demand" shall include the commencement and
continuance of any legal proceedings. The Guarantor represents and warrants that
it owns, directly or indirectly, at least the portion of the capital stock of
the Transferee required by the Refunding Agreement and that, except as otherwise
provided in Section 5 hereof, its obligations hereunder shall continue
unimpaired, even if the Guarantor no longer owns, directly or indirectly, such
portion of the capital stock of the Transferee.
5. Transfer of Interest in Transferee. Guarantor
shall not assign, convey or otherwise transfer to any person (a)
any of its interest in Transferee unless in connection therewith,
- 3 -
<PAGE> 72
Guarantor assigns its rights and obligations hereunder to a guarantor which
meets the requirements of Section 10 of the Refunding Agreement; provided that
nothing contained in this Section 5 shall be construed to prohibit any merger,
consolidation or other corporate restructuring of Transferee or Guarantor so
long as the resulting corporation meets the requirements of Section 10 of the
Refunding Agreement and assumes the obligations of the corporation merged or
consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Obligations and notice of or proof of reliance by any Beneficiary upon
this Guarantee or acceptance of this Guarantee; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon this Guarantee; and
all dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Transferee
or the Guarantor with respect to the Obligations. The Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance (and not merely of
collectibility) without regard to (a) the validity, regularity or enforceability
of any Relevant Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Transferee against any Beneficiary,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Transferee or the Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of the Transferee for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Transferee or any other person or
entity or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Beneficiary to
pursue such other rights or remedies or to collect any payments from the
Transferee or any such other person or entity or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Transferee or any such other person or entity or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and
- 4 -
<PAGE> 73
remedies, whether express, implied or available as a matter of law, of any
Beneficiary against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Beneficiaries, and their respective successors, endorsees, transferees
and assigns, until all of the Obligations and the Obligations of the Guarantor
under this Agreement shall have been satisfied by payment and performance in
full. The Guarantor further agrees that, without limiting the generality of this
Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by
applicable law from exercising its remedies (or any of them) against the
Transferee under any Operative Document, such Beneficiary (or any assignee
thereof) shall be entitled to receive hereunder from the Guarantor, upon demand
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any beneficiary upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made. The Guarantor shall not commence any "case" (as
defined in Title 11 of the United States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that
payments hereunder shall be paid without set-off, counterclaim, deduction or
withholding, and shall be made in U.S. Dollars. If any payment hereunder is
subject to deduction or withholding, Guarantor shall pay an additional amount
such that, after deduction of all amounts required to be deducted or withheld,
the net amount actually received will equal the amount that would have been
received had such deduction or withholding not been required.
9. Representations and Warranties. The Guarantor
hereby represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged;
- 5 -
<PAGE> 74
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Guarantee, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the
creation or imposition of any lien on any of the properties or revenues
of the Guarantor pursuant to any requirement of law or contractual
obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or governmental authority and no
consent of any other person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee;
(f) no litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
against any of its properties or revenues (i) with respect to this
Guarantee or any of the transactions contemplated hereby or (ii) that
could have a material adverse effect on the business, operations,
property or financial or other condition of the Guarantor;
[(g) the balance sheet of the Guarantor as at _________________ and
the related statement of income and retained earnings for the fiscal
year then ended (copies of which have heretofore been furnished to each
Beneficiary) have been prepared in accordance with generally accepted
accounting principles applied consistently throughout the period
involved, are complete and correct and present fairly the financial
condition of the Guarantor as at such date and the results of its
operations for such fiscal year; since such date there has been no
material adverse change in the business, operations, property or
financial or other condition of the Guarantor; the Guarantor has no
material contingent obligation, contingent liability or liability for
- 6 -
<PAGE> 75
taxes, long-term lease or unusual forward or long-term commitment that
is not reflected in the foregoing statements or in the notes thereto;
and](1)
(h) the Guarantor is [type of legal personality] with a
[combined capital, surplus and undivided profits] [tangible net worth]
of at least $60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall
by any act (except by a written instrument pursuant to Section 13 hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of any Beneficiary, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by a Beneficiary of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy that such Beneficiary would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire
agreement of Guarantor with respect to the subject matter hereof
and there are no promises or representations by any Beneficiary
relative to the subject matter hereof not reflected herein.
13. Amendments and Waivers. None of the terms or
provisions of this Guarantee may be waived, amended or
supplemented or otherwise modified except by a written instrument
executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in
this Guarantee are for convenience of reference only and not to
(1) This representation is not applicable if Transferee is a wholly-owned
subsidiary of the Owner Participant.
- 7 -
<PAGE> 76
affect the construction hereof or be taken into consideration in
the interpretation hereof.
15. Successors and Assigns. This Guarantee shall be
binding upon the successors and assigns of Guarantor and shall
inure to the benefit of Beneficiaries and their respective
successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon
the Guarantor or any Beneficiary to be effective shall be in writing or by
telegraph, telex or telecopy and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, two days after deposit in the postal system, first class
postage pre-paid, or, in the case of telegraphic notice, when sent, answerback
received, addressed to (a) in the case of the Guarantor, the address provided on
the signature page hereof, and (b) in the case of any Beneficiary, the address
provided for such party in the Refunding Agreement.
- 8 -
<PAGE> 77
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and the year first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
- 9 -
<PAGE> 78
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1990 AWA-15]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-15]
("Assignment") dated as of _____________, between ______________, a ___________
corporation ("Assignor") and ________________, a __________ corporation
("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee,
Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned
below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer
by Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
________________________________, Fleet National Bank, as Subordination Agent,
and Fleet National Bank, as Indenture Trustee, as amended, modified or
supplemented from time to time (the "Refunding Agreement"), (ii) the Trust
Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as
defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA
identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the
Indenture (as defined in the Refunding Agreement) and (b) the assumption by
Assignee of the obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the meaning ascribed thereto in the Refunding Agreement.
For purposes of this Assignment, the defined term "Operative Document" shall
have the meaning ascribed thereto in the Refunding Agreement and shall be deemed
to include the Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned,
transferred and set over, and does hereby sell, convey, assign, transfer and set
over, unto Assignee, as of the date hereof, all of its right, title and interest
in, under and with respect to the Refunding Agreement, the Trust Agreement, the
Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the
other Operative Documents to which Assignor is a party or any other contract,
agreement, document or instrument relating to the Trust Estate by which Assignor
is bound, and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
<PAGE> 79
rights of Assignor as have accrued to Assignor prior to the date hereof
(including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust Agreement as of a date prior
to such date and the right to receive any indemnity payment pursuant to the
Refunding Agreement or the Lease with respect to events occurring prior to such
date).
3. Assumption. Assignee hereby undertakes all of the duties
and obligations of Assignor whenever accrued (other than duties and obligations
of Assignor required to be performed by it on or prior to the date hereof under
the Operative Documents to which Owner Participant is a party and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound), pursuant to the Trust Agreement
and any of the other Operative Documents by which Assignor is bound or any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound, and hereby confirms that
it shall be deemed a party to the Trust Agreement and shall be bound by each of
the other Operative Documents and each other contract, agreement, document or
other instrument relating to the Trust Estate to which Assignor is a party or by
which it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the
within assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
- 2 -
<PAGE> 80
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay over
to Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Assignor that, under Section 2 hereof, belong to Assignee, and
Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents
that it is acquiring the Trust Estate interests and other
interests hereby assigned to it without a view to the
distribution or resale of either thereof.
8. Representations and Warranties. Assignee repre-
sents and warrants that:
(a) it has all requisite power and authority and legal right
to enter into and carry out the transactions contemplated hereby and to
carry out and perform the transactions of Owner Participant as
contemplated by the Operative Documents;
(b) on the date hereof it is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act
and the rules and regulations of the FAA thereunder;
(c) on and as of the date hereof, the representations and
warranties of Owner Participant set forth in Section 9 of the Refunding
Agreement and as set forth in any other Agreement to which Owner
Participant is a party are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of
the Refunding Agreement;
(e) Assignee or its guarantor has a [combined capital, surplus
and undivided profits] [tangible net worth] of not less than
$60,000,000.
- 3 -
<PAGE> 81
9. Governing Law. This Assignment and Assumption
Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:___________________________________
Title:
[ASSIGNEE]
By:___________________________________
Title:
- 4 -
<PAGE> 82
EXHIBIT C to
REFUNDING AGREEMENT
LIST OF COUNTRIES
Australia
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Japan
Luxembourg
Netherlands
New Zealand
Norway
Singapore
South Korea
Sweden
Switzerland
United Kingdom
<PAGE> 83
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 84
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1990 AWA-15] No. 2 dated
November 26, 1996 (the "Trust Agreement Supplement") between
the Owner Trustee and the Owner Participant, amending the
Trust Agreement, which Trust Agreement Supplement was filed
with the FAA at 12:20 p.m., C.S.T. on November 26, 1996;
(b) First Amended and Restated Trust Indenture and Security
Agreement [GPA 1990 AWA-15] dated as of November 26,
1996 (the "Amended and Restated Indenture") between the
Owner Trustee and the Indenture Trustee, amending and
restating the Original Indenture with attached thereto
Trust Agreement and Indenture Supplement No. 2 [GPA
1990 AWA-15] dated November 26, 1996 (the "Indenture
Supplement") , with respect to the Aircraft, which
Amended and Restated Indenture with the Indenture
Supplement attached was filed with the FAA at 12:21
p.m., C.S.T. on November 26, 1996;
(c) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of November 26, 1996 (the "Lease
Amendment") among the Original Head Lessee, as
assignor, the Owner Trustee, as lessor, the Lessee, as
successor lessee, and the Indenture Trustee, which (i)
assigns all right, title and interest of the Original
Head Lessee in and to the Original Head Lease to the
Lessee, (ii) terminates the Sublease and (iii) releases
the Sublease Collateral Assignment, which Lease
Amendment was filed with the FAA at 12:22 p.m., C.S.T.
on November 26, 1996; and
(d) Amended and Restated Aircraft Lease Agreement [GPA 1990
AWA-15] dated as of September 21, 1990 and amended and
restated as of November 26, 1996 (the "Amended and
Restated Lease") between the Owner Trustee, as lessor,
and the Lessee, as successor lessee, amending and
restating the original Head Lease, with Lease
Supplement [GPA 1990 AWA-15] No. 3 dated November 26,
1996 (the "Lease Supplement") between the Owner
Trustee, as lessor, and the Lessee, as successor
lessee, with respect to the Aircraft, attached thereto,
which Amended and Restated Lease with the Lease
Supplement attached was filed with the FAA at 12:23
p.m., C.S.T. on November 26, 1996.
Trust Agreement
Trust Agreement [GPA 1990 AWA-15] dated as of September 21,
1990 between _____________________________, as owner
<PAGE> 85
participant, and Wilmington Trust Company, as owner trustee, as supplemented by
Trust Agreement Supplement [GPA 1990 AWA-15] No. 1 dated September 28, 1990.
Original Indenture
Trust Indenture and Security Agreement [GPA 1990 AWA-15]
dated as of September 21, 1990 between Wilmington Trust Company, as trustee
under Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, and
Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut National Association, and The Connecticut National
Bank), as indenture trustee, which was recorded by the Federal Aviation
Administration on September 28, 1990 and assigned Conveyance No. L61291, as
supplemented and amended by the following described instruments:
<TABLE>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Trust Indenture
Supplement No. 1 09/28/90 09/28/90 L61291
Amendment No. 1 to
Trust Indenture and
Security Agreement
[GPA 1990 AWA-15] 03/27/92 05/18/92 EE003013
Amendment No. 2 to
Trust Indenture and
Security Agreement as of
[GPA 1990 AWA-15] 07/29/93 08/04/93 F59675
</TABLE>
Original Head Lease
Aircraft Lease Agreement [GPA 1990 AWA-15] dated as of
September 21, 1990 between Wilmington Trust Company, as trustee under Trust
Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as lessor, and GPA
Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation
Administration on September 28, 1990 and assigned Conveyance No. L61292, as
supplemented by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Lease Supplement
[GPA 1990 AWA-15]
No. 1 09/28/90 09/28/90 L61292
Lease Supplement
[GPA 1990 AWA-15]
No. 2 12/31/91 (which was not filed for
recordation with the FAA)
</TABLE>
- 2 -
<PAGE> 86
Sublease
Aircraft Sublease Agreement [GPA 1990 AWA-15] dated as of
September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and
America West Airlines, Inc., as sublessee, which was recorded by the Federal
Aviation Administration on September 28, 1990 and assigned Conveyance No.
L61293, as supplemented. and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 09/28/90 09/28/90 L61293
Amendment No. 1 to
Aircraft Sublease
Agreement [GPA 1990 as of
AWA-15] 08/26/91 09/11/91 X116697
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease [GPA 1990 AWA-15] dated as of September
21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust
Company, as trustee under Trust Agreement [GPA 1990 AWA-15] dated as of
September 21, 1990, as assignee, which was attached to and recorded as one
instrument with the Sublease on September 28, 1990 and assigned Conveyance No.
L61293.
- 3 -
<PAGE> 1
Exhibit 4.18
- --------------------------------------------------------------------------------
REFUNDING AGREEMENT
[GPA 1990 AWA-16]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA SUB I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
-------------------------------,
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 099
Registration No. N637AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
SECTION 1. Purchase of Equipment Notes; Refunding ...................... 5
SECTION 2. Equipment Notes ............................................. 7
SECTION 3. Conditions Precedent ........................................ 7
SECTION 4. Certain Conditions Precedent to the
Obligations of the Original Head Lessee
and the Parent Guarantor; Certain
Conditions Precedent to the Obligations
of the Lessee; Conditions Precedent
with respect to the Pass Through
Trustee .................................................... 15
SECTION 5. Amendment and Restatement of the
Original Indenture ......................................... 19
SECTION 6. Amendment and Restatement of the
Original Lease ............................................. 19
SECTION 7. Termination of the Participation
Agreement; Termination of Sublease,
etc ........................................................ 19
SECTION 8. Representations and Warranties of the
Lessee ..................................................... 20
SECTION 9. Representations and Warranties .............................. 25
SECTION 10. Transfer of Owner Participant's
Interest ................................................... 42
SECTION 11. Re-Registration of the Aircraft ............................. 45
SECTION 12. Quiet Enjoyment ............................................. 47
SECTION 13. Liens ....................................................... 47
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent
Guarantor, Trust Company, Owner Trustee
and Owner Participant ...................................... 49
SECTION 15. Certain Retained Rights and Releases ........................ 52
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SECTION 16. Certain Additional Obligations of the
Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee ...................... 54
SECTION 17. Lessee Protection of Title .................................. 55
SECTION 18. Jurisdictional and Related Matters .......................... 55
SECTION 19. Limitation on Recourse ...................................... 56
SECTION 20. Notices ..................................................... 56
SECTION 21. Expenses .................................................... 56
SECTION 22. Reliance of Liquidity Provider .............................. 58
SECTION 23. Miscellaneous ............................................... 58
SECTION 24. Governing Law ............................................... 59
SECTION 25. Effectiveness ............................................... 59
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
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<PAGE> 4
REFUNDING AGREEMENT
[GPA 1990 AWA-16]
REFUNDING AGREEMENT [GPA 1990 AWA-16] (this "Agreement"),
dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA SUB I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) ________________________________,
a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY,
a Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
five separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank), a national banking
association, not in its individual capacity except as otherwise expressly
provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under
the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Sanwa International PLC, as Lender (and predecessor in
interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and
The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the
Owner Trustee and the Indenture Trustee entered into the Participation Agreement
[GPA 1990 AWA-16], dated as of September 21, 1990, as amended by the Letter
Agreement dated as of July 29, 1993 (as amended, supplemented or otherwise
modified from time to time, the "Participation Agreement"), providing for the
financing of one Airbus A320-231 aircraft (the "Aircraft");
WHEREAS, concurrently with the execution and delivery
of the Participation Agreement, the Owner Trustee and the
<PAGE> 5
Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA
1990 AWA-16], dated as of September 21, 1990, as supplemented by Trust Indenture
Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 to
Trust Indenture and Security Agreement dated March 27, 1992, and as further
amended by Amendment No. 2 to Trust Indenture and Security Agreement dated as of
July 29, 1993 (as so amended, supplemented or otherwise modified to the date
hereof, the "Original Indenture"), pursuant to which the Owner Trustee issued
loan certificates substantially in the form set forth in Section 2.02 thereof
(the "Original Certificates") to the Lenders as evidence of the indebtedness
then being made by the Owner Trustee to finance a portion of the purchase price
of the Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1990 AWA-16], dated as of September 21,
1990, as supplemented by Lease Supplement [GPA 1990 AWA-16] No. 1 dated
September 28, 1990, and as further supplemented by Lease Supplement No. 2 dated
as of December 31, 1991 (as so supplemented, the "Original Lease"), whereby,
subject to the terms and conditions set forth therein, the Owner Trustee agreed
to lease to the Original Head Lessee, and the Original Head Lessee agreed to
lease from the Owner Trustee, the Aircraft commencing on the Delivery Date (as
therein defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1990 AWA-16] dated as of September 21, 1990 (the "Parent Head
Lease Guaranty") for the benefit of the Owner Trustee pursuant to which the
Parent Guarantor guaranteed all of the obligations of the Original Head Lessee
under the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, as
supplemented by Trust Agreement Supplement [GPA 1990 AWA-16] No. 1 dated
September 28, 1990 (as amended, supplemented or otherwise modified to the date
hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee
agreed, among other things, to hold the Trust Estate defined in Section 1.1
thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-16],
dated as of
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<PAGE> 6
September 21, 1990 (as amended, supplemented or otherwise modified to the date
hereof, the "Head Lease TIA");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Original Head Lessee in its capacity as sublessor
(in such capacity, the "Sublessor") and America West Airlines, Inc. in its
capacity as sublessee (in such capacity, the "Sublessee") entered into the
Aircraft Sublease Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as
supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-16] dated September 28,
1990, and as amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1990
AWA-16] dated as of August 26, 1991 (as amended, supplemented or otherwise
modified to the date hereof, the "Sublease"), whereby, subject to the terms and
conditions set forth therein, the Sublessor agreed to sublease to the Sublessee,
and the Sublessee agreed to sublease from the Sublessor, the Aircraft commencing
on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Parent Guarantor entered into the GPAG Sublease Guaranty [GPA 1990
AWA-16] dated as of September 21, 1990 (as amended, modified or otherwise
supplemented to the date hereof, the "Sublease Guaranty") for the benefit of the
Sublessee pursuant to which the Parent Guarantor guaranteed the obligations of
the Original Head Lessee under Section 21(f) of the Sublease;
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1990 AWA-16], dated as of September 21, 1990
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease [GPA 1990 AWA-16] dated as of September 21, 1990 (as amended, modified
or otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will amend and restate the Original Indenture as the
First Amended and Restated Trust Indenture and Security Agreement [GPA 1990
AWA-16], dated as of the Restatement Date, as supplemented by Trust Indenture
Supplement No. 2 dated the Restatement Date (the "First Amended and Restated
Indenture" and, the First Amended and Restated Indenture as so amended and
restated, the "Indenture"), under which Indenture the Owner Trustee will issue
secured equipment notes substantially in the form set forth in Section 2.01
thereof (the "Equipment Notes") in five series, the proceeds from the
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<PAGE> 7
issuance and sale of which will be applied in part to the
prepayment in full of the Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
Original Lease as the Amended and Restated Lease (as so amended and restated,
the "Lease");
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1990 AWA-16] No. 2
("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended
and as further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Amended and Restated Head Lease Tax
Indemnification Agreement, amending and restating the Head Lease TIA (as so
amended and restated, the "Amended and Restated Head Lease TIA") and the
Sublessor and the Sublessee will enter into the Amended and Restated Sublease
Tax Indemnification Agreement amending and restating the Sublease TIA (as so
amended and restated, the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
five separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving
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<PAGE> 8
credit agreements (each, a "Liquidity Facility"), for the benefit of the Holders
of Equipment Notes of each of three Pass Through Trusts, with the Subordination
Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through
Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the
Subordination Agent will enter into the Intercreditor Agreement, dated as of the
Restatement Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject
to the satisfaction or waiver of the conditions set forth herein, on November
26, 1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as a payment
of Supplemental Rent under the Sublease all accrued and unpaid Rent
under the Sublease up to the Restatement Date, if any, (less any
amounts for which Sublessee is indemnified by Sublessor) and (B) the
Original Head Lessee shall pay to the Owner Trustee, as a payment of
Supplemental Rent under the Original Lease, an amount equal to the
accrued and unpaid interest on the Original Certificates up to but not
including the Restatement Date plus an amount (the "Prepayment Amount")
equal to all other amounts due to the holders of the Original
Certificates under the Original Indenture and the other Operative
Documents (as defined in the Original Indenture) payable on the
Restatement Date under Section 2.12 of the Original Indenture;
(ii) the Pass Through Trustee for each Pass Through Trust
shall pay to the Owner Trustee the aggregate purchase price of the
Equipment Notes being issued to such Pass Through Trustee as set forth
in clause (xii) below;
(iii) the Owner Trustee (to the extent of proceeds received
under clauses (i) and (ii)) shall pay to the Indenture Trustee for the
benefit of the holders of the Original Certificates an amount equal to
the aggregate principal amount of the Original Certificates outstanding
on the Restatement Date, together with accrued and unpaid
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<PAGE> 9
interest on the Original Certificates up to but not including the
Restatement Date plus the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the holders of
the Original Certificates the amounts of principal, interest, Break
Funding Cost, if any, described in clause (iii) above, owing to them on
the Restatement Date with respect to the Original Certificates as a
prepayment of the Original Certificates;
(v) the Indenture Trustee shall receive the Original
Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture (including Trust Indenture Supplement No. 2);
(vii) the Original Head Lessee, the Sublessee, the Owner
Trustee and the Indenture Trustee shall enter into Lease Amendment No.
1;
(viii) the Owner Participant and the Trust Company shall enter
into Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner Participant shall
enter into the Amended and Restated Head Lease TIA and the Sublessor
and the Sublessee shall enter into the Amended and Restated Sublease
TIA;
(x) the Original Head Lessee, GPA Leasing USA I, Inc., the
Parent Guarantor and the Lessee shall enter into an agreement in form
and substance reasonably satisfactory to each, inter alia, confirming
the termination of certain rights which the Parent Guarantor has to
"put" aircraft to the Lessee and the obligation of the Lessee to accept
and lease such aircraft (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of its affiliates
and the Lessee will enter into an agreement (the "Deed of Indemnity")
pursuant to which the Parent Guarantor and/or one or more of its
affiliates, on the one hand, and the Lessee, on the other, will
indemnify each other with respect to certain information included in
the Prospectus and the Registration Statement (as such terms are
defined in the Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Equipment Notes of the
maturity and aggregate
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<PAGE> 10
principal amount, bearing the interest rate and for the purchase price
set forth on Schedule II hereto opposite the name of such Pass Through
Trust.
(b) The Owner Participant, by its execution and delivery
hereof, requests and directs the Owner Trustee to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions contemplated
herein.
(c) The closing (the "Closing") of the transactions described
in this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New York, New York 10005, on the Restatement
Date, or at such other place as the parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated
hereby, the Original Head Lessee, GPA Leasing USA I, Inc., the Parent Guarantor
and the Lessee have entered into the Underwriting Agreement, dated as of
November 20, 1996 (the "Underwriting Agreement"), among such Persons and Morgan
Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon
Brothers Inc (collectively, the "Underwriters"), and, subject to the terms and
conditions hereof, the Lessee will enter into each of the Pass Through Trust
Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be
payable as to principal in accordance with the terms of the Indenture, and the
Equipment Notes shall provide for a fixed rate of interest per annum and shall
contain the terms and provisions provided for the Equipment Notes in the
Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Equipment Notes bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Equipment Notes in the aggregate shall be in the principal amounts set forth on
Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust
Agreements and of the other Operative Documents, all such Equipment Notes shall
be dated and authenticated as of the Restatement Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass
Through Trustee to make the payments described in
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<PAGE> 11
Section 1(a)(ii) and the obligations of the Owner Trustee to make the payments
described in Section 1(a)(iii) and the obligations of each of the Pass Through
Trustee, the Owner Trustee, the Owner Participant and the Indenture Trustee to
participate in the transactions contemplated by this Agreement on the
Restatement Date are subject to the fulfillment, prior to or on the Restatement
Date, of the following conditions precedent (except that paragraphs (a), (f) and
(j) shall not be conditions precedent to the obligations of the Owner Trustee
hereunder, paragraphs (g) and (l) shall not be conditions precedent to the
obligations of the Owner Participant hereunder and paragraphs (e) and (k) shall
not be conditions precedent to the obligations of the Indenture Trustee
hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes
to the Indenture Trustee for authentication, and the Indenture Trustee
shall have authenticated such Equipment Notes and shall have tendered
the Equipment Notes to the Subordination Agent on behalf of the Pass
Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of
the following documents and the Indenture Trustee shall have received
executed counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated
Lease and Lease Supplement No. 3;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and
Trust Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements and
each Pass Through Trust Supplement set forth in
Schedule I hereto;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the Class A,
Class B and Class C Trusts (as defined in the
Intercreditor Agreement).
(c) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received the
following:
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<PAGE> 12
(1) an incumbency certificate of each of the Original
Head Lessee, the Lessee and the Parent Guarantor as to the
person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on
behalf of such Person in connection with the transactions
contemplated hereby (including, without limitation, each of
the documents referred to herein) and as to the signatures of
such person or persons;
(2) a copy of the resolutions of the board of
directors of each of the Original Head Lessee, the Lessee and
the Parent Guarantor or the applicable committee thereof,
certified by the Secretary or an Assistant Secretary of such
Person, duly authorizing the transactions contemplated hereby
and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of
such Person in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of
each of the Original Head Lessee and the Lessee, certified by
the Secretary of State of its state of incorporation, a copy
of the by-laws of each of the Original Head Lessee and the
Lessee, certified by the Secretary or Assistant Secretary of
such Person, and a certificate or other evidence from the
Secretary of State of its state of incorporation, dated as of
a date reasonably near the Restatement Date, as to its due
incorporation and good standing in such state; and
(4) a copy of the Memorandum and Articles of
Association of the Parent Guarantor certified to be true and
correct by the Secretary or an Assistant Secretary of the
Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case
of (1), (5) and (6) below, a certificate signed by an authorized
officer of the Lessee and, in the case of (2), (3) and (4) below, a
certificate signed by an authorized officer of the Original Head
Lessee, dated the Restatement Date, certifying that:
(1) the Aircraft has been duly certified by the
FAA as to type and airworthiness and has a current,
valid certificate of airworthiness;
(2) the Aircraft FAA Bill of Sale (as defined in
the Participation Agreement), the Original Lease
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<PAGE> 13
(excluding Lease Supplement No. 2) and the Original Indenture
have each been duly recorded, and the Original Trust Agreement
has been duly filed, with the FAA pursuant to the sections of
Title 49 of the United States Code relating to aviation (the
"Federal Aviation Act");
(3) Lease Amendment No. 1, the Amended and Restated
Lease, Lease Supplement No. 3, the First Amended and Restated
Indenture, Trust Indenture Supplement No. 2 and Trust
Supplement No. 2 covering the Aircraft shall have been duly
filed for recordation with the FAA pursuant to the Federal
Aviation Act;
(4) the Aircraft has been registered with the FAA in
the name of the Owner Trustee;
(5) the Lessee has authority to operate the Aircraft;
and
(6) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the
Secretary, an Assistant Secretary or other appropriate officer
of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
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<PAGE> 14
(3) a copy of the articles of association and by-laws
of the Indenture Trustee, each certified by the Secretary, an
Assistant Secretary or other appropriate officer of the
Indenture Trustee; and
(4) a certificate signed by an authorized officer of
the Indenture Trustee, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Indenture Trustee are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as
to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Trustee in connection with the
transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-
laws of the Owner Trustee, each certified by the Secretary or
an Assistant Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
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<PAGE> 15
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
(1) an incumbency certificate of the Owner
Participant as to the person or persons authorized to execute
and deliver this Agreement and each of the other documents to
be executed on behalf of the Owner Participant in connection
with the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Participant or the applicable authority
designated by the board of directors thereof, certified by the
Secretary or an Assistant Secretary of the Owner Participant,
duly authorizing the transactions contemplated hereby and the
execution, delivery and performance of each of the documents
required to be executed and delivered on behalf of the Owner
Participant in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of the
Owner Participant, certified by the Secretary of State of its
state of incorporation, a copy of the by-laws of the Owner
Participant, certified by the Secretary or Assistant Secretary
of the Owner Participant, and a certificate or other evidence
from the Secretary of State of its state of incorporation,
dated as of a date reasonably near the Restatement Date, as to
its due incorporation and good standing in such state; and
(4) a certificate signed by an authorized
representative of the Owner Participant, dated the Restatement
Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as
though made on and as of the Restatement Date, except to the
extent that such representations and warranties relate solely
to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the
Lessee a report from Willis Corroon in substantially the form of
Exhibit D attached hereto.
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<PAGE> 16
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion
addressed to it from (i) Latham & Watkins, special counsel for the
Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee,
(iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis
& Roca, special Arizona counsel for the Lessee, in each case in form
and substance satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received an opinion addressed to it
from Morris, James, Hitchens & Williams, special counsel for the Owner
Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from
Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the
Subordination Agent and the Pass Through Trustee, in each case in form
and substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received an opinion addressed to it from
(i) Hunton & Williams, special counsel for the Owner Participant and
(ii) in-house counsel for the Owner Participant, in each case in form
and substance satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case,
special counsel for the Liquidity Provider, and (ii) in-house counsel
for the Liquidity Provider, in each case in form and substance
satisfactory to the Pass Through Trustee, the Owner Trustee and the
Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma, in form and substance satisfactory
to each of them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP,
special New York counsel for the Original Head Lessee and the Parent
Guarantor, in form and substance satisfactory to each of them.
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<PAGE> 17
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from McCann FitzGerald, special Irish counsel
for the Parent Guarantor, in form and substance satisfactory to each of
them.
(q) The Original Head Lessee, the Lessee, GPA Leasing USA I,
Inc. and the Parent Guarantor shall have entered into the Underwriting
Agreement and the Lessee shall have entered into each of the Pass
Through Trust Agreements, the Certificates shall have been issued and
sold pursuant to the Underwriting Agreement and the Pass Through Trust
Agreements, and the Underwriters shall have transferred to the Pass
Through Trustee in immediately available funds an amount equal to the
aggregate purchase price of the Equipment Notes to be purchased from
the Owner Trustee.
(r) The Original Head Lessee and the Owner Participant shall
each have executed and delivered to the other the Amended and Restated
Head Lease TIA.
(s) The Sublessor and the Sublessee shall each have
executed and delivered to the other the Amended and Restated
Sublease TIA.
(t) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would make it illegal for the Pass Through Trustee to make
the payments described in Section 1(a)(ii) or for the Lessee, the
Indenture Trustee, the Owner Trustee or the Owner Participant or any
other party hereto to participate in the transactions contemplated by
this Agreement on the Restatement Date.
(u) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in
connection with the Pass Through Trustee's making of the payments
described in Section 1(a)(ii) or the Owner Trustee's or the Owner
Participant's participation in the transactions contemplated by this
Agreement on the Restatement Date shall have been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security
interests created by or pursuant to the Indenture that are not covered
by the recording system established by the Federal Aviation Act shall
have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee and the Owner Trustee, as the
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<PAGE> 18
case may be, and such financing, termination, amendment and
continuation statement or statements or documents to the same purposes
shall have been duly filed in all places necessary or advisable, and
any additional Uniform Commercial Code financing, termination,
amendment and continuation statements deemed advisable by the Original
Head Lessee, the Lessee, the Owner Participant or the Indenture Trustee
shall have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee or the Owner Trustee, as the case may be,
and duly filed in all places advisable.
(w) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would adversely affect the tax consequences of the
transactions contemplated by this Agreement to the Owner Participant,
the Owner Trustee or any of their respective Affiliates.
(x) The Owner Trustee shall have received a letter of credit
in the amount of $1,000,000 from the Lessee in the form of Exhibit D-2
to the Lease.
(y) The Owner Participant shall have received any other
documents and evidence as the Owner Participant or its counsel may
request.
Promptly following the recording of Lease Amendment No. 1, the
Amended and Restated Lease (including Lease Supplement No. 3) and the First
Amended and Restated Indenture (including Trust Indenture Supplement No. 2)
pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3,
the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and
Trust Supplement No. 2.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
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<PAGE> 19
(i) Each of the Original Head Lessee and the Parent Guarantor shall
have received counterparts of the following documents executed by each
of the parties thereto other than the Original Head Lessee and the
Parent Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated
Lease and Lease Supplement No. 3;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination statements
relating to the Original Head Lease executed by
the Owner Trustee and/or the Indenture Trustee
and such other releases and terminations as it
may reasonably request; and
(9) that certain letter agreement dated as of the
Restatement Date relating to Stipulated Loss
Values with respect to the Amended and Restated
Lease (the "SLV Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent Guarantor
shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee referred
to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i), Section
3(j), Section 3(k), Section 3(l), Section 3(m)
and Section 3(n), in each case addressed to each
of the Original Head Lessee and the Parent
Guarantor and in form and substance satisfactory
to each of them;
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<PAGE> 20
(5) the opinions of Paul, Hastings, Janofsky & Walker
LLP and Milbank, Tweed, Hadley & McCloy with
respect to certain matters relating to and
described in the Prospectus, in each case
addressed to the Original Head Lessee and the
Parent Guarantor and in form and substance
reasonably satisfactory to each of them; and
(6) the report referred to in Section 3(h) addressed
to each of the Original Head Lessee and the
Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent
Guarantor shall have received such other documents and evidence with
respect to each other party hereto as each of them or its counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement and the "Refunding
Agreements" (as defined in the Registration Statement), the taking of
all necessary action in connection therewith and compliance with the
conditions herein or therein set forth.
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated
Lease and Lease Supplement No. 3;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
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<PAGE> 21
(8) Uniform Commercial Code termination statements
relating to the Sublease executed by the Original
Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the following
documents:
(1) the incumbency certificate of the Original Head
Lessee and Parent Guarantor referred to in
Section 3(c)(1);
(2) the resolutions of the Original Head Lessee and
Parent Guarantor referred to in Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j), Section
3(k), Section 3(l), Section 3(m), Section 3(n),
Section 3(o) and Section 3(p), in each case
addressed to Lessee and in form and substance
satisfactory to Lessee; and
(5) the opinions of Paul, Hastings, Janofsky & Walker
LLP and Milbank, Tweed, Hadley & McCloy with
respect to certain matters relating to and
described in the Prospectus, in each case
addressed to Lessee and in form and substance
reasonably satisfactory to Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass
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<PAGE> 22
Through Trust Agreements of the Pass Through Trustee are correct as of the
Restatement Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date), (ii) an opinion
addressed to each of them of Shipman & Goodwin LLP, special counsel for the Pass
Through Trustee, in form and substance satisfactory to each of them, and (iii)
such other documents and evidence with respect to the Pass Through Trustee as it
may reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement, the taking of all necessary action
in connection therewith and compliance with the conditions herein set forth.
SECTION 5. Amendment and Restatement of the Original
Indenture. Subject to the satisfaction or waiver of the conditions precedent set
forth herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the First
Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee,
by execution and delivery hereof, agree to execute and deliver the First Amended
and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor
and the Lessee, by execution and delivery hereof, consent to such execution and
delivery of the First Amended and Restated Indenture. The First Amended and
Restated Indenture shall be effective as of the Restatement Date.
SECTION 6. Amendment and Restatement of the Original Lease.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor
and the Owner Participant, by execution and delivery hereof, consent to the
assignments, delegations, and releases set forth in, and to the amendment and
restatement of the Original Lease effected by, and the Owner Participant
requests and instructs the Owner Trustee to execute and deliver, Lease Amendment
No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee
and the Sublessee agree, by execution and delivery hereof, to execute and
deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective
as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner Trustee,
the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect from and including the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no
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<PAGE> 23
obligations on the parties thereto. Upon the execution and delivery of Lease
Amendment No. 1 by each of the parties thereto, the Sublease, the Sublease
Guaranty and the Assignment of Sublease shall be terminated as and to the extent
set forth herein and therein. Lease Amendment No. 1 shall be effective as of the
Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original Head
Lessee (except as to the representation and warranty contained in Section 8(i)),
the Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has the corporate power and authority to own or hold under lease its
properties, has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and perform its
obligations under this Agreement, Lease Amendment No. 1, the Lease, the
Pass Through Trust Agreements, the Amended and Restated Sublease TIA,
the SLV Letter Agreement and any certificate delivered by the Lessee
pursuant to the foregoing (the "Lessee Documents") and is duly
qualified to do business as a foreign corporation in each jurisdiction
where the failure to so qualify would have a material adverse effect on
its business, operations or condition (financial or otherwise), or on
its ability to perform its obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under
the Lessee Documents have been duly authorized by all necessary
corporate action on the part of the Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation,
judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions
of, or constitute a default under,
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<PAGE> 24
or result in the creation of any Lien (other than Permitted Liens) upon
the property of the Lessee under, any indenture, mortgage, contract,
lease or other agreement in each case having payment obligations in
excess of $500,000 to which the Lessee is a party or by which it may be
bound or affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee
under the Lessee Documents nor the consummation by the Lessee of any of
the transactions contemplated by the Lessee Documents, requires the
consent or approval of, the giving of notice to, the registration with,
or the taking of any other action in respect of, the Department of
Transportation, the FAA, or any other federal, state, local or foreign
governmental authority having jurisdiction, other than those which have
already been received and which the Lessee is in compliance with and
(i) the registration of the Certificates under the Securities Act of
1933, as amended (the "Securities Act") and the securities laws of any
state in which the Certificates may be offered for sale if the laws of
such state require such action, (ii) the qualification of the Pass
Through Trust Agreements under the Trust Indenture Act of 1939, as
amended, (iii) (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee required to
be obtained on or prior to the Restatement Date, which orders, permits,
waivers, exemptions, authorizations and approvals have been duly
obtained and are, or will on the Restatement Date be in full force and
effect, (B) the registration of the Aircraft pursuant to the Federal
Aviation Act and (C) such consents, approvals, notices, registrations
and other actions required by the terms of the Lessee Documents to the
extent required to be given or obtained only after the Restatement Date
and (iv) the registrations and filings referred to in Section 8(i);
(e) each Lessee Document has been duly executed and delivered
by the Lessee and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, each Lessee Document
constitutes, or when executed will constitute, the legal, valid and
binding obligations of the Lessee enforceable against the Lessee in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors or lessors
generally and by general principles of equity, whether considered in a
proceeding at law or in equity, and except, in the case of the Lease,
as may be limited by applicable laws which may affect the remedies
provided in
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<PAGE> 25
the Lease, which laws, however, do not make the remedies provided in
the Lease inadequate for the practical realization of the benefits
intended to be afforded thereby;
(f) except as disclosed in the Prospectus, there are no
pending or, to its knowledge, threatened actions or proceedings before
any court or administrative agency or regulatory commission or other
governmental agency against or affecting the Lessee that are reasonably
expected to materially adversely affect the ability of Lessee to enter
into or perform its obligations under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be free
and clear of any and all Liens (other than Permitted Liens) created by
or through the Lessee;
(i) except for the registration of the Aircraft pursuant to
the Federal Aviation Act, the filing for recordation pursuant to the
Federal Aviation Act (with confidential financial terms redacted) of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement
No. 3, Trust Supplement No. 2, the First Amended and Restated Indenture
and Indenture Supplement No. 2, and each of the other documents
referred to in Annex A hereto, all with the FAA, the filing of a
Uniform Commercial Code ("UCC") amended financing statement with the
Secretary of State of the State of Delaware with regard to the Original
Lease, the filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States of New
York, Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with
respect to the Lease, the filing of a UCC termination statement with
the Secretary of State of the State of Arizona with respect to the
Sublease, and the filing of a UCC termination statement with the
Secretary of State of the State of Delaware with respect to the Initial
Sublease Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly effected as
of the Restatement Date (and assignments thereof and continuation
statements at periodic intervals), and other than the taking of
possession by the Indenture Trustee of the original counterparts of the
Original Lease, Lease Amendment No. 1, the Amended and Restated Lease,
and all Lease Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification required by
Section 6(e) of the Lease, no further filing or recording of the Lease
or of any
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<PAGE> 26
other document (including any financing statement under Article 9 of
the UCC of the State of Delaware, New York or Arizona) and no further
action is necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to perfect the
Owner Trustee's interest in the Aircraft as against the Lessee and any
third parties, or to perfect the security interest in favor of the
Indenture Trustee in the Owner Trustee's interest in the Aircraft and
in the Lease;
(j) all obligations of the Lessee owing to the Lessor in
connection with the Lease are at least pari passu with all unsecured
and unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default
but for the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an Event
of Loss with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are required
to be filed and has paid or will pay or has caused or will cause to be
paid all taxes shown to be due or payable on said returns and on any
assessment received by the Lessee, to the extent such taxes have become
due and payable, except for taxes and returns with respect thereto the
nonpayment or nonfiling of which, either in any case or in the
aggregate, could have no material adverse effect on the Lessee, its
condition (financial or otherwise), business, operations or prospects,
or on its ability to perform its obligations under the Lease or which
are being diligently contested by the Lessee in good faith by
appropriate proceedings and with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all
material respects and fairly present the Lessee's financial condition
as of September 30, 1996 and the results of its operations for the
period covered in conformance with GAAP (except as otherwise noted
therein and with which any such change the independent auditors of the
Lessee have agreed), since September 30, 1996, there has been no
material adverse change in the Lessee's business, operations, condition
(financial or otherwise) or prospects which has not been disclosed in
writing to the Owner Participant and the Indenture Trustee and does not
contain
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<PAGE> 27
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary,
duties or other similar Taxes then due and for which the Lessee is
responsible pursuant to the Lessee Documents, shall have been paid,
other than such Taxes which are being contested by the Lessee in good
faith and by appropriate proceedings (and for which the Lessee shall
have established such reserves as are required under GAAP) so long as
such proceedings or the non-payment of such Taxes do not involve any
material danger to the sale, forfeiture or loss of the Aircraft;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations or
the Cuban Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, or of any regulations, interpretations or rulings issued
thereunder, and the Lessee is not, and is not acting on behalf of or
for the benefit of, an "Iranian Entity" within the meaning of the
Iranian Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, and the transactions contemplated by this Agreement are not
prohibited by Executive Order 12170, the above-mentioned Iranian Assets
Control Regulations or any regulations, interpretations or rulings
issued under any thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made out
of the assets of any "employee benefit plan" as defined in Section 3(3)
of ERISA;
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the
Owner Participant or the Indenture Trustee by the Lessee in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to
the Lessee (other than matters of a general economic nature) which the
Lessee has not disclosed in writing to the Owner Participant or the
Indenture Trustee which could impair its ability to perform its
obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy
Code, the Lessor as lessor of the Aircraft under
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<PAGE> 28
the Lease, and the Indenture Trustee, as assignee of the Owner
Trustee's rights under the Lease pursuant to the Indenture, would be
entitled to the benefits of Section 1110 of the Bankruptcy Code with
respect to the Aircraft.
SECTION 9. Representations and Warranties. Each of the parties
below represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below)
represents and warrants that:
(1) the Indenture Trustee is a banking association
duly organized, validly existing and in good standing under
the federal laws of the United States of America, is a
"citizen of the United States" as defined in Section
40102(a)(15) of the Federal Aviation Act and the rules and
regulations of the FAA thereunder (as so defined, a "Citizen
of the United States") (without making use of a voting trust,
voting powers agreement or similar arrangement), will notify
promptly all parties to this Agreement if in its reasonable
opinion its status as a Citizen of the United States (without
making use of a voting trust, voting powers agreement or
similar arrangement) is likely to change and will resign as
Indenture Trustee as provided in Section 8.02 of the Indenture
promptly after it obtains actual knowledge that it has ceased
to be such a Citizen of the United States (without making use
of a voting trust, voting powers agreement or similar
arrangement), and has the full corporate power, authority and
legal right under the laws of the State of Connecticut and the
federal laws of the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver each of this
Agreement, the Indenture and each other Operative Document to
which it is a party and to carry out its obligations under
this Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) neither the execution and delivery by the
Indenture Trustee of this Agreement, the Indenture, Lease
Amendment No. 1 and each other Operative Document to which it
is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the
compliance by it with any of the terms and
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<PAGE> 29
provisions hereof and thereof, (A) requires or will require
any approval of its stockholders, or approval or consent of
any trustees or holders of any indebtedness or obligations of
it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene any
provision of, or constitutes or will constitute a default
under, or results or will result in any breach of, or results
or will result in the creation of any Lien (other than as
permitted under the Operative Documents) upon its property
under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which
it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation or any
judgment or order applicable to or binding on it of any United
States governmental authority or agency governing the trust
powers of the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture,
when executed and delivered by the Indenture Trustee, will
constitute, the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents to which
it is a party;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any State of Connecticut or any
United States of America governmental authority or agency
regulating the trust powers of the Indenture Trustee is
required for the execution and delivery of, or the carrying
out by, the Indenture Trustee of any of the transactions
contemplated hereby or by the Indenture, Lease
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<PAGE> 30
Amendment No. 1 or any other Operative Document to which it is
a party or by which it is bound, other than any such consent,
approval, order, authorization, registration, notice or action
as has been duly obtained, given or taken;
(6) there are no Lenders' Liens (as defined in the
Lease) on the Aircraft or any portion of the Trust Estate
created by or through the Indenture Trustee in its individual
capacity; and
(7) it has possession of the chattel paper original
counterpart of the Original Lease, Lease Amendment No. 1 and
the Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties
are made solely by the Owner Trustee) and the Owner Trustee represents
and warrants that:
(1) the Trust Company is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and
authority to carry on its business as now conducted, has, or
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver Trust
Supplement No. 2, has the corporate power and authority to
carry out the terms of the Trust Agreement, and each of the
Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant), the corporate power and authority
to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Equipment Notes, Lease Amendment
No. 1, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
(2) (i) each of the Trust Company and the Owner
Trustee has duly authorized, executed and delivered the Trust
Agreement and this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant) the Trust Agreement constitutes a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of
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creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, (ii)
the Owner Trustee has duly authorized, executed and delivered
this Agreement and (assuming the due authorization, execution
and delivery of Trust Supplement No. 2 by the Owner
Participant) this Agreement and the Trust Agreement
constitute, and the Indenture and the Lease, when entered
into, will constitute, a legal, valid and binding obligation
of the Owner Trustee, in its individual capacity or as Owner
Trustee and the Trust Company, as the case may be, enforceable
against it in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(3) assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant,
the Owner Trustee has duly authorized, and on the Restatement
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Equipment Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Equipment Note on the Restatement Date
will constitute the valid and binding obligation of the Owner
Trustee and will be entitled to the benefits and security
afforded by the Indenture in accordance with the terms of such
Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner
Trustee or the Trust Company, as the case may be, of this
Agreement, the Original Trust Agreement, Trust Supplement No.
2, the Original Indenture, the Indenture, the Original Lease,
Lease Amendment No. 1, the Lease, the Equipment Notes, or any
other Operative Document to which it is a party, nor the
consummation by it of any of the transactions contemplated
hereby or thereby, nor the compliance by it with any of the
terms and provisions hereof and thereof, (A) requires or will
require any approval of its stockholders, or approval or
consent of any trustees or holders of any indebtedness or
obligations of it, or (B) violates or will violate its
articles of association or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute
a default under, or results or will result in any breach of,
or results or will result in the creation of any Lien (other
than as permitted under the Operative Documents) upon its
property under, any indenture, mortgage, chattel
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<PAGE> 32
mortgage, deed of trust, conditional sale contract, bank loan
or credit agreement, license or other agreement or instrument
to which it is a party or by which it is bound, or contravenes
or will contravene any law, governmental rule or regulation of
the State of Delaware or any United States governmental
authority or agency governing the trust powers of the Owner
Trustee, or any judgment or order applicable to or binding on
it;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any state or local governmental
authority or agency or any State of Delaware or any United
States of America governmental authority or agency regulating
the trust powers of the Trust Company is required for the
execution and delivery of, or the carrying out by, the Trust
Company or the Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust
Agreement, the Indenture, the Lease, Lease Amendment No. 1,
the Equipment Notes or any other Operative Document to which
it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice
or action as has been duly obtained, given or taken or which
is described in Section 8(d);
(6) there exists no Lessor's Lien or Head Lessor's
Lien (each as defined in the Lease) (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens) attributable to
the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's
Lien (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens) attributable to the Trust Company;
(8) there are no Taxes payable by the Owner Trustee
or the Trust Company imposed by the State of Delaware or any
political subdivision thereof in connection with the
prepayment of the Original Certificates or the issuance of the
Equipment Notes, or the execution and delivery by it of any of
the instruments referred to in clauses (1), (2), (3) and (4)
above, that, in each case, would not have been imposed if the
Trust Estate were not located in the State of Delaware and the
Trust Company had not (a) had its principal place of business
in, (b) performed (in its individual
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<PAGE> 33
capacity or as Owner Trustee) any or all of its duties under
the Operative Documents in, and (c) engaged in any activities
unrelated to the transactions contemplated by the Operative
Documents in, the State of Delaware;
(9) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner Trustee,
either in its individual capacity or as Owner Trustee, before
any court or administrative agency which, if determined
adversely to it, would materially adversely affect the ability
of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under
any of the instruments referred to in clauses (1), (2), (3)
and (4) above;
(10) both its chief executive office, and the place
where its records concerning the Aircraft and all its
interests in, to and under all documents relating to the Trust
Estate (other than such as may be maintained and held by the
Indenture Trustee pursuant to the Indenture), are located in
Wilmington, Delaware. Owner Trustee, in its individual
capacity or as Owner Trustee, agrees that it will not change
the location of such office to a location outside of Delaware,
without prior written notice to all parties hereto; and
(11) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangements).
(c) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to carry
on its present business and operations and to own or lease its
properties, has, or had on the respective dates of execution
thereof, as the case may be, the corporate power and authority
to enter into and to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement and
the Amended and Restated Head Lease TIA; this Agreement, the
SLV Letter Agreement and Trust Supplement No. 2 have been duly
authorized, executed and delivered by it; and, assuming the
due authorization, execution and delivery hereof and thereof
by the other parties hereto and thereto, this Agreement, the
Trust Agreement, the SLV Letter
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<PAGE> 34
Agreement and the Amended and Restated Head Lease TIA
constitute the legal, valid and binding obligations of the
Owner Participant enforceable against it in accordance with
their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Amended and Restated Head Lease TIA
or any other Operative Document to which it is a party nor (B)
compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding on
the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements
of the Owner Participant under applicable law), or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its
certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its
property may be bound or affected, except where such
contravention or default would not result in any liability to
any other party hereto or have a material adverse effect on
the rights or on the remedies of the other parties hereto or
on its ability to perform its obligations hereunder or
thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Amended and Restated Head Lease TIA (it
being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee other than the laws, rules or regulations relating to
aircraft lease transactions generally or to the
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<PAGE> 35
citizenship requirements of the Owner Participant under
the Federal Aviation Act);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant before any court or administrative agency or
arbitrator which, if determined adversely to the Owner
Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement or
the Amended and Restated Head Lease TIA;
(5) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant (including for this purpose Liens
that would be Lessor's Liens but for the first proviso in the
definition of Lessor's Liens); and
(6) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangement). If at any time Owner
Participant has ceased to be, or shall have actual knowledge
that it is likely to cease to be, such a citizen, and (i) the
Aircraft shall be or would thereupon become ineligible for
registration in the name of Owner Trustee under the Federal
Aviation Act as in effect at such time (without regard to the
"based and primarily used" provisions thereof) and the
regulations then applicable thereunder, or (ii) the Aircraft
is registered in a jurisdiction other than the United States
of America, in circumstances in which the preceding clause (i)
does not apply and the Lessee or any Permitted Sublessee at
any time proposes to register the Aircraft in the United
States of America, then Owner Participant shall (at its own
expense and without any reimbursement or indemnification from
the Lessee or any Permitted Sublessee) (A) immediately either
(1) transfer in accordance with Section 10 hereof all of its
right, title and interest in and to the Trust Agreement, the
Trust Estate, this Agreement and the Amended and Restated Head
Lease TIA or (2) take such other action, including, without
limitation, the establishment of a voting trust or voting
powers agreement (in which case Owner Participant shall remain
the beneficial owner of the Trust Estate), as may be necessary
to prevent the deregistration of the Aircraft under the
Federal Aviation Act or to maintain such registration of the
Aircraft or to make possible such registration of the Aircraft
in the United States of
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<PAGE> 36
America and to prevent Indenture Trustee, the Holders of the
Equipment Notes, the Lessee or any Permitted Sublessee from
being adversely affected as a result thereof and (B) indemnify
the Lessee, the Indenture Trustee, the Holders of the
Equipment Notes and any Permitted Sublessee, from and against
any and all Claims incurred or suffered as a result of Owner
Participant's failure to be such a citizen or loss of such
citizenship, including, without limitation, as a result of the
Aircraft's becoming ineligible or ceasing to remain eligible
for such registration.
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly organized,
validly existing and in good standing under the federal laws
of the United States of America, and has the full corporate
power, authority and legal right under the federal laws of the
United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Intercreditor Agreement, and
this Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement will
have been, duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement constitutes, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement, will
constitute, the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement or this Agreement, the
purchase by the Pass Through Trustee of the Equipment Notes
pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements,
contravenes any
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<PAGE> 37
law, rule or regulation of the State of Connecticut or any
United States governmental authority or agency regulating the
Pass Through Trustee's banking, trust or fiduciary powers or
any judgment or order applicable to or binding on the Pass
Through Trustee and does not contravene or result in any
breach of, or constitute a default under, the Pass Through
Trustee's articles of association or by-laws or any agreement
or instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(5) assuming that the trusts created by the Pass
Through Trust Agreements will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code for
federal income tax purposes, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the acquisition, possession or ownership by
the Pass Through Trustee of any of the Equipment Notes (other
than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
prior to the exercise of remedies upon the occurrence of an
Indenture Event of Default, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of
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<PAGE> 38
the Pass Through Trust Agreements), and such trusts will not
be subject to any Taxes imposed by the State of Connecticut or
any political subdivision or taxing authority thereof; upon
the exercise of remedies following the occurrence of an
Indenture Event of Default, there will be no Taxes payable by
the Pass Through Trustee imposed by the State of Connecticut
or any political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other
than franchise or other Taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
the trusts created by the Pass Through Trust Agreements will
not be subject to any Taxes imposed by the State of
Connecticut or any political subdivision thereof, solely
because the Pass Through Trustee maintains an office in, and
administers the trusts created by the Pass Through Trust
Agreements in, the State of Connecticut;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly
or indirectly offered any Equipment Notes for sale to any
Person or solicited any offer to acquire any Equipment Notes
from any Person, nor has the Pass Through Trustee authorized
anyone to act on its behalf to offer directly or indirectly
any Equipment Notes for sale to any Person, or to solicit any
offer to acquire any Equipment Notes from any Person; and the
Pass Through Trustee is not in default under any Pass Through
Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
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<PAGE> 39
(e) The Subordination Agent represents and warrants that:
(1) the Subordination Agent is a duly organized
national banking association, validly existing and in good
standing with the Comptroller of the Currency under the laws
of the United States of America and has the full corporate
power, authority and legal right under the laws of the United
States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement and
to perform its obligations under this Agreement, the Liquidity
Facilities and the Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement will have been,
duly authorized, executed and delivered by the Subordination
Agent; this Agreement constitutes, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement, will constitute,
the legal, valid and binding obligations of the Subordination
Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Subordination Agent of each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement or
the performance by the Subordination Agent of this Agreement,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Subordination Agent and do not contravene or
result in any breach of, or constitute a default under, the
Subordination Agent's articles of association or by-laws or
any agreement or instrument to which the Subordination Agent
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities,
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<PAGE> 40
the Intercreditor Agreement or this Agreement nor the
consummation by the Subordination Agent of any of the
transactions contemplated hereby or thereby requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Subordination Agent's banking, trust or
fiduciary powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Subordination Agent
of this Agreement, any of the Liquidity Facilities or the
Intercreditor Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities) solely because
the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are
no Taxes payable by the Subordination Agent imposed by the
State of Connecticut or any political subdivision thereof in
connection with the acquisition, possession or ownership by
the Subordination Agent of any of the Equipment Notes solely
because the Subordination Agent maintains an office and
administers its trust business in the State of Connecticut
(other than franchise or other taxes based on or measured by
any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any Person
or solicited any offer to acquire any Equipment Note from any
Person, nor has the Subordination Agent
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<PAGE> 41
authorized anyone to act on its behalf to offer directly or
indirectly any Equipment Note for sale to any Person, or to
solicit any offer to acquire any Equipment Note from any
Person; and the Subordination Agent is not in default under
any Liquidity Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Amended and Restated Head Lease TIA, the Amended
and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents nor (B) compliance
by it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Original
Head Lessee, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument
to which the Original Head Lessee is a party or by which it or
any of its property may be bound or affected, except where
such contravention or default
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<PAGE> 42
would not result in any liability to any other party hereto or
have a material adverse effect on the rights or on the
remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Original Head Lessee of this
Agreement and each of the other Original Head Lessee
Transaction Documents;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Original Head Lessee before any court
or administrative agency or arbitrator which, if determined
adversely to the Original Head Lessee, would materially
adversely affect the Original Head Lessee's ability to perform
its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease);
(6) on the Delivery Date, the Owner Trustee received
good title to the Aircraft free and clear of all Liens, except
the rights of the Original Head Lessee under the Original
Lease, the rights of the Sublessee under the Sublease, the
Lien of the Original Indenture, the beneficial interest of the
Owner Participant in the Aircraft, and Permitted Liens under
the Original Lease;
(7) title to the Buyer Furnished Equipment for the
Aircraft has been transferred to the Owner Trustee in
accordance with Section 8(y) of the Participation Agreement.
As of the Restatement Date, there are no existing Claims
against Parent Guarantor or Original Head Lessee with respect
to Buyer Furnished Equipment; and
(8) except for the registration of the Aircraft
pursuant to the Federal Aviation Act, the filing for
recordation pursuant to the Federal Aviation Act (with
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<PAGE> 43
confidential financial terms redacted) of Lease Amendment No.
1, the Amended and Restated Lease, Lease Supplement No. 3,
Trust Supplement No. 2, the First Amended and Restated
Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all with the
FAA, the filing of a Uniform Commercial Code ("UCC") amended
financing statement with the Secretary of State of the State
of Delaware with regard to the Original Lease, the filing of
UCC termination statements with regard to the Original Head
Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC
financing statement with the Secretary of State of the State
of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State
of Arizona with respect to the Sublease, and the filing of a
UCC termination statement with the Secretary of State of the
State of Delaware with respect to the Initial Sublease
Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly
effected as of the Restatement Date (and assignments thereof
and continuation statements at periodic intervals), and other
than the taking of possession by the Indenture Trustee of the
original counterparts of the Original Lease, Lease Amendment
No. 1, the Amended and Restated Lease, and all Lease
Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification
required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any
financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Aircraft as
against the Lessee and any third parties, or to perfect the
security interest in favor of the Indenture Trustee in the
Owner Trustee's interest in the Aircraft and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement; this Agreement has been duly authorized and
constitutes the legal, valid and binding obligations of the
Parent Guarantor enforceable against it in accordance with its
terms,
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<PAGE> 44
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(2) neither (A) the execution and delivery by the
Parent Guarantor of this Agreement nor (B) compliance by it
with all of the provisions hereof (x) will contravene any law
or order of any court or governmental authority or agency
applicable to or binding on the Parent Guarantor, or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its Memorandum
and Articles of Association or any indenture, mortgage,
contract or other agreement or instrument to which the Parent
Guarantor is a party or by which it or any of its property may
be bound or affected, except where such contravention or
default would not result in any liability to any other party
hereto or have a material adverse effect on the rights or on
the remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Parent Guarantor of this
Agreement;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty with
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respect to Section 9(f)(8) shall be only for the benefit of
the Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by operation of law, consolidation, merger, sale of assets or
otherwise) any of its right, title or interest in and to the Trust Estate, the
Aircraft, the Lease, this Agreement, the Trust Agreement, the Amended and
Restated Head Lease TIA or any other Operative Document or any proceeds
therefrom or permit the transfer of any of its stock in any transaction which
has the practical effect of any of the foregoing; provided that, and subject to
the conditions set forth below, Owner Participant may transfer to a Transferee
(as defined below) all (but not less than all) of its right (except for such
rights accruing prior to transfer), title and interest as an entirety in and to
the Trust Estate, the Aircraft, this Agreement, the Trust Agreement, the Amended
and Restated Head Lease TIA and each other Operative Document to which Owner
Participant is a party or by which Owner Participant is bound. Each such
transfer shall be subject to the following conditions, and Owner Participant
agrees for the express benefit of each party hereto that any such transfer will
comply with such conditions:
(i) the Person to whom such transfer is to be made (a
"Transferee") is either (A) a bank, trust company or other like
regulated financial institution with a combined capital, surplus and
undivided profits of, or a corporation with a tangible net worth of, in
either case at least $60,000,000, (B) any wholly-owned subsidiary of
such bank, trust company, financial institution or corporation if such
bank, trust company, financial institution or corporation furnishes to
Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an
agreement or agreements of such bank, financial institution or
corporation guaranteeing such subsidiary's obligations as Owner
Participant contained in this Agreement, the Trust Agreement, the
Amended and Restated Head Lease TIA and each other Operative Document
to which Owner Participant is a party or by which it is bound, which
guarantee shall be substantially in the form attached as Exhibit A
hereto or (C) a subsidiary of Owner Participant if Owner Participant
furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and
Lessee an agreement whereby Owner Participant will guarantee such
subsidiary's obligations as Owner Participant contained in this
Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA
and each other Operative Document to which Owner Participant is a party
or by which it is bound, which guarantee shall be substantially in the
form attached as Exhibit A hereto;
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(ii) Owner Trustee, Indenture Trustee, Original Head Lessee
and Lessee shall have received at least 15 days' prior written notice
of such transfer specifying the name and address of any proposed
transferee and specifying the facts necessary to determine whether such
proposed transferee qualifies as a "Transferee" under clause (i) above
and does not violate clause (viii) below; provided that if such
Transferee is a subsidiary of Owner Participant, such notice may be
given promptly following rather than prior to such transfer if such
Transferee meets the net worth requirement set forth above on its own
account without a guaranty and otherwise meets the requirements of this
Section 10;
(iii) upon giving effect to such transfer, such Transferee is
a Citizen of the United States and such Transferee shall deliver to
Lessee an affidavit to such effect;
(iv) such Transferee has the requisite power and authority and
legal right to enter into and carry out the transactions contemplated
hereby;
(v) such Transferee enters into an agreement in substantially
the form attached as Exhibit B hereto whereby such Transferee confirms
that it shall be deemed a party to this Agreement, the Trust Agreement,
the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party or by which Owner
Participant is bound, and in which the transferee shall agree to be
bound by and undertake the obligations of Owner Participant in the
Operative Documents and shall make representations and warranties
comparable to those of Owner Participant contained herein;
(vi) such transfer does not violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or create a relationship that would be in violation
thereof, or violate any provisions of the Securities Act or any other
applicable Federal, state or other law, rule or regulation;
(vii) such transfer does not violate any provision of ERISA or
any rules or regulations thereunder;
(viii) such Transferee is not an airline, a commercial air
carrier, an air freight forwarder, any Person engaged in the business
of parcel transport by air or a subsidiary or an Affiliate of such an
airline, a commercial air carrier, an air freight forwarder, Person
engaged in the business of parcel transport by air or other similar
Person;
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<PAGE> 47
(ix) an opinion of counsel of the Transferee confirming the
matters referred to in clauses (iv) and (vi) above (with appropriate
reliance on certificates of corporate officers or public officials as
to matters of fact) and confirming that the agreement referred to in
clause (v) above is the legal, valid, binding and enforceable
obligation of the Transferee and that the guarantee referred to in
clause (i)(B) or (C) above, if any, is the legal, valid, binding and
enforceable obligation of the Transferee's guarantor shall be provided,
at least 3 days prior to such transfer, to Lessee, Owner Trustee,
Original Head Lessee and Indenture Trustee, which shall be in form and
substance reasonably satisfactory to each of them; and
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Aircraft previously made by Owner Participant; and except
as the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to "Owner Participant" shall thereafter be deemed to include such
Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Amended and Restated Head
Lease TIA and under the other Operative Documents, except to the extent
expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Amended and Restated Head Lease TIA by or against Owner Participant which have
accrued or been made prior to the date of such transfer. The transferor Owner
Participant shall pay the reasonable expenses of each party hereto related to
any such transfer.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions of
clause (A) of paragraph (6) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease. The Lessee
shall have no obligation to prevent any such deregistration or assist in
maintaining or otherwise enhancing the Aircraft's
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eligibility for registration by restricting the use of the Aircraft.
SECTION 11. Re-Registration of the Aircraft. The Indenture
Trustee agrees, that if the Owner Participant consents thereto, which consent
shall not be unreasonably withheld, at any time after the Restricted Use Period,
Lessee may, in connection with effecting a Permitted Sublease elect to effect a
change in registration of the Aircraft, at Lessee's cost and expense, so long as
(a) the country of registry of the Aircraft is a country listed on Exhibit C
hereto (or such other country as the Owner Participant approves) and (b) the
following conditions are met: (i) unless the country of registry is Taiwan, the
United States of America maintains normal diplomatic relations with the country
of registry of the Aircraft, and if the country of registry is Taiwan, the
United States of America maintains diplomatic relations at least as good as
those in effect on the Restatement Date; and (ii) the Owner Trustee, the Owner
Participant and the Indenture Trustee shall have received favorable opinions
(subject to customary exceptions) addressed to each such party, from counsel of
recognized reputation qualified in the laws of the relevant jurisdiction and
reasonably acceptable to the Owner Participant to the effect of the following
and as to such other matters as the Owner Participant may reasonably request:
(A) the Owner Trustee's ownership interest in the Aircraft and
interest in the Lease and any Permitted Sublease shall be recognized
under the laws of such jurisdiction,
(B) the obligations of Lessee, and the rights and remedies of
the Owner Trustee, under the Lease shall remain valid, binding and
(subject to customary bankruptcy and equitable remedies exceptions and
to other exceptions customary in foreign opinions generally)
enforceable under the laws of such jurisdiction (or the laws of the
jurisdiction to which the laws of such jurisdiction would refer as the
applicable governing law),
(C) after giving effect to such change in registration, the
Lien of the Indenture on the Owner Trustee's right, title and interest
in and to the Aircraft, the Lease and any Permitted Sublease shall
continue as a valid and duly perfected security interest and all
filing, recording or other action necessary to protect the same and the
Owner Trustee's ownership interest in the Aircraft shall have been
accomplished (or, if such opinion cannot be given at the time of such
proposed change in registration because such change in registration is
not yet effective, (1) the opinion shall detail what filing, recording
or other action is necessary and (2) the Owner Trustee and the
Indenture
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Trustee shall have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action shall
be accomplished and a supplemental opinion to that effect shall be
delivered to the Owner Trustee and the Indenture Trustee on or prior to
the effective date of such change in registration),
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other activity
of the Owner Trustee, the Owner Participant or the Indenture Trustee
(or any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such jurisdiction,
(E) there is no tort liability of the owner of an aircraft not
in possession thereof under the laws of such jurisdiction (it being
agreed that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to the Owner Participant is provided
to cover such risk),
(F) (unless Lessee shall have agreed, or pursuant to the Lease
shall have been required, to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such
jurisdiction so long as such Aircraft is registered under the laws of
such jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in currency
freely convertible into Dollars for the loss of use of such Aircraft in
the event of the requisition by such government of such use.
In addition, as a condition precedent to any such change in registration, (i)
the insurance required by Section 12 of the Lease shall be in full force and
effect at the time of such change in registration after giving effect to such
change in registration and the Owner Trustee and the Indenture Trustee shall
have received a certificate of the type described in Section 12(f) of the Lease
and (ii) the aircraft maintenance standards of the new country of registry shall
not be materially less stringent from those of the United States of America or
not materially less stringent from those of the United Kingdom and the Owner
Trustee and the Indenture Trustee shall have received a certificate to such
effect signed by the President, any Executive Vice President or any Senior Vice
President of Lessee which certificate shall, as among the parties hereto, be
presumed to be correct as to the matters stated therein absent conclusive
evidence to the contrary. Lessee shall pay all reasonable costs,
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<PAGE> 50
expenses, fees, and recording and registration taxes, including the reasonable
fees and expenses of counsel to the Owner Trustee, the Owner Participant and the
Indenture Trustee, and other charges in connection with any such change in
registration.
SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming by, through or on behalf of it to interfere with the
right of Lessee or any Permitted Sublessee to the possession, use, operation and
quiet enjoyment of and other rights with respect to the Aircraft under the
Lease, and all rents, revenues, profits and income therefrom, in accordance with
the terms of the Lease; provided that the Trust Company, Owner Trustee and Owner
Participant shall not be liable for any such interference by Indenture Trustee,
Pass Through Trustee, holders of any Equipment Notes, or any other Person
lawfully claiming by, through or on behalf of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate or the Indenture Estate. Each of Trust Company,
Owner Trustee and Owner Participant severally agrees that it will promptly, at
its own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Lessor's Lien or Head
Lessor's Lien attributable to it. For all purposes of this Agreement and the
other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a
result of the nonpayment of any Tax imposed on or measured by the net income of
the Trust Estate or the trust created by the Trust Agreement that is not
indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
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Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through
Trustee and Subordination Agent severally agrees that it will promptly, at its
own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Trustee's Lien attributable to it and to make restitution to the Trust Estate
and the Indenture Estate for any diminution of the assets thereof resulting
therefrom and will indemnify and hold harmless Lessee and each Indemnitee
against any claims incurred or suffered by any such Person and any reduction in
amounts payable out of, or diminution in the assets of, the Trust Estate or the
Indenture Estate resulting from any such Trustee's Lien attributable to it. For
purposes of this paragraph, "Trustee's Lien" means any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee), Pass Through Trustee in its individual capacity (and not as
Pass Through Trustee) or Subordination Agent in its individual capacity (and not
as Subordination Agent) on or in respect of (as the case may be) the Aircraft or
any other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against such Person not related to its interest in the
Aircraft or the administration of the Trust Estate or the Trust Indenture Estate
pursuant to the Indenture, whether under Section 9-207(2)(e) of the Uniform
Commercial Code or otherwise, (ii) acts or omissions of such Person not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of such Person which are in violation of any of the Operative
Documents, or (iii) Taxes imposed on or Claims against such Person which are
excluded from indemnification by Lessee, or (iv) Claims against such Person
arising out of the voluntary or involuntary transfer by such Person of all or
any portion of its interest in the Aircraft, the Airframe, any Engine, the Trust
Estate, the Trust Indenture Estate or the Operative Documents (except a Claim
resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the
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Original Head Lessee and Parent Guarantor severally agrees that it will
promptly, at its own expense (and without any right of indemnification or
reimbursement from Lessee), take such action as may be necessary duly to
discharge any such Sublessor's Lien attributable to it or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect and to make restitution to
the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Sublessor's Lien
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original
Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees with
Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement except in accordance with the terms thereof, provided that any such
amendment, supplement or modification shall not adversely affect the Lessee, and
(iii) not to terminate or revoke the Trust Agreement except in accordance with
the terms thereof, provided that any such termination or revocation shall not
adversely affect the Lessee.
(b) Notwithstanding anything to the contrary in the Trust
Agreement or Section 14(a) hereof, but subject always to the provisions of
Section 14(c) hereof, Owner Participant shall
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not consent to or direct a change in the situs of the Trust Estate so long as a
successor Owner Trustee meeting the requirements of the Trust Agreement is
reasonably available at the present situs of the Trust Estate (A) unless the
Indenture Trustee, the Original Head Lessee and Lessee shall have been given 30
days' prior notice thereof and (B) if, within 15 days after notice of such a
proposed change is given to Lessee and the Original Head Lessee, either (1)
Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee
(at the expense of Owner Participant) an opinion of counsel, which counsel shall
be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would have an adverse
effect on the rights or obligations of Lessee or Original Head Lessee or (2)
Lessee or Original Head Lessee delivers to Owner Participant and Owner Trustee
(at the expense of Owner Participant) an opinion of counsel, which counsel shall
be reasonably satisfactory to Owner Participant and Owner Trustee, to the effect
that such proposed change in the situs of the Trust Estate would cause an
increase in the amount for which Lessee may be required to indemnify any Person
pursuant to the provisions of Section 10 of the Lease or for which Original Head
Lessee is required to indemnify any Person pursuant to the provisions of the
Amended and Restated Head Lease TIA, unless any and all Persons entitled to
indemnification pursuant to Section 10 of the Lease or applicable provision of
the Amended and Restated Head Lease TIA shall waive indemnification under
Section 10 of the Lease or applicable provision of the Amended and Restated Head
Lease TIA for any adverse tax or other consequences to it of such a change in
the situs of the Trust Estate, (C) unless Indenture Trustee receives from Owner
Participant an opinion of counsel, which counsel shall be reasonably
satisfactory to Indenture Trustee, to the effect that such proposed change in
the situs of the Trust Estate would not have an adverse effect on the validity
or priority of the Lien of the Indenture and that such Uniform Commercial Code
and FAA filings as are required to maintain the validity and priority of the
Lien of Indenture have been made, and (D) such change does not affect the
registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to any
Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as
a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States of America from the state in which
it is then located, the situs of the trust shall be moved and Owner Participant
will take whatever action may be requested by Lessee that is reasonably
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification with respect to such change of situs and
request of Lessee as Original Head Lessee, Owner Participant or
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the Indenture Trustee (subject to the exclusions set forth in Section 10(b) of
the Lease and the exclusions in the Amended and Restated Head Lease TIA) may
reasonably request, (B) promptly after notice thereof Owner Participant has not
notified Lessee and provided reasonable evidence of an adverse effect on Owner
Participant's rights or obligations under the Trust Agreement, (C) Indenture
Trustee shall have received an opinion of counsel selected by Lessee, which
counsel shall be reasonably satisfactory to Indenture Trustee, to the effect
that the validity and priority of the Lien of the Indenture Estate will not be
adversely affected by such action, and that such Uniform Commercial Code and FAA
filings as are required to maintain the validity and the priority of the Lien of
the Indenture have been made, (D) Owner Participant and Indenture Trustee shall
have received an opinion or opinions of counsel selected by Owner Participant to
the effect that, with customary exceptions, (I) the trust, as thus removed,
shall remain a validly established trust, (II) any amendments to the Trust
Agreement or the Indenture necessitated by such removal shall have been duly
authorized, executed and delivered by the parties thereto and shall constitute
the legal, valid and binding obligations of such parties, enforceable in
accordance with their terms, (III) if such removal involves the replacement of
Owner Trustee, an opinion of counsel to such successor Owner Trustee in form and
substance reasonably satisfactory to Indenture Trustee and to Owner Participant
covering the matters described in the opinion described in Section 3(j) hereof,
and (IV) covering such other matters as Owner Participant or the Indenture
Trustee may reasonably request, and (E) Lessee shall indemnify and hold harmless
on an after tax basis Owner Trustee, Owner Participant and their respective
Affiliates and Indenture Trustee against any and all reasonable and actual costs
and expenses including reasonable attorneys' fees and disbursements,
registration, recording or filing fees and other Taxes incurred by Owner
Trustee, Owner Participant and their respective Affiliates, or Indenture Trustee
in connection with such change of situs and shall indemnify and hold harmless
Owner Participant, Owner Trustee and their respective Affiliates, and Indenture
Trustee on an after tax basis (subject to the exclusions set forth in Section
10(b) of the Lease and the Amended and Restated Sublease TIA) from and against
any increase in Taxes borne by such Person that results from such change in
situs. In no event shall any change in situs of the trust affect Original Head
Lessee's rights or obligations under the Amended and Restated Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed by
Owner Participant, a successor Owner Trustee may be appointed, and a corporation
may become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that
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Owner Participant has actual knowledge that Owner Trustee is not in compliance
with its covenants contained herein. No successor Owner Trustee shall be
appointed unless Lessee and Indenture Trustee shall have given written consent
thereto, which consent shall not be unreasonably withheld. Owner Participant
will not instruct Owner Trustee to terminate any Operative Document or take any
action thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Aircraft as contemplated hereby.
Lessee shall pay expenses on an after tax basis relating to the resignation or,
if requested by Lessee, the removal of Owner Trustee, provided that the Owner
Participant shall pay expenses relating to the removal of the Owner Trustee, if
such removal was solely at the request of the Owner Participant.
(e) The Trust Company agrees that if at any time it shall
obtain actual knowledge that it has ceased to be or will likely cease to be a
Citizen of the United States, it will promptly resign as Owner Trustee (if and
so long as such citizenship is necessary under such Federal Aviation Act or any
other law to permit the continued registration of the Aircraft in the name of
the Lessor or, if it is not necessary, if and so long as Owner Trustee's
citizenship would have any material adverse effect on any holder of Equipment
Notes, the Lessee or any Permitted Sublessee), effective upon the appointment of
the successor Owner Trustee in accordance with Section 10.1 of the Trust
Agreement.
SECTION 15. Certain Retained Rights and Releases. (a) Each of
Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to
and confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease and the Sublease Guaranty: (i) Lessee, Original Head
Lessee and Parent Guarantor shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable for
all of its obligations under Sections 10 and 13 of the Sublease, with respect to
the period up to (but excluding) the Restatement Date and each of Parent
Guarantor, Original Head Lessee and Lessee shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the
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<PAGE> 56
termination or expiration thereof (including, without limitation, any such
liability arising from and including the Restatement Date under the Sublease in
respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), (ii) all
rights, benefits, obligations and liabilities under the Sublease TIA (which
rights, benefits, obligations and liabilities are amended and restated as of the
Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall
remain liable to Sublessee under the Sublease and the Sublease Guaranty for
Sublessor's Liens (as therein defined); all of which rights, benefits,
obligations and liabilities shall expressly survive the termination of the
Sublease and the Sublease Guaranty. In furtherance of the foregoing, it is
agreed that (x) Original Head Lessee shall continue to be liable to the
Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens and (y) Parent Guarantor is hereby released from any and all obligations
and liabilities under the Sublease Guaranty, other than in respect of the
obligations and liabilities of the Original Head Lessee in respect of
Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner Participant
agree as among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: Lessee, and Owner
Trustee, Owner Participant and the other "Indemnitees" (as such term is defined
in the Sublease) other than Original Head Lessee and Parent Guarantor, shall
retain all rights, benefits, obligations and liabilities under the Sublease,
including that Sublessee shall remain liable for all of its obligations under
Sections 10 and 13 of the Sublease, with respect to the period up to (but
excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner
Participant shall retain all rights and liabilities under any provision of the
Sublease which by the express terms thereof survives the termination thereof
(including, without limitation, any such liability arising on or after the
Restatement Date under the Sublease in respect of the period up to (but
excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date), all of which rights, benefits, obligations
and liabilities shall expressly survive the termination of the Sublease. In
furtherance of the foregoing, it is agreed by Sublessee that the indemnities
contained in Sections 10 and 13 of the Sublease are expressly made for the
benefit of and shall be enforceable by each Indemnitee (as such term is defined
in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA
to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent
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<PAGE> 57
Guarantor shall, as of the Restatement Date, have no liabilities or obligations
under the "Operative Documents" (as defined in the Original Head Lease as in
effect immediately prior to (but excluding) the Restatement Date and excluding
the Head Lease TIA (which rights, benefits, obligations and liabilities are
amended and restated as of the Restatement Date)) and are released from all such
obligations and liabilities, except the Original Head Lessee and the Parent
Guarantor pursuant to the Parent Head Lease Guaranty (i) shall continue to be
liable to the parties hereto for the removal of any Sublessor's Liens and (ii)
(without releasing Sublessor as provided in the Sublease) each of the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Indenture Trustee and
the Owner Participant agree as among themselves and for the benefit of the other
"Indemnitees" (as such term is defined in the Original Head Lease) that all
rights, benefits, obligations and liabilities under Sections 7(c) and 7(d) of
the Participation Agreement with respect to the period up to (but excluding) the
Restatement Date and under any other provision of the Participation Agreement
which by the express terms thereof survives the termination thereof (including,
without limitation, any such liability arising from and including the
Restatement Date under the Participation Agreement in respect of the period up
to (but excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date) shall survive the termination of the
Participation Agreement, the Original Head Lease and the Parent Head Lease
Guaranty (the foregoing surviving rights, benefits, obligations and liabilities
of Parent Guarantor and Original Head Lessee, are, collectively, the "Retained
Head Lease Rights and Obligations"). In furtherance of the foregoing, the
parties hereto consent and agree that the Parent Guarantor is hereby released
from any and all "Obligations" under and as defined in the Parent Head Lease
Guaranty, except in respect of the Retained Head Lease Rights and Obligations
and except in respect of the Amended and Restated Head Lease TIA, the
"Obligations" in respect of which shall continue in full force and effect in
accordance with the Parent Head Lease Guaranty and are hereby ratified and
confirmed by the Parent Guarantor.
SECTION 16. Certain Additional Obligations of the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee,
Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and
agrees for the benefit of each other that it will be bound by the terms of the
other Operative Documents to which it or its applicable trustee is a party, and
comply with and perform its agreements, covenants and indemnities set forth in
the other Operative Documents to which it or its applicable trustee is a party,
as amended, supplemented or otherwise modified from time to time as permitted
hereby.
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<PAGE> 58
SECTION 17. Lessee Protection of Title. Each of the Owner
Trustee and the Indenture Trustee agrees to execute and deliver such documents
or other instruments as the Lessee may reasonably request to enable the Lessee
to perform its obligations under Section 15 of the Lease for the benefit of such
Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee,
Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and
Lessee (i) hereby irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York in New York
County, and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service
of process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP, Attention: John
Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New York 10022, as its
agent for service of process, and covenants and agrees that service of process
in any suit, action or proceeding may be made upon it at the office of such
agent or such other office of Parent Guarantor or such other agent, as from time
to time may be designated by Parent Guarantor in writing to Owner Trustee, Owner
Participant and Indenture Trustee. Original Head Lessee hereby generally
consents to service of process by registered mail, return receipt requested,
addressed to it at c/o GPA Corporation, 83 Wooster Heights Road, Danbury,
Connecticut 06810 or such other office of Original Head Lessee as from time to
time may be designated by Original Head Lessee in writing to Owner Trustee,
Owner Participant and Indenture Trustee. Owner Participant generally consents to
service of process by registered mail, return receipt requested,
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<PAGE> 59
addressed to it at ________________________________ or such other office of
Owner Participant as from time to time may be designated by Owner Participant in
writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee.
Owner Trustee generally consents to service of process by registered mail,
return receipt requested, addressed to it at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner
Trustee as from time to time may be designated by Owner Trustee in writing to
Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture
Trustee generally consents to service of process by registered mail, return
receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford,
Connecticut 06115 or such other office of Indenture Trustee as from time to time
may be designated in writing to Owner Participant, Original Head Lessee, Owner
Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has
not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the Original
Head Lessee of invoices therefor in reasonable detail prior to the Restatement
Date, all of the reasonable out-of-
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<PAGE> 60
pocket costs, fees and expenses incurred by the Lessee, the Owner Trustee, the
Owner Participant, the Pass Through Trustee, the Subordination Agent, the
Liquidity Provider, the Indenture Trustee and the Original Certificate Holders
in connection with the transactions contemplated by this Agreement, the other
Operative Documents, the Lease, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Underwriting Agreement
(except, in each case, as otherwise provided therein) shall be paid on or prior
to the Closing by the Original Head Lessee, including, without limitation:
(1) the reasonable fees, expenses and disbursements allocable
to the Equipment Notes issued under the Indenture of (A) Shipman &
Goodwin LLP, special counsel for the Pass Through Trustee, the
Subordination Agent and the Indenture Trustee, (B) Morris, James,
Hitchens & Williams, special counsel for the Owner Trustee, (C)
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City,
Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for
the Underwriters;
(2) the reasonable fees, expenses and disbursements of
Hunton & Williams, special counsel for the Owner
Participant;
(3) the fees, expenses and disbursements of Andrews & Kurth
L.L.P. and Latham & Watkins, special counsel for the Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and
the Subordination Agent;
(6) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code financing statements in the United
States of America; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred to
in this Section 21.
(c) The Lessee agrees to pay the amounts it is
obligated to pay under Section 21(j) of the Lease.
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<PAGE> 61
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations and
warranties were made to the Liquidity Provider directly. The terms of this
Agreement shall inure to the benefit of the Liquidity Provider, its successors
and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Original Head Lessee and its successors and permitted assigns, the Parent
Guarantor and its successors and permitted assigns, the Lessee and its
successors and permitted assigns, the Pass Through Trustee and its successors as
Pass Through Trustee (and any additional trustee appointed) under any of the
Pass Through Trust Agreements, the Indenture Trustee and its successors as
Indenture Trustee (and any additional Indenture Trustee appointed) under the
Indenture, the Subordination Agent and its successors as Subordination Agent
under the Intercreditor Agreement, the Owner Trustee and its successors as Owner
Trustee under the Trust Agreement, and the Owner Participant and its successors
and permitted assigns. No purchaser or holder of any Equipment Notes shall be
deemed to be a successor or assign of any holder of the Original Certificates.
(b) Upon the release of the Aircraft from the lien of the
Indenture and the termination of the Indenture pursuant to
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<PAGE> 62
and in accordance with Section 10.01 thereof, each requirement in the Operative
Documents that the consent of Indenture Trustee be obtained or that the
Indenture Trustee be given notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that this
Agreement shall be effective among all such parties on and as of the Restatement
Date.
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<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:_______________________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA SUB I, INC.
By:_______________________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:_______________________________________
Name:
Title:
Address: GPA House
Shannon, County Clare, Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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<PAGE> 64
WILMINGTON TRUST COMPANY, not in its individual
capacity, except as expressly provided herein, but
solely as Owner Trustee
By:_______________________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust Administration
[___________________________________]
By:_______________________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided herein, but
solely as Indenture Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 65
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided herein, but
solely as Subordination Agent
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided herein, but
solely as Pass Through Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 66
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1D, dated November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1E, dated November 26, 1996.
<PAGE> 67
SCHEDULE II to Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
- ------------ --------- -------- -------- --------
<S> <C> <C> <C> <C>
Class A $ 11,897,518 02-Jan-2009 6.85% $ 11,897,518
Class B $ 4,413,774 02-Jul-2005 6.93% $ 4,413,774
Class C $ 4,552,621 02-Jan-2002 6.86% $ 4,552,621
Class D $ 4,249,113 02-Jan-2002 8.16% $ 4,249,113
Class E $ 2,541,597 02-Jul-2002 10.50% $ 2,541,597
</TABLE>
<PAGE> 68
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115,
Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of
Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290.
<PAGE> 69
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1990 AWA-16]
TRANSFEREE'S PARENT GUARANTEE [GPA 1990 AWA-16], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, _________________________________, a Delaware
corporation ("Transferor"), is the Owner Participant under that certain
Refunding Agreement [GPA 1990 AWA-16], dated as of November 20, 1996 among
Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass
Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified
or supplemented from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the
benefit of Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms defined in
the Refunding Agreement are used herein as therein defined, unless otherwise
defined herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably
guarantees to Beneficiaries and their respective successors, endorsees,
transferees and assigns, the prompt and complete payment by Transferee when due
(whether at the stated maturity,
<PAGE> 70
by acceleration or otherwise) of, and the faithful performance of, and
compliance with, all payment obligations of Transferee under the Refunding
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party and each other Operative Document
to which Transferee is a party or by which either is bound (collectively, the
"Relevant Documents"), strictly in accordance with the terms thereof and the
timely performance of all other obligations of Transferee thereunder (such
payment and other obligations, the "Obligations"), and Guarantor further agrees
to pay any and all expenses (including, without limitation, all fees and
disbursements of counsel) that may be paid or incurred by Beneficiaries in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any
other guarantor or any other Person or received or collected by any Beneficiary
from Transferee, Guarantor, any other guarantor or any other person by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of
Guarantor hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or
observed by Transferee (whether affirmative or negative in character) shall not
be observed or performed, or if any amount payable by Transferee referred to in
Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor
shall promptly perform or observe or cause to be performed or observed each such
Obligation or undertaking and shall forthwith pay such amount at the place and
to the person or entity entitled thereto pursuant to the Relevant Documents
regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass
Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of
any of them shall have instituted any suit, action or proceeding or exhausted
its remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments
made by Guarantor hereunder or any setoff or application of funds of Guarantor
by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of
the rights of any Beneficiary against Transferee or any collateral, security or
guarantee or
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<PAGE> 71
right of set-off held by any Beneficiary for the payment of the Obligations, nor
shall Guarantor seek or be entitled to seek any reimbursement from Transferee in
respect of payments made by Guarantor hereunder, until all amounts and
performance owing to Beneficiaries by Transferee on account of the Obligations
are paid and performed in full.
4. Amendments, etc., with respect to the Obligations; Waiver
of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without notice
to or further assent by the Guarantor, any demand for payment or performance of
any of the Obligations made by any Beneficiary may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not
assign, convey or otherwise transfer to any person (a) any of its interest in
Transferee unless in connection therewith,
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<PAGE> 72
Guarantor assigns its rights and obligations hereunder to a guarantor which
meets the requirements of Section 10 of the Refunding Agreement; provided that
nothing contained in this Section 5 shall be construed to prohibit any merger,
consolidation or other corporate restructuring of Transferee or Guarantor so
long as the resulting corporation meets the requirements of Section 10 of the
Refunding Agreement and assumes the obligations of the corporation merged or
consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guarantee or acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Transferee
or the Guarantor with respect to the Obligations. The Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance (and not merely of
collectibility) without regard to (a) the validity, regularity or enforceability
of any Relevant Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Transferee against any Beneficiary,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Transferee or the Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of the Transferee for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Transferee or any other person or
entity or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Beneficiary to
pursue such other rights or remedies or to collect any payments from the
Transferee or any such other person or entity or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Transferee or any such other person or entity or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and
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<PAGE> 73
remedies, whether express, implied or available as a matter of law, of any
Beneficiary against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Beneficiaries, and their respective successors, endorsees, transferees
and assigns, until all of the Obligations and the Obligations of the Guarantor
under this Agreement shall have been satisfied by payment and performance in
full. The Guarantor further agrees that, without limiting the generality of this
Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by
applicable law from exercising its remedies (or any of them) against the
Transferee under any Operative Document, such Beneficiary (or any assignee
thereof) shall be entitled to receive hereunder from the Guarantor, upon demand
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any beneficiary upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made. The Guarantor shall not commence any "case" (as
defined in Title 11 of the United States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction or withholding,
and shall be made in U.S. Dollars. If any payment hereunder is subject to
deduction or withholding, Guarantor shall pay an additional amount such that,
after deduction of all amounts required to be deducted or withheld, the net
amount actually received will equal the amount that would have been received had
such deduction or withholding not been required.
9. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged;
- 5 -
<PAGE> 74
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Guarantee, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the
creation or imposition of any lien on any of the properties or revenues
of the Guarantor pursuant to any requirement of law or contractual
obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or governmental authority and no
consent of any other person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee;
(f) no litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
against any of its properties or revenues (i) with respect to this
Guarantee or any of the transactions contemplated hereby or (ii) that
could have a material adverse effect on the business, operations,
property or financial or other condition of the Guarantor;
[(g) the balance sheet of the Guarantor as at
_________________ and the related statement of income and retained
earnings for the fiscal year then ended (copies of which have
heretofore been furnished to each Beneficiary) have been prepared in
accordance with generally accepted accounting principles applied
consistently throughout the period involved, are complete and correct
and present fairly the financial condition of the Guarantor as at such
date and the results of its operations for such fiscal year; since
such date there has been no material adverse change in the business,
operations, property or financial or other condition of the Guarantor;
the Guarantor has no material contingent obligation, contingent
liability or liability for
- 6 -
<PAGE> 75
taxes, long-term lease or unusual forward or long-term commitment that
is not reflected in the foregoing statements or in the notes thereto;
and](1)
(h) the Guarantor is [type of legal personality] with a
[combined capital, surplus and undivided profits] [tangible net worth]
of at least $60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by
any act (except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any
Beneficiary, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire
agreement of Guarantor with respect to the subject matter hereof and there are
no promises or representations by any Beneficiary relative to the subject matter
hereof not reflected herein.
13. Amendments and Waivers. None of the terms or provisions of
this Guarantee may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this
Guarantee are for convenience of reference only and not to
- --------
(1) This representation is not applicable if Transferee is a wholly-owned
subsidiary of the Owner Participant.
- 7 -
<PAGE> 76
affect the construction hereof or be taken into consideration in the
interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing or by
telegraph, telex or telecopy and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, two days after deposit in the postal system, first class
postage pre-paid, or, in the case of telegraphic notice, when sent, answerback
received, addressed to (a) in the case of the Guarantor, the address provided on
the signature page hereof, and (b) in the case of any Beneficiary, the address
provided for such party in the Refunding Agreement.
- 8 -
<PAGE> 77
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and the year first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
- 9 -
<PAGE> 78
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1990 AWA-16]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1990 AWA-16]
("Assignment") dated as of _____________, between ______________, a ___________
corporation ("Assignor") and ________________, a __________ corporation
("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee,
Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned
below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer
by Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA Sub I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
____________________________, Fleet National Bank, as Subordination Agent, and
Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement"), (ii) the Trust Agreement
identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the
Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the
Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as
defined in the Refunding Agreement) and (b) the assumption by Assignee of the
obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the meaning ascribed thereto in the Refunding Agreement.
For purposes of this Assignment, the defined term "Operative Document" shall
have the meaning ascribed thereto in the Refunding Agreement and shall be deemed
to include the Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned,
transferred and set over, and does hereby sell, convey, assign, transfer and set
over, unto Assignee, as of the date hereof, all of its right, title and interest
in, under and with respect to the Refunding Agreement, the Trust Agreement, the
Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the
other Operative Documents to which Assignor is a party or any other contract,
agreement, document or instrument relating to the Trust Estate by which Assignor
is bound, and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
<PAGE> 79
rights of Assignor as have accrued to Assignor prior to the date hereof
(including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust Agreement as of a date prior
to such date and the right to receive any indemnity payment pursuant to the
Refunding Agreement or the Lease with respect to events occurring prior to such
date).
3. Assumption. Assignee hereby undertakes all of the duties
and obligations of Assignor whenever accrued (other than duties and obligations
of Assignor required to be performed by it on or prior to the date hereof under
the Operative Documents to which Owner Participant is a party and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound), pursuant to the Trust Agreement
and any of the other Operative Documents by which Assignor is bound or any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound, and hereby confirms that
it shall be deemed a party to the Trust Agreement and shall be bound by each of
the other Operative Documents and each other contract, agreement, document or
other instrument relating to the Trust Estate to which Assignor is a party or by
which it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the
within assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
- 2 -
<PAGE> 80
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay over
to Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Assignor that, under Section 2 hereof, belong to Assignee, and
Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents that it is
acquiring the Trust Estate interests and other interests hereby assigned to it
without a view to the distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents and
warrants that:
(a) it has all requisite power and authority and legal right
to enter into and carry out the transactions contemplated hereby and to
carry out and perform the transactions of Owner Participant as
contemplated by the Operative Documents;
(b) on the date hereof it is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act
and the rules and regulations of the FAA thereunder;
(c) on and as of the date hereof, the representations and
warranties of Owner Participant set forth in Section 9 of the Refunding
Agreement and as set forth in any other Agreement to which Owner
Participant is a party are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of the
Refunding Agreement;
(e) Assignee or its guarantor has a [combined capital, surplus
and undivided profits] [tangible net worth] of not less than
$60,000,000.
- 3 -
<PAGE> 81
9. Governing Law. This Assignment and Assumption Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:________________________________
Title:
[ASSIGNEE]
By:________________________________
Title:
- 4 -
<PAGE> 82
EXHIBIT C to
REFUNDING AGREEMENT
LIST OF COUNTRIES
Australia
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Japan
Luxembourg
Netherlands
New Zealand
Norway
Singapore
South Korea
Sweden
Switzerland
United Kingdom
<PAGE> 83
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 84
ANNEX A to REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1990 AWA-16] No. 2 dated
November 26, 1996 (the "Trust Agreement Supplement") between
the Owner Trustee and the Owner Participant, amending the
Trust Agreement, which Trust Agreement Supplement was filed
with the FAA at 12:20 p.m., C.S.T. on November 26, 1996;
(b) First Amended and Restated Trust Indenture and Security
Agreement [GPA 1990 AWA-16] dated as of November 26, 1996 (the
"Amended and Restated Indenture") between the Owner Trustee
and the Indenture Trustee, amending and restating the Original
Indenture with attached thereto Trust Agreement and Indenture
Supplement No. 2 [GPA 1990 AWA-16] dated November 26, 1996
(the "Indenture Supplement") with respect to the Aircraft,
which Amended and Restated Indenture with the Indenture
Supplement attached was filed with the FAA at 12:21 p.m.,
C.S.T. on November 26, 1996;
(c) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of November 26, 1996 (the "Lease
Amendment") among the Original Head Lessee, as assignor, the
Owner Trustee, as lessor, the Lessee, as successor lessee, and
the Indenture Trustee, which (i) assigns all right, title and
interest of the Original Head Lessee in and to the Original
Head Lease to the Lessee, (ii) terminates the Sublease and
(iii) releases the Sublease Collateral Assignment, which Lease
Amendment was filed with the FAA at 12:22 p.m., C.S.T. on
November 26, 1996; and
(d) Amended and Restated Aircraft Lease Agreement [GPA 1990
AWA-16] dated as of September 21, 1990 and amended and
restated as of November 26, 1996 (the "Amended and Restated
Lease") between the owner Trustee, as lessor, and the Lessee,
as successor lessee, amending and restating the Original Head
Lease, with Lease Supplement [GPA 1990 AWA-16] No. 3 dated
November 26, 1996 (the "Lease Supplement") between the Owner
Trustee, as lessor, and the Lessee, as successor lessee, with
respect to the Aircraft, attached thereto, which Amended and
Restated Lease with the Lease Supplement attached was filed
with the FAA at 12:23 p.m., C.S.T. on November 26, 1996.
Trust Agreement
Trust Agreement [GPA 1990 AWA-16] dated as of September 21,
1990 between __________________________, as owner
<PAGE> 85
participant, and Wilmington Trust Company, as owner trustee, as supplemented by
Trust Agreement Supplement [GPA 1990 AWA-16] No. 1 dated September 28, 1990.
Original Indenture
Trust Indenture and Security Agreement [GPA 1990 AWA- 16]
dated as of September 21, 1990 between Wilmington Trust Company, as trustee
under Trust Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, and
Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut, National Association, and The Connecticut National
Bank), as indenture trustee, which was recorded by the Federal Aviation
Administration on September 28, 1990 and assigned Conveyance No. P92334, as
supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
Trust Indenture
<S> <C> <C> <C>
Supplement No. 1 09/28/90 09/28/90 P92334
Amendment No. 1 to
Trust Indenture and
Security Agreement
[GPA 1990 AWA-16] 03/27/92 05/18/92 EE003012
Amendment No. 2 to
Trust Indenture and
Security Agreement as of
[GPA 1990 AWA-16] 07/29/93 08/04/93 FS9676
</TABLE>
Original Head Lease
Aircraft Lease Agreement [GPA 1990 AWA-16] dated as of
September 21, 1990 between Wilmington Trust Company, as trustee under Trust
Agreement [GPA 1990 AWA-16] dated as of September 21, 1990, as lessor, and GPA
Leasing USA Sub I, Inc., as lessee, which was recorded by the Federal Aviation
Administration on September 28, 1990 and assigned Conveyance No. P92335, as
supplemented by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
Lease Supplement
[GPA 1990 AWA-16]
<S> <C> <C> <C>
No. 1 09/28/90 09/28/90 P92335
Lease Supplement
[GPA 1990 AWA-16]
No. 2 12/31/91 (which was not filed for
recordation with the FAA)
</TABLE>
- 2 -
<PAGE> 86
Sublease
Aircraft Sublease Agreement [GPA 1990 AWA-16] dated as of
September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and
America West Airlines, Inc., as sublessee, which was recorded by the Federal
Aviation Administration on September 28, 1990 and assigned Conveyance No.
P92336, as supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
Sublease Supplement
<S> <C> <C> <C>
No. 1 09/28/90 09/28/90 P92336
Amendment No. 1 to
Aircraft Sublease
Agreement [GPA 1990 as of
AWA-16] 08/26/91 09/11/91 Y36535
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease [GPA 1990 AWA-16] dated as of September
21, 1990 between GPA Leasing USA Sub I, Inc., as assignor, and Wilmington Trust
Company, as trustee under Trust Agreement [GPA 1990 AWA-16] dated as of
September 21, 1990, as assignee, which was attached to and recorded as one
instrument with the Sublease on September 28, 1990 and assigned Conveyance No.
P92336.
- 3 -
<PAGE> 1
Exhibit 4.19
------------------------------------------------------------------------------
REFUNDING AGREEMENT
[GPA 1991 AWA-E1]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
--------------------------------,
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
------------------------------------------------------------------------------
Secured Equipment Notes Covering
One IAE International Aero Engines AG V2500-A1 Engine
Manufacturer's Serial No. V0025
Leased by America West Airlines, Inc.
------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
SECTION 1. Purchase of Equipment Notes; Refunding......................... 5
SECTION 2. Equipment Notes................................................ 7
SECTION 3. Conditions Precedent........................................... 7
SECTION 4. Certain Conditions Precedent to the
Obligations of the Original Head Lessee
and the Parent Guarantor; Certain
Conditions Precedent to the Obligations
of the Lessee; Conditions Precedent
with respect to the Pass Through
Trustee.................................................... 15
SECTION 5. Amendment and Restatement of the
Original Indenture......................................... 18
SECTION 6. Amendment and Restatement of the
Original Lease............................................. 19
SECTION 7. Termination of the Participation
Agreement; Termination of Sublease,
etc........................................................ 19
SECTION 8. Representations and Warranties of the
Lessee..................................................... 19
SECTION 9. Representations and Warranties................................. 24
SECTION 10. Transfer of Owner Participant's
Interest................................................... 39
SECTION 11. [Reserved]..................................................... 42
SECTION 12. Quiet Enjoyment................................................ 42
SECTION 13. Liens.......................................................... 43
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent
Guarantor, Trust Company, Owner Trustee
and Owner Participant...................................... 45
SECTION 15. Certain Retained Rights and Releases........................... 48
- i -
<PAGE> 3
PAGE
----
SECTION 16. Certain Additional Obligations of the
Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee...................... 50
SECTION 17. Lessee Protection of Title..................................... 50
SECTION 18. Jurisdictional and Related Matters............................. 50
SECTION 19. Limitation on Recourse......................................... 51
SECTION 20. Notices........................................................ 52
SECTION 21. Expenses....................................................... 52
SECTION 22. Reliance of Liquidity Provider................................. 53
SECTION 23. Miscellaneous.................................................. 53
SECTION 24. Governing Law.................................................. 54
SECTION 25. Effectiveness.................................................. 54
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1991 AWA-E1]
REFUNDING AGREEMENT [GPA 1991 AWA-E1] (this "Agreement"), dated as
of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) _______________________________,
a Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY,
a Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
five separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank), a national banking
association, not in its individual capacity except as otherwise expressly
provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under
the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used herein
in capitalized form shall have the meanings attributed thereto in the Indenture
(whether set forth therein or by reference to another document) as if the
Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the Owner
Participant, Sanwa International PLC, as Lender (and predecessor in interest to
the Mitsubishi Trust and Banking Corporation, New York Branch, and The Hachijuni
Bank, Ltd., New York Branch, collectively, the "Lenders"), the Owner Trustee and
the Indenture Trustee entered into the Participation Agreement [GPA 1991
AWA-E1], dated as of March 15, 1991 (as amended, supplemented or otherwise
modified from time to time, the "Participation Agreement"), providing for the
financing of one IAE International Aero Engines AG V2500-A1 Engine (the
"Engine");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the
<PAGE> 5
Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA
1991 AWA-E1], dated as of March 15, 1991, as supplemented by Trust Indenture
Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1 to Trust
Indenture and Security Agreement dated March 27, 1992, and as further amended by
Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29,
1993 (as so amended, supplemented or otherwise modified to the date hereof, the
"Original Indenture"), pursuant to which the Owner Trustee issued loan
certificates substantially in the form set forth in Section 2.02 thereof (the
"Original Certificates") to the Lenders as evidence of the indebtedness then
being made by the Owner Trustee to finance a portion of the purchase price of
the Engine;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Engine Lease Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991,
as supplemented by Lease Supplement [GPA 1991 AWA-E1] No. 1 dated March 27, 1991
(as so supplemented, the "Original Lease"), whereby, subject to the terms and
conditions set forth therein, the Owner Trustee agreed to lease to the Original
Head Lessee, and the Original Head Lessee agreed to lease from the Owner
Trustee, the Engine commencing on the Delivery Date (as therein defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1991 AWA-E1] dated as of March 15, 1991 (the "Parent Head Lease
Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent
Guarantor guaranteed all of the obligations of the Original Head Lessee under
the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991, as
supplemented by Trust Agreement Supplement [GPA 1991 AWA-E1] No. 1 dated March
27, 1991 (as amended, supplemented or otherwise modified to the date hereof, the
"Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.1 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1991 AWA-E1],
dated as of March 15, 1991 (as amended, supplemented or otherwise modified to
the date hereof, the "Head Lease TIA");
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<PAGE> 6
WHEREAS, prior to the execution and delivery of the Participation
Agreement, the Original Head Lessee in its capacity as sublessor (in such
capacity, the "Sublessor") and America West Airlines, Inc. in its capacity as
sublessee (in such capacity, the "Sublessee") entered into the Engine Sublease
Agreement [GPA 1990 AWA-E1] dated as of December 12, 1990, as supplemented by
Sublease Supplement No. 1 [GPA 1990 AWA-E1] dated February 8, 1991, as amended
by Amendment No. 1 to Engine Sublease Agreement [GPA 1990 AWA-E1] dated as of
August 26, 1991 (as amended, supplemented or otherwise modified to the date
hereof, the "Sublease"), whereby, subject to the terms and conditions set forth
therein, the Sublessor agreed to sublease to the Sublessee, and the Sublessee
agreed to sublease from the Sublessor, the Engine commencing on the Delivery
Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991 (as
amended, modified or otherwise supplemented to the date hereof, the "Sublease
TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease [GPA 1991 AWA-E1] dated as of March 15, 1991 (as amended, modified or
otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee and
the Indenture Trustee will amend and restate the Original Indenture as the First
Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E1],
dated as of the Restatement Date, as supplemented by Trust Indenture Supplement
No. 2 dated the Restatement Date (the "First Amended and Restated Indenture"
and, the First Amended and Restated Indenture as so amended and restated, the
"Indenture"), under which Indenture the Owner Trustee will issue secured
equipment notes substantially in the form set forth in Section 2.01 thereof (the
"Equipment Notes") in five series, the proceeds from the issuance and sale of
which will be applied in part to the prepayment in full of the Original
Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
Original Lease as the Amended and Restated Lease (as so amended and restated,
the "Lease");
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<PAGE> 7
WHEREAS, at the Closing, the Owner Participant and the Owner Trustee
will enter into Trust Agreement Supplement [GPA 1991 AWA-E1] No. 2 ("Trust
Supplement No. 2"), amending the Original Trust Agreement (as so amended and as
further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the Original Head
Lessee will enter into the Amended and Restated Head Lease Tax Indemnification
Agreement, amending and restating the Head Lease TIA (as so amended and
restated, the "Amended and Restated Head Lease TIA") and the Sublessor and the
Sublessee will enter into the Amended and Restated Sublease Tax Indemnification
Agreement amending and restating the Sublease TIA (as so amended and restated,
the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of
the Pass Through Trust Supplements set forth in Schedule I hereto (collectively,
the "Pass Through Trust Agreements"), on the Restatement Date, five separate
grantor trusts (collectively, the "Pass Through Trusts" and, individually, a
"Pass Through Trust") will be created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale by
each Pass Through Trust of pass through certificates pursuant thereto
(collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the Certificates
by each Pass Through Trust will be applied by the Pass Through Trustee at the
Closing to purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Equipment Notes bearing the same interest rate as the
Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch (the
"Liquidity Provider") will enter into three revolving credit agreements (each, a
"Liquidity Facility"), for the benefit of the Holders of Equipment Notes of each
of three Pass Through Trusts, with the Subordination Agent, as agent for the
Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the
Pass Through Trustee, the Liquidity Provider and the Subordination Agent will
enter into the Intercreditor Agreement, dated as of the Restatement Date (the
"Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination Agent
pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts;
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<PAGE> 8
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject to
the satisfaction or waiver of the conditions set forth herein, on November 26,
1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as a payment of
Supplemental Rent under the Sublease all accrued and unpaid Rent under the
Sublease up to the Restatement Date, if any, (less any amounts for which
Sublessee is indemnified by Sublessor) and (B) the Original Head Lessee
shall pay to the Owner Trustee, as a payment of Supplemental Rent under
the Original Lease, an amount equal to the accrued and unpaid interest on
the Original Certificates up to but not including the Restatement Date
plus an amount (the "Prepayment Amount") equal to all other amounts due to
the holders of the Original Certificates under the Original Indenture and
the other Operative Documents (as defined in the Original Indenture)
payable on the Restatement Date under Section 2.12 of the Original
Indenture;
(ii) the Pass Through Trustee for each Pass Through Trust shall pay
to the Owner Trustee the aggregate purchase price of the Equipment Notes
being issued to such Pass Through Trustee as set forth in clause (xii)
below;
(iii) the Owner Trustee (to the extent of proceeds received under
clauses (i) and (ii)) shall pay to the Indenture Trustee for the benefit
of the holders of the Original Certificates an amount equal to the
aggregate principal amount of the Original Certificates outstanding on the
Restatement Date, together with accrued and unpaid interest on the
Original Certificates up to but not including the Restatement Date plus
the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the holders of the
Original Certificates the amounts of principal, interest, Break Funding
Cost, if any, described in clause (iii) above, owing to them on the
Restatement Date with respect to the Original Certificates as a prepayment
of the Original Certificates;
(v) the Indenture Trustee shall receive the Original Certificates
for cancellation;
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<PAGE> 9
(vi) the Owner Trustee and the Indenture Trustee shall enter into
the Indenture (including Trust Indenture Supplement No. 2);
(vii) the Original Head Lessee, the Sublessee, the Owner Trustee and
the Indenture Trustee shall enter into Lease Amendment No. 1;
(viii) the Owner Participant and the Trust Company shall enter into
Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner Participant shall enter
into the Amended and Restated Head Lease TIA and the Sublessor and the
Sublessee shall enter into the Amended and Restated Sublease TIA;
(x) the Original Head Lessee, GPA Leasing USA Sub I, Inc., the
Parent Guarantor and the Lessee shall enter into an agreement in form and
substance reasonably satisfactory to each, inter alia, confirming the
termination of certain rights which the Parent Guarantor has to "put"
engines to the Lessee and the obligation of the Lessee to accept and lease
such engines (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of its affiliates and
the Lessee will enter into an agreement (the "Deed of Indemnity") pursuant
to which the Parent Guarantor and/or one or more of its affiliates, on the
one hand, and the Lessee, on the other, will indemnify each other with
respect to certain information included in the Prospectus and the
Registration Statement (as such terms are defined in the Underwriting
Agreement) (the "Prospectus" and the "Registration Statement",
respectively); and
(xii) the Owner Trustee shall issue, pursuant to Article II of the
Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Equipment Notes of the
maturity and aggregate principal amount, bearing the interest rate and for
the purchase price set forth on Schedule II hereto opposite the name of
such Pass Through Trust.
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) The closing (the "Closing") of the transactions described in
this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New
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<PAGE> 10
York, New York 10005, on the Restatement Date, or at such other place as the
parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated hereby, the
Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent Guarantor and the
Lessee have entered into the Underwriting Agreement, dated as of November 20,
1996 (the "Underwriting Agreement"), among such Persons and Morgan Stanley &
Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and Salomon Brothers Inc
(collectively, the "Underwriters"), and, subject to the terms and conditions
hereof, the Lessee will enter into each of the Pass Through Trust Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be payable as
to principal in accordance with the terms of the Indenture, and the Equipment
Notes shall provide for a fixed rate of interest per annum and shall contain the
terms and provisions provided for the Equipment Notes in the Indenture. The
Owner Trustee shall execute, and the Indenture Trustee shall authenticate and
deliver to the Pass Through Trustee for each Pass Through Trust, a principal
amount of Equipment Notes bearing the interest rate set forth opposite the name
of such Pass Through Trust on Schedule II hereto, which Equipment Notes in the
aggregate shall be in the principal amounts set forth on Schedule II hereto.
Subject to the terms hereof, of the Pass Through Trust Agreements and of the
other Operative Documents, all such Equipment Notes shall be dated and
authenticated as of the Restatement Date and shall bear interest therefrom,
shall be registered in such names as shall be specified by the Subordination
Agent and shall be paid in the manner and at such places as are set forth in the
Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass Through
Trustee to make the payments described in Section 1(a)(ii) and the obligations
of the Owner Trustee to make the payments described in Section 1(a)(iii) and the
obligations of each of the Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee to participate in the transactions
contemplated by this Agreement on the Restatement Date are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent (except that paragraphs (a), (f) and (j) shall not be conditions
precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and
(l) shall not be conditions precedent to the obligations of the Owner
Participant hereunder and paragraphs (e) and (k) shall
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<PAGE> 11
not be conditions precedent to the obligations of the Indenture Trustee
hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes to the
Indenture Trustee for authentication, and the Indenture Trustee shall have
authenticated such Equipment Notes and shall have tendered the Equipment
Notes to the Subordination Agent on behalf of the Pass Through Trustee in
accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of the
following documents and the Indenture Trustee shall have received executed
counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated Lease
and Lease Supplement No. 2;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and Trust
Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements and each Pass
Through Trust Supplement set forth in Schedule I hereto;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the Class A, Class B
and Class C Trusts (as defined in the Intercreditor
Agreement).
(c) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received the following:
(1) an incumbency certificate of each of the Original Head
Lessee, the Lessee and the Parent Guarantor as to the person or
persons authorized to execute and deliver this Agreement and each of
the other documents to be executed on behalf of such Person in
connection with the transactions contemplated hereby (including,
without limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
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<PAGE> 12
(2) a copy of the resolutions of the board of directors of
each of the Original Head Lessee, the Lessee and the Parent
Guarantor or the applicable committee thereof, certified by the
Secretary or an Assistant Secretary of such Person, duly authorizing
the transactions contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed and
delivered on behalf of such Person in connection with the
transactions contemplated hereby;
(3) a copy of the certificate of incorporation of each of the
Original Head Lessee and the Lessee, certified by the Secretary of
State of its state of incorporation, a copy of the by-laws of each
of the Original Head Lessee and the Lessee, certified by the
Secretary or Assistant Secretary of such Person, and a certificate
or other evidence from the Secretary of State of its state of
incorporation, dated as of a date reasonably near the Restatement
Date, as to its due incorporation and good standing in such state;
and
(4) a copy of the Memorandum and Articles of Association of
the Parent Guarantor certified to be true and correct by the
Secretary or an Assistant Secretary of the Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case of
(3) below, a certificate signed by an authorized officer of the Lessee
and, in the case of (1) and (2) below, a certificate signed by an
authorized officer of the Original Head Lessee, dated the Restatement
Date, certifying that:
(1) the Original Lease and the Original Indenture have each
been duly recorded with the FAA pursuant to the sections of Title 49
of the United States Code relating to aviation (the "Federal
Aviation Act");
(2) Lease Amendment No. 1, the Amended and Restated Lease,
Lease Supplement No. 2, the First Amended and Restated Indenture,
Trust Indenture Supplement No. 2 and Trust Supplement No. 2 covering
the Engine shall have been duly filed for recordation with the FAA
pursuant to the Federal Aviation Act; and
(3) the representations and warranties contained herein of the
Lessee are correct as of the Restatement Date, except to the extent
that such representations and warranties relate solely to an earlier
date (in
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<PAGE> 13
which case such representations and warranties were correct on and
as of such earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on behalf
of the Indenture Trustee in connection with the transactions
contemplated hereby (including, without limitation, each of the
documents referred to herein) and as to the signatures of such
person or persons;
(2) a copy of the resolutions of the board of directors of the
Indenture Trustee, certified by the Secretary, an Assistant
Secretary or other appropriate officer of the Indenture Trustee,
duly authorizing the transactions contemplated hereby and the
execution, delivery and performance of each of the documents
required to be executed and delivered on behalf of the Indenture
Trustee in connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary, an Assistant
Secretary or other appropriate officer of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Restatement Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Restatement
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement
and each of the other documents to be executed on behalf of the
Owner Trustee in connection with the transactions contemplated
hereby (including, without limitation, each of
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<PAGE> 14
the documents referred to herein) and as to the signatures of such
person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner Trustee, certified by the Secretary or an Assistant Secretary
of the Owner Trustee, duly authorizing the transactions contemplated
hereby and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of the
Owner Trustee in connection with the transactions contemplated
hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the Owner
Trustee, dated the Restatement Date, certifying that the
representations and warranties contained herein of the Owner Trustee
are correct as though made on and as of the Restatement Date, except
to the extent that such representations and warranties relate solely
to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(g) The Pass Through Trustee, the Indenture Trustee and the Owner
Trustee each shall have received the following:
(1) an incumbency certificate of the Owner Participant as to
the person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on behalf
of the Owner Participant in connection with the transactions
contemplated hereby (including, without limitation, each of the
documents referred to herein) and as to the signatures of such
person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner Participant or the applicable authority designated by the
board of directors thereof, certified by the Secretary or an
Assistant Secretary of the Owner Participant, duly authorizing the
transactions contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed and
delivered on behalf of the Owner Participant in connection with the
transactions contemplated hereby;
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<PAGE> 15
(3) a copy of the certificate of incorporation of the Owner
Participant, certified by the Secretary of State of its state of
incorporation, a copy of the by-laws of the Owner Participant,
certified by the Secretary or Assistant Secretary of the Owner
Participant, and a certificate or other evidence from the Secretary
of State of its state of incorporation, dated as of a date
reasonably near the Restatement Date, as to its due incorporation
and good standing in such state; and
(4) a certificate signed by an authorized representative of
the Owner Participant, dated the Restatement Date, certifying that
the representations and warranties contained herein of the Owner
Participant are correct as though made on and as of the Restatement
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the Lessee
a report from Willis Corroon in substantially the form of Exhibit D
attached hereto.
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion
addressed to it from (i) Latham & Watkins, special counsel for the Lessee,
(ii) Andrews & Kurth L.L.P., special counsel for the Lessee, (iii) the
Senior Vice President-Legal Affairs of Lessee and (iv) Lewis & Roca,
special Arizona counsel for the Lessee, in each case in form and substance
satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the Owner
Participant each shall have received an opinion addressed to it from
Morris, James, Hitchens & Williams, special counsel for the Owner Trustee,
in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from
Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the
Subordination Agent and the Pass Through Trustee, in each case in form and
substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the Owner
Trustee each shall have received an opinion addressed to it from (i)
Hunton & Williams, special counsel
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<PAGE> 16
for the Owner Participant and (ii) in-house counsel for the Owner
Participant, in each case in form and substance satisfactory to each of
them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case, special
counsel for the Liquidity Provider, and (ii) in-house counsel for the
Liquidity Provider, in each case in form and substance satisfactory to the
Pass Through Trustee, the Owner Trustee and the Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Daugherty, Fowler & Peregrin, special counsel in
Oklahoma City, Oklahoma, in form and substance satisfactory to each of
them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from Paul, Hastings, Janofsky & Walker LLP, special New
York counsel for the Original Head Lessee and the Parent Guarantor, in
form and substance satisfactory to each of them.
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an opinion
addressed to it from McCann FitzGerald, special Irish counsel for the
Parent Guarantor, in form and substance satisfactory to each of them.
(q) The Original Head Lessee, the Lessee, GPA Leasing USA Sub I,
Inc. and the Parent Guarantor shall have entered into the Underwriting
Agreement and the Lessee shall have entered into each of the Pass Through
Trust Agreements, the Certificates shall have been issued and sold
pursuant to the Underwriting Agreement and the Pass Through Trust
Agreements, and the Underwriters shall have transferred to the Pass
Through Trustee in immediately available funds an amount equal to the
aggregate purchase price of the Equipment Notes to be purchased from the
Owner Trustee.
(r) The Original Head Lessee and the Owner Participant shall each
have executed and delivered to the other the Amended and Restated Head
Lease TIA.
(s) The Sublessor and the Sublessee shall each have executed and
delivered to the other the Amended and Restated Sublease TIA.
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<PAGE> 17
(t) No change shall have occurred after the date of this Agreement
in applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal
for the Pass Through Trustee to make the payments described in Section
1(a)(ii) or for the Lessee, the Indenture Trustee, the Owner Trustee or
the Owner Participant or any other party hereto to participate in the
transactions contemplated by this Agreement on the Restatement Date.
(u) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in connection
with the Pass Through Trustee's making of the payments described in
Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's
participation in the transactions contemplated by this Agreement on the
Restatement Date shall have been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment and
continuation statement or statements covering all of the security
interests created by or pursuant to the Indenture that are not covered by
the recording system established by the Federal Aviation Act shall have
been executed and delivered by the Original Head Lessee, the Lessee, the
Indenture Trustee and the Owner Trustee, as the case may be, and such
financing, termination, amendment and continuation statement or statements
or documents to the same purposes shall have been duly filed in all places
necessary or advisable, and any additional Uniform Commercial Code
financing, termination, amendment and continuation statements deemed
advisable by the Original Head Lessee, the Lessee, the Owner Participant
or the Indenture Trustee shall have been executed and delivered by the
Original Head Lessee, the Lessee, the Indenture Trustee or the Owner
Trustee, as the case may be, and duly filed in all places advisable.
(w) No change shall have occurred after the date of this Agreement
in applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would adversely
affect the tax consequences of the transactions contemplated by this
Agreement to the Owner Participant, the Owner Trustee or any of their
respective Affiliates.
(x) The Owner Trustee shall have received a letter of credit in the
amount of $200,000 from the Lessee in the form of Exhibit D-2 to the
Lease.
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<PAGE> 18
(y) The Owner Participant shall have received any other documents
and evidence as the Owner Participant or its counsel may request.
Promptly following the recording of Lease Amendment No. 1, the
Amended and Restated Lease (including Lease Supplement No. 2) and the First
Amended and Restated Indenture (including Trust Indenture Supplement No. 2)
pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2,
the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and
Trust Supplement No. 2.
SECTION 4. Certain Conditions Precedent to the Obligations of the
Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent to
the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
(i) Each of the Original Head Lessee and the Parent Guarantor shall
have received counterparts of the following documents executed by each of
the parties thereto other than the Original Head Lessee and the Parent
Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated Lease
and Lease Supplement No. 2;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination statements relating
to the Original Head Lease executed by the Owner Trustee
and/or the Indenture Trustee and such other releases
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<PAGE> 19
and terminations as it may reasonably request; and
(9) that certain letter agreement dated as of the
Restatement Date relating to Stipulated Loss Values with
respect to the Amended and Restated Lease (the "SLV
Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent Guarantor shall
have received originals of the following documents:
(1) the incumbency certificate of the Lessee referred to in
Section 3(c)(1);
(2) the resolutions of the Lessee referred to in Section
3(c)(2);
(3) the documents referred to in Section 3(e), Section 3(f)
and Section 3(g);
(4) the opinions referred to in Section 3(i), Section 3(j),
Section 3(k), Section 3(l), Section 3(m) and Section
3(n), in each case addressed to each of the Original
Head Lessee and the Parent Guarantor and in form and
substance satisfactory to each of them;
(5) the opinions of Paul, Hastings, Janofsky & Walker LLP
and Milbank, Tweed, Hadley & McCloy with respect to
certain matters relating to and described in the
Prospectus, in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form and
substance reasonably satisfactory to each of them; and
(6) the report referred to in Section 3(h) addressed to each
of the Original Head Lessee and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent Guarantor
shall have received such other documents and evidence with respect to each
other party hereto as each of them or its counsel may reasonably request
in order to establish the due consummation of the transactions
contemplated by this Agreement and the "Refunding Agreements" (as defined
in the Registration Statement), the taking of all necessary action in
connection therewith and compliance with the conditions herein or therein
set forth.
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<PAGE> 20
(b) The obligations of the Lessee to make the payment described in
Section 1(a)(i)(A) (if any), to participate in the transactions contemplated by
this Agreement on the Restatement Date, and to execute and deliver each of the
Pass Through Trust Agreements are subject to the fulfillment, prior to or on the
Restatement Date, of the following conditions precedent:
(i) The Lessee shall have received counterparts of the following
documents executed by each of the parties thereto other than Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated Lease
and Lease Supplement No. 2;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination statements relating
to the Sublease executed by the Original Head Lessee;
and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the
following documents:
(1) the incumbency certificate of the Original Head Lessee
and Parent Guarantor referred to in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee and Parent
Guarantor referred to in Section 3(c)(2);
(3) the documents referred to in Section 3(e), Section 3(f)
and Section 3(g);
(4) the opinions referred to in Section 3(j), Section 3(k),
Section 3(l), Section 3(m), Section 3(n), Section 3(o)
and Section 3(p), in each case addressed to Lessee and
in form and substance satisfactory to Lessee; and
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<PAGE> 21
(5) the opinions of Paul, Hastings, Janofsky & Walker LLP
and Milbank, Tweed, Hadley & McCloy with respect to
certain matters relating to and described in the
Prospectus, in each case addressed to Lessee and in form
and substance reasonably satisfactory to Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its counsel
may reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement and the "Refunding Agreements"
(as defined in the Registration Statement), the taking of all necessary
action in connection therewith and compliance with the conditions herein
and therein set forth.
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass Through Trust Agreements of the Pass Through
Trustee are correct as of the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary action in connection therewith and compliance with the conditions
herein set forth.
SECTION 5. Amendment and Restatement of the Original Indenture.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the First
Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee,
by execution and delivery hereof, agree to execute and deliver the First Amended
and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor
and the Lessee, by execution and delivery hereof, consent to such execution and
delivery of the First Amended and Restated Indenture. The First
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<PAGE> 22
Amended and Restated Indenture shall be effective as of the Restatement Date.
SECTION 6. Amendment and Restatement of the Original Lease. Subject
to the satisfaction or waiver of the conditions precedent set forth herein, the
Indenture Trustee, the Pass Through Trustee, the Parent Guarantor and the Owner
Participant, by execution and delivery hereof, consent to the assignments,
delegations, and releases set forth in, and to the amendment and restatement of
the Original Lease effected by, and the Owner Participant requests and instructs
the Owner Trustee to execute and deliver, Lease Amendment No. 1, and the Owner
Trustee, the Original Head Lessee, the Indenture Trustee and the Sublessee
agree, by execution and delivery hereof, to execute and deliver Lease Amendment
No. 1. The Amended and Restated Lease shall be effective as of the Restatement
Date.
SECTION 7. Termination of the Participation Agreement; Termination
of Sublease, etc. Subject to the satisfaction or waiver of the conditions
precedent set forth herein, the Owner Participant, the Owner Trustee, the
Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect from and including the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no obligations on the parties thereto. Upon
the execution and delivery of Lease Amendment No. 1 by each of the parties
thereto, the Sublease and the Assignment of Sublease shall be terminated as and
to the extent set forth herein and therein. Lease Amendment No. 1 shall be
effective as of the Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The Lessee
represents and warrants, as of the Restatement Date, to the Original Head Lessee
(except as to the representation and warranty contained in Section 8(i)), the
Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, has the
corporate power and authority to own or hold under lease its properties,
has, or had on the respective dates of execution thereof, the corporate
power and authority to enter into and perform its obligations under this
Agreement, Lease Amendment No. 1, the Lease, the Pass Through Trust
Agreements, the Amended and Restated Sublease TIA, the SLV Letter
Agreement and any certificate delivered by the Lessee pursuant to the
foregoing (the
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<PAGE> 23
"Lessee Documents") and is duly qualified to do business as a foreign
corporation in each jurisdiction where the failure to so qualify would
have a material adverse effect on its business, operations or condition
(financial or otherwise), or on its ability to perform its obligations
under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000 East
Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee Documents
and the performance of the obligations of the Lessee under the Lessee
Documents have been duly authorized by all necessary corporate action on
the part of the Lessee, do not require any stockholder approval, or
approval or consent of any trustee or holder of any material indebtedness
or material obligations of the Lessee, except such as have been duly
obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation, judgment or order binding on the Lessee or
the certificate of incorporation or by-laws of the Lessee, or contravene
the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Permitted Liens) upon the property of the
Lessee under, any indenture, mortgage, contract, lease or other agreement
in each case having payment obligations in excess of $500,000 to which the
Lessee is a party or by which it may be bound or affected;
(d) neither the execution and delivery by the Lessee of the Lessee
Documents nor the performance of the obligations of the Lessee under the
Lessee Documents nor the consummation by the Lessee of any of the
transactions contemplated by the Lessee Documents, requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action in respect of, the Department of Transportation, the
FAA, or any other federal, state, local or foreign governmental authority
having jurisdiction, other than those which have already been received and
which the Lessee is in compliance with and (i) the registration of the
Certificates under the Securities Act of 1933, as amended (the "Securities
Act") and the securities laws of any state in which the Certificates may
be offered for sale if the laws of such state require such action, (ii)
the qualification of the Pass Through Trust Agreements under the Trust
Indenture Act of 1939, as amended, (iii) (A) the orders, permits, waivers,
exemptions, authorizations and approvals of the regulatory authorities
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<PAGE> 24
having jurisdiction with respect to the Engine required to be obtained on
or prior to the Restatement Date, which orders, permits, waivers,
exemptions, authorizations and approvals have been duly obtained and are,
or will on the Restatement Date be in full force and effect and (B) such
consents, approvals, notices, registrations and other actions required by
the terms of the Lessee Documents to the extent required to be given or
obtained only after the Restatement Date and (iv) the registrations and
filings referred to in Section 8(i);
(e) each Lessee Document has been duly executed and delivered by the
Lessee and, assuming the due authorization, execution and delivery thereof
by the other parties thereto, each Lessee Document constitutes, or when
executed will constitute, the legal, valid and binding obligations of the
Lessee enforceable against the Lessee in accordance with their respective
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors or lessors generally and by general principles of
equity, whether considered in a proceeding at law or in equity, and
except, in the case of the Lease, as may be limited by applicable laws
which may affect the remedies provided in the Lease, which laws, however,
do not make the remedies provided in the Lease inadequate for the
practical realization of the benefits intended to be afforded thereby;
(f) except as disclosed in the Prospectus, there are no pending or,
to its knowledge, threatened actions or proceedings before any court or
administrative agency or regulatory commission or other governmental
agency against or affecting the Lessee that are reasonably expected to
materially adversely affect the ability of Lessee to enter into or perform
its obligations under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be free and
clear of any and all Liens (other than Permitted Liens) created by or
through the Lessee;
(i) except for the filing for recordation pursuant to
the Federal Aviation Act (with confidential financial terms
redacted) of Lease Amendment No. 1, the Amended and Restated
Lease, Lease Supplement No. 2, Trust Supplement No. 2, the
First Amended and Restated Indenture and Indenture
Supplement No. 2, and each of the other documents referred
to in Annex A hereto, all with the FAA, the filing of a
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<PAGE> 25
Uniform Commercial Code ("UCC") amended financing statement with the
Secretary of State of the State of Delaware with regard to the Original
Lease, the filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States of New
York, Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with respect
to the Lease, the filing of a UCC termination statement with the Secretary
of State of the State of Arizona with respect to the Sublease, and the
filing of a UCC termination statement with the Secretary of State of the
State of Delaware with respect to the Initial Sublease Assignment (as
defined in the Original Lease) all of which financing and termination
statements shall have been duly effected as of the Restatement Date (and
assignments thereof and continuation statements at periodic intervals),
and other than the taking of possession by the Indenture Trustee of the
original counterparts of the Original Lease, Lease Amendment No. 1, the
Amended and Restated Lease, and all Lease Supplements thereto (to the
extent the Lease constitutes chattel paper), and the placing of the Lease
identification required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any financing
statement under Article 9 of the UCC of the State of Delaware, New York or
Arizona) and no further action is necessary, under the laws of the United
States of America or the States of Delaware, New York and Arizona in order
to perfect the Owner Trustee's interest in the Engine as against the
Lessee and any third parties, or to perfect the security interest in favor
of the Indenture Trustee in the Owner Trustee's interest in the Engine and
in the Lease;
(j) all obligations of the Lessee owing to the Lessor in connection
with the Lease are at least pari passu with all unsecured and
unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes a
Lease Event of Default or would constitute a Lease Event of Default but
for the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes an
Event of Loss (as defined in the Lease) or would constitute an Event of
Loss with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will cause
to be filed, all federal and state tax returns which are required to be
filed and has paid or will pay or has caused or will cause to be paid all
taxes shown to be
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<PAGE> 26
due or payable on said returns and on any assessment received by the
Lessee, to the extent such taxes have become due and payable, except for
taxes and returns with respect thereto the nonpayment or nonfiling of
which, either in any case or in the aggregate, could have no material
adverse effect on the Lessee, its condition (financial or otherwise),
business, operations or prospects, or on its ability to perform its
obligations under the Lease or which are being diligently contested by the
Lessee in good faith by appropriate proceedings and with appropriate
reserves;
(n) the financial statements together with the notes related thereto
contained in the Registration Statement are complete in all material
respects and fairly present the Lessee's financial condition as of
September 30, 1996 and the results of its operations for the period
covered in conformance with GAAP (except as otherwise noted therein and
with which any such change the independent auditors of the Lessee have
agreed), since September 30, 1996, there has been no material adverse
change in the Lessee's business, operations, condition (financial or
otherwise) or prospects which has not been disclosed in writing to the
Owner Participant and the Indenture Trustee and does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary, duties or
other similar Taxes then due and for which the Lessee is responsible
pursuant to the Lessee Documents, shall have been paid, other than such
Taxes which are being contested by the Lessee in good faith and by
appropriate proceedings (and for which the Lessee shall have established
such reserves as are required under GAAP) so long as such proceedings or
the non-payment of such Taxes do not involve any material danger to the
sale, forfeiture or loss of the Engine;
(p) the Lessee is not a "national" of any designated foreign country
within the meaning of the Foreign Assets Control Regulations or the Cuban
Assets Control Regulations of the United States Treasury Department, 31
Code of Federal Regulations, Subtitle B, Chapter V, as amended, or of any
regulations, interpretations or rulings issued thereunder, and the Lessee
is not, and is not acting on behalf of or for the benefit of, an "Iranian
Entity" within the meaning of the Iranian Assets Control Regulations of
the United States Treasury Department, 31 Code of Federal Regulations,
Subtitle B, Chapter V, as amended, and the transactions contemplated by
this Agreement are not prohibited by Executive Order 12170, the
above-mentioned Iranian Assets
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<PAGE> 27
Control Regulations or any regulations, interpretations or rulings issued
under any thereof;
(q) no part of the Rent or other payments made by the Lessee under
the Lease or under the other Operative Documents will be made out of the
assets of any "employee benefit plan" as defined in Section 3(3) of ERISA;
(r) no representation or warranty of the Lessee contained in any
Lessee Document or other information in writing furnished to the Owner
Participant or the Indenture Trustee by the Lessee in connection herewith
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein
or therein not misleading. There is no fact known to the Lessee (other
than matters of a general economic nature) which the Lessee has not
disclosed in writing to the Owner Participant or the Indenture Trustee
which could impair its ability to perform its obligations under the Lessee
Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy Code,
the Lessor as lessor of the Engine under the Lease, and the Indenture
Trustee, as assignee of the Owner Trustee's rights under the Lease
pursuant to the Indenture, would be entitled to the benefits of Section
1110 of the Bankruptcy Code with respect to the Engine.
SECTION 9. Representations and Warranties. Each of the parties below
represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below) represents
and warrants that:
(1) the Indenture Trustee is a banking association duly
organized, validly existing and in good standing under the federal
laws of the United States of America, and has the full corporate
power, authority and legal right under the laws of the State of
Connecticut and the federal laws of the United States pertaining to
its banking, trust and fiduciary powers to execute and deliver each
of this Agreement, the Indenture and each other Operative Document
to which it is a party and to carry out its obligations under this
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<PAGE> 28
Agreement, the Indenture and each other Operative Document to which
it is a party;
(2) neither the execution and delivery by the Indenture
Trustee of this Agreement, the Indenture, Lease Amendment No. 1 and
each other Operative Document to which it is a party, nor the
consummation by it of any of the transactions contemplated hereby or
thereby, nor the compliance by it with any of the terms and
provisions hereof and thereof, (A) requires or will require any
approval of its stockholders, or approval or consent of any trustees
or holders of any indebtedness or obligations of it, or (B) violates
or will violate its articles of association or by-laws, or
contravenes or will contravene any provision of, or constitutes or
will constitute a default under, or results or will result in any
breach of, or results or will result in the creation of any Lien
(other than as permitted under the Operative Documents) upon its
property under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit agreement,
license or other agreement or instrument to which it is a party or
by which it is bound, or contravenes or will contravene any law,
governmental rule or regulation or any judgment or order applicable
to or binding on it of any United States governmental authority or
agency governing the trust powers of the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture, when
executed and delivered by the Indenture Trustee, will constitute,
the legal, valid and binding obligations of the Indenture Trustee
enforceable against it in accordance with their respective terms,
except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(4) there are no pending or, to its knowledge, threatened
actions or proceedings against the Indenture Trustee, either in its
individual capacity or as Indenture Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Indenture Trustee, in
its individual capacity or as Indenture Trustee, as the case may be,
to perform its obligations under the Operative Documents to which it
is a party;
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<PAGE> 29
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any State of Connecticut or any United States of America
governmental authority or agency regulating the trust powers of the
Indenture Trustee is required for the execution and delivery of, or
the carrying out by, the Indenture Trustee of any of the
transactions contemplated hereby or by the Indenture, Lease
Amendment No. 1 or any other Operative Document to which it is a
party or by which it is bound, other than any such consent,
approval, order, authorization, registration, notice or action as
has been duly obtained, given or taken;
(6) there are no Lenders' Liens (as defined in the Lease) on
the Engine or any portion of the Trust Estate created by or through
the Indenture Trustee in its individual capacity; and
(7) it has possession of the chattel paper original
counterpart of the Original Lease, Lease Amendment No. 1 and the
Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties are
made solely by the Owner Trustee) and the Owner Trustee represents and
warrants that:
(1) the Trust Company is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, has full corporate power and authority to carry on its
business as now conducted, has, or had on the respective dates of
execution thereof, the corporate power and authority to execute and
deliver Trust Supplement No. 2, has the corporate power and
authority to carry out the terms of the Trust Agreement, and each of
the Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the authorization,
execution and delivery of Trust Supplement No. 2 by the Owner
Participant), the corporate power and authority to execute and
deliver and to carry out the terms of this Agreement, the Indenture,
the Equipment Notes, Lease Amendment No. 1, the Lease and each other
Operative Document (other than the Trust Agreement) to which it is a
party;
(2) (i) each of the Trust Company and the Owner Trustee has
duly authorized, executed and delivered the Trust Agreement and this
Agreement and (assuming the
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<PAGE> 30
due authorization, execution and delivery of Trust Supplement No. 2
by the Owner Participant) the Trust Agreement constitutes a legal,
valid and binding obligation of the Owner Trustee, in its individual
capacity or as Owner Trustee and the Trust Company, as the case may
be, enforceable against it in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity, (ii) the Owner
Trustee has duly authorized, executed and delivered this Agreement
and (assuming the due authorization, execution and delivery of Trust
Supplement No. 2 by the Owner Participant) this Agreement and the
Trust Agreement constitute, and the Indenture and the Lease, when
entered into, will constitute, a legal, valid and binding obligation
of the Owner Trustee, in its individual capacity or as Owner Trustee
and the Trust Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at
law or in equity;
(3) assuming the due authorization, execution and delivery of
Trust Supplement No. 2 by the Owner Participant, the Owner Trustee
has duly authorized, and on the Restatement Date shall have duly
issued, executed and delivered to the Indenture Trustee for
authentication, the Equipment Notes pursuant to the terms and
provisions hereof and of the Indenture, and each Equipment Note on
the Restatement Date will constitute the valid and binding
obligation of the Owner Trustee and will be entitled to the benefits
and security afforded by the Indenture in accordance with the terms
of such Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner Trustee or
the Trust Company, as the case may be, of this Agreement, the
Original Trust Agreement, Trust Supplement No. 2, the Original
Indenture, the Indenture, the Original Lease, Lease Amendment No. 1,
the Lease, the Equipment Notes, or any other Operative Document to
which it is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the compliance by
it with any of the terms and provisions hereof and thereof, (A)
requires or will require any approval of its stockholders, or
approval
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<PAGE> 31
or consent of any trustees or holders of any indebtedness or
obligations of it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene any
provision of, or constitutes or will constitute a default under, or
results or will result in any breach of, or results or will result
in the creation of any Lien (other than as permitted under the
Operative Documents) upon its property under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other agreement
or instrument to which it is a party or by which it is bound, or
contravenes or will contravene any law, governmental rule or
regulation of the State of Delaware or any United States
governmental authority or agency governing the trust powers of the
Owner Trustee, or any judgment or order applicable to or binding on
it;
(5) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any state or local governmental authority or agency or
any State of Delaware or any United States of America governmental
authority or agency regulating the trust powers of the Trust Company
is required for the execution and delivery of, or the carrying out
by, the Trust Company or the Owner Trustee, as the case may be, of
any of the transactions contemplated hereby or by the Trust
Agreement, the Indenture, the Lease, Lease Amendment No. 1, the
Equipment Notes or any other Operative Document to which it is a
party or by which it is bound, other than any such consent,
approval, order, authorization, registration, notice or action as
has been duly obtained, given or taken or which is described in
Section 8(d);
(6) there exists no Lessor's Lien or Head Lessor's Lien (each
as defined in the Lease) (including for this purpose Liens that
would be Lessor's Liens but for the first proviso in the definition
of Lessor's Liens) attributable to the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's Lien
(including for this purpose Liens that would be Lessor's Liens but
for the first proviso in the definition of Lessor's Liens)
attributable to the Trust Company;
(8) there are no Taxes payable by the Owner Trustee or the
Trust Company imposed by the State of
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<PAGE> 32
Delaware or any political subdivision thereof in connection with the
prepayment of the Original Certificates or the issuance of the
Equipment Notes, or the execution and delivery by it of any of the
instruments referred to in clauses (1), (2), (3) and (4) above,
that, in each case, would not have been imposed if the Trust Estate
were not located in the State of Delaware and the Trust Company had
not (a) had its principal place of business in, (b) performed (in
its individual capacity or as Owner Trustee) any or all of its
duties under the Operative Documents in, and (c) engaged in any
activities unrelated to the transactions contemplated by the
Operative Documents in, the State of Delaware;
(9) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to
perform its obligations under any of the instruments referred to in
clauses (1), (2), (3) and (4) above; and
(10) both its chief executive office, and the place where its
records concerning the Engine and all its interests in, to and under
all documents relating to the Trust Estate (other than such as may
be maintained and held by the Indenture Trustee pursuant to the
Indenture), are located in Wilmington, Delaware. Owner Trustee, in
its individual capacity or as Owner Trustee, agrees that it will not
change the location of such office to a location outside of
Delaware, without prior written notice to all parties hereto.
(c) The Owner Participant represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties, has, or
had on the respective dates of execution thereof, as the case may
be, the corporate power and authority to enter into and to perform
its obligations under this Agreement, the Trust Agreement, the SLV
Letter Agreement and the Amended and Restated Head Lease TIA; this
Agreement, the SLV Letter Agreement and Trust
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<PAGE> 33
Supplement No. 2 have been duly authorized, executed and delivered
by it; and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto and thereto, this
Agreement, the Trust Agreement, the SLV Letter Agreement and the
Amended and Restated Head Lease TIA constitute the legal, valid and
binding obligations of the Owner Participant enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the Owner
Participant of this Agreement, the Trust Agreement, the SLV Letter
Agreement, the Amended and Restated Head Lease TIA or any other
Operative Document to which it is a party nor (B) compliance by it
with all of the provisions hereof or thereof, (x) will contravene
any law or order of any court or governmental authority or agency
applicable to or binding on the Owner Participant (it being
understood that no representation or warranty is made with respect
to laws, rules or regulations relating to aviation or to the nature
of the equipment owned by the Owner Trustee), or (y) will contravene
the provisions of, or constitutes or has constituted or will
constitute a default under, its certificate of incorporation or
by-laws or any indenture, mortgage, contract or other agreement or
instrument to which the Owner Participant is a party or by which it
or any of its property may be bound or affected, except where such
contravention or default would not result in any liability to any
other party hereto or have a material adverse effect on the rights
or on the remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body (other than as required by the Federal Aviation Act or the
regulations promulgated thereunder) is or was required, as the case
may be, for the due execution, delivery or performance by it of this
Agreement, the Trust Agreement and the Amended and Restated Head
Lease TIA (it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to aviation
or to the nature of the equipment owned by the Owner Trustee
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<PAGE> 34
other than the laws, rules or regulations relating to engine lease
transactions generally);
(4) there are no pending or, to its knowledge, threatened
actions or proceedings against the Owner Participant before any
court or administrative agency or arbitrator which, if determined
adversely to the Owner Participant, would materially adversely
affect the Owner Participant's ability to perform its obligations
under this Agreement, the Trust Agreement, the SLV Letter Agreement
or the Amended and Restated Head Lease TIA; and
(5) on the Restatement Date, the Trust Estate shall be free of
Lessor's Liens and Head Lessor's Liens attributable to the Owner
Participant (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens).
(d) The Pass Through Trustee represents, warrants and covenants
that:
(1) the Pass Through Trustee is duly organized, validly
existing and in good standing under the federal laws of the United
States of America, and has the full corporate power, authority and
legal right under the federal laws of the United States of America
pertaining to its banking, trust and fiduciary powers to execute and
deliver each of the Pass Through Trust Agreements, the Intercreditor
Agreement, and this Agreement and to perform its obligations under
this Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and delivered
by the Pass Through Trustee, each of the Pass Through Trust
Agreements and the Intercreditor Agreement will have been, duly
authorized, executed and delivered by the Pass Through Trustee; this
Agreement constitutes, and when executed and delivered by the Pass
Through Trustee, each of the Pass Through Trust Agreements and the
Intercreditor Agreement, will constitute, the legal, valid and
binding obligations of the Pass Through Trustee enforceable against
it in accordance with their respective terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered in
a proceeding at law or in equity;
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<PAGE> 35
(3) none of the execution, delivery and performance by the
Pass Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, the purchase by the
Pass Through Trustee of the Equipment Notes pursuant to this
Agreement, or the issuance of the Certificates pursuant to the Pass
Through Trust Agreements, contravenes any law, rule or regulation of
the State of Connecticut or any United States governmental authority
or agency regulating the Pass Through Trustee's banking, trust or
fiduciary powers or any judgment or order applicable to or binding
on the Pass Through Trustee and does not contravene or result in any
breach of, or constitute a default under, the Pass Through Trustee's
articles of association or by-laws or any agreement or instrument to
which the Pass Through Trustee is a party or by which it or any of
its properties may be bound;
(4) neither the execution and delivery by the Pass Through
Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement or this Agreement, nor the consummation by
the Pass Through Trustee of any of the transactions contemplated
hereby or thereby, requires the consent or approval of, the giving
of notice to, the registration with, or the taking of any other
action with respect to, any State of Connecticut governmental
authority or agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary
powers;
(5) assuming that the trusts created by the Pass Through Trust
Agreements will not be taxable as corporations, but, rather, each
will be characterized as a grantor trust under subpart E, Part I of
Subchapter J of the Code for federal income tax purposes, there are
no Taxes payable by the Pass Through Trustee imposed by the State of
Connecticut or any political subdivision or taxing authority thereof
in connection with the acquisition, possession or ownership by the
Pass Through Trustee of any of the Equipment Notes (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by any of
the Pass Through Trust Agreements), and prior to the exercise of
remedies upon the occurrence of an Indenture Event of Default, there
are no Taxes payable by the Pass Through Trustee imposed by the
State of Connecticut or any political subdivision or taxing
authority thereof in connection
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<PAGE> 36
with the execution, delivery and performance by the Pass Through
Trustee of this Agreement, any of the Pass Through Trust Agreements
or the Intercreditor Agreement (other than franchise or other Taxes
based on or measured by any fees or compensation received by the
Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust
Agreements), and such trusts will not be subject to any Taxes
imposed by the State of Connecticut or any political subdivision or
taxing authority thereof; upon the exercise of remedies following
the occurrence of an Indenture Event of Default, there will be no
Taxes payable by the Pass Through Trustee imposed by the State of
Connecticut or any political subdivision or taxing authority thereof
in connection with the execution, delivery and performance by the
Pass Through Trustee of this Agreement, any of the Pass Through
Trust Agreements or the Intercreditor Agreement (other than
franchise or other Taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by any of
the Pass Through Trust Agreements), and the trusts created by the
Pass Through Trust Agreements will not be subject to any Taxes
imposed by the State of Connecticut or any political subdivision
thereof, solely because the Pass Through Trustee maintains an office
in, and administers the trusts created by the Pass Through Trust
Agreements in, the State of Connecticut;
(6) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of
the Pass Through Trustee to perform its obligations under this
Agreement, the Intercreditor Agreement or any Pass Through Trust
Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any Equipment Notes for sale to any Person or
solicited any offer to acquire any Equipment Notes from any Person,
nor has the Pass Through Trustee authorized anyone to act on its
behalf to offer directly or indirectly any Equipment Notes for sale
to any Person, or to solicit any offer to acquire any Equipment
Notes from any Person; and the Pass Through Trustee is not in
default under any Pass Through Trust Agreement; and
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<PAGE> 37
(8) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, the Underwriters or the Lessee.
(e) The Subordination Agent represents and warrants that:
(1) the Subordination Agent is a duly organized national
banking association, validly existing and in good standing with the
Comptroller of the Currency under the laws of the United States of
America and has the full corporate power, authority and legal right
under the laws of the United States of America pertaining to its
banking, trust and fiduciary powers to execute and deliver each of
the Liquidity Facilities, the Intercreditor Agreement and this
Agreement and to perform its obligations under this Agreement, the
Liquidity Facilities and the Intercreditor Agreement;
(2) this Agreement has been, and when executed and delivered
by the Subordination Agent, each of the Liquidity Facilities and the
Intercreditor Agreement will have been, duly authorized, executed
and delivered by the Subordination Agent; this Agreement
constitutes, and when executed and delivered by the Subordination
Agent, each of the Liquidity Facilities and the Intercreditor
Agreement, will constitute, the legal, valid and binding obligations
of the Subordination Agent enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at
law or in equity;
(3) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement and this Agreement or the performance by the
Subordination Agent of this Agreement, contravenes any law, rule or
regulation of the State of Connecticut or any United States
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Subordination Agent and do not
contravene or result in any breach of, or constitute a default
under, the Subordination Agent's articles of association or by-laws
or any agreement or instrument
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<PAGE> 38
to which the Subordination Agent is a party or by which it or any of
its properties may be bound;
(4) neither the execution and delivery by the Subordination
Agent of any of the Liquidity Facilities, the Intercreditor
Agreement or this Agreement nor the consummation by the
Subordination Agent of any of the transactions contemplated hereby
or thereby requires the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency regulating
the Subordination Agent's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination Agent
imposed by the State of Connecticut or any political subdivision or
taxing authority thereof in connection with the execution, delivery
and performance by the Subordination Agent of this Agreement, any of
the Liquidity Facilities or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services
rendered in connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities) solely
because the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are no
Taxes payable by the Subordination Agent imposed by the State of
Connecticut or any political subdivision thereof in connection with
the acquisition, possession or ownership by the Subordination Agent
of any of the Equipment Notes solely because the Subordination Agent
maintains an office and administers its trust business in the State
of Connecticut (other than franchise or other taxes based on or
measured by any fees or compensation received by the Subordination
Agent for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the Liquidity
Facilities);
(6) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined
adversely to it, would materially adversely affect the ability of
the Subordination Agent to perform its obligations under this
Agreement, the Intercreditor Agreement or any Liquidity Facility;
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<PAGE> 39
(7) the Subordination Agent has not directly or indirectly
offered any Equipment Note for sale to any Person or solicited any
offer to acquire any Equipment Note from any Person, nor has the
Subordination Agent authorized anyone to act on its behalf to offer
directly or indirectly any Equipment Note for sale to any Person, or
to solicit any offer to acquire any Equipment Note from any Person;
and the Subordination Agent is not in default under any Liquidity
Facility; and
(8) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, the Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants that:
(1) it is duly incorporated, validly existing and in good
standing under the laws of the State of Connecticut and has the
corporate power and authority to carry on its present business and
operations and to own or lease its properties, has the corporate
power and authority to enter into and to perform its obligations
under this Agreement, Lease Amendment No. 1, the Amended and
Restated Head Lease TIA, the Amended and Restated Sublease TIA and
the SLV Letter Agreement (collectively, the "Original Head Lessee
Transaction Documents"); each Original Head Lessee Transaction
Document has been duly authorized, and upon the execution and
delivery thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it in
accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the Original
Head Lessee of this Agreement and each of the other Original Head
Lessee Transaction Documents nor (B) compliance by it with all of
the provisions hereof or thereof, (x) will contravene any law or
order of any court or governmental authority or agency applicable to
or binding on the Original Head Lessee, or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute
a default under, its certificate of incorporation or by-laws or any
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<PAGE> 40
indenture, mortgage, contract or other agreement or instrument to
which the Original Head Lessee is a party or by which it or any of
its property may be bound or affected, except where such
contravention or default would not result in any liability to any
other party hereto or have a material adverse effect on the rights
or on the remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body (other than as required by the Federal Aviation Act or the
regulations promulgated thereunder) is or was required, as the case
may be, for the due execution, delivery or performance by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents;
(4) except as set forth in the Parent Guarantor's most recent
Form 20-F filed with the Commission, there are no pending or, to its
knowledge, threatened actions or proceedings against the Original
Head Lessee before any court or administrative agency or arbitrator
which, if determined adversely to the Original Head Lessee, would
materially adversely affect the Original Head Lessee's ability to
perform its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the Engine and
each Part shall be free and clear of any and all Sublessor's Liens
(as defined in the Sublease);
(6) on the Delivery Date, the Owner Trustee received good
title to the Engine free and clear of all Liens, except the rights
of the Original Head Lessee under the Original Lease, the rights of
the Sublessee under the Sublease, the Lien of the Original
Indenture, the beneficial interest of the Owner Participant in the
Engine, and Permitted Liens under the Original Lease;
(7) [Intentionally Omitted]; and
(8) except for the filing for recordation pursuant to the
Federal Aviation Act (with confidential financial terms redacted) of
Lease Amendment No. 1, the Amended and Restated Lease, Lease
Supplement No. 2, Trust Supplement No. 2, the First Amended and
Restated Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all
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<PAGE> 41
with the FAA, the filing of a Uniform Commercial Code ("UCC")
amended financing statement with the Secretary of State of the State
of Delaware with regard to the Original Lease, the filing of UCC
termination statements with regard to the Original Head Lessee with
the Secretary of State of the States of New York, Connecticut and
Arizona, the filing of a protective UCC financing statement with the
Secretary of State of the State of Arizona with respect to the
Lease, the filing of a UCC termination statement with the Secretary
of State of the State of Arizona with respect to the Sublease, and
the filing of a UCC termination statement with the Secretary of
State of the State of Delaware with respect to the Initial Sublease
Assignment (as defined in the Original Lease) all of which financing
and termination statements shall have been duly effected as of the
Restatement Date (and assignments thereof and continuation
statements at periodic intervals), and other than the taking of
possession by the Indenture Trustee of the original counterparts of
the Original Lease, Lease Amendment No. 1, the Amended and Restated
Lease, and all Lease Supplements thereto (to the extent the Lease
constitutes chattel paper), and the placing of the Lease
identification required by Section 6(e) of the Lease, no further
filing or recording of the Lease or of any other document (including
any financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is necessary,
under the laws of the United States of America or the States of
Delaware, New York and Arizona in order to perfect the Owner
Trustee's interest in the Engine as against the Lessee and any third
parties, or to perfect the security interest in favor of the
Indenture Trustee in the Owner Trustee's interest in the Engine and
in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under the laws
of Ireland and has the corporate power and authority to enter into
and to perform its obligations under this Agreement; this Agreement
has been duly authorized and constitutes the legal, valid and
binding obligations of the Parent Guarantor enforceable against it
in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a proceeding
at law or in equity;
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<PAGE> 42
(2) neither (A) the execution and delivery by the Parent
Guarantor of this Agreement nor (B) compliance by it with all of the
provisions hereof (x) will contravene any law or order of any court
or governmental authority or agency applicable to or binding on the
Parent Guarantor, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default under,
its Memorandum and Articles of Association or any indenture,
mortgage, contract or other agreement or instrument to which the
Parent Guarantor is a party or by which it or any of its property
may be bound or affected, except where such contravention or default
would not result in any liability to any other party hereto or have
a material adverse effect on the rights or on the remedies of the
other parties hereto or on its ability to perform its obligations
hereunder or thereunder;
(3) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body (other than as required by the Federal Aviation Act or the
regulations promulgated thereunder) is or was required, as the case
may be, for the due execution, delivery or performance by the Parent
Guarantor of this Agreement;
(4) except as set forth in the Parent Guarantor's most recent
Form 20-F filed with the Commission, there are no pending or, to its
knowledge, threatened actions or proceedings against the Parent
Guarantor before any court or administrative agency or arbitrator
which, if determined adversely to the Parent Guarantor, would
materially adversely affect the Parent Guarantor's ability to
perform its obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the Engine and
each Part shall be free and clear of any and all Sublessor's Liens
(as defined in the Sublease); and
(6) The representations and warranties of the Original Head
Lessee contained in this Agreement are true and correct in all
respects on the date made (provided that the representation and
warranty with respect to Section 9(f)(8) shall be only for the
benefit of the Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by operation of law, con-
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<PAGE> 43
solidation, merger, sale of assets or otherwise) any of its right, title or
interest in and to the Trust Estate, the Engine, the Lease, this Agreement, the
Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative
Document or any proceeds therefrom or permit the transfer of any of its stock in
any transaction which has the practical effect of any of the foregoing; provided
that, and subject to the conditions set forth below, Owner Participant may
transfer to a Transferee (as defined below) all (but not less than all) of its
right (except for such rights accruing prior to transfer), title and interest as
an entirety in and to the Trust Estate, the Engine, this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party or by which Owner Participant is
bound. Each such transfer shall be subject to the following conditions, and
Owner Participant agrees for the express benefit of each party hereto that any
such transfer will comply with such conditions:
(i) the Person to whom such transfer is to be made (a "Transferee")
is either (A) a bank, trust company or other like regulated financial
institution with a combined capital, surplus and undivided profits of, or
a corporation with a tangible net worth of, in either case at least
$60,000,000, (B) any wholly-owned subsidiary of such bank, trust company,
financial institution or corporation if such bank, trust company,
financial institution or corporation furnishes to Owner Trustee, Indenture
Trustee, Original Head Lessee and Lessee an agreement or agreements of
such bank, financial institution or corporation guaranteeing such
subsidiary's obligations as Owner Participant contained in this Agreement,
the Trust Agreement, the Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by which
it is bound, which guarantee shall be substantially in the form attached
as Exhibit A hereto or (C) a subsidiary of Owner Participant if Owner
Participant furnishes to Owner Trustee, Indenture Trustee, Original Head
Lessee and Lessee an agreement whereby Owner Participant will guarantee
such subsidiary's obligations as Owner Participant contained in this
Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA
and each other Operative Document to which Owner Participant is a party or
by which it is bound, which guarantee shall be substantially in the form
attached as Exhibit A hereto;
(ii) Owner Trustee, Indenture Trustee, Original Head Lessee and
Lessee shall have received at least 15 days' prior written notice of such
transfer specifying the name and address of any proposed transferee and
specifying the facts necessary to determine whether such proposed trans-
feree qualifies as a "Transferee" under clause (i) above and
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<PAGE> 44
does not violate clause (viii) below; provided that if such Transferee is
a subsidiary of Owner Participant, such notice may be given promptly
following rather than prior to such transfer if such Transferee meets the
net worth requirement set forth above on its own account without a
guaranty and otherwise meets the requirements of this Section 10;
(iii) [Intentionally Omitted];
(iv) such Transferee has the requisite power and authority and legal
right to enter into and carry out the transactions contemplated hereby;
(v) such Transferee enters into an agreement in substantially the
form attached as Exhibit B hereto whereby such Transferee confirms that it
shall be deemed a party to this Agreement, the Trust Agreement, the
Amended and Restated Head Lease TIA and each other Operative Document to
which Owner Participant is a party or by which Owner Participant is bound,
and in which the transferee shall agree to be bound by and undertake the
obligations of Owner Participant in the Operative Documents and shall make
representations and warranties comparable to those of Owner Participant
contained herein;
(vi) such transfer does not violate any provision of the Federal
Aviation Act or any rules or regulations promulgated thereunder, or create
a relationship that would be in violation thereof, or violate any
provisions of the Securities Act or any other applicable Federal, state or
other law, rule or regulation;
(vii) such transfer does not violate any provision of ERISA or any
rules or regulations thereunder;
(viii) such Transferee is not an airline, a commercial air carrier,
an air freight forwarder, any Person engaged in the business of parcel
transport by air or a subsidiary or an Affiliate of such an airline, a
commercial air carrier, an air freight forwarder, Person engaged in the
business of parcel transport by air or other similar Person;
(ix) an opinion of counsel of the Transferee confirming the matters
referred to in clauses (iv) and (vi) above (with appropriate reliance on
certificates of corporate officers or public officials as to matters of
fact) and confirming that the agreement referred to in clause (v) above is
the legal, valid, binding and enforceable obligation of the Transferee and
that the guarantee referred to in clause (i)(B) or (C) above, if any, is
the legal, valid, binding and enforceable obligation of the Transferee's
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<PAGE> 45
guarantor shall be provided, at least 3 days prior to such transfer, to
Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee, which
shall be in form and substance reasonably satisfactory to each of them;
and
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Engine previously made by Owner Participant; and except as
the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to "Owner Participant" shall thereafter be deemed to include such
Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Amended and Restated Head
Lease TIA and under the other Operative Documents, except to the extent
expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Amended and Restated Head Lease TIA by or against Owner Participant which have
accrued or been made prior to the date of such transfer. The transferor Owner
Participant shall pay the reasonable expenses of each party hereto related to
any such transfer.
Each party hereto agrees, upon the request of Owner Participant, to
use reasonable efforts to cooperate at no cost or expense to it with Owner
Participant in complying with its obligations under the provisions of clause (A)
of paragraph (6) of Section 9(c), provided that such cooperation shall not be
subject to the indemnity in Section 13 of the Lease.
SECTION 11. [Reserved].
SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming
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<PAGE> 46
by, through or on behalf of it to interfere with the right of Lessee or any
Permitted Sublessee to the possession, use, operation and quiet enjoyment of and
other rights with respect to the Engine under the Lease, and all rents,
revenues, profits and income therefrom, in accordance with the terms of the
Lease; provided that the Trust Company, Owner Trustee and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
Trustee, holders of any Equipment Notes, or any other Person lawfully claiming
by, through or on behalf of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee and
Owner Participant severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Lessor's Lien or Head Lessor's Lien
attributable to it with respect to the Engine or any other portion of the Trust
Estate or the Indenture Estate. Each of Trust Company, Owner Trustee and Owner
Participant severally agrees that it will promptly, at its own expense (and
without any right of indemnification or reimbursement from Lessee), take such
action as may be necessary duly to discharge any such Lessor's Lien or Head
Lessor's Lien attributable to it and to make restitution to the Trust Estate and
the Indenture Estate for any diminution of the assets thereof resulting
therefrom and will indemnify and hold harmless Lessee and each Indemnitee
against any claims incurred or suffered by any such Person and any reduction in
amounts payable out of, or diminution in the assets of, the Trust Estate or the
Indenture Estate resulting from any such Lessor's Lien or Head Lessor's Lien
attributable to it. For all purposes of this Agreement and the other Operative
Documents, any Lessor's Lien or Head Lessor's Lien arising as a result of the
nonpayment of any Tax imposed on or measured by the net income of the Trust
Estate or the trust created by the Trust Agreement that is not indemnifiable by
Lessee or Original Head Lessee shall be deemed to be attributable to Owner
Participant, and Owner Participant shall be responsible for all Lessor's Liens
attributable to Owner Participant and Owner Trustee.
Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Engine or any other portion of the Trust
Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee
and Subordination Agent severally agrees that it will promptly, at its own
expense (and without any right of indemnification or reimbursement from Lessee),
take such action as may be necessary duly to discharge any such Trustee's Lien
attributable to it and to make restitution to the Trust Estate and the Indenture
Estate for any diminution of the assets thereof resulting therefrom and will
indemnify and hold harmless Lessee
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<PAGE> 47
and each Indemnitee against any claims incurred or suffered by any such Person
and any reduction in amounts payable out of, or diminution in the assets of, the
Trust Estate or the Indenture Estate resulting from any such Trustee's Lien
attributable to it. For purposes of this paragraph, "Trustee's Lien" means any
Lien or disposition of title attributable to Indenture Trustee in its individual
capacity (and not as Indenture Trustee), Pass Through Trustee in its individual
capacity (and not as Pass Through Trustee) or Subordination Agent in its
individual capacity (and not as Subordination Agent) on or in respect of (as the
case may be) the Engine or any other portion of the Trust Estate or the Trust
Indenture Estate arising as a result of (i) Claims against such Person not
related to its interest in the Engine or the administration of the Trust Estate
or the Trust Indenture Estate pursuant to the Indenture, whether under Section
9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions
of such Person not contemplated hereunder or under the other Operative
Documents, or acts or omissions of such Person which are in violation of any of
the Operative Documents, or (iii) Taxes imposed on or Claims against such Person
which are excluded from indemnification by Lessee, or (iv) Claims against such
Person arising out of the voluntary or involuntary transfer by such Person of
all or any portion of its interest in the Engine, the Trust Estate, the Trust
Indenture Estate or the Operative Documents (except a Claim resulting from the
exercise of remedies under and in accordance with the Indenture or for a
transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly and
severally covenants and agrees with each other party hereto that it shall not
cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Engine or any other portion of the Trust Estate or the
Indenture Estate. Each of the Original Head Lessee and Parent Guarantor
severally agrees that it will promptly, at its own expense (and without any
right of indemnification or reimbursement from Lessee), take such action as may
be necessary duly to discharge any such Sublessor's Lien attributable to it or
other Lien or disposition of title created by or through Original Head Lessee,
Parent Guarantor or any Affiliate of either thereof which would have constituted
a Sublessor's Lien had the Sublease remained in effect and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any
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<PAGE> 48
such Sublessor's Lien attributable to it or other Lien or disposition of title
created by or through Original Head Lessee, Parent Guarantor or any Affiliate of
either thereof which would have constituted a Sublessor's Lien had the Sublease
remained in effect.
In no event will Lessee be liable for any Claims resulting from,
pertaining to, arising from, or related to the granting, creation or existence
of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a Sublessor's Lien
or other Lien or disposition of title created by or through Original Head
Lessee, Parent Guarantor or any Affiliate of either thereof which would have
constituted a Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause the
Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original Head
Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner Participant.
(a) Each of Owner Participant and Trust Company hereby agrees with Lessee and
Indenture Trustee (i) to comply with the terms of the Trust Agreement, (ii) not
to amend, supplement, or otherwise modify the Trust Agreement except in
accordance with the terms thereof, provided that any such amendment, supplement
or modification shall not adversely affect the Lessee, and (iii) not to
terminate or revoke the Trust Agreement except in accordance with the terms
thereof, provided that any such termination or revocation shall not adversely
affect the Lessee.
(b) Notwithstanding anything to the contrary in the Trust Agreement
or Section 14(a) hereof, but subject always to the provisions of Section 14(c)
hereof, Owner Participant shall not consent to or direct a change in the situs
of the Trust Estate so long as a successor Owner Trustee meeting the
requirements of the Trust Agreement is reasonably available at the present situs
of the Trust Estate (A) unless the Indenture Trustee, the Original Head Lessee
and Lessee shall have been given 30 days' prior notice thereof and (B) if,
within 15 days after notice of such a proposed change is given to Lessee and the
Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to
Owner Participant and Owner Trustee (at the expense of Owner Participant) an
opinion of counsel, which counsel shall be reasonably satisfactory to Owner
Participant and Owner Trustee, to the effect that such proposed change in the
situs of the Trust Estate would have an adverse effect on the rights or
obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head
Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner
Participant) an opinion of
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<PAGE> 49
counsel, which counsel shall be reasonably satisfactory to Owner Participant and
Owner Trustee, to the effect that such proposed change in the situs of the Trust
Estate would cause an increase in the amount for which Lessee may be required to
indemnify any Person pursuant to the provisions of Section 10 of the Lease or
for which Original Head Lessee is required to indemnify any Person pursuant to
the provisions of the Amended and Restated Head Lease TIA, unless any and all
Persons entitled to indemnification pursuant to Section 10 of the Lease or
applicable provision of the Amended and Restated Head Lease TIA shall waive
indemnification under Section 10 of the Lease or applicable provision of the
Amended and Restated Head Lease TIA for any adverse tax or other consequences to
it of such a change in the situs of the Trust Estate, and (C) unless Indenture
Trustee receives from Owner Participant an opinion of counsel, which counsel
shall be reasonably satisfactory to Indenture Trustee, to the effect that such
proposed change in the situs of the Trust Estate would not have an adverse
effect on the validity or priority of the Lien of the Indenture and that such
Uniform Commercial Code and FAA filings as are required to maintain the validity
and priority of the Lien of Indenture have been made.
(c) Owner Participant agrees that if, at any time, the Trust Estate
has become, or in Lessee's good faith opinion will become, subject to any Taxes
for which it is indemnified pursuant to Section 10 of the Lease and if, as a
consequence thereof, Lessee should request that the situs of the trust be moved
to another state in the United States of America from the state in which it is
then located, the situs of the trust shall be moved and Owner Participant will
take whatever action may be requested by Lessee that is reasonably necessary to
accomplish such removal; provided that (A) Lessee shall provide such additional
tax indemnification with respect to such change of situs and request of Lessee
as Original Head Lessee, Owner Participant or the Indenture Trustee (subject to
the exclusions set forth in Section 10(b) of the Lease and the exclusions in the
Amended and Restated Head Lease TIA) may reasonably request, (B) promptly after
notice thereof Owner Participant has not notified Lessee and provided reasonable
evidence of an adverse effect on Owner Participant's rights or obligations under
the Trust Agreement, (C) Indenture Trustee shall have received an opinion of
counsel selected by Lessee, which counsel shall be reasonably satisfactory to
Indenture Trustee, to the effect that the validity and priority of the Lien of
the Indenture Estate will not be adversely affected by such action, and that
such Uniform Commercial Code and FAA filings as are required to maintain the
validity and the priority of the Lien of the Indenture have been made, (D) Owner
Participant and Indenture Trustee shall have received an opinion or opinions of
counsel selected by Owner Participant to the effect that, with customary
exceptions, (I) the trust, as thus removed, shall remain a validly established
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<PAGE> 50
trust, (II) any amendments to the Trust Agreement or the Indenture necessitated
by such removal shall have been duly authorized, executed and delivered by the
parties thereto and shall constitute the legal, valid and binding obligations of
such parties, enforceable in accordance with their terms, (III) if such removal
involves the replacement of Owner Trustee, an opinion of counsel to such
successor Owner Trustee in form and substance reasonably satisfactory to
Indenture Trustee and to Owner Participant covering the matters described in the
opinion described in Section 3(j) hereof, and (IV) covering such other matters
as Owner Participant or the Indenture Trustee may reasonably request, and (E)
Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee,
Owner Participant and their respective Affiliates and Indenture Trustee against
any and all reasonable and actual costs and expenses including reasonable
attorneys' fees and disbursements, registration, recording or filing fees and
other Taxes incurred by Owner Trustee, Owner Participant and their respective
Affiliates, or Indenture Trustee in connection with such change of situs and
shall indemnify and hold harmless Owner Participant, Owner Trustee and their
respective Affiliates, and Indenture Trustee on an after tax basis (subject to
the exclusions set forth in Section 10(b) of the Lease and the Amended and
Restated Sublease TIA) from and against any increase in Taxes borne by such
Person that results from such change in situs. In no event shall any change in
situs of the trust affect Original Head Lessee's rights or obligations under the
Amended and Restated Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed by Owner
Participant, a successor Owner Trustee may be appointed, and a corporation may
become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that Owner
Participant has actual knowledge that Owner Trustee is not in compliance with
its covenants contained herein. No successor Owner Trustee shall be appointed
unless Lessee and Indenture Trustee shall have given written consent thereto,
which consent shall not be unreasonably withheld. Owner Participant will not
instruct Owner Trustee to terminate any Operative Document or take any action
thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Engine as contemplated hereby. Lessee
shall pay expenses on an after tax basis relating to the resignation or, if
requested by Lessee, the removal of Owner Trustee, provided that the Owner
Participant shall pay expenses relating to the removal of the Owner Trustee, if
such removal was solely at the request of the Owner Participant.
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<PAGE> 51
SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner
Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to and
confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee agree
as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease: (i) Lessee, Original Head Lessee and Parent
Guarantor shall retain all rights, benefits, obligations and liabilities under
the Sublease, including that Sublessee shall remain liable for all of its
obligations under Sections 10 and 13 of the Sublease, with respect to the period
up to (but excluding) the Restatement Date and each of Parent Guarantor,
Original Head Lessee and Lessee shall retain all rights and liabilities under
any provision of the Sublease which by the express terms thereof survives the
termination or expiration thereof (including, without limitation, any such
liability arising from and including the Restatement Date under the Sublease in
respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), (ii) all
rights, benefits, obligations and liabilities under the Sublease TIA (which
rights, benefits, obligations and liabilities are amended and restated as of the
Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall
remain liable to Sublessee under the Sublease for Sublessor's Liens (as therein
defined); all of which rights, benefits, obligations and liabilities shall
expressly survive the termination of the Sublease. In furtherance of the
foregoing, it is agreed that Original Head Lessee shall continue to be liable to
the Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens.
(c) Each of the Lessee, Owner Trustee and Owner Participant agree as
among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: Lessee, and Owner
Trustee, Owner Participant and the other "Indemnitees" (as such term is defined
in the Sublease) other than Original Head Lessee and Parent Guarantor, shall
retain all rights, benefits, obligations and liabilities under the Sublease,
including that Sublessee shall remain liable for all of its obligations under
Sections 10 and 13 of the Sublease, with respect to the period up to (but
excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner
Participant shall retain all rights and liabilities under any provision of the
Sublease which by the express terms thereof survives the termination thereof
(including, without limitation,
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<PAGE> 52
any such liability arising on or after the Restatement Date under the Sublease
in respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), all of
which rights, benefits, obligations and liabilities shall expressly survive the
termination of the Sublease. In furtherance of the foregoing, it is agreed by
Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease
are expressly made for the benefit of and shall be enforceable by each
Indemnitee (as such term is defined in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA to the
extent provided in Section 15(b) and (c) hereof, it is expressly understood and
agreed by each of the parties hereto that the Original Head Lessee and the
Parent Guarantor shall, as of the Restatement Date, have no liabilities or
obligations under the "Operative Documents" (as defined in the Original Head
Lease as in effect immediately prior to (but excluding) the Restatement Date and
excluding the Head Lease TIA (which rights, benefits, obligations and
liabilities are amended and restated as of the Restatement Date)) and are
released from all such obligations and liabilities, except the Original Head
Lessee and the Parent Guarantor pursuant to the Parent Head Lease Guaranty (i)
shall continue to be liable to the parties hereto for the removal of any
Sublessor's Liens and (ii) (without releasing Sublessor as provided in the
Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner
Trustee, the Indenture Trustee and the Owner Participant agree as among
themselves and for the benefit of the other "Indemnitees" (as such term is
defined in the Original Head Lease) that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period up to (but excluding) the Restatement Date and under any
other provision of the Participation Agreement which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising from and including the Restatement Date under the
Participation Agreement in respect of the period up to (but excluding), or acts
or omissions or circumstances arising prior to (but excluding), the Restatement
Date) shall survive the termination of the Participation Agreement, the Original
Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights,
benefits, obligations and liabilities of Parent Guarantor and Original Head
Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In
furtherance of the foregoing, the parties hereto consent and agree that the
Parent Guarantor is hereby released from any and all "Obligations" under and as
defined in the Parent Head Lease Guaranty, except in respect of the Retained
Head Lease Rights and Obligations and except in respect of the Amended and
Restated Head Lease TIA, the "Obligations" in respect of which shall continue in
full force and effect in accordance
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<PAGE> 53
with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the
Parent Guarantor.
SECTION 16. Certain Additional Obligations of the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee, Owner
Trustee, Owner Participant and Indenture Trustee hereby covenants and agrees for
the benefit of each other that it will be bound by the terms of the other
Operative Documents to which it or its applicable trustee is a party, and comply
with and perform its agreements, covenants and indemnities set forth in the
other Operative Documents to which it or its applicable trustee is a party, as
amended, supplemented or otherwise modified from time to time as permitted
hereby.
SECTION 17. Lessee Protection of Title. Each of the Owner Trustee
and the Indenture Trustee agrees to execute and deliver such documents or other
instruments as the Lessee may reasonably request to enable the Lessee to perform
its obligations under Section 15 of the Lease for the benefit of such Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee, Trust
Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and Lessee
(i) hereby irrevocably submits for itself and its property to the nonexclusive
jurisdiction of the courts of the State of New York in New York County, and to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service of
process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP,
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Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New
York 10022, as its agent for service of process, and covenants and agrees that
service of process in any suit, action or proceeding may be made upon it at the
office of such agent or such other office of Parent Guarantor or such other
agent, as from time to time may be designated by Parent Guarantor in writing to
Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee
hereby generally consents to service of process by registered mail, return
receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights
Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as
from time to time may be designated by Original Head Lessee in writing to Owner
Trustee, Owner Participant and Indenture Trustee. Owner Participant generally
consents to service of process by registered mail, return receipt requested,
addressed to it at _________________________________ or such other office of
Owner Participant as from time to time may be designated by Owner Participant in
writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee.
Owner Trustee generally consents to service of process by registered mail,
return receipt requested, addressed to it at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner
Trustee as from time to time may be designated by Owner Trustee in writing to
Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture
Trustee generally consents to service of process by registered mail, return
receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford,
Connecticut 06115 or such other office of Indenture Trustee as from time to time
may be designated in writing to Owner Participant, Original Head Lessee, Owner
Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has not
been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
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<PAGE> 55
SECTION 20. Notices. Unless otherwise specifically provided herein,
all notices required or permitted by the terms of this Agreement shall be in
English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the Original Head
Lessee of invoices therefor in reasonable detail prior to the Restatement Date,
all of the reasonable out-of-pocket costs, fees and expenses incurred by the
Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Liquidity Provider, the Indenture Trustee and the
Original Certificate Holders in connection with the transactions contemplated by
this Agreement, the other Operative Documents, the Lease, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided therein)
shall be paid on or prior to the Closing by the Original Head Lessee, including,
without limitation:
(1) the reasonable fees, expenses and disbursements allocable to the
Equipment Notes issued under the Indenture of (A) Shipman & Goodwin LLP,
special counsel for the Pass Through Trustee, the Subordination Agent and
the Indenture Trustee, (B) Morris, James, Hitchens & Williams, special
counsel for the Owner Trustee, (C) Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma and (D) Milbank, Tweed, Hadley &
McCloy, special counsel for the Underwriters;
(2) the reasonable fees, expenses and disbursements of Hunton &
Williams, special counsel for the Owner Participant;
(3) the fees, expenses and disbursements of Andrews & Kurth L.L.P.
and Latham & Watkins, special counsel for the Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee, the Indenture Trustee, the Owner Trustee and the
Subordination Agent;
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(6) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code financing statements in the United States
of America; and
(7) the reasonable fees, expenses and disbursements of White & Case,
special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this Section
21 and the agreements referred to herein are not consummated, the Original Head
Lessee shall bear and pay all costs, expenses and fees referred to in this
Section 21.
(c) The Lessee agrees to pay the amounts it is obligated to pay
under Section 21(j) of the Lease.
SECTION 22. Reliance of Liquidity Provider. Each of the parties
hereto agrees and acknowledges that the Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly. The terms of this Agreement shall inure
to the benefit of the Liquidity Provider, its successors and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Original Head Lessee and its successors and permitted assigns, the Parent
Guarantor and its successors and permitted assigns,
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<PAGE> 57
the Lessee and its successors and permitted assigns, the Pass Through Trustee
and its successors as Pass Through Trustee (and any additional trustee
appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee
and its successors as Indenture Trustee (and any additional Indenture Trustee
appointed) under the Indenture, the Subordination Agent and its successors as
Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement, and the Owner Participant
and its successors and permitted assigns. No purchaser or holder of any
Equipment Notes shall be deemed to be a successor or assign of any holder of the
Original Certificates.
(b) Upon the release of the Engine from the lien of the Indenture
and the termination of the Indenture pursuant to and in accordance with Section
10.01 thereof, each requirement in the Operative Documents that the consent of
Indenture Trustee be obtained or that the Indenture Trustee be given notice
shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee that the
Lessee can rely on the options, elections, determinations, consents, approvals,
waivers and notices given, exercised or made by the Owner Trustee under the
Lease to the extent reserved to the Owner Trustee pursuant to Section 5.10(d) of
the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that this
Agreement shall be effective among all such parties on and as of the Restatement
Date.
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<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers there unto duly authorized as of
the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:_______________________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA I, INC.
By:_______________________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:_______________________________________
Name:
Title:
Address: GPA House
Shannon, County Clare, Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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<PAGE> 59
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner Trustee
By:_______________________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust Administration
[______________________________________]
By:_______________________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Indenture Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 60
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Subordination Agent
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Pass Through Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 61
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1D, dated November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1E, dated November 26, 1996.
<PAGE> 62
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
- ------------ ---------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Class A $1,343,995 02-Jul-2009 6.85% $1,343,995
Class B $ 503,996 02-Jan-2006 6.93% $ 503,996
Class C $ 524,996 02-Jan-2004 6.86% $ 524,996
Class D $ 489,995 02-Jul-2002 8.16% $ 489,995
Class E $1,458,204 02-Jan-2004 10.50% $1,458,204
</TABLE>
<PAGE> 63
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn:
Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet
National Bank Account No. ABA #011900445, ACCT. # 0067548290.
<PAGE> 64
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1991 AWA-E1]
TRANSFEREE'S PARENT GUARANTEE [GPA 1991 AWA-E1], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, ______________________________, a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1991 AWA-E1], dated as of November 20, 1996 among Lessee, Original Head
Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee,
Subordination Agent and Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the benefit of
Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms defined in the
Refunding Agreement are used herein as therein defined, unless otherwise defined
herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably guarantees to
Beneficiaries and their respective successors, endorsees, transferees and
assigns, the prompt and complete payment by Transferee when due (whether at the
stated maturity,
<PAGE> 65
by acceleration or otherwise) of, and the faithful performance of, and
compliance with, all payment obligations of Transferee under the Refunding
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party and each other Operative Document
to which Transferee is a party or by which either is bound (collectively, the
"Relevant Documents"), strictly in accordance with the terms thereof and the
timely performance of all other obligations of Transferee thereunder (such
payment and other obligations, the "Obligations"), and Guarantor further agrees
to pay any and all expenses (including, without limitation, all fees and
disbursements of counsel) that may be paid or incurred by Beneficiaries in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any other
guarantor or any other Person or received or collected by any Beneficiary from
Transferee, Guarantor, any other guarantor or any other person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of Guarantor
hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or observed by
Transferee (whether affirmative or negative in character) shall not be observed
or performed, or if any amount payable by Transferee referred to in Section 1(a)
hereof shall not be paid promptly when due and payable, Guarantor shall promptly
perform or observe or cause to be performed or observed each such Obligation or
undertaking and shall forthwith pay such amount at the place and to the person
or entity entitled thereto pursuant to the Relevant Documents regardless of
whether or not Lessee, Original Head Lessee, Owner Trustee, Pass Through
Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of any of
them shall have instituted any suit, action or proceeding or exhausted its
remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments made by
Guarantor hereunder or any setoff or application of funds of Guarantor by any
Beneficiary, Guarantor shall not be entitled to be subrogated to any of the
rights of any Beneficiary against Transferee or any collateral, security or
guarantee or
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<PAGE> 66
right of set-off held by any Beneficiary for the payment of the Obligations, nor
shall Guarantor seek or be entitled to seek any reimbursement from Transferee in
respect of payments made by Guarantor hereunder, until all amounts and
performance owing to Beneficiaries by Transferee on account of the Obligations
are paid and performed in full.
4. Amendments, etc., with respect to the Obligations; Waiver of
Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without notice
to or further assent by the Guarantor, any demand for payment or performance of
any of the Obligations made by any Beneficiary may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not assign,
convey or otherwise transfer to any person (a) any of its interest in Transferee
unless in connection therewith,
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<PAGE> 67
Guarantor assigns its rights and obligations hereunder to a guarantor which
meets the requirements of Section 10 of the Refunding Agreement; provided that
nothing contained in this Section 5 shall be construed to prohibit any merger,
consolidation or other corporate restructuring of Transferee or Guarantor so
long as the resulting corporation meets the requirements of Section 10 of the
Refunding Agreement and assumes the obligations of the corporation merged or
consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guarantee or acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Transferee
or the Guarantor with respect to the Obligations. The Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance (and not merely of
collectibility) without regard to (a) the validity, regularity or enforceability
of any Relevant Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Transferee against any Beneficiary,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Transferee or the Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of the Transferee for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Transferee or any other person or
entity or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Beneficiary to
pursue such other rights or remedies or to collect any payments from the
Transferee or any such other person or entity or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Transferee or any such other person or entity or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and
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<PAGE> 68
remedies, whether express, implied or available as a matter of law, of any
Beneficiary against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Beneficiaries, and their respective successors, endorsees, transferees
and assigns, until all of the Obligations and the Obligations of the Guarantor
under this Agreement shall have been satisfied by payment and performance in
full. The Guarantor further agrees that, without limiting the generality of this
Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by
applicable law from exercising its remedies (or any of them) against the
Transferee under any Operative Document, such Beneficiary (or any assignee
thereof) shall be entitled to receive hereunder from the Guarantor, upon demand
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or returned
by any beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Transferee or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Transferee or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made. The
Guarantor shall not commence any "case" (as defined in Title 11 of the United
States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments hereunder
shall be paid without set-off, counterclaim, deduction or withholding, and shall
be made in U.S. Dollars. If any payment hereunder is subject to deduction or
withholding, Guarantor shall pay an additional amount such that, after deduction
of all amounts required to be deducted or withheld, the net amount actually
received will equal the amount that would have been received had such deduction
or withholding not been required.
9. Representations and Warranties. The Guarantor hereby represents
and warrants that:
(a) the Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it operates
and to conduct the business in which it is currently engaged;
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<PAGE> 69
(b) the Guarantor has the corporate power and authority and the
legal right to execute and deliver, and to perform its obligations under,
this Guarantee, and has taken all necessary corporate action to authorize
its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding obligation
of the Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally;
(d) the execution, delivery and performance of this Guarantee will
not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the creation
or imposition of any lien on any of the properties or revenues of the
Guarantor pursuant to any requirement of law or contractual obligation of
the Guarantor;
(e) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or governmental authority and no consent of
any other person (including, without limitation, any stockholder or
creditor of the Guarantor) is required in connection with the execution,
delivery, performance, validity or enforceability of this Guarantee;
(f) no litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of
the Guarantor, threatened by or against the Guarantor or against any of
its properties or revenues (i) with respect to this Guarantee or any of
the transactions contemplated hereby or (ii) that could have a material
adverse effect on the business, operations, property or financial or other
condition of the Guarantor;
[(g) the balance sheet of the Guarantor as at _________________ and
the related statement of income and retained earnings for the fiscal year
then ended (copies of which have heretofore been furnished to each
Beneficiary) have been prepared in accordance with generally accepted
accounting principles applied consistently throughout the period involved,
are complete and correct and present fairly the financial condition of the
Guarantor as at such date and the results of its operations for such
fiscal year; since such date there has been no material adverse change in
the business, operations, property or financial or other condition of the
Guarantor; the Guarantor has no material contingent obligation, contingent
liability or liability for
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<PAGE> 70
taxes, long-term lease or unusual forward or long-term commitment that is
not reflected in the foregoing statements or in the notes thereto; and]1
(h) the Guarantor is [type of legal personality] with a [combined
capital, surplus and undivided profits] [tangible net worth] of at least
$60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act
(except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any
Beneficiary, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire agreement of
Guarantor with respect to the subject matter hereof and there are no promises or
representations by any Beneficiary relative to the subject matter hereof not
reflected herein.
13. Amendments and Waivers. None of the terms or provisions of this
Guarantee may be waived, amended or supplemented or otherwise modified except by
a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this Guarantee
are for convenience of reference only and not to
- --------
1 This representation is not applicable if Transferee is a
wholly-owned subsidiary of the Owner Participant.
- 7 -
<PAGE> 71
affect the construction hereof or be taken into consideration in the
interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding upon the
successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing or by
telegraph, telex or telecopy and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, two days after deposit in the postal system, first class
postage pre-paid, or, in the case of telegraphic notice, when sent, answerback
received, addressed to (a) in the case of the Guarantor, the address provided on
the signature page hereof, and (b) in the case of any Beneficiary, the address
provided for such party in the Refunding Agreement.
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<PAGE> 72
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered by its duly authorized officer as of the day and the
year first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
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<PAGE> 73
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1991 AWA-E1]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1991 AWA-E1] ("Assignment")
dated as of _____________, between ______________, a ___________ corporation
("Assignor") and ________________, a __________ corporation ("Assignee") entered
into for the benefit of Indenture Trustee, Owner Trustee, Original Head Lessee
and Lessee referred to in the Refunding Agreement mentioned below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer by
Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
_________________________________, Fleet National Bank, as Subordination Agent,
and Fleet National Bank, as Indenture Trustee, as amended, modified or
supplemented from time to time (the "Refunding Agreement"), (ii) the Trust
Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as
defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA
identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the
Indenture (as defined in the Refunding Agreement) and (b) the assumption by
Assignee of the obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the meaning ascribed thereto in the Refunding Agreement. For purposes
of this Assignment, the defined term "Operative Document" shall have the meaning
ascribed thereto in the Refunding Agreement and shall be deemed to include the
Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned, transferred
and set over, and does hereby sell, convey, assign, transfer and set over, unto
Assignee, as of the date hereof, all of its right, title and interest in, under
and with respect to the Refunding Agreement, the Trust Agreement, the Trust
Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the other
Operative Documents to which Assignor is a party or any other contract,
agreement, document or instrument relating to the Trust Estate by which Assignor
is bound, and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
<PAGE> 74
rights of Assignor as have accrued to Assignor prior to the date hereof
(including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust Agreement as of a date prior
to such date and the right to receive any indemnity payment pursuant to the
Refunding Agreement or the Lease with respect to events occurring prior to such
date).
3. Assumption. Assignee hereby undertakes all of the duties and
obligations of Assignor whenever accrued (other than duties and obligations of
Assignor required to be performed by it on or prior to the date hereof under the
Operative Documents to which Owner Participant is a party and any of the other
Operative Documents by which Assignor is bound or any other contract, agreement,
document or other instrument relating to the Trust Estate to which Assignor is a
party or by which it is bound), pursuant to the Trust Agreement and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound, and hereby confirms that it shall
be deemed a party to the Trust Agreement and shall be bound by each of the other
Operative Documents and each other contract, agreement, document or other
instrument relating to the Trust Estate to which Assignor is a party or by which
it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the within
assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
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<PAGE> 75
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay over to
Assignee, if and when received following the date hereof, any amounts (including
any sums payable as interest in respect thereof) paid to or for the benefit of
Assignor that, under Section 2 hereof, belong to Assignee, and Assignee hereby
covenants and agrees to pay over to Assignor, if and when received following the
date hereof, any amounts (including any sums payable as interest in respect
thereof) paid to or for the benefit of Assignee that, under Section 2 hereof,
belong to Assignor.
7. Investment Purpose. Assignee hereby represents that it is
acquiring the Trust Estate interests and other interests hereby assigned to it
without a view to the distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents and
warrants that:
(a) it has all requisite power and authority and legal right to
enter into and carry out the transactions contemplated hereby and to carry
out and perform the transactions of Owner Participant as contemplated by
the Operative Documents;
(b) [Intentionally Omitted];
(c) on and as of the date hereof, the representations and warranties
of Owner Participant set forth in Section 9 of the Refunding Agreement and
as set forth in any other Agreement to which Owner Participant is a party
are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of the Refunding
Agreement;
(e) Assignee or its guarantor has a [combined capital, surplus and
undivided profits] [tangible net worth] of not less than $60,000,000.
9. Governing Law. This Assignment and Assumption Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
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<PAGE> 76
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:___________________________________
Title:
[ASSIGNEE]
By:___________________________________
Title:
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<PAGE> 77
EXHIBIT C to
REFUNDING AGREEMENT
[INTENTIONALLY OMITTED]
<PAGE> 78
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 79
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) First Amended and Restated Trust Indenture and Security Agreement
[GPA 1991 AWA-E1] dated as of November 26, 1996 (the "Amended and
Restated Indenture") between the Owner Trustee and the Indenture
Trustee, amending and restating the Original Indenture with attached
thereto Trust Agreement and Indenture Supplement No. 2 [GPA 1991
AWA-E1] dated November 26, 1996 (the "Indenture Supplement") , with
respect to the Engine, which Amended and Restated Indenture with the
Indenture Supplement attached was filed with the FAA at 12:21 p.m.,
C.S.T. on November 26, 1996;
(b) Assignment and Amendment No. 1 and Sublease Termination Agreement
dated as of November 26, 1996 (the "Lease Amendment") among the
Original Head Lessee, as assignor, the Owner Trustee, as lessor, the
Lessee, as assignee, and the Indenture Trustee, which (i) assigns
all right, title and interest of the Original Head Lessee in and to
the Original Head Lease to the Lessee, (ii) terminates the Sublease
and (iii) releases the Sublease Collateral Assignment, which Lease
Amendment was filed with the FAA at 12:22 p.m., C.S.T. on November
26, 1996 and
(c) Amended and Restated Engine Lease Agreement, [GPA 1991 AWA-E1] dated
as of March 15, 1991 and amended and restated as of November 26,
1996 (the "Amended and Restated Lease") between the Owner Trustee,
as lessor, and the Lessee, as successor lessee, amending and
restating the Original Head Lease, with Lease Supplement [GPA 1991
AWA-E1] No. 2 dated November 26, 1996 (the "Lease Supplement")
between the Owner Trustee, as lessor, and the Lessee, as successor
lessee, with respect to the Engine, attached thereto, which Amended
and Restated Lease with the Lease Supplement attached was filed with
the FAA at 12:23 p.m. C.S.T. on November 26, 1996.
Trust Agreement
Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991 between
Wilmington Trust Company, as owner trustee, and ________________________________
________________________________, as owner participant, as supplemented by Trust
Agreement Supplement [GPA 1991 AWA-E1] No. 1 dated March 27, 1991, which were
not filed with the FAA.
Original Indenture
<PAGE> 80
Trust Indenture and Security Agreement [GPA 1991 AWA-E1] dated as
of March 15, 1991 between Wilmington Trust Company, as owner trustee under Trust
Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, and Fleet National Bank
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank), as indenture trustee,
which was recorded by the Federal Aviation Administration on March 28, 1991 and
assigned Conveyance No. 259534, as supplemented and amended by the following
described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- ------------------------------------
<S> <C> <C> <C>
Trust Indenture
Supplement No. 1 03/27/91 03/28/91 259534
Amendment No. 1 to
Trust Indenture and
Security Agreement 03/27/92 04/30/92 DD002565
Amendment No. 2 to
Trust Indenture and as of
Security Agreement 07/29/93 08/04/93 F59677
</TABLE>
Original Head Lease
Engine Lease Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991
between Wilmington Trust Company, as owner trustee under Trust Agreement [GPA
1991 AWA-E1] dated as of March 15, 1991, as lessor, and GPA Leasing USA I, Inc.,
as lessee, which was recorded by the Federal Aviation Administration on March
28, 1991 and assigned Conveyance No. 259535, as supplemented by the following
described instrument:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- ------------------------------------
<S> <C> <C> <C>
Lease Supplement
[GPA 1991 AWA-E1]
No. 1 03/27/91 03/28/91 259535
</TABLE>
Sublease
Engine Sublease Agreement [GPA 1990 AWA-E1] dated as of December 12,
1990 between GPA Leasing USA I, Inc. , as sublessor, and America West Airlines,
Inc., as sublessee, which was recorded by the Federal Aviation Administration on
February 19, 1991 and assigned Conveyance No. AA46491, as supplemented and
amended by the following described instruments:
Date of FAA FAA
- 2 -
<PAGE> 81
<TABLE>
<CAPTION>
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- ------------------------------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 02/08/91 02/19/91 AA46491
Amendment No. 1 to
Engine Sublease
Agreement [GPA 1990 as of
AWA-E1] 08/26/91 09/11/91 J68135
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease [GPA 1991 AWA-E1] dated as of March 15, 1991
between GPA Leasing USA I, Inc., as assignor, and Wilmington Trust Company, as
owner trustee under Trust Agreement [GPA 1991 AWA-E1] dated as of March 15,
1991, as supplemented, as assignee, which was recorded by the Federal Aviation
Administration on March 28, 1991 and assigned Conveyance No. 259536.
- 3 -
<PAGE> 1
Exhibit 4.20
REFUNDING AGREEMENT
[GPA 1991 AWA-E2]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
----------------------------,
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
Secured Equipment Notes Covering
One IAE International Aero Engines AG V2500-A1 Engine
Manufacturer's Serial No. V0049
Leased by America West Airlines, Inc.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. Purchase of Equipment Notes; Refunding.......................................... 5
SECTION 2. Equipment Notes................................................................. 7
SECTION 3. Conditions Precedent............................................................ 7
SECTION 4. Certain Conditions Precedent to the
Obligations of the Original Head Lessee
and the Parent Guarantor; Certain
Conditions Precedent to the Obligations
of the Lessee; Conditions Precedent
with respect to the Pass Through
Trustee........................................................................ 15
SECTION 5. Amendment and Restatement of the
Original Indenture............................................................. 18
SECTION 6. Amendment and Restatement of the
Original Lease................................................................. 19
SECTION 7. Termination of the Participation
Agreement; Termination of Sublease,
etc............................................................................ 19
SECTION 8. Representations and Warranties of the
Lessee......................................................................... 19
SECTION 9. Representations and Warranties.................................................. 24
SECTION 10. Transfer of Owner Participant's
Interest....................................................................... 39
SECTION 11. [Reserved] ..................................................................... 42
SECTION 12. Quiet Enjoyment................................................................. 42
SECTION 13. Liens ..................................................................... 43
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent
Guarantor, Trust Company, Owner Trustee
and Owner Participant.......................................................... 45
SECTION 15. Certain Retained Rights and Releases............................................ 48
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 16. Certain Additional Obligations of the
Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee................................. 50
SECTION 17. Lessee Protection of Title....................................................... 50
SECTION 18. Jurisdictional and Related Matters............................................... 50
SECTION 19. Limitation on Recourse........................................................... 51
SECTION 20. Notices ...................................................................... 52
SECTION 21. Expenses ...................................................................... 52
SECTION 22. Reliance of Liquidity Provider................................................... 53
SECTION 23. Miscellaneous.................................................................... 53
SECTION 24. Governing Law.................................................................... 54
SECTION 25. Effectiveness.................................................................... 54
</TABLE>
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1991 AWA-E2]
REFUNDING AGREEMENT [GPA 1991 AWA-E2] (this "Agreement"),
dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) ______________________________, a
Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a
Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
five separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank), a national banking
association, not in its individual capacity except as otherwise expressly
provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under
the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Sanwa International PLC, as Lender (and predecessor in
interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and
The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the
Owner Trustee and the Indenture Trustee entered into the Participation Agreement
[GPA 1991 AWA-E2], dated as of March 15, 1991 (as amended, supplemented or
otherwise modified from time to time, the "Participation Agreement"), providing
for the financing of one IAE International Aero Engines AG V2500-A1 Engine (the
"Engine");
WHEREAS, concurrently with the execution and delivery
of the Participation Agreement, the Owner Trustee and the
<PAGE> 5
Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA
1991 AWA-E2], dated as of March 15, 1991, as supplemented by Trust Indenture
Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1 to Trust
Indenture and Security Agreement dated March 27, 1992, and as further amended by
Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29,
1993 (as so amended, supplemented or otherwise modified to the date hereof, the
"Original Indenture"), pursuant to which the Owner Trustee issued loan
certificates substantially in the form set forth in Section 2.02 thereof (the
"Original Certificates") to the Lenders as evidence of the indebtedness then
being made by the Owner Trustee to finance a portion of the purchase price of
the Engine;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Engine Lease Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991,
as supplemented by Lease Supplement [GPA 1991 AWA-E2] No. 1 dated March 27, 1991
(as so supplemented, the "Original Lease"), whereby, subject to the terms and
conditions set forth therein, the Owner Trustee agreed to lease to the Original
Head Lessee, and the Original Head Lessee agreed to lease from the Owner
Trustee, the Engine commencing on the Delivery Date (as therein defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1991 AWA-E2] dated as of March 15, 1991 (the "Parent Head Lease
Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent
Guarantor guaranteed all of the obligations of the Original Head Lessee under
the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, as
supplemented by Trust Agreement Supplement [GPA 1991 AWA-E2] No. 1 dated March
27, 1991 (as amended, supplemented or otherwise modified to the date hereof, the
"Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.1 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1991 AWA-E2],
dated as of March 15, 1991 (as amended, supplemented or otherwise modified to
the date hereof, the "Head Lease TIA");
- 2 -
<PAGE> 6
WHEREAS, prior to the execution and delivery of the
Participation Agreement, the Original Head Lessee in its capacity as sublessor
(in such capacity, the "Sublessor") and America West Airlines, Inc. in its
capacity as sublessee (in such capacity, the "Sublessee") entered into the
Engine Sublease Agreement [GPA 1990 AWA-E2] dated as of December 12, 1990, as
supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-E2] dated February 8,
1991, as amended by Amendment No. 1 to Engine Sublease Agreement [GPA 1990
AWA-E2] dated as of August 26, 1991 (as amended, supplemented or otherwise
modified to the date hereof, the "Sublease"), whereby, subject to the terms and
conditions set forth therein, the Sublessor agreed to sublease to the Sublessee,
and the Sublessee agreed to sublease from the Sublessor, the Engine commencing
on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991 (as
amended, modified or otherwise supplemented to the date hereof, the "Sublease
TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease [GPA 1991 AWA-E2] dated as of March 15, 1991 (as amended, modified or
otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will amend and restate the Original Indenture as the
First Amended and Restated Trust Indenture and Security Agreement [GPA 1991
AWA-E2], dated as of the Restatement Date, as supplemented by Trust Indenture
Supplement No. 2 dated the Restatement Date (the "First Amended and Restated
Indenture" and, the First Amended and Restated Indenture as so amended and
restated, the "Indenture"), under which Indenture the Owner Trustee will issue
secured equipment notes substantially in the form set forth in Section 2.01
thereof (the "Equipment Notes") in five series, the proceeds from the issuance
and sale of which will be applied in part to the prepayment in full of the
Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
Original Lease as the Amended and Restated Lease (as so amended and restated,
the "Lease");
- 3 -
<PAGE> 7
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1991 AWA-E2] No. 2
("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended
and as further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Amended and Restated Head Lease Tax
Indemnification Agreement, amending and restating the Head Lease TIA (as so
amended and restated, the "Amended and Restated Head Lease TIA") and the
Sublessor and the Sublessee will enter into the Amended and Restated Sublease
Tax Indemnification Agreement amending and restating the Sublease TIA (as so
amended and restated, the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
five separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving credit agreements
(each, a "Liquidity Facility"), for the benefit of the Holders of Equipment
Notes of each of three Pass Through Trusts, with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination
Agent will enter into the Intercreditor Agreement, dated as of the Restatement
Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
- 4 -
<PAGE> 8
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject
to the satisfaction or waiver of the conditions set forth herein, on November
26, 1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as a
payment of Supplemental Rent under the Sublease all accrued and unpaid
Rent under the Sublease up to the Restatement Date, if any, (less any
amounts for which Sublessee is indemnified by Sublessor) and (B) the
Original Head Lessee shall pay to the Owner Trustee, as a payment of
Supplemental Rent under the Original Lease, an amount equal to the
accrued and unpaid interest on the Original Certificates up to but not
including the Restatement Date plus an amount (the "Prepayment Amount")
equal to all other amounts due to the holders of the Original
Certificates under the Original Indenture and the other Operative
Documents (as defined in the Original Indenture) payable on the
Restatement Date under Section 2.12 of the Original Indenture;
(ii) the Pass Through Trustee for each Pass Through Trust
shall pay to the Owner Trustee the aggregate purchase price of the
Equipment Notes being issued to such Pass Through Trustee as set forth
in clause (xii) below;
(iii) the Owner Trustee (to the extent of proceeds received
under clauses (i) and (ii)) shall pay to the Indenture Trustee for the
benefit of the holders of the Original Certificates an amount equal to
the aggregate principal amount of the Original Certificates outstanding
on the Restatement Date, together with accrued and unpaid interest on
the Original Certificates up to but not including the Restatement Date
plus the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the holders of
the Original Certificates the amounts of principal, interest, Break
Funding Cost, if any, described in clause (iii) above, owing to them on
the Restatement Date with respect to the Original Certificates as a
prepayment of the Original Certificates;
(v) the Indenture Trustee shall receive the Original
Certificates for cancellation;
- 5 -
<PAGE> 9
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture (including Trust Indenture Supplement No. 2);
(vii) the Original Head Lessee, the Sublessee, the Owner
Trustee and the Indenture Trustee shall enter into Lease Amendment No.
1;
(viii) the Owner Participant and the Trust Company shall
enter into Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner Participant shall
enter into the Amended and Restated Head Lease TIA and the Sublessor
and the Sublessee shall enter into the Amended and Restated Sublease
TIA;
(x) the Original Head Lessee, GPA Leasing USA Sub I, Inc.,
the Parent Guarantor and the Lessee shall enter into an agreement in
form and substance reasonably satisfactory to each, inter alia,
confirming the termination of certain rights which the Parent Guarantor
has to "put" engines to the Lessee and the obligation of the Lessee to
accept and lease such engines (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of its
affiliates and the Lessee will enter into an agreement (the "Deed of
Indemnity") pursuant to which the Parent Guarantor and/or one or more
of its affiliates, on the one hand, and the Lessee, on the other, will
indemnify each other with respect to certain information included in
the Prospectus and the Registration Statement (as such terms are
defined in the Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Equipment Notes of the
maturity and aggregate principal amount, bearing the interest rate and
for the purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust.
(b) The Owner Participant, by its execution and delivery
hereof, requests and directs the Owner Trustee to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions contemplated
herein.
(c) The closing (the "Closing") of the transactions described
in this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New
- 6 -
<PAGE> 10
York, New York 10005, on the Restatement Date, or at such other place as the
parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated
hereby, the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent
Guarantor and the Lessee have entered into the Underwriting Agreement, dated as
of November 20, 1996 (the "Underwriting Agreement"), among such Persons and
Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and
Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the
terms and conditions hereof, the Lessee will enter into each of the Pass Through
Trust Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be
payable as to principal in accordance with the terms of the Indenture, and the
Equipment Notes shall provide for a fixed rate of interest per annum and shall
contain the terms and provisions provided for the Equipment Notes in the
Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Equipment Notes bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Equipment Notes in the aggregate shall be in the principal amounts set forth on
Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust
Agreements and of the other Operative Documents, all such Equipment Notes shall
be dated and authenticated as of the Restatement Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass
Through Trustee to make the payments described in Section 1(a)(ii) and the
obligations of the Owner Trustee to make the payments described in Section
1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner
Trustee, the Owner Participant and the Indenture Trustee to participate in the
transactions contemplated by this Agreement on the Restatement Date are subject
to the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent (except that paragraphs (a), (f) and (j) shall not be
conditions precedent to the obligations of the Owner Trustee hereunder,
paragraphs (g) and (l) shall not be conditions precedent to the obligations of
the Owner Participant hereunder and paragraphs (e) and (k) shall
- 7 -
<PAGE> 11
not be conditions precedent to the obligations of the Indenture
Trustee hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes
to the Indenture Trustee for authentication, and the Indenture Trustee
shall have authenticated such Equipment Notes and shall have tendered
the Equipment Notes to the Subordination Agent on behalf of the Pass
Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of
the following documents and the Indenture Trustee shall have received
executed counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated
Lease and Lease Supplement No. 2;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and
Trust Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements and
each Pass Through Trust Supplement set forth in
Schedule I hereto;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the Class A,
Class B and Class C Trusts (as defined in the
Intercreditor Agreement).
(c) The Pass Through Trustee, the Indenture Trustee,
the Owner Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of each of the Original
Head Lessee, the Lessee and the Parent Guarantor as to the
person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on
behalf of such Person in connection with the transactions
contemplated hereby (including, without limitation, each of
the documents referred to herein) and as to the signatures of
such person or persons;
- 8 -
<PAGE> 12
(2) a copy of the resolutions of the board of
directors of each of the Original Head Lessee, the Lessee and
the Parent Guarantor or the applicable committee thereof,
certified by the Secretary or an Assistant Secretary of such
Person, duly authorizing the transactions contemplated hereby
and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of
such Person in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of
each of the Original Head Lessee and the Lessee, certified by
the Secretary of State of its state of incorporation, a copy
of the by-laws of each of the Original Head Lessee and the
Lessee, certified by the Secretary or Assistant Secretary of
such Person, and a certificate or other evidence from the
Secretary of State of its state of incorporation, dated as of
a date reasonably near the Restatement Date, as to its due
incorporation and good standing in such state; and
(4) a copy of the Memorandum and Articles of
Association of the Parent Guarantor certified to be true and
correct by the Secretary or an Assistant Secretary of the
Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case
of (3) below, a certificate signed by an authorized officer of the
Lessee and, in the case of (1) and (2) below, a certificate signed by
an authorized officer of the Original Head Lessee, dated the
Restatement Date, certifying that:
(1) the Original Lease and the Original Indenture
have each been duly recorded with the FAA pursuant to the
sections of Title 49 of the United States Code relating to
aviation (the "Federal Aviation Act");
(2) Lease Amendment No. 1, the Amended and Restated
Lease, Lease Supplement No. 2, the First Amended and Restated
Indenture, Trust Indenture Supplement No. 2 and Trust
Supplement No. 2 covering the Engine shall have been duly
filed for recordation with the FAA pursuant to the Federal
Aviation Act; and
(3) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in
- 9 -
<PAGE> 13
which case such representations and warranties were correct on
and as of such earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the
Secretary, an Assistant Secretary or other appropriate officer
of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Indenture Trustee, each certified by the Secretary, an
Assistant Secretary or other appropriate officer of the
Indenture Trustee; and
(4) a certificate signed by an authorized officer of
the Indenture Trustee, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Indenture Trustee are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as
to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Trustee in connection with the
transactions contemplated hereby (including, without
limitation, each of
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<PAGE> 14
the documents referred to herein) and as to the
signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Owner Trustee, each certified by the Secretary or an
Assistant Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
(1) an incumbency certificate of the Owner
Participant as to the person or persons authorized to execute
and deliver this Agreement and each of the other documents to
be executed on behalf of the Owner Participant in connection
with the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Participant or the applicable authority
designated by the board of directors thereof, certified by the
Secretary or an Assistant Secretary of the Owner Participant,
duly authorizing the transactions contemplated hereby and the
execution, delivery and performance of each of the documents
required to be executed and delivered on behalf of the Owner
Participant in connection with the transactions contemplated
hereby;
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<PAGE> 15
(3) a copy of the certificate of incorporation of the
Owner Participant, certified by the Secretary of State of its
state of incorporation, a copy of the by-laws of the Owner
Participant, certified by the Secretary or Assistant Secretary
of the Owner Participant, and a certificate or other evidence
from the Secretary of State of its state of incorporation,
dated as of a date reasonably near the Restatement Date, as to
its due incorporation and good standing in such state; and
(4) a certificate signed by an authorized
representative of the Owner Participant, dated the Restatement
Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as
though made on and as of the Restatement Date, except to the
extent that such representations and warranties relate solely
to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the
Lessee a report from Willis Corroon in substantially the form of
Exhibit D attached hereto.
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion
addressed to it from (i) Latham & Watkins, special counsel for the
Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee,
(iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis
& Roca, special Arizona counsel for the Lessee, in each case in form
and substance satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received an opinion addressed to it
from Morris, James, Hitchens & Williams, special counsel for the Owner
Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from
Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the
Subordination Agent and the Pass Through Trustee, in each case in form
and substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received an opinion addressed to it from
(i) Hunton & Williams, special counsel
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<PAGE> 16
for the Owner Participant and (ii) in-house counsel for the Owner
Participant, in each case in form and substance satisfactory to each of
them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case,
special counsel for the Liquidity Provider, and (ii) in-house counsel
for the Liquidity Provider, in each case in form and substance
satisfactory to the Pass Through Trustee, the Owner Trustee and the
Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma, in form and substance satisfactory
to each of them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP,
special New York counsel for the Original Head Lessee and the Parent
Guarantor, in form and substance satisfactory to each of them.
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from McCann FitzGerald, special Irish counsel
for the Parent Guarantor, in form and substance satisfactory to each of
them.
(q) The Original Head Lessee, the Lessee, GPA Leasing USA Sub
I, Inc. and the Parent Guarantor shall have entered into the
Underwriting Agreement and the Lessee shall have entered into each of
the Pass Through Trust Agreements, the Certificates shall have been
issued and sold pursuant to the Underwriting Agreement and the Pass
Through Trust Agreements, and the Underwriters shall have transferred
to the Pass Through Trustee in immediately available funds an amount
equal to the aggregate purchase price of the Equipment Notes to be
purchased from the Owner Trustee.
(r) The Original Head Lessee and the Owner Participant shall
each have executed and delivered to the other the Amended and Restated
Head Lease TIA.
(s) The Sublessor and the Sublessee shall each have executed
and delivered to the other the Amended and Restated Sublease TIA.
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<PAGE> 17
(t) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would make it illegal for the Pass Through Trustee to make
the payments described in Section 1(a)(ii) or for the Lessee, the
Indenture Trustee, the Owner Trustee or the Owner Participant or any
other party hereto to participate in the transactions contemplated by
this Agreement on the Restatement Date.
(u) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in
connection with the Pass Through Trustee's making of the payments
described in Section 1(a)(ii) or the Owner Trustee's or the Owner
Participant's participation in the transactions contemplated by this
Agreement on the Restatement Date shall have been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security
interests created by or pursuant to the Indenture that are not covered
by the recording system established by the Federal Aviation Act shall
have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee and the Owner Trustee, as the case may
be, and such financing, termination, amendment and continuation
statement or statements or documents to the same purposes shall have
been duly filed in all places necessary or advisable, and any
additional Uniform Commercial Code financing, termination, amendment
and continuation statements deemed advisable by the Original Head
Lessee, the Lessee, the Owner Participant or the Indenture Trustee
shall have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee or the Owner Trustee, as the case may be,
and duly filed in all places advisable.
(w) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would adversely affect the tax consequences of the
transactions contemplated by this Agreement to the Owner Participant,
the Owner Trustee or any of their respective Affiliates.
(x) The Owner Trustee shall have received a letter of credit
in the amount of $200,000 from the Lessee in the form of Exhibit D-2 to
the Lease.
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<PAGE> 18
(y) The Owner Participant shall have received any other
documents and evidence as the Owner Participant or its counsel may
request.
Promptly following the recording of Lease Amendment No. 1, the
Amended and Restated Lease (including Lease Supplement No. 2) and the First
Amended and Restated Indenture (including Trust Indenture Supplement No. 2)
pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2,
the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and
Trust Supplement No. 2.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
(i) Each of the Original Head Lessee and the Parent Guarantor
shall have received counterparts of the following documents executed by
each of the parties thereto other than the Original Head Lessee and the
Parent Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 2;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee and such other
releases
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<PAGE> 19
and terminations as it may reasonably
request; and
(9) that certain letter agreement dated as of
the Restatement Date relating to Stipulated
Loss Values with respect to the Amended and
Restated Lease (the "SLV Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent Guarantor
shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee
referred to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i),
Section 3(j), Section 3(k), Section 3(l),
Section 3(m) and Section 3(n), in each case
addressed to each of the Original Head
Lessee and the Parent Guarantor and in form
and substance satisfactory to each of them;
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form
and substance reasonably satisfactory to
each of them; and
(6) the report referred to in Section 3(h)
addressed to each of the Original Head
Lessee and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent Guarantor
shall have received such other documents and evidence with respect to
each other party hereto as each of them or its counsel may reasonably
request in order to establish the due consummation of the transactions
contemplated by this Agreement and the "Refunding Agreements" (as
defined in the Registration Statement), the taking of all necessary
action in connection therewith and compliance with the conditions
herein or therein set forth.
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<PAGE> 20
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 2;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the following
documents:
(1) the incumbency certificate of the Original
Head Lessee and Parent Guarantor referred to
in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee
and Parent Guarantor referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j),
Section 3(k), Section 3(l), Section 3(m),
Section 3(n), Section 3(o) and Section 3(p),
in each case addressed to Lessee and in form
and substance satisfactory to Lessee; and
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<PAGE> 21
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to Lessee and in form
and substance reasonably satisfactory to
Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass Through Trust Agreements of the Pass Through
Trustee are correct as of the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary action in connection therewith and compliance with the conditions
herein set forth.
SECTION 5. Amendment and Restatement of the Original
Indenture. Subject to the satisfaction or waiver of the conditions precedent set
forth herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the First
Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee,
by execution and delivery hereof, agree to execute and deliver the First Amended
and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor
and the Lessee, by execution and delivery hereof, consent to such execution and
delivery of the First Amended and Restated Indenture. The First
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<PAGE> 22
Amended and Restated Indenture shall be effective as of the Restatement Date.
SECTION 6. Amendment and Restatement of the Original Lease.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor
and the Owner Participant, by execution and delivery hereof, consent to the
assignments, delegations, and releases set forth in, and to the amendment and
restatement of the Original Lease effected by, and the Owner Participant
requests and instructs the Owner Trustee to execute and deliver, Lease Amendment
No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee
and the Sublessee agree, by execution and delivery hereof, to execute and
deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective
as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner Trustee,
the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect from and including the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no obligations on the parties thereto. Upon
the execution and delivery of Lease Amendment No. 1 by each of the parties
thereto, the Sublease and the Assignment of Sublease shall be terminated as and
to the extent set forth herein and therein. Lease Amendment No. 1 shall be
effective as of the Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original Head
Lessee (except as to the representation and warranty contained in Section 8(i)),
the Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has the corporate power and authority to own or hold under lease its
properties, has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and perform its
obligations under this Agreement, Lease Amendment No. 1, the Lease, the
Pass Through Trust Agreements, the Amended and Restated Sublease TIA,
the SLV Letter Agreement and any certificate delivered by the Lessee
pursuant to the foregoing (the
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<PAGE> 23
"Lessee Documents") and is duly qualified to do business as a foreign
corporation in each jurisdiction where the failure to so qualify would
have a material adverse effect on its business, operations or condition
(financial or otherwise), or on its ability to perform its obligations
under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under
the Lessee Documents have been duly authorized by all necessary
corporate action on the part of the Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation,
judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions
of, or constitute a default under, or result in the creation of any
Lien (other than Permitted Liens) upon the property of the Lessee
under, any indenture, mortgage, contract, lease or other agreement in
each case having payment obligations in excess of $500,000 to which the
Lessee is a party or by which it may be bound or affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee
under the Lessee Documents nor the consummation by the Lessee of any of
the transactions contemplated by the Lessee Documents, requires the
consent or approval of, the giving of notice to, the registration with,
or the taking of any other action in respect of, the Department of
Transportation, the FAA, or any other federal, state, local or foreign
governmental authority having jurisdiction, other than those which have
already been received and which the Lessee is in compliance with and
(i) the registration of the Certificates under the Securities Act of
1933, as amended (the "Securities Act") and the securities laws of any
state in which the Certificates may be offered for sale if the laws of
such state require such action, (ii) the qualification of the Pass
Through Trust Agreements under the Trust Indenture Act of 1939, as
amended, (iii) (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities
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<PAGE> 24
having jurisdiction with respect to the Engine required to be obtained
on or prior to the Restatement Date, which orders, permits, waivers,
exemptions, authorizations and approvals have been duly obtained and
are, or will on the Restatement Date be in full force and effect and
(B) such consents, approvals, notices, registrations and other actions
required by the terms of the Lessee Documents to the extent required to
be given or obtained only after the Restatement Date and (iv) the
registrations and filings referred to in Section 8(i);
(e) each Lessee Document has been duly executed and delivered
by the Lessee and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, each Lessee Document
constitutes, or when executed will constitute, the legal, valid and
binding obligations of the Lessee enforceable against the Lessee in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors or lessors
generally and by general principles of equity, whether considered in a
proceeding at law or in equity, and except, in the case of the Lease,
as may be limited by applicable laws which may affect the remedies
provided in the Lease, which laws, however, do not make the remedies
provided in the Lease inadequate for the practical realization of the
benefits intended to be afforded thereby;
(f) except as disclosed in the Prospectus, there are no
pending or, to its knowledge, threatened actions or proceedings before
any court or administrative agency or regulatory commission or other
governmental agency against or affecting the Lessee that are reasonably
expected to materially adversely affect the ability of Lessee to enter
into or perform its obligations under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be free
and clear of any and all Liens (other than Permitted Liens) created by
or through the Lessee;
(i) except for the filing for recordation pursuant to the
Federal Aviation Act (with confidential financial terms redacted) of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement
No. 2, Trust Supplement No. 2, the First Amended and Restated Indenture
and Indenture Supplement No. 2, and each of the other documents
referred to in Annex A hereto, all with the FAA, the filing of a
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<PAGE> 25
Uniform Commercial Code ("UCC") amended financing statement with the
Secretary of State of the State of Delaware with regard to the Original
Lease, the filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States of New
York, Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with
respect to the Lease, the filing of a UCC termination statement with
the Secretary of State of the State of Arizona with respect to the
Sublease, and the filing of a UCC termination statement with the
Secretary of State of the State of Delaware with respect to the Initial
Sublease Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly effected as
of the Restatement Date (and assignments thereof and continuation
statements at periodic intervals), and other than the taking of
possession by the Indenture Trustee of the original counterparts of the
Original Lease, Lease Amendment No. 1, the Amended and Restated Lease,
and all Lease Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification required by
Section 6(e) of the Lease, no further filing or recording of the Lease
or of any other document (including any financing statement under
Article 9 of the UCC of the State of Delaware, New York or Arizona) and
no further action is necessary, under the laws of the United States of
America or the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Engine as against the
Lessee and any third parties, or to perfect the security interest in
favor of the Indenture Trustee in the Owner Trustee's interest in the
Engine and in the Lease;
(j) all obligations of the Lessee owing to the Lessor in
connection with the Lease are at least pari passu with all unsecured
and unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default
but for the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an Event
of Loss with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are required
to be filed and has paid or will pay or has caused or will cause to be
paid all taxes shown to be
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<PAGE> 26
due or payable on said returns and on any assessment received by the
Lessee, to the extent such taxes have become due and payable, except
for taxes and returns with respect thereto the nonpayment or nonfiling
of which, either in any case or in the aggregate, could have no
material adverse effect on the Lessee, its condition (financial or
otherwise), business, operations or prospects, or on its ability to
perform its obligations under the Lease or which are being diligently
contested by the Lessee in good faith by appropriate proceedings and
with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all
material respects and fairly present the Lessee's financial condition
as of September 30, 1996 and the results of its operations for the
period covered in conformance with GAAP (except as otherwise noted
therein and with which any such change the independent auditors of the
Lessee have agreed), since September 30, 1996, there has been no
material adverse change in the Lessee's business, operations, condition
(financial or otherwise) or prospects which has not been disclosed in
writing to the Owner Participant and the Indenture Trustee and does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary,
duties or other similar Taxes then due and for which the Lessee is
responsible pursuant to the Lessee Documents, shall have been paid,
other than such Taxes which are being contested by the Lessee in good
faith and by appropriate proceedings (and for which the Lessee shall
have established such reserves as are required under GAAP) so long as
such proceedings or the non-payment of such Taxes do not involve any
material danger to the sale, forfeiture or loss of the Engine;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations or
the Cuban Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, or of any regulations, interpretations or rulings issued
thereunder, and the Lessee is not, and is not acting on behalf of or
for the benefit of, an "Iranian Entity" within the meaning of the
Iranian Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, and the transactions contemplated by this Agreement are not
prohibited by Executive Order 12170, the above-mentioned Iranian Assets
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<PAGE> 27
Control Regulations or any regulations, interpretations or
rulings issued under any thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made out
of the assets of any "employee benefit plan" as defined in Section 3(3)
of ERISA;
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the
Owner Participant or the Indenture Trustee by the Lessee in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to
the Lessee (other than matters of a general economic nature) which the
Lessee has not disclosed in writing to the Owner Participant or the
Indenture Trustee which could impair its ability to perform its
obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy
Code, the Lessor as lessor of the Engine under the Lease, and the
Indenture Trustee, as assignee of the Owner Trustee's rights under the
Lease pursuant to the Indenture, would be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect to the Engine.
SECTION 9. Representations and Warranties. Each of the parties
below represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below)
represents and warrants that:
(1) the Indenture Trustee is a banking association
duly organized, validly existing and in good standing under
the federal laws of the United States of America, and has the
full corporate power, authority and legal right under the laws
of the State of Connecticut and the federal laws of the United
States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of this Agreement, the Indenture
and each other Operative Document to which it is a party and
to carry out its obligations under this
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Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) neither the execution and delivery by the
Indenture Trustee of this Agreement, the Indenture, Lease
Amendment No. 1 and each other Operative Document to which it
is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the
compliance by it with any of the terms and provisions hereof
and thereof, (A) requires or will require any approval of its
stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or
by-laws, or contravenes or will contravene any provision of,
or constitutes or will constitute a default under, or results
or will result in any breach of, or results or will result in
the creation of any Lien (other than as permitted under the
Operative Documents) upon its property under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other
agreement or instrument to which it is a party or by which it
is bound, or contravenes or will contravene any law,
governmental rule or regulation or any judgment or order
applicable to or binding on it of any United States
governmental authority or agency governing the trust powers of
the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture,
when executed and delivered by the Indenture Trustee, will
constitute, the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents to which
it is a party;
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(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any State of Connecticut or any
United States of America governmental authority or agency
regulating the trust powers of the Indenture Trustee is
required for the execution and delivery of, or the carrying
out by, the Indenture Trustee of any of the transactions
contemplated hereby or by the Indenture, Lease Amendment No. 1
or any other Operative Document to which it is a party or by
which it is bound, other than any such consent, approval,
order, authorization, registration, notice or action as has
been duly obtained, given or taken;
(6) there are no Lenders' Liens (as defined in the
Lease) on the Engine or any portion of the Trust Estate
created by or through the Indenture Trustee in its individual
capacity; and
(7) it has possession of the chattel paper original
counterpart of the Original Lease, Lease Amendment No. 1 and
the Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties
are made solely by the Owner Trustee) and the Owner Trustee represents
and warrants that:
(1) the Trust Company is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and
authority to carry on its business as now conducted, has, or
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver Trust
Supplement No. 2, has the corporate power and authority to
carry out the terms of the Trust Agreement, and each of the
Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant), the corporate power and authority
to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Equipment Notes, Lease Amendment
No. 1, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
(2) (i) each of the Trust Company and the Owner
Trustee has duly authorized, executed and delivered the Trust
Agreement and this Agreement and (assuming the
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due authorization, execution and delivery of Trust Supplement
No. 2 by the Owner Participant) the Trust Agreement
constitutes a legal, valid and binding obligation of the Owner
Trustee, in its individual capacity or as Owner Trustee and
the Trust Company, as the case may be, enforceable against it
in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity, (ii) the Owner
Trustee has duly authorized, executed and delivered this
Agreement and (assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant)
this Agreement and the Trust Agreement constitute, and the
Indenture and the Lease, when entered into, will constitute, a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant,
the Owner Trustee has duly authorized, and on the Restatement
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Equipment Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Equipment Note on the Restatement Date
will constitute the valid and binding obligation of the Owner
Trustee and will be entitled to the benefits and security
afforded by the Indenture in accordance with the terms of such
Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner
Trustee or the Trust Company, as the case may be, of this
Agreement, the Original Trust Agreement, Trust Supplement No.
2, the Original Indenture, the Indenture, the Original Lease,
Lease Amendment No. 1, the Lease, the Equipment Notes, or any
other Operative Document to which it is a party, nor the
consummation by it of any of the transactions contemplated
hereby or thereby, nor the compliance by it with any of the
terms and provisions hereof and thereof, (A) requires or will
require any approval of its stockholders, or approval
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<PAGE> 31
or consent of any trustees or holders of any indebtedness or
obligations of it, or (B) violates or will violate its
articles of association or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute
a default under, or results or will result in any breach of,
or results or will result in the creation of any Lien (other
than as permitted under the Operative Documents) upon its
property under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which
it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation of the
State of Delaware or any United States governmental authority
or agency governing the trust powers of the Owner Trustee, or
any judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any state or local governmental
authority or agency or any State of Delaware or any United
States of America governmental authority or agency regulating
the trust powers of the Trust Company is required for the
execution and delivery of, or the carrying out by, the Trust
Company or the Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust
Agreement, the Indenture, the Lease, Lease Amendment No. 1,
the Equipment Notes or any other Operative Document to which
it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice
or action as has been duly obtained, given or taken or which
is described in Section 8(d);
(6) there exists no Lessor's Lien or Head Lessor's
Lien (each as defined in the Lease) (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens) attributable to
the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's
Lien (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens) attributable to the Trust Company;
(8) there are no Taxes payable by the Owner
Trustee or the Trust Company imposed by the State of
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<PAGE> 32
Delaware or any political subdivision thereof in connection
with the prepayment of the Original Certificates or the
issuance of the Equipment Notes, or the execution and delivery
by it of any of the instruments referred to in clauses (1),
(2), (3) and (4) above, that, in each case, would not have
been imposed if the Trust Estate were not located in the State
of Delaware and the Trust Company had not (a) had its
principal place of business in, (b) performed (in its
individual capacity or as Owner Trustee) any or all of its
duties under the Operative Documents in, and (c) engaged in
any activities unrelated to the transactions contemplated by
the Operative Documents in, the State of Delaware;
(9) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner Trustee,
either in its individual capacity or as Owner Trustee, before
any court or administrative agency which, if determined
adversely to it, would materially adversely affect the ability
of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under
any of the instruments referred to in clauses (1), (2), (3)
and (4) above; and
(10) both its chief executive office, and the place where
its records concerning the Engine and all its interests in, to
and under all documents relating to the Trust Estate (other
than such as may be maintained and held by the Indenture
Trustee pursuant to the Indenture), are located in Wilmington,
Delaware. Owner Trustee, in its individual capacity or as
Owner Trustee, agrees that it will not change the location of
such office to a location outside of Delaware, without prior
written notice to all parties hereto.
(c) The Owner Participant represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to carry
on its present business and operations and to own or lease its
properties, has, or had on the respective dates of execution
thereof, as the case may be, the corporate power and authority
to enter into and to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement and
the Amended and Restated Head Lease TIA; this Agreement, the
SLV Letter Agreement and Trust
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<PAGE> 33
Supplement No. 2 have been duly authorized, executed and
delivered by it; and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties
hereto and thereto, this Agreement, the Trust Agreement, the
SLV Letter Agreement and the Amended and Restated Head Lease
TIA constitute the legal, valid and binding obligations of the
Owner Participant enforceable against it in accordance with
their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Amended and Restated Head Lease TIA
or any other Operative Document to which it is a party nor (B)
compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding on
the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee), or (y) will contravene
the provisions of, or constitutes or has constituted or will
constitute a default under, its certificate of incorporation
or by-laws or any indenture, mortgage, contract or other
agreement or instrument to which the Owner Participant is a
party or by which it or any of its property may be bound or
affected, except where such contravention or default would not
result in any liability to any other party hereto or have a
material adverse effect on the rights or on the remedies of
the other parties hereto or on its ability to perform its
obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Amended and Restated Head Lease TIA (it
being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee
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<PAGE> 34
other than the laws, rules or regulations relating to
engine lease transactions generally);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant before any court or administrative agency or
arbitrator which, if determined adversely to the Owner
Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement or
the Amended and Restated Head Lease TIA; and
(5) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant (including for this purpose Liens
that would be Lessor's Liens but for the first proviso in the
definition of Lessor's Liens).
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly organized,
validly existing and in good standing under the federal laws
of the United States of America, and has the full corporate
power, authority and legal right under the federal laws of the
United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Intercreditor Agreement, and
this Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement will
have been, duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement constitutes, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement, will
constitute, the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
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<PAGE> 35
(3) none of the execution, delivery and performance
by the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement or this Agreement, the
purchase by the Pass Through Trustee of the Equipment Notes
pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Pass Through Trustee's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Pass Through Trustee and does not contravene or
result in any breach of, or constitute a default under, the
Pass Through Trustee's articles of association or by-laws or
any agreement or instrument to which the Pass Through Trustee
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(5) assuming that the trusts created by the Pass
Through Trust Agreements will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code for
federal income tax purposes, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the acquisition, possession or ownership by
the Pass Through Trustee of any of the Equipment Notes (other
than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
prior to the exercise of remedies upon the occurrence of an
Indenture Event of Default, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection
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<PAGE> 36
with the execution, delivery and performance by the Pass
Through Trustee of this Agreement, any of the Pass Through
Trust Agreements or the Intercreditor Agreement (other than
franchise or other Taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by
any of the Pass Through Trust Agreements), and such trusts
will not be subject to any Taxes imposed by the State of
Connecticut or any political subdivision or taxing authority
thereof; upon the exercise of remedies following the
occurrence of an Indenture Event of Default, there will be no
Taxes payable by the Pass Through Trustee imposed by the State
of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery
and performance by the Pass Through Trustee of this Agreement,
any of the Pass Through Trust Agreements or the Intercreditor
Agreement (other than franchise or other Taxes based on or
measured by any fees or compensation received by the Pass
Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust
Agreements), and the trusts created by the Pass Through Trust
Agreements will not be subject to any Taxes imposed by the
State of Connecticut or any political subdivision thereof,
solely because the Pass Through Trustee maintains an office
in, and administers the trusts created by the Pass Through
Trust Agreements in, the State of Connecticut;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly
or indirectly offered any Equipment Notes for sale to any
Person or solicited any offer to acquire any Equipment Notes
from any Person, nor has the Pass Through Trustee authorized
anyone to act on its behalf to offer directly or indirectly
any Equipment Notes for sale to any Person, or to solicit any
offer to acquire any Equipment Notes from any Person; and the
Pass Through Trustee is not in default under any Pass Through
Trust Agreement; and
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<PAGE> 37
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(e) The Subordination Agent represents and warrants
that:
(1) the Subordination Agent is a duly organized
national banking association, validly existing and in good
standing with the Comptroller of the Currency under the laws
of the United States of America and has the full corporate
power, authority and legal right under the laws of the United
States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement and
to perform its obligations under this Agreement, the Liquidity
Facilities and the Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement will have been,
duly authorized, executed and delivered by the Subordination
Agent; this Agreement constitutes, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement, will constitute,
the legal, valid and binding obligations of the Subordination
Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Subordination Agent of each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement or
the performance by the Subordination Agent of this Agreement,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Subordination Agent and do not contravene or
result in any breach of, or constitute a default under, the
Subordination Agent's articles of association or by-laws or
any agreement or instrument
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<PAGE> 38
to which the Subordination Agent is a party or by which
it or any of its properties may be bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement or this Agreement nor the consummation
by the Subordination Agent of any of the transactions
contemplated hereby or thereby requires the consent or
approval of, the giving of notice to, the registration with,
or the taking of any other action with respect to, any State
of Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Subordination Agent
of this Agreement, any of the Liquidity Facilities or the
Intercreditor Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities) solely because
the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are
no Taxes payable by the Subordination Agent imposed by the
State of Connecticut or any political subdivision thereof in
connection with the acquisition, possession or ownership by
the Subordination Agent of any of the Equipment Notes solely
because the Subordination Agent maintains an office and
administers its trust business in the State of Connecticut
(other than franchise or other taxes based on or measured by
any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
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<PAGE> 39
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any Person
or solicited any offer to acquire any Equipment Note from any
Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any
Equipment Note for sale to any Person, or to solicit any offer
to acquire any Equipment Note from any Person; and the
Subordination Agent is not in default under any Liquidity
Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Amended and Restated Head Lease TIA, the Amended
and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents nor (B) compliance
by it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Original
Head Lessee, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
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<PAGE> 40
indenture, mortgage, contract or other agreement or instrument
to which the Original Head Lessee is a party or by which it or
any of its property may be bound or affected, except where
such contravention or default would not result in any
liability to any other party hereto or have a material adverse
effect on the rights or on the remedies of the other parties
hereto or on its ability to perform its obligations hereunder
or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Original Head Lessee of this
Agreement and each of the other Original Head Lessee
Transaction Documents;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Original Head Lessee before any court
or administrative agency or arbitrator which, if determined
adversely to the Original Head Lessee, would materially
adversely affect the Original Head Lessee's ability to perform
its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Engine and each Part shall be free and clear of any and all
Sublessor's Liens (as defined in the Sublease);
(6) on the Delivery Date, the Owner Trustee received
good title to the Engine free and clear of all Liens, except
the rights of the Original Head Lessee under the Original
Lease, the rights of the Sublessee under the Sublease, the
Lien of the Original Indenture, the beneficial interest of the
Owner Participant in the Engine, and Permitted Liens under the
Original Lease;
(7) [Intentionally Omitted]; and
(8) except for the filing for recordation pursuant to
the Federal Aviation Act (with confidential financial terms
redacted) of Lease Amendment No. 1, the Amended and Restated
Lease, Lease Supplement No. 2, Trust Supplement No. 2, the
First Amended and Restated Indenture and Indenture Supplement
No. 2, and each of the other documents referred to in Annex A
hereto, all
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<PAGE> 41
with the FAA, the filing of a Uniform Commercial Code ("UCC")
amended financing statement with the Secretary of State of the
State of Delaware with regard to the Original Lease, the
filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States
of New York, Connecticut and Arizona, the filing of a
protective UCC financing statement with the Secretary of State
of the State of Arizona with respect to the Lease, the filing
of a UCC termination statement with the Secretary of State of
the State of Arizona with respect to the Sublease, and the
filing of a UCC termination statement with the Secretary of
State of the State of Delaware with respect to the Initial
Sublease Assignment (as defined in the Original Lease) all of
which financing and termination statements shall have been
duly effected as of the Restatement Date (and assignments
thereof and continuation statements at periodic intervals),
and other than the taking of possession by the Indenture
Trustee of the original counterparts of the Original Lease,
Lease Amendment No. 1, the Amended and Restated Lease, and all
Lease Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification
required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any
financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Engine as against
the Lessee and any third parties, or to perfect the security
interest in favor of the Indenture Trustee in the Owner
Trustee's interest in the Engine and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement; this Agreement has been duly authorized and
constitutes the legal, valid and binding obligations of the
Parent Guarantor enforceable against it in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a
proceeding at law or in equity;
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<PAGE> 42
(2) neither (A) the execution and delivery by the
Parent Guarantor of this Agreement nor (B) compliance by it
with all of the provisions hereof (x) will contravene any law
or order of any court or governmental authority or agency
applicable to or binding on the Parent Guarantor, or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its Memorandum
and Articles of Association or any indenture, mortgage,
contract or other agreement or instrument to which the Parent
Guarantor is a party or by which it or any of its property may
be bound or affected, except where such contravention or
default would not result in any liability to any other party
hereto or have a material adverse effect on the rights or on
the remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Parent Guarantor of this
Agreement;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the
Engine and each Part shall be free and clear of any and all
Sublessor's Liens (as defined in the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty with respect to Section 9(f)(8)
shall be only for the benefit of the Lessee).
SECTION 10. Transfer of Owner Participant's Interest.
Owner Participant shall not directly or indirectly sell, assign,
convey or otherwise transfer (whether by operation of law, con-
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<PAGE> 43
solidation, merger, sale of assets or otherwise) any of its right, title or
interest in and to the Trust Estate, the Engine, the Lease, this Agreement, the
Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative
Document or any proceeds therefrom or permit the transfer of any of its stock in
any transaction which has the practical effect of any of the foregoing; provided
that, and subject to the conditions set forth below, Owner Participant may
transfer to a Transferee (as defined below) all (but not less than all) of its
right (except for such rights accruing prior to transfer), title and interest as
an entirety in and to the Trust Estate, the Engine, this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party or by which Owner Participant is
bound. Each such transfer shall be subject to the following conditions, and
Owner Participant agrees for the express benefit of each party hereto that any
such transfer will comply with such conditions:
(i) the Person to whom such transfer is to be made (a
"Transferee") is either (A) a bank, trust company or other like
regulated financial institution with a combined capital, surplus and
undivided profits of, or a corporation with a tangible net worth of, in
either case at least $60,000,000, (B) any wholly-owned subsidiary of
such bank, trust company, financial institution or corporation if such
bank, trust company, financial institution or corporation furnishes to
Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an
agreement or agreements of such bank, financial institution or
corporation guaranteeing such subsidiary's obligations as Owner
Participant contained in this Agreement, the Trust Agreement, the
Amended and Restated Head Lease TIA and each other Operative Document
to which Owner Participant is a party or by which it is bound, which
guarantee shall be substantially in the form attached as Exhibit A
hereto or (C) a subsidiary of Owner Participant if Owner Participant
furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and
Lessee an agreement whereby Owner Participant will guarantee such
subsidiary's obligations as Owner Participant contained in this
Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA
and each other Operative Document to which Owner Participant is a party
or by which it is bound, which guarantee shall be substantially in the
form attached as Exhibit A hereto;
(ii) Owner Trustee, Indenture Trustee, Original Head Lessee
and Lessee shall have received at least 15 days' prior written notice
of such transfer specifying the name and address of any proposed
transferee and specifying the facts necessary to determine whether such
proposed transferee qualifies as a "Transferee" under clause (i)
above and
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<PAGE> 44
does not violate clause (viii) below; provided that if such Transferee
is a subsidiary of Owner Participant, such notice may be given promptly
following rather than prior to such transfer if such Transferee meets
the net worth requirement set forth above on its own account without a
guaranty and otherwise meets the requirements of this Section 10;
(iii) [Intentionally Omitted];
(iv) such Transferee has the requisite power and authority
and legal right to enter into and carry out the transactions
contemplated hereby;
(v) such Transferee enters into an agreement in
substantially the form attached as Exhibit B hereto whereby such
Transferee confirms that it shall be deemed a party to this Agreement,
the Trust Agreement, the Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by
which Owner Participant is bound, and in which the transferee shall
agree to be bound by and undertake the obligations of Owner Participant
in the Operative Documents and shall make representations and
warranties comparable to those of Owner Participant contained herein;
(vi) such transfer does not violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or create a relationship that would be in violation
thereof, or violate any provisions of the Securities Act or any other
applicable Federal, state or other law, rule or regulation;
(vii) such transfer does not violate any provision of
ERISA or any rules or regulations thereunder;
(viii) such Transferee is not an airline, a commercial air
carrier, an air freight forwarder, any Person engaged in the business
of parcel transport by air or a subsidiary or an Affiliate of such an
airline, a commercial air carrier, an air freight forwarder, Person
engaged in the business of parcel transport by air or other similar
Person;
(ix) an opinion of counsel of the Transferee confirming the
matters referred to in clauses (iv) and (vi) above (with appropriate
reliance on certificates of corporate officers or public officials as
to matters of fact) and confirming that the agreement referred to in
clause (v) above is the legal, valid, binding and enforceable
obligation of the Transferee and that the guarantee referred to in
clause (i)(B) or (C) above, if any, is the legal, valid, binding and
enforceable obligation of the Transferee's
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<PAGE> 45
guarantor shall be provided, at least 3 days prior to such transfer, to
Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee,
which shall be in form and substance reasonably satisfactory to each of
them; and
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Engine previously made by Owner Participant; and except as
the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to "Owner Participant" shall thereafter be deemed to include such
Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Amended and Restated Head
Lease TIA and under the other Operative Documents, except to the extent
expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Amended and Restated Head Lease TIA by or against Owner Participant which have
accrued or been made prior to the date of such transfer. The transferor Owner
Participant shall pay the reasonable expenses of each party hereto related to
any such transfer.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions of
clause (A) of paragraph (6) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease.
SECTION 11. [Reserved].
SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming
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<PAGE> 46
by, through or on behalf of it to interfere with the right of Lessee or any
Permitted Sublessee to the possession, use, operation and quiet enjoyment of and
other rights with respect to the Engine under the Lease, and all rents,
revenues, profits and income therefrom, in accordance with the terms of the
Lease; provided that the Trust Company, Owner Trustee and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
Trustee, holders of any Equipment Notes, or any other Person lawfully claiming
by, through or on behalf of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Engine or any other portion
of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner
Trustee and Owner Participant severally agrees that it will promptly, at its own
expense (and without any right of indemnification or reimbursement from Lessee),
take such action as may be necessary duly to discharge any such Lessor's Lien or
Head Lessor's Lien attributable to it and to make restitution to the Trust
Estate and the Indenture Estate for any diminution of the assets thereof
resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Lessor's Lien or Head
Lessor's Lien attributable to it. For all purposes of this Agreement and the
other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a
result of the nonpayment of any Tax imposed on or measured by the net income of
the Trust Estate or the trust created by the Trust Agreement that is not
indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Engine or any other portion of the Trust
Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee
and Subordination Agent severally agrees that it will promptly, at its own
expense (and without any right of indemnification or reimbursement from Lessee),
take such action as may be necessary duly to discharge any such Trustee's Lien
attributable to it and to make restitution to the Trust Estate and the Indenture
Estate for any diminution of the assets thereof resulting therefrom and will
indemnify and hold harmless Lessee
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<PAGE> 47
and each Indemnitee against any claims incurred or suffered by any such Person
and any reduction in amounts payable out of, or diminution in the assets of, the
Trust Estate or the Indenture Estate resulting from any such Trustee's Lien
attributable to it. For purposes of this paragraph, "Trustee's Lien" means any
Lien or disposition of title attributable to Indenture Trustee in its individual
capacity (and not as Indenture Trustee), Pass Through Trustee in its individual
capacity (and not as Pass Through Trustee) or Subordination Agent in its
individual capacity (and not as Subordination Agent) on or in respect of (as the
case may be) the Engine or any other portion of the Trust Estate or the Trust
Indenture Estate arising as a result of (i) Claims against such Person not
related to its interest in the Engine or the administration of the Trust Estate
or the Trust Indenture Estate pursuant to the Indenture, whether under Section
9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions
of such Person not contemplated hereunder or under the other Operative
Documents, or acts or omissions of such Person which are in violation of any of
the Operative Documents, or (iii) Taxes imposed on or Claims against such Person
which are excluded from indemnification by Lessee, or (iv) Claims against such
Person arising out of the voluntary or involuntary transfer by such Person of
all or any portion of its interest in the Engine, the Trust Estate, the Trust
Indenture Estate or the Operative Documents (except a Claim resulting from the
exercise of remedies under and in accordance with the Indenture or for a
transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Engine or any other portion of the Trust Estate or the
Indenture Estate. Each of the Original Head Lessee and Parent Guarantor
severally agrees that it will promptly, at its own expense (and without any
right of indemnification or reimbursement from Lessee), take such action as may
be necessary duly to discharge any such Sublessor's Lien attributable to it or
other Lien or disposition of title created by or through Original Head Lessee,
Parent Guarantor or any Affiliate of either thereof which would have constituted
a Sublessor's Lien had the Sublease remained in effect and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any
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<PAGE> 48
such Sublessor's Lien attributable to it or other Lien or disposition of title
created by or through Original Head Lessee, Parent Guarantor or any Affiliate of
either thereof which would have constituted a Sublessor's Lien had the Sublease
remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original
Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees with
Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement except in accordance with the terms thereof, provided that any such
amendment, supplement or modification shall not adversely affect the Lessee, and
(iii) not to terminate or revoke the Trust Agreement except in accordance with
the terms thereof, provided that any such termination or revocation shall not
adversely affect the Lessee.
(b) Notwithstanding anything to the contrary in the Trust
Agreement or Section 14(a) hereof, but subject always to the provisions of
Section 14(c) hereof, Owner Participant shall not consent to or direct a change
in the situs of the Trust Estate so long as a successor Owner Trustee meeting
the requirements of the Trust Agreement is reasonably available at the present
situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head
Lessee and Lessee shall have been given 30 days' prior notice thereof and (B)
if, within 15 days after notice of such a proposed change is given to Lessee and
the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to
Owner Participant and Owner Trustee (at the expense of Owner Participant) an
opinion of counsel, which counsel shall be reasonably satisfactory to Owner
Participant and Owner Trustee, to the effect that such proposed change in the
situs of the Trust Estate would have an adverse effect on the rights or
obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head
Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner
Participant) an opinion of
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<PAGE> 49
counsel, which counsel shall be reasonably satisfactory to Owner Participant and
Owner Trustee, to the effect that such proposed change in the situs of the Trust
Estate would cause an increase in the amount for which Lessee may be required to
indemnify any Person pursuant to the provisions of Section 10 of the Lease or
for which Original Head Lessee is required to indemnify any Person pursuant to
the provisions of the Amended and Restated Head Lease TIA, unless any and all
Persons entitled to indemnification pursuant to Section 10 of the Lease or
applicable provision of the Amended and Restated Head Lease TIA shall waive
indemnification under Section 10 of the Lease or applicable provision of the
Amended and Restated Head Lease TIA for any adverse tax or other consequences to
it of such a change in the situs of the Trust Estate, and (C) unless Indenture
Trustee receives from Owner Participant an opinion of counsel, which counsel
shall be reasonably satisfactory to Indenture Trustee, to the effect that such
proposed change in the situs of the Trust Estate would not have an adverse
effect on the validity or priority of the Lien of the Indenture and that such
Uniform Commercial Code and FAA filings as are required to maintain the validity
and priority of the Lien of Indenture have been made.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to any
Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as
a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States of America from the state in which
it is then located, the situs of the trust shall be moved and Owner Participant
will take whatever action may be requested by Lessee that is reasonably
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification with respect to such change of situs and
request of Lessee as Original Head Lessee, Owner Participant or the Indenture
Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and
the exclusions in the Amended and Restated Head Lease TIA) may reasonably
request, (B) promptly after notice thereof Owner Participant has not notified
Lessee and provided reasonable evidence of an adverse effect on Owner
Participant's rights or obligations under the Trust Agreement, (C) Indenture
Trustee shall have received an opinion of counsel selected by Lessee, which
counsel shall be reasonably satisfactory to Indenture Trustee, to the effect
that the validity and priority of the Lien of the Indenture Estate will not be
adversely affected by such action, and that such Uniform Commercial Code and FAA
filings as are required to maintain the validity and the priority of the Lien of
the Indenture have been made, (D) Owner Participant and Indenture Trustee shall
have received an opinion or opinions of counsel selected by Owner Participant to
the effect that, with customary exceptions, (I) the trust, as thus removed,
shall remain a validly established
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trust, (II) any amendments to the Trust Agreement or the Indenture necessitated
by such removal shall have been duly authorized, executed and delivered by the
parties thereto and shall constitute the legal, valid and binding obligations of
such parties, enforceable in accordance with their terms, (III) if such removal
involves the replacement of Owner Trustee, an opinion of counsel to such
successor Owner Trustee in form and substance reasonably satisfactory to
Indenture Trustee and to Owner Participant covering the matters described in the
opinion described in Section 3(j) hereof, and (IV) covering such other matters
as Owner Participant or the Indenture Trustee may reasonably request, and (E)
Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee,
Owner Participant and their respective Affiliates and Indenture Trustee against
any and all reasonable and actual costs and expenses including reasonable
attorneys' fees and disbursements, registration, recording or filing fees and
other Taxes incurred by Owner Trustee, Owner Participant and their respective
Affiliates, or Indenture Trustee in connection with such change of situs and
shall indemnify and hold harmless Owner Participant, Owner Trustee and their
respective Affiliates, and Indenture Trustee on an after tax basis (subject to
the exclusions set forth in Section 10(b) of the Lease and the Amended and
Restated Sublease TIA) from and against any increase in Taxes borne by such
Person that results from such change in situs. In no event shall any change in
situs of the trust affect Original Head Lessee's rights or obligations under the
Amended and Restated Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed by
Owner Participant, a successor Owner Trustee may be appointed, and a corporation
may become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that Owner
Participant has actual knowledge that Owner Trustee is not in compliance with
its covenants contained herein. No successor Owner Trustee shall be appointed
unless Lessee and Indenture Trustee shall have given written consent thereto,
which consent shall not be unreasonably withheld. Owner Participant will not
instruct Owner Trustee to terminate any Operative Document or take any action
thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Engine as contemplated hereby. Lessee
shall pay expenses on an after tax basis relating to the resignation or, if
requested by Lessee, the removal of Owner Trustee, provided that the Owner
Participant shall pay expenses relating to the removal of the Owner Trustee, if
such removal was solely at the request of the Owner Participant.
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SECTION 15. Certain Retained Rights and Releases. (a) Each of
Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to
and confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease: (i) Lessee, Original Head Lessee and Parent
Guarantor shall retain all rights, benefits, obligations and liabilities under
the Sublease, including that Sublessee shall remain liable for all of its
obligations under Sections 10 and 13 of the Sublease, with respect to the period
up to (but excluding) the Restatement Date and each of Parent Guarantor,
Original Head Lessee and Lessee shall retain all rights and liabilities under
any provision of the Sublease which by the express terms thereof survives the
termination or expiration thereof (including, without limitation, any such
liability arising from and including the Restatement Date under the Sublease in
respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), (ii) all
rights, benefits, obligations and liabilities under the Sublease TIA (which
rights, benefits, obligations and liabilities are amended and restated as of the
Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall
remain liable to Sublessee under the Sublease for Sublessor's Liens (as therein
defined); all of which rights, benefits, obligations and liabilities shall
expressly survive the termination of the Sublease. In furtherance of the
foregoing, it is agreed that Original Head Lessee shall continue to be liable to
the Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens.
(c) Each of the Lessee, Owner Trustee and Owner Participant
agree as among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: Lessee, and Owner
Trustee, Owner Participant and the other "Indemnitees" (as such term is defined
in the Sublease) other than Original Head Lessee and Parent Guarantor, shall
retain all rights, benefits, obligations and liabilities under the Sublease,
including that Sublessee shall remain liable for all of its obligations under
Sections 10 and 13 of the Sublease, with respect to the period up to (but
excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner
Participant shall retain all rights and liabilities under any provision of the
Sublease which by the express terms thereof survives the termination thereof
(including, without limitation,
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any such liability arising on or after the Restatement Date under the Sublease
in respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), all of
which rights, benefits, obligations and liabilities shall expressly survive the
termination of the Sublease. In furtherance of the foregoing, it is agreed by
Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease
are expressly made for the benefit of and shall be enforceable by each
Indemnitee (as such term is defined in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA
to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent Guarantor shall, as of the Restatement Date, have no
liabilities or obligations under the "Operative Documents" (as defined in the
Original Head Lease as in effect immediately prior to (but excluding) the
Restatement Date and excluding the Head Lease TIA (which rights, benefits,
obligations and liabilities are amended and restated as of the Restatement
Date)) and are released from all such obligations and liabilities, except the
Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease
Guaranty (i) shall continue to be liable to the parties hereto for the removal
of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in
the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner
Trustee, the Indenture Trustee and the Owner Participant agree as among
themselves and for the benefit of the other "Indemnitees" (as such term is
defined in the Original Head Lease) that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period up to (but excluding) the Restatement Date and under any
other provision of the Participation Agreement which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising from and including the Restatement Date under the
Participation Agreement in respect of the period up to (but excluding), or acts
or omissions or circumstances arising prior to (but excluding), the Restatement
Date) shall survive the termination of the Participation Agreement, the Original
Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights,
benefits, obligations and liabilities of Parent Guarantor and Original Head
Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In
furtherance of the foregoing, the parties hereto consent and agree that the
Parent Guarantor is hereby released from any and all "Obligations" under and as
defined in the Parent Head Lease Guaranty, except in respect of the Retained
Head Lease Rights and Obligations and except in respect of the Amended and
Restated Head Lease TIA, the "Obligations" in respect of which shall continue in
full force and effect in accordance
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with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the
Parent Guarantor.
SECTION 16. Certain Additional Obligations of the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee,
Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and
agrees for the benefit of each other that it will be bound by the terms of the
other Operative Documents to which it or its applicable trustee is a party, and
comply with and perform its agreements, covenants and indemnities set forth in
the other Operative Documents to which it or its applicable trustee is a party,
as amended, supplemented or otherwise modified from time to time as permitted
hereby.
SECTION 17. Lessee Protection of Title. Each of the Owner
Trustee and the Indenture Trustee agrees to execute and deliver such documents
or other instruments as the Lessee may reasonably request to enable the Lessee
to perform its obligations under Section 15 of the Lease for the benefit of such
Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee,
Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and
Lessee (i) hereby irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York in New York
County, and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service
of process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP,
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<PAGE> 54
Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New
York 10022, as its agent for service of process, and covenants and agrees that
service of process in any suit, action or proceeding may be made upon it at the
office of such agent or such other office of Parent Guarantor or such other
agent, as from time to time may be designated by Parent Guarantor in writing to
Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee
hereby generally consents to service of process by registered mail, return
receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights
Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as
from time to time may be designated by Original Head Lessee in writing to Owner
Trustee, Owner Participant and Indenture Trustee. Owner Participant generally
consents to service of process by registered mail, return receipt requested,
addressed to it at _____________________________________ or such other office of
Owner Participant as from time to time may be designated by Owner Participant in
writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee.
Owner Trustee generally consents to service of process by registered mail,
return receipt requested, addressed to it at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner
Trustee as from time to time may be designated by Owner Trustee in writing to
Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture
Trustee generally consents to service of process by registered mail, return
receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford,
Connecticut 06115 or such other office of Indenture Trustee as from time to time
may be designated in writing to Owner Participant, Original Head Lessee, Owner
Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has
not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
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<PAGE> 55
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the Original
Head Lessee of invoices therefor in reasonable detail prior to the Restatement
Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by
the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee,
the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the
Original Certificate Holders in connection with the transactions contemplated by
this Agreement, the other Operative Documents, the Lease, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided therein)
shall be paid on or prior to the Closing by the Original Head Lessee, including,
without limitation:
(1) the reasonable fees, expenses and disbursements allocable
to the Equipment Notes issued under the Indenture of (A) Shipman &
Goodwin LLP, special counsel for the Pass Through Trustee, the
Subordination Agent and the Indenture Trustee, (B) Morris, James,
Hitchens & Williams, special counsel for the Owner Trustee, (C)
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City,
Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for
the Underwriters;
(2) the reasonable fees, expenses and disbursements of
Hunton & Williams, special counsel for the Owner
Participant;
(3) the fees, expenses and disbursements of Andrews &
Kurth L.L.P. and Latham & Watkins, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and
the Subordination Agent;
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<PAGE> 56
(6) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code financing statements in the United
States of America; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred to
in this Section 21.
(c) The Lessee agrees to pay the amounts it is
obligated to pay under Section 21(j) of the Lease.
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations and
warranties were made to the Liquidity Provider directly. The terms of this
Agreement shall inure to the benefit of the Liquidity Provider, its successors
and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Original Head Lessee and its successors and permitted assigns, the Parent
Guarantor and its successors and permitted assigns,
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<PAGE> 57
the Lessee and its successors and permitted assigns, the Pass Through Trustee
and its successors as Pass Through Trustee (and any additional trustee
appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee
and its successors as Indenture Trustee (and any additional Indenture Trustee
appointed) under the Indenture, the Subordination Agent and its successors as
Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement, and the Owner Participant
and its successors and permitted assigns. No purchaser or holder of any
Equipment Notes shall be deemed to be a successor or assign of any holder of the
Original Certificates.
(b) Upon the release of the Engine from the lien of the
Indenture and the termination of the Indenture pursuant to and in accordance
with Section 10.01 thereof, each requirement in the Operative Documents that the
consent of Indenture Trustee be obtained or that the Indenture Trustee be given
notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that this
Agreement shall be effective among all such parties on and as of the Restatement
Date.
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<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:_______________________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President - Legal Affairs
GPA LEASING USA I, INC.
By:_______________________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:_______________________________________
Name:
Title:
Address: GPA House
Shannon, County Clare, Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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<PAGE> 59
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner
Trustee
By:_______________________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust Administration
[___________________________________]
By:_______________________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
FLEET NATIONAL BANK, not in its
individual capacity, except as otherwise
provided herein, but solely as Indenture
Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 60
FLEET NATIONAL BANK, not in its
individual capacity, except as otherwise
provided herein, but solely as
Subordination Agent
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
FLEET NATIONAL BANK, not in its
individual capacity, except as otherwise
provided herein, but solely as Pass
Through Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
- 57 -
<PAGE> 61
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1A, dated
November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1B, dated
November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1C, dated
November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1D, dated
November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1E, dated
November 26, 1996.
<PAGE> 62
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
- ------------ --------- -------- -------- ---------
<S> <C> <C> <C> <C>
Class A $ 1,343,995 02-Jul-2009 6.85% $ 1,343,995
Class B $ 503,996 02-Jan-2006 6.93% $ 503,996
Class C $ 524,996 02-Jan-2004 6.86% $ 524,996
Class D $ 489,995 02-Jul-2002 8.16% $ 489,995
Class E $ 1,458,204 02-Jan-2004 10.50% $ 1,458,204
</TABLE>
<PAGE> 63
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut
06115, Attn: Philip Kane, Corporate Trust Administration, Ref.
AWA, for the account of Fleet National Bank Account No. ABA
#011900445, ACCT. # 0067548290.
<PAGE> 64
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1991 AWA-E2]
TRANSFEREE'S PARENT GUARANTEE [GPA 1991 AWA-E2], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, _____________________________, a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1991 AWA-E2], dated as of November 20, 1996 among Lessee, Original Head
Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass Through Trustee,
Subordination Agent and Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the
benefit of Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms
defined in the Refunding Agreement are used herein as therein
defined, unless otherwise defined herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably
guarantees to Beneficiaries and their respective successors, endorsees,
transferees and assigns, the prompt and complete payment by Transferee when due
(whether at the stated maturity,
<PAGE> 65
by acceleration or otherwise) of, and the faithful performance of, and
compliance with, all payment obligations of Transferee under the Refunding
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party and each other Operative Document
to which Transferee is a party or by which either is bound (collectively, the
"Relevant Documents"), strictly in accordance with the terms thereof and the
timely performance of all other obligations of Transferee thereunder (such
payment and other obligations, the "Obligations"), and Guarantor further agrees
to pay any and all expenses (including, without limitation, all fees and
disbursements of counsel) that may be paid or incurred by Beneficiaries in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any
other guarantor or any other Person or received or collected by any Beneficiary
from Transferee, Guarantor, any other guarantor or any other person by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of
Guarantor hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or
observed by Transferee (whether affirmative or negative in character) shall not
be observed or performed, or if any amount payable by Transferee referred to in
Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor
shall promptly perform or observe or cause to be performed or observed each such
Obligation or undertaking and shall forthwith pay such amount at the place and
to the person or entity entitled thereto pursuant to the Relevant Documents
regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass
Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of
any of them shall have instituted any suit, action or proceeding or exhausted
its remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments
made by Guarantor hereunder or any setoff or application of funds of Guarantor
by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of
the rights of any Beneficiary against Transferee or any collateral, security or
guarantee or
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<PAGE> 66
right of set-off held by any Beneficiary for the payment of the Obligations, nor
shall Guarantor seek or be entitled to seek any reimbursement from Transferee in
respect of payments made by Guarantor hereunder, until all amounts and
performance owing to Beneficiaries by Transferee on account of the Obligations
are paid and performed in full.
4. Amendments, etc., with respect to the Obligations; Waiver
of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without notice
to or further assent by the Guarantor, any demand for payment or performance of
any of the Obligations made by any Beneficiary may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not
assign, convey or otherwise transfer to any person (a) any of its interest in
Transferee unless in connection therewith,
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<PAGE> 67
Guarantor assigns its rights and obligations hereunder to a guarantor which
meets the requirements of Section 10 of the Refunding Agreement; provided that
nothing contained in this Section 5 shall be construed to prohibit any merger,
consolidation or other corporate restructuring of Transferee or Guarantor so
long as the resulting corporation meets the requirements of Section 10 of the
Refunding Agreement and assumes the obligations of the corporation merged or
consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guarantee or acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Transferee
or the Guarantor with respect to the Obligations. The Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance (and not merely of
collectibility) without regard to (a) the validity, regularity or enforceability
of any Relevant Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Transferee against any Beneficiary,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Transferee or the Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of the Transferee for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Transferee or any other person or
entity or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Beneficiary to
pursue such other rights or remedies or to collect any payments from the
Transferee or any such other person or entity or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Transferee or any such other person or entity or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and
- 4 -
<PAGE> 68
remedies, whether express, implied or available as a matter of law, of any
Beneficiary against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Beneficiaries, and their respective successors, endorsees, transferees
and assigns, until all of the Obligations and the Obligations of the Guarantor
under this Agreement shall have been satisfied by payment and performance in
full. The Guarantor further agrees that, without limiting the generality of this
Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by
applicable law from exercising its remedies (or any of them) against the
Transferee under any Operative Document, such Beneficiary (or any assignee
thereof) shall be entitled to receive hereunder from the Guarantor, upon demand
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any beneficiary upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made. The Guarantor shall not commence any "case" (as
defined in Title 11 of the United States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction or withholding,
and shall be made in U.S. Dollars. If any payment hereunder is subject to
deduction or withholding, Guarantor shall pay an additional amount such that,
after deduction of all amounts required to be deducted or withheld, the net
amount actually received will equal the amount that would have been received had
such deduction or withholding not been required.
9. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged;
- 5 -
<PAGE> 69
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Guarantee, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the
creation or imposition of any lien on any of the properties or revenues
of the Guarantor pursuant to any requirement of law or contractual
obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or governmental authority and no
consent of any other person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee;
(f) no litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
against any of its properties or revenues (i) with respect to this
Guarantee or any of the transactions contemplated hereby or (ii) that
could have a material adverse effect on the business, operations,
property or financial or other condition of the Guarantor;
[(g) the balance sheet of the Guarantor as at _________________
and the related statement of income and retained earnings for the
fiscal year then ended (copies of which have heretofore been furnished
to each Beneficiary) have been prepared in accordance with generally
accepted accounting principles applied consistently throughout the
period involved, are complete and correct and present fairly the
financial condition of the Guarantor as at such date and the results of
its operations for such fiscal year; since such date there has been no
material adverse change in the business, operations, property or
financial or other condition of the Guarantor; the Guarantor has no
material contingent obligation, contingent liability or liability for
- 6 -
<PAGE> 70
taxes, long-term lease or unusual forward or long-term commitment that
is not reflected in the foregoing statements or in the notes thereto;
and](1)
(h) the Guarantor is [type of legal personality] with a
[combined capital, surplus and undivided profits] [tangible net worth]
of at least $60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by
any act (except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any
Beneficiary, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire
agreement of Guarantor with respect to the subject matter hereof and there are
no promises or representations by any Beneficiary relative to the subject matter
hereof not reflected herein.
13. Amendments and Waivers. None of the terms or provisions of
this Guarantee may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this
Guarantee are for convenience of reference only and not to
- --------
1 This representation is not applicable if Transferee is a wholly-owned
subsidiary of the Owner Participant.
- 7 -
<PAGE> 71
affect the construction hereof or be taken into consideration in
the interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing or by
telegraph, telex or telecopy and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, two days after deposit in the postal system, first class
postage pre-paid, or, in the case of telegraphic notice, when sent, answerback
received, addressed to (a) in the case of the Guarantor, the address provided on
the signature page hereof, and (b) in the case of any Beneficiary, the address
provided for such party in the Refunding Agreement.
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<PAGE> 72
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and the year first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
- 9 -
<PAGE> 73
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1991 AWA-E2]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1991 AWA-E2]
("Assignment") dated as of _____________, between ______________, a ___________
corporation ("Assignor") and ________________, a __________ corporation
("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee,
Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned
below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer
by Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
_______________________________, Fleet National Bank, as Subordination Agent,
and Fleet National Bank, as Indenture Trustee, as amended, modified or
supplemented from time to time (the "Refunding Agreement"), (ii) the Trust
Agreement identified in the Refunding Agreement, (iii) the Trust Estate (as
defined in the Trust Agreement), (iv) the Amended and Restated Head Lease TIA
identified in the Refunding Agreement, (v) the proceeds therefrom and (vi) the
Indenture (as defined in the Refunding Agreement) and (b) the assumption by
Assignee of the obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the meaning ascribed thereto in the Refunding Agreement.
For purposes of this Assignment, the defined term "Operative Document" shall
have the meaning ascribed thereto in the Refunding Agreement and shall be deemed
to include the Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned,
transferred and set over, and does hereby sell, convey, assign, transfer and set
over, unto Assignee, as of the date hereof, all of its right, title and interest
in, under and with respect to the Refunding Agreement, the Trust Agreement, the
Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the
other Operative Documents to which Assignor is a party or any other contract,
agreement, document or instrument relating to the Trust Estate by which Assignor
is bound, and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
<PAGE> 74
rights of Assignor as have accrued to Assignor prior to the date hereof
(including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust Agreement as of a date prior
to such date and the right to receive any indemnity payment pursuant to the
Refunding Agreement or the Lease with respect to events occurring prior to such
date).
3. Assumption. Assignee hereby undertakes all of the duties
and obligations of Assignor whenever accrued (other than duties and obligations
of Assignor required to be performed by it on or prior to the date hereof under
the Operative Documents to which Owner Participant is a party and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound), pursuant to the Trust Agreement
and any of the other Operative Documents by which Assignor is bound or any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound, and hereby confirms that
it shall be deemed a party to the Trust Agreement and shall be bound by each of
the other Operative Documents and each other contract, agreement, document or
other instrument relating to the Trust Estate to which Assignor is a party or by
which it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the
within assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
- 2 -
<PAGE> 75
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay over
to Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Assignor that, under Section 2 hereof, belong to Assignee, and
Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents that it is
acquiring the Trust Estate interests and other interests hereby assigned to it
without a view to the distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents and
warrants that:
(a) it has all requisite power and authority and legal right
to enter into and carry out the transactions contemplated hereby and to
carry out and perform the transactions of Owner Participant as
contemplated by the Operative Documents;
(b) [Intentionally Omitted];
(c) on and as of the date hereof, the representations and
warranties of Owner Participant set forth in Section 9 of the Refunding
Agreement and as set forth in any other Agreement to which Owner
Participant is a party are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of
the Refunding Agreement;
(e) Assignee or its guarantor has a [combined capital, surplus
and undivided profits] [tangible net worth] of not less than
$60,000,000.
9. Governing Law. This Assignment and Assumption Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
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<PAGE> 76
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:___________________________________
Title:
[ASSIGNEE]
By:___________________________________
Title:
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<PAGE> 77
EXHIBIT C to
REFUNDING AGREEMENT
[INTENTIONALLY OMITTED]
<PAGE> 78
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 79
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) First Amended and Restated Trust Indenture and Security
Agreement [GPA 1991 AWA-E2] dated as of November 26,
1996 (the "Amended and Restated Indenture") between the
Owner Trustee and the Indenture Trustee, amending and
restating the Original Indenture with attached thereto
Trust Agreement and Indenture Supplement No. 2 [GPA
1991 AWA-E2] dated November 26, 1996 (the "Indenture
Supplement"), with respect to the Engine, which Amended
and Restated Indenture with the Indenture Supplement
attached was filed with the FAA at 12:21 p.m., C.S.T.
on November 26, 1996;
(b) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of November 26, 1996 (the "Lease
Amendment") among the Original Head Lessee, as
assignor, the Owner Trustee, as lessor, the Lessee, as
assignee, and the Indenture Trustee, which (i) assigns
all right, title and interest of the Original Head
Lessee in and to the Original Head Lease to the Lessee,
(ii) terminates the Sublease and (iii) releases the
Sublease Collateral Assignment, which Lease Amendment
was filed with the FAA at 12:22 p.m., C.S.T. on
November 26, 1996; and
(c) Amended and Restated Engine Lease Agreement [GPA 1991
AWA-E2] dated as of March 15, 1991 and amended and
restated as of November 26, 1996 (the "Amended and
Restated Lease") between the Owner Trustee, as lessor,
and the Lessee, as successor lessee, amending and
restating the Original Head Lease, with Lease
Supplement [GPA 1991 AWA-E2] No. 2 dated November 26,
1996 (the "Lease Supplement") between the Owner
Trustee, as lessor, and the Lessee, as successor
lessee, with respect to the Engine, attached thereto,
which Amended and Restated Lease with the Lease
Supplement attached was filed with the FAA at 12:23
p.m., C.S.T. on November 26, 1996.
Trust Agreement
Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991
between Wilmington Trust Company, as owner trustee, and
__________________________, as owner participant, as supplemented by Trust
Agreement Supplement [GPA 1991 AWA-E2] No. 1 dated March 27, 1991, which were
not filed with the FAA.
Original Indenture
<PAGE> 80
Trust Indenture and Security Agreement [GPA 1991 AWA- E2]
dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee
under Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, and Fleet
National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut
Bank Connecticut, National Association, and The Connecticut National Bank), as
indenture trustee, which was recorded by the Federal Aviation Administration on
March 28, 1991 and assigned Conveyance No. L62815, as supplemented and amended
by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Trust Indenture
Supplement No. 1 03/27/91 03/28/91 L62815
Amendment No. 1 to
Trust Indenture and
Security Agreement 03/27/92 04/29/92 DD002563
Amendment No. 2 to
Trust Indenture and as of
Security Agreement 07/29/93 08/06/93 F59679
</TABLE>
Original Head Lease
Engine Lease Agreement [GPA 1991 AWA-E2] dated as of March 15,
1991 between Wilmington Trust Company, as owner trustee under Trust Agreement
[GPA 1991 AWA-E2] dated as of March 15, 1991, as lessor, and GPA Leasing USA I,
Inc., as lessee, which was recorded by the Federal Aviation Administration on
March 28, 1991 and assigned Conveyance No. L62816, as supplemented by the
following described instrument:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Lease Supplement
[GPA 1991 AWA-E2]
No. 1 03/27/91 03/28/91 L62816
</TABLE>
Sublease
Engine Sublease Agreement [GPA 1990 AWA-E2] dated as of
December 12, 1990 between GPA Leasing USA I, Inc., as sublessor, and America
West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation
Administration on February 19, 1991 and assigned Conveyance No. AA46490, as
supplemented and amended by the following described instruments:
- 2 -
<PAGE> 81
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 02/08/91 02/19/91 AA46490
Amendment No. 1 to
Engine Sublease
Agreement [GPA 1990 as of
AWA-E2] 08/26/91 09/11/91 J68136
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease [GPA 1991 AWA-E2] dated as of March 15,
1991 between GPA Leasing USA I, Inc., as assignor, and Wilmington Trust Company,
as owner trustee under Trust Agreement [GPA 1991 AWA-E2] dated as of March 15,
1991, as supplemented, as assignee, which was recorded by the Federal Aviation
Administration on March 28, 1991 and assigned Conveyance No. L62818.
- 3 -
<PAGE> 1
Exhibit 4.21
REFUNDING AGREEMENT
[GPA 1991 AWA-E3]
Dated as of November 20, 1996
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
----------------------------------,
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
Secured Equipment Notes Covering
One IAE International Aero Engines AG V2500-A1 Engine
Manufacturer's Serial No. V0019
Leased by America West Airlines, Inc.
<PAGE> 2
TABLE OF CONTENTS
PAGE
SECTION 1. Purchase of Equipment Notes; Refunding....................... 5
SECTION 2. Equipment Notes.............................................. 7
SECTION 3. Conditions Precedent......................................... 7
SECTION 4. Certain Conditions Precedent to the
Obligations of the Original Head Lessee
and the Parent Guarantor; Certain
Conditions Precedent to the Obligations
of the Lessee; Conditions Precedent
with respect to the Pass Through
Trustee........................................... 15
SECTION 5. Amendment and Restatement of the
Original Indenture................................ 18
SECTION 6. Amendment and Restatement of the
Original Lease.................................... 19
SECTION 7. Termination of the Participation
Agreement; Termination of Sublease,
etc............................................... 19
SECTION 8. Representations and Warranties of the
Lessee............................................ 19
SECTION 9. Representations and Warranties............................... 24
SECTION 10. Transfer of Owner Participant's
Interest.......................................... 39
SECTION 11. [Reserved] .................................................. 42
SECTION 12. Quiet Enjoyment.............................................. 42
SECTION 13. Liens .................................................. 43
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent
Guarantor, Trust Company, Owner Trustee
and Owner Participant............................. 45
SECTION 15. Certain Retained Rights and Releases......................... 48
- i -
<PAGE> 3
PAGE
SECTION 16. Certain Additional Obligations of the
Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee............. 50
SECTION 17. Lessee Protection of Title................................... 50
SECTION 18. Jurisdictional and Related Matters........................... 50
SECTION 19. Limitation on Recourse....................................... 51
SECTION 20. Notices...................................................... 52
SECTION 21. Expenses..................................................... 52
SECTION 22. Reliance of Liquidity Provider............................... 53
SECTION 23. Miscellaneous................................................ 53
SECTION 24. Governing Law................................................ 54
SECTION 25. Effectiveness................................................ 54
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase
Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1991 AWA-E3]
REFUNDING AGREEMENT [GPA 1991 AWA-E3] (this "Agreement"),
dated as of November 20, 1996, among (i) AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Lessee"), (ii) GPA LEASING USA I, INC., a Connecticut
corporation (the "Original Head Lessee"), (iii) GPA GROUP plc, an Irish public
limited company (the "Parent Guarantor"), (iv) ___________________________, a
Delaware corporation (the "Owner Participant"), (v) WILMINGTON TRUST COMPANY, a
Delaware banking corporation (the "Trust Company"), not in its individual
capacity except as otherwise expressly provided herein, but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement (as defined below), (vi)
FLEET NATIONAL BANK, a national banking association, not in its individual
capacity except as otherwise expressly provided herein, but solely as pass
through trustee (in such capacity, the "Pass Through Trustee") under each of the
five separate Pass Through Trust Agreements (as defined below), (vii) FLEET
NATIONAL BANK, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (as defined below), and (viii) FLEET NATIONAL BANK
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank), a national banking
association, not in its individual capacity except as otherwise expressly
provided herein, but solely as Indenture Trustee (the "Indenture Trustee") under
the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Sanwa International PLC, as Lender (and predecessor in
interest to the Mitsubishi Trust and Banking Corporation, New York Branch, and
The Hachijuni Bank, Ltd., New York Branch, collectively, the "Lenders"), the
Owner Trustee and the Indenture Trustee entered into the Participation Agreement
[GPA 1991 AWA-E3], dated as of March 15, 1991 (as amended, supplemented or
otherwise modified from time to time, the "Participation Agreement"), providing
for the financing of one IAE International Aero Engines AG V2500-A1 Engine (the
"Engine");
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the
<PAGE> 5
Indenture Trustee entered into the Trust Indenture and Security Agreement [GPA
1991 AWA-E3], dated as of March 15, 1991, as supplemented by Trust Indenture
Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1 to Trust
Indenture and Security Agreement dated March 27, 1992, and as further amended by
Amendment No. 2 to Trust Indenture and Security Agreement dated as of July 29,
1993 (as so amended, supplemented or otherwise modified to the date hereof, the
"Original Indenture"), pursuant to which the Owner Trustee issued loan
certificates substantially in the form set forth in Section 2.02 thereof (the
"Original Certificates") to the Lenders as evidence of the indebtedness then
being made by the Owner Trustee to finance a portion of the purchase price of
the Engine;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Engine Lease Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991,
as supplemented by Lease Supplement [GPA 1991 AWA-E3] No. 1 dated March 27, 1991
(as so supplemented, the "Original Lease"), whereby, subject to the terms and
conditions set forth therein, the Owner Trustee agreed to lease to the Original
Head Lessee, and the Original Head Lessee agreed to lease from the Owner
Trustee, the Engine commencing on the Delivery Date (as therein defined);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Parent Guarantor entered into the Parent Head Lease
Guaranty [GPA 1991 AWA-E3] dated as of March 15, 1991 (the "Parent Head Lease
Guaranty") for the benefit of the Owner Trustee pursuant to which the Parent
Guarantor guaranteed all of the obligations of the Original Head Lessee under
the Operative Documents (as defined in the Participation Agreement);
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Trust Company entered
into the Trust Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, as
supplemented by Trust Agreement Supplement [GPA 1991 AWA-E3] No. 1 dated March
27, 1991 (as amended, supplemented or otherwise modified to the date hereof, the
"Original Trust Agreement"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1.1 thereof for the
benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Participant and the Original Head Lessee
entered into the Head Lease Tax Indemnification Agreement [GPA 1991 AWA-E3],
dated as of March 15, 1991 (as amended, supplemented or otherwise modified to
the date hereof, the "Head Lease TIA");
- 2 -
<PAGE> 6
WHEREAS, prior to the execution and delivery of the
Participation Agreement, the Original Head Lessee in its capacity as sublessor
(in such capacity, the "Sublessor") and America West Airlines, Inc. in its
capacity as sublessee (in such capacity, the "Sublessee") entered into the
Engine Sublease Agreement [GPA 1990 AWA-E3] dated as of December 12, 1990, as
supplemented by Sublease Supplement No. 1 [GPA 1990 AWA-E3] dated February 8,
1991, as amended by Amendment No. 1 to Engine Sublease Agreement [GPA 1990
AWA-E3] dated as of August 26, 1991 (as amended, supplemented or otherwise
modified to the date hereof, the "Sublease"), whereby, subject to the terms and
conditions set forth therein, the Sublessor agreed to sublease to the Sublessee,
and the Sublessee agreed to sublease from the Sublessor, the Engine commencing
on the Delivery Date (as defined therein);
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Original Head Lessee and the Sublessee entered into the Sublease
Tax Indemnification Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991 (as
amended, modified or otherwise supplemented to the date hereof, the "Sublease
TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease [GPA 1991 AWA-E3] dated as of March 15, 1991 (as amended, modified or
otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will amend and restate the Original Indenture as the
First Amended and Restated Trust Indenture and Security Agreement [GPA 1991
AWA-E3], dated as of the Restatement Date, as supplemented by Trust Indenture
Supplement No. 2 dated the Restatement Date (the "First Amended and Restated
Indenture" and, the First Amended and Restated Indenture as so amended and
restated, the "Indenture"), under which Indenture the Owner Trustee will issue
secured equipment notes substantially in the form set forth in Section 2.01
thereof (the "Equipment Notes") in five series, the proceeds from the issuance
and sale of which will be applied in part to the prepayment in full of the
Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
Original Lease as the Amended and Restated Lease (as so amended and restated,
the "Lease");
- 3 -
<PAGE> 7
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1991 AWA-E3] No. 2
("Trust Supplement No. 2"), amending the Original Trust Agreement (as so amended
and as further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Amended and Restated Head Lease Tax
Indemnification Agreement, amending and restating the Head Lease TIA (as so
amended and restated, the "Amended and Restated Head Lease TIA") and the
Sublessor and the Sublessee will enter into the Amended and Restated Sublease
Tax Indemnification Agreement amending and restating the Sublease TIA (as so
amended and restated, the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
five separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving credit agreements
(each, a "Liquidity Facility"), for the benefit of the Holders of Equipment
Notes of each of three Pass Through Trusts, with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination
Agent will enter into the Intercreditor Agreement, dated as of the Restatement
Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
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NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a) Subject
to the satisfaction or waiver of the conditions set forth herein, on November
26, 1996 or on such other date agreed to by the parties hereto (the "Restatement
Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor as a
payment of Supplemental Rent under the Sublease all accrued and unpaid
Rent under the Sublease up to the Restatement Date, if any, (less any
amounts for which Sublessee is indemnified by Sublessor) and (B) the
Original Head Lessee shall pay to the Owner Trustee, as a payment of
Supplemental Rent under the Original Lease, an amount equal to the
accrued and unpaid interest on the Original Certificates up to but not
including the Restatement Date plus an amount (the "Prepayment Amount")
equal to all other amounts due to the holders of the Original
Certificates under the Original Indenture and the other Operative
Documents (as defined in the Original Indenture) payable on the
Restatement Date under Section 2.12 of the Original Indenture;
(ii) the Pass Through Trustee for each Pass Through Trust
shall pay to the Owner Trustee the aggregate purchase price of the
Equipment Notes being issued to such Pass Through Trustee as set forth
in clause (xii) below;
(iii) the Owner Trustee (to the extent of proceeds received
under clauses (i) and (ii)) shall pay to the Indenture Trustee for the
benefit of the holders of the Original Certificates an amount equal to
the aggregate principal amount of the Original Certificates outstanding
on the Restatement Date, together with accrued and unpaid interest on
the Original Certificates up to but not including the Restatement Date
plus the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the holders of
the Original Certificates the amounts of principal, interest, Break
Funding Cost, if any, described in clause (iii) above, owing to them on
the Restatement Date with respect to the Original Certificates as a
prepayment of the Original Certificates;
(v) the Indenture Trustee shall receive the Original
Certificates for cancellation;
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<PAGE> 9
(vi) the Owner Trustee and the Indenture Trustee shall enter
into the Indenture (including Trust Indenture Supplement No. 2);
(vii) the Original Head Lessee, the Sublessee, the Owner
Trustee and the Indenture Trustee shall enter into Lease Amendment No.
1;
(viii) the Owner Participant and the Trust Company shall
enter into Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner Participant shall
enter into the Amended and Restated Head Lease TIA and the Sublessor
and the Sublessee shall enter into the Amended and Restated Sublease
TIA;
(x) the Original Head Lessee, GPA Leasing USA Sub I, Inc.,
the Parent Guarantor and the Lessee shall enter into an agreement in
form and substance reasonably satisfactory to each, inter alia,
confirming the termination of certain rights which the Parent Guarantor
has to "put" engines to the Lessee and the obligation of the Lessee to
accept and lease such engines (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of its
affiliates and the Lessee will enter into an agreement (the "Deed of
Indemnity") pursuant to which the Parent Guarantor and/or one or more
of its affiliates, on the one hand, and the Lessee, on the other, will
indemnify each other with respect to certain information included in
the Prospectus and the Registration Statement (as such terms are
defined in the Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xii) the Owner Trustee shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Equipment Notes of the
maturity and aggregate principal amount, bearing the interest rate and
for the purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust.
(b) The Owner Participant, by its execution and delivery
hereof, requests and directs the Owner Trustee to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions contemplated
herein.
(c) The closing (the "Closing") of the transactions described
in this Agreement shall take place at the offices of Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New
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<PAGE> 10
York, New York 10005, on the Restatement Date, or at such other place as the
parties hereto may agree.
(d) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Restatement Date.
(e) In order to facilitate the transactions contemplated
hereby, the Original Head Lessee, GPA Leasing USA Sub I, Inc., the Parent
Guarantor and the Lessee have entered into the Underwriting Agreement, dated as
of November 20, 1996 (the "Underwriting Agreement"), among such Persons and
Morgan Stanley & Co., Citicorp Securities, Inc., Lehman Brothers, Inc. and
Salomon Brothers Inc (collectively, the "Underwriters"), and, subject to the
terms and conditions hereof, the Lessee will enter into each of the Pass Through
Trust Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall be
payable as to principal in accordance with the terms of the Indenture, and the
Equipment Notes shall provide for a fixed rate of interest per annum and shall
contain the terms and provisions provided for the Equipment Notes in the
Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall
authenticate and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Equipment Notes bearing the interest rate set forth
opposite the name of such Pass Through Trust on Schedule II hereto, which
Equipment Notes in the aggregate shall be in the principal amounts set forth on
Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust
Agreements and of the other Operative Documents, all such Equipment Notes shall
be dated and authenticated as of the Restatement Date and shall bear interest
therefrom, shall be registered in such names as shall be specified by the
Subordination Agent and shall be paid in the manner and at such places as are
set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligations of the Pass
Through Trustee to make the payments described in Section 1(a)(ii) and the
obligations of the Owner Trustee to make the payments described in Section
1(a)(iii) and the obligations of each of the Pass Through Trustee, the Owner
Trustee, the Owner Participant and the Indenture Trustee to participate in the
transactions contemplated by this Agreement on the Restatement Date are subject
to the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent (except that paragraphs (a), (f) and (j) shall not be
conditions precedent to the obligations of the Owner Trustee hereunder,
paragraphs (g) and (l) shall not be conditions precedent to the obligations of
the Owner Participant hereunder and paragraphs (e) and (k) shall
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<PAGE> 11
not be conditions precedent to the obligations of the Indenture Trustee
hereunder):
(a) The Owner Trustee shall have tendered the Equipment Notes
to the Indenture Trustee for authentication, and the Indenture Trustee
shall have authenticated such Equipment Notes and shall have tendered
the Equipment Notes to the Subordination Agent on behalf of the Pass
Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts of each of
the following documents and the Indenture Trustee shall have received
executed counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 2;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and
Trust Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements and
each Pass Through Trust Supplement set forth
in Schedule I hereto;
(6) the Intercreditor Agreement; and
(7) the Liquidity Facility for each of the
Class A, Class B and Class C Trusts (as
defined in the Intercreditor Agreement).
(c) The Pass Through Trustee, the Indenture Trustee,
the Owner Trustee and the Owner Participant each shall have
received the following:
(1) an incumbency certificate of each of the Original
Head Lessee, the Lessee and the Parent Guarantor as to the
person or persons authorized to execute and deliver this
Agreement and each of the other documents to be executed on
behalf of such Person in connection with the transactions
contemplated hereby (including, without limitation, each of
the documents referred to herein) and as to the signatures of
such person or persons;
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<PAGE> 12
(2) a copy of the resolutions of the board of
directors of each of the Original Head Lessee, the Lessee and
the Parent Guarantor or the applicable committee thereof,
certified by the Secretary or an Assistant Secretary of such
Person, duly authorizing the transactions contemplated hereby
and the execution, delivery and performance of each of the
documents required to be executed and delivered on behalf of
such Person in connection with the transactions contemplated
hereby;
(3) a copy of the certificate of incorporation of
each of the Original Head Lessee and the Lessee, certified by
the Secretary of State of its state of incorporation, a copy
of the by-laws of each of the Original Head Lessee and the
Lessee, certified by the Secretary or Assistant Secretary of
such Person, and a certificate or other evidence from the
Secretary of State of its state of incorporation, dated as of
a date reasonably near the Restatement Date, as to its due
incorporation and good standing in such state; and
(4) a copy of the Memorandum and Articles of
Association of the Parent Guarantor certified to be true and
correct by the Secretary or an Assistant Secretary of the
Parent Guarantor.
(d) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received, in the case
of (3) below, a certificate signed by an authorized officer of the
Lessee and, in the case of (1) and (2) below, a certificate signed by
an authorized officer of the Original Head Lessee, dated the
Restatement Date, certifying that:
(1) the Original Lease and the Original Indenture
have each been duly recorded with the FAA pursuant to the
sections of Title 49 of the United States Code relating to
aviation (the "Federal Aviation Act");
(2) Lease Amendment No. 1, the Amended and Restated
Lease, Lease Supplement No. 2, the First Amended and Restated
Indenture, Trust Indenture Supplement No. 2 and Trust
Supplement No. 2 covering the Engine shall have been duly
filed for recordation with the FAA pursuant to the Federal
Aviation Act; and
(3) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in
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<PAGE> 13
which case such representations and warranties were correct on
and as of such earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the
Secretary, an Assistant Secretary or other appropriate officer
of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution, delivery and
performance of each of the documents required to be executed
and delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Indenture Trustee, each certified by the Secretary, an
Assistant Secretary or other appropriate officer of the
Indenture Trustee; and
(4) a certificate signed by an authorized officer of
the Indenture Trustee, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Indenture Trustee are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee as
to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Trustee in connection with the
transactions contemplated hereby (including, without
limitation, each of
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<PAGE> 14
the documents referred to herein) and as to the signatures of
such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws
of the Owner Trustee, each certified by the Secretary or an
Assistant Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
(1) an incumbency certificate of the Owner
Participant as to the person or persons authorized to execute
and deliver this Agreement and each of the other documents to
be executed on behalf of the Owner Participant in connection
with the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner Participant or the applicable authority
designated by the board of directors thereof, certified by the
Secretary or an Assistant Secretary of the Owner Participant,
duly authorizing the transactions contemplated hereby and the
execution, delivery and performance of each of the documents
required to be executed and delivered on behalf of the Owner
Participant in connection with the transactions contemplated
hereby;
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<PAGE> 15
(3) a copy of the certificate of incorporation of the
Owner Participant, certified by the Secretary of State of its
state of incorporation, a copy of the by-laws of the Owner
Participant, certified by the Secretary or Assistant Secretary
of the Owner Participant, and a certificate or other evidence
from the Secretary of State of its state of incorporation,
dated as of a date reasonably near the Restatement Date, as to
its due incorporation and good standing in such state; and
(4) a certificate signed by an authorized
representative of the Owner Participant, dated the Restatement
Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as
though made on and as of the Restatement Date, except to the
extent that such representations and warranties relate solely
to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(h) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received from the
Lessee a report from Willis Corroon in substantially the form of
Exhibit D attached hereto.
(i) The Pass Through Trustee, the Indenture Trustee, the Owner
Trustee and the Owner Participant each shall have received an opinion
addressed to it from (i) Latham & Watkins, special counsel for the
Lessee, (ii) Andrews & Kurth L.L.P., special counsel for the Lessee,
(iii) the Senior Vice President-Legal Affairs of Lessee and (iv) Lewis
& Roca, special Arizona counsel for the Lessee, in each case in form
and substance satisfactory to each of them.
(j) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received an opinion addressed to it
from Morris, James, Hitchens & Williams, special counsel for the Owner
Trustee, in form and substance satisfactory to each of them.
(k) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from
Shipman & Goodwin LLP, special counsel for the Indenture Trustee, the
Subordination Agent and the Pass Through Trustee, in each case in form
and substance satisfactory to each of them.
(l) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received an opinion addressed to it from
(i) Hunton & Williams, special counsel
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<PAGE> 16
for the Owner Participant and (ii) in-house counsel for the Owner
Participant, in each case in form and substance satisfactory to each of
them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case,
special counsel for the Liquidity Provider, and (ii) in-house counsel
for the Liquidity Provider, in each case in form and substance
satisfactory to the Pass Through Trustee, the Owner Trustee and the
Owner Participant.
(n) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Daugherty, Fowler & Peregrin, special
counsel in Oklahoma City, Oklahoma, in form and substance satisfactory
to each of them.
(o) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from Paul, Hastings, Janofsky & Walker LLP,
special New York counsel for the Original Head Lessee and the Parent
Guarantor, in form and substance satisfactory to each of them.
(p) The Pass Through Trustee, the Owner Trustee, the Owner
Participant and the Indenture Trustee each shall have received an
opinion addressed to it from McCann FitzGerald, special Irish counsel
for the Parent Guarantor, in form and substance satisfactory to each of
them.
(q) The Original Head Lessee, the Lessee, GPA Leasing USA Sub
I, Inc. and the Parent Guarantor shall have entered into the
Underwriting Agreement and the Lessee shall have entered into each of
the Pass Through Trust Agreements, the Certificates shall have been
issued and sold pursuant to the Underwriting Agreement and the Pass
Through Trust Agreements, and the Underwriters shall have transferred
to the Pass Through Trustee in immediately available funds an amount
equal to the aggregate purchase price of the Equipment Notes to be
purchased from the Owner Trustee.
(r) The Original Head Lessee and the Owner Participant shall
each have executed and delivered to the other the Amended and Restated
Head Lease TIA.
(s) The Sublessor and the Sublessee shall each have executed
and delivered to the other the Amended and Restated Sublease TIA.
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<PAGE> 17
(t) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would make it illegal for the Pass Through Trustee to make
the payments described in Section 1(a)(ii) or for the Lessee, the
Indenture Trustee, the Owner Trustee or the Owner Participant or any
other party hereto to participate in the transactions contemplated by
this Agreement on the Restatement Date.
(u) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in
connection with the Pass Through Trustee's making of the payments
described in Section 1(a)(ii) or the Owner Trustee's or the Owner
Participant's participation in the transactions contemplated by this
Agreement on the Restatement Date shall have been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security
interests created by or pursuant to the Indenture that are not covered
by the recording system established by the Federal Aviation Act shall
have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee and the Owner Trustee, as the case may
be, and such financing, termination, amendment and continuation
statement or statements or documents to the same purposes shall have
been duly filed in all places necessary or advisable, and any
additional Uniform Commercial Code financing, termination, amendment
and continuation statements deemed advisable by the Original Head
Lessee, the Lessee, the Owner Participant or the Indenture Trustee
shall have been executed and delivered by the Original Head Lessee, the
Lessee, the Indenture Trustee or the Owner Trustee, as the case may be,
and duly filed in all places advisable.
(w) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or any
court that would adversely affect the tax consequences of the
transactions contemplated by this Agreement to the Owner Participant,
the Owner Trustee or any of their respective Affiliates.
(x) The Owner Trustee shall have received a letter of credit
in the amount of $200,000 from the Lessee in the form of Exhibit D-2 to
the Lease.
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<PAGE> 18
(y) The Owner Participant shall have received any other
documents and evidence as the Owner Participant or its counsel may
request.
Promptly following the recording of Lease Amendment No. 1, the
Amended and Restated Lease (including Lease Supplement No. 2) and the First
Amended and Restated Indenture (including Trust Indenture Supplement No. 2)
pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 2,
the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and
Trust Supplement No. 2.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the Parent
Guarantor to participate in the transactions contemplated by this Agreement on
the Restatement Date, and to execute and deliver this Agreement are subject to
the fulfillment, prior to or on the Restatement Date, of the following
conditions precedent:
(i) Each of the Original Head Lessee and the Parent Guarantor
shall have received counterparts of the following documents executed by
each of the parties thereto other than the Original Head Lessee and the
Parent Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 2;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee and such other
releases
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<PAGE> 19
and terminations as it may reasonably
request; and
(9) that certain letter agreement dated as of
the Restatement Date relating to Stipulated
Loss Values with respect to the Amended and
Restated Lease (the "SLV Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent Guarantor
shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee
referred to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i),
Section 3(j), Section 3(k), Section 3(l),
Section 3(m) and Section 3(n), in each case
addressed to each of the Original Head
Lessee and the Parent Guarantor and in form
and substance satisfactory to each of them;
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form
and substance reasonably satisfactory to
each of them; and
(6) the report referred to in Section 3(h)
addressed to each of the Original Head
Lessee and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent
Guarantor shall have received such other documents and evidence with
respect to each other party hereto as each of them or its counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement and the "Refunding
Agreements" (as defined in the Registration Statement), the taking of
all necessary action in connection therewith and compliance with the
conditions herein or therein set forth.
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<PAGE> 20
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 2;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the
following documents:
(1) the incumbency certificate of the Original
Head Lessee and Parent Guarantor referred to
in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee
and Parent Guarantor referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j),
Section 3(k), Section 3(l), Section 3(m),
Section 3(n), Section 3(o) and Section 3(p),
in each case addressed to Lessee and in form
and substance satisfactory to Lessee; and
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<PAGE> 21
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to Lessee and in form
and substance reasonably satisfactory to
Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and the
"Refunding Agreements" (as defined in the Registration Statement), the
taking of all necessary action in connection therewith and compliance
with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the Pass
Through Trustee (solely as to clause (ii)), the Original Head Lessee, the Owner
Participant, the Owner Trustee and the Indenture Trustee to participate in the
transactions contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass Through Trustee,
dated the Restatement Date, certifying that the representations and warranties
contained herein and in the Pass Through Trust Agreements of the Pass Through
Trustee are correct as of the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such earlier date),
(ii) an opinion addressed to each of them of Shipman & Goodwin LLP, special
counsel for the Pass Through Trustee, in form and substance satisfactory to each
of them, and (iii) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary action in connection therewith and compliance with the conditions
herein set forth.
SECTION 5. Amendment and Restatement of the Original
Indenture. Subject to the satisfaction or waiver of the conditions precedent set
forth herein, the Owner Participant, by execution and delivery hereof, requests,
authorizes and directs the Owner Trustee to execute and deliver the First
Amended and Restated Indenture, and the Owner Trustee and the Indenture Trustee,
by execution and delivery hereof, agree to execute and deliver the First Amended
and Restated Indenture. Each of the Original Head Lessee, the Parent Guarantor
and the Lessee, by execution and delivery hereof, consent to such execution and
delivery of the First Amended and Restated Indenture. The First
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Amended and Restated Indenture shall be effective as of the Restatement Date.
SECTION 6. Amendment and Restatement of the Original Lease.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor
and the Owner Participant, by execution and delivery hereof, consent to the
assignments, delegations, and releases set forth in, and to the amendment and
restatement of the Original Lease effected by, and the Owner Participant
requests and instructs the Owner Trustee to execute and deliver, Lease Amendment
No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture Trustee
and the Sublessee agree, by execution and delivery hereof, to execute and
deliver Lease Amendment No. 1. The Amended and Restated Lease shall be effective
as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner Trustee,
the Original Head Lessee, the Parent Guarantor and the Indenture Trustee, by
execution and delivery hereof, agree that, with effect from and including the
Restatement Date and except as otherwise provided in Section 15 hereof, the
Participation Agreement shall terminate and forever be without force and effect,
conferring no rights and imposing no obligations on the parties thereto. Upon
the execution and delivery of Lease Amendment No. 1 by each of the parties
thereto, the Sublease and the Assignment of Sublease shall be terminated as and
to the extent set forth herein and therein. Lease Amendment No. 1 shall be
effective as of the Restatement Date.
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original Head
Lessee (except as to the representation and warranty contained in Section 8(i)),
the Parent Guarantor (except as to the representation and warranty contained in
Section 8(i)), the Pass Through Trustee, the Owner Participant, the Owner
Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has the corporate power and authority to own or hold under lease its
properties, has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and perform its
obligations under this Agreement, Lease Amendment No. 1, the Lease, the
Pass Through Trust Agreements, the Amended and Restated Sublease TIA,
the SLV Letter Agreement and any certificate delivered by the Lessee
pursuant to the foregoing (the
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<PAGE> 23
"Lessee Documents") and is duly qualified to do business as a foreign
corporation in each jurisdiction where the failure to so qualify would
have a material adverse effect on its business, operations or condition
(financial or otherwise), or on its ability to perform its obligations
under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under
the Lessee Documents have been duly authorized by all necessary
corporate action on the part of the Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation,
judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions
of, or constitute a default under, or result in the creation of any
Lien (other than Permitted Liens) upon the property of the Lessee
under, any indenture, mortgage, contract, lease or other agreement in
each case having payment obligations in excess of $500,000 to which the
Lessee is a party or by which it may be bound or affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee
under the Lessee Documents nor the consummation by the Lessee of any of
the transactions contemplated by the Lessee Documents, requires the
consent or approval of, the giving of notice to, the registration with,
or the taking of any other action in respect of, the Department of
Transportation, the FAA, or any other federal, state, local or foreign
governmental authority having jurisdiction, other than those which have
already been received and which the Lessee is in compliance with and
(i) the registration of the Certificates under the Securities Act of
1933, as amended (the "Securities Act") and the securities laws of any
state in which the Certificates may be offered for sale if the laws of
such state require such action, (ii) the qualification of the Pass
Through Trust Agreements under the Trust Indenture Act of 1939, as
amended, (iii) (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities
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<PAGE> 24
having jurisdiction with respect to the Engine required to be obtained
on or prior to the Restatement Date, which orders, permits, waivers,
exemptions, authorizations and approvals have been duly obtained and
are, or will on the Restatement Date be in full force and effect and
(B) such consents, approvals, notices, registrations and other actions
required by the terms of the Lessee Documents to the extent required to
be given or obtained only after the Restatement Date and (iv) the
registrations and filings referred to in Section 8(i);
(e) each Lessee Document has been duly executed and delivered
by the Lessee and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, each Lessee Document
constitutes, or when executed will constitute, the legal, valid and
binding obligations of the Lessee enforceable against the Lessee in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors or lessors
generally and by general principles of equity, whether considered in a
proceeding at law or in equity, and except, in the case of the Lease,
as may be limited by applicable laws which may affect the remedies
provided in the Lease, which laws, however, do not make the remedies
provided in the Lease inadequate for the practical realization of the
benefits intended to be afforded thereby;
(f) except as disclosed in the Prospectus, there are no
pending or, to its knowledge, threatened actions or proceedings before
any court or administrative agency or regulatory commission or other
governmental agency against or affecting the Lessee that are reasonably
expected to materially adversely affect the ability of Lessee to enter
into or perform its obligations under the Lessee Documents;
(g) the Lessee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(h) on the Restatement Date, the Trust Estate shall be free
and clear of any and all Liens (other than Permitted Liens) created by
or through the Lessee;
(i) except for the filing for recordation pursuant to
the Federal Aviation Act (with confidential financial terms
redacted) of Lease Amendment No. 1, the Amended and Restated
Lease, Lease Supplement No. 2, Trust Supplement No. 2, the
First Amended and Restated Indenture and Indenture
Supplement No. 2, and each of the other documents referred
to in Annex A hereto, all with the FAA, the filing of a
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<PAGE> 25
Uniform Commercial Code ("UCC") amended financing statement with the
Secretary of State of the State of Delaware with regard to the Original
Lease, the filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States of New
York, Connecticut and Arizona, the filing of a protective UCC financing
statement with the Secretary of State of the State of Arizona with
respect to the Lease, the filing of a UCC termination statement with
the Secretary of State of the State of Arizona with respect to the
Sublease, and the filing of a UCC termination statement with the
Secretary of State of the State of Delaware with respect to the Initial
Sublease Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly effected as
of the Restatement Date (and assignments thereof and continuation
statements at periodic intervals), and other than the taking of
possession by the Indenture Trustee of the original counterparts of the
Original Lease, Lease Amendment No. 1, the Amended and Restated Lease,
and all Lease Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification required by
Section 6(e) of the Lease, no further filing or recording of the Lease
or of any other document (including any financing statement under
Article 9 of the UCC of the State of Delaware, New York or Arizona) and
no further action is necessary, under the laws of the United States of
America or the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Engine as against the
Lessee and any third parties, or to perfect the security interest in
favor of the Indenture Trustee in the Owner Trustee's interest in the
Engine and in the Lease;
(j) all obligations of the Lessee owing to the Lessor in
connection with the Lease are at least pari passu with all unsecured
and unsubordinated debt obligations of the Lessee;
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default
but for the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an Event
of Loss with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are required
to be filed and has paid or will pay or has caused or will cause to be
paid all taxes shown to be
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<PAGE> 26
due or payable on said returns and on any assessment received by the
Lessee, to the extent such taxes have become due and payable, except
for taxes and returns with respect thereto the nonpayment or nonfiling
of which, either in any case or in the aggregate, could have no
material adverse effect on the Lessee, its condition (financial or
otherwise), business, operations or prospects, or on its ability to
perform its obligations under the Lease or which are being diligently
contested by the Lessee in good faith by appropriate proceedings and
with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all
material respects and fairly present the Lessee's financial condition
as of September 30, 1996 and the results of its operations for the
period covered in conformance with GAAP (except as otherwise noted
therein and with which any such change the independent auditors of the
Lessee have agreed), since September 30, 1996, there has been no
material adverse change in the Lessee's business, operations, condition
(financial or otherwise) or prospects which has not been disclosed in
writing to the Owner Participant and the Indenture Trustee and does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading;
(o) on the Restatement Date, all sales, use, documentary,
duties or other similar Taxes then due and for which the Lessee is
responsible pursuant to the Lessee Documents, shall have been paid,
other than such Taxes which are being contested by the Lessee in good
faith and by appropriate proceedings (and for which the Lessee shall
have established such reserves as are required under GAAP) so long as
such proceedings or the non-payment of such Taxes do not involve any
material danger to the sale, forfeiture or loss of the Engine;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations or
the Cuban Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, or of any regulations, interpretations or rulings issued
thereunder, and the Lessee is not, and is not acting on behalf of or
for the benefit of, an "Iranian Entity" within the meaning of the
Iranian Assets Control Regulations of the United States Treasury
Department, 31 Code of Federal Regulations, Subtitle B, Chapter V, as
amended, and the transactions contemplated by this Agreement are not
prohibited by Executive Order 12170, the above-mentioned Iranian Assets
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<PAGE> 27
Control Regulations or any regulations, interpretations or rulings
issued under any thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made out
of the assets of any "employee benefit plan" as defined in Section 3(3)
of ERISA;
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the
Owner Participant or the Indenture Trustee by the Lessee in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to
the Lessee (other than matters of a general economic nature) which the
Lessee has not disclosed in writing to the Owner Participant or the
Indenture Trustee which could impair its ability to perform its
obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the Bankruptcy
Code, the Lessor as lessor of the Engine under the Lease, and the
Indenture Trustee, as assignee of the Owner Trustee's rights under the
Lease pursuant to the Indenture, would be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect to the Engine.
SECTION 9. Representations and Warranties. Each of the parties
below represents and warrants, as of the Restatement Date, to each of the other
parties to this Agreement and to the Liquidity Provider (except that the
representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below)
represents and warrants that:
(1) the Indenture Trustee is a banking association
duly organized, validly existing and in good standing under
the federal laws of the United States of America, and has the
full corporate power, authority and legal right under the laws
of the State of Connecticut and the federal laws of the United
States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of this Agreement, the Indenture
and each other Operative Document to which it is a party and
to carry out its obligations under this
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<PAGE> 28
Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) neither the execution and delivery by the
Indenture Trustee of this Agreement, the Indenture, Lease
Amendment No. 1 and each other Operative Document to which it
is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the
compliance by it with any of the terms and provisions hereof
and thereof, (A) requires or will require any approval of its
stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or
by-laws, or contravenes or will contravene any provision of,
or constitutes or will constitute a default under, or results
or will result in any breach of, or results or will result in
the creation of any Lien (other than as permitted under the
Operative Documents) upon its property under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other
agreement or instrument to which it is a party or by which it
is bound, or contravenes or will contravene any law,
governmental rule or regulation or any judgment or order
applicable to or binding on it of any United States
governmental authority or agency governing the trust powers of
the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture,
when executed and delivered by the Indenture Trustee, will
constitute, the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents to which
it is a party;
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<PAGE> 29
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any State of Connecticut or any
United States of America governmental authority or agency
regulating the trust powers of the Indenture Trustee is
required for the execution and delivery of, or the carrying
out by, the Indenture Trustee of any of the transactions
contemplated hereby or by the Indenture, Lease Amendment No. 1
or any other Operative Document to which it is a party or by
which it is bound, other than any such consent, approval,
order, authorization, registration, notice or action as has
been duly obtained, given or taken;
(6) there are no Lenders' Liens (as defined in the
Lease) on the Engine or any portion of the Trust Estate
created by or through the Indenture Trustee in its individual
capacity; and
(7) it has possession of the chattel paper original
counterpart of the Original Lease, Lease Amendment No. 1 and
the Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations and warranties
are made solely by the Owner Trustee) and the Owner Trustee represents
and warrants that:
(1) the Trust Company is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and
authority to carry on its business as now conducted, has, or
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver Trust
Supplement No. 2, has the corporate power and authority to
carry out the terms of the Trust Agreement, and each of the
Trust Company and the Owner Trustee has, or had on the
respective dates of execution thereof (assuming the
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant), the corporate power and authority
to execute and deliver and to carry out the terms of this
Agreement, the Indenture, the Equipment Notes, Lease Amendment
No. 1, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
(2) (i) each of the Trust Company and the Owner
Trustee has duly authorized, executed and delivered the Trust
Agreement and this Agreement and (assuming the
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<PAGE> 30
due authorization, execution and delivery of Trust Supplement
No. 2 by the Owner Participant) the Trust Agreement
constitutes a legal, valid and binding obligation of the Owner
Trustee, in its individual capacity or as Owner Trustee and
the Trust Company, as the case may be, enforceable against it
in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity, (ii) the Owner
Trustee has duly authorized, executed and delivered this
Agreement and (assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant)
this Agreement and the Trust Agreement constitute, and the
Indenture and the Lease, when entered into, will constitute, a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity or as Owner Trustee and the Trust
Company, as the case may be, enforceable against it in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(3) assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant,
the Owner Trustee has duly authorized, and on the Restatement
Date shall have duly issued, executed and delivered to the
Indenture Trustee for authentication, the Equipment Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Equipment Note on the Restatement Date
will constitute the valid and binding obligation of the Owner
Trustee and will be entitled to the benefits and security
afforded by the Indenture in accordance with the terms of such
Equipment Note and the Indenture;
(4) neither the execution and delivery by the Owner
Trustee or the Trust Company, as the case may be, of this
Agreement, the Original Trust Agreement, Trust Supplement No.
2, the Original Indenture, the Indenture, the Original Lease,
Lease Amendment No. 1, the Lease, the Equipment Notes, or any
other Operative Document to which it is a party, nor the
consummation by it of any of the transactions contemplated
hereby or thereby, nor the compliance by it with any of the
terms and provisions hereof and thereof, (A) requires or will
require any approval of its stockholders, or approval
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<PAGE> 31
or consent of any trustees or holders of any indebtedness or
obligations of it, or (B) violates or will violate its
articles of association or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute
a default under, or results or will result in any breach of,
or results or will result in the creation of any Lien (other
than as permitted under the Operative Documents) upon its
property under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which
it is a party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation of the
State of Delaware or any United States governmental authority
or agency governing the trust powers of the Owner Trustee, or
any judgment or order applicable to or binding on it;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any state or local governmental
authority or agency or any State of Delaware or any United
States of America governmental authority or agency regulating
the trust powers of the Trust Company is required for the
execution and delivery of, or the carrying out by, the Trust
Company or the Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust
Agreement, the Indenture, the Lease, Lease Amendment No. 1,
the Equipment Notes or any other Operative Document to which
it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice
or action as has been duly obtained, given or taken or which
is described in Section 8(d);
(6) there exists no Lessor's Lien or Head Lessor's
Lien (each as defined in the Lease) (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens) attributable to
the Owner Trustee;
(7) there exists no Lessor's Lien or Head Lessor's
Lien (including for this purpose Liens that would be Lessor's
Liens but for the first proviso in the definition of Lessor's
Liens) attributable to the Trust Company;
(8) there are no Taxes payable by the Owner
Trustee or the Trust Company imposed by the State of
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<PAGE> 32
Delaware or any political subdivision thereof in connection
with the prepayment of the Original Certificates or the
issuance of the Equipment Notes, or the execution and delivery
by it of any of the instruments referred to in clauses (1),
(2), (3) and (4) above, that, in each case, would not have
been imposed if the Trust Estate were not located in the State
of Delaware and the Trust Company had not (a) had its
principal place of business in, (b) performed (in its
individual capacity or as Owner Trustee) any or all of its
duties under the Operative Documents in, and (c) engaged in
any activities unrelated to the transactions contemplated by
the Operative Documents in, the State of Delaware;
(9) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner Trustee,
either in its individual capacity or as Owner Trustee, before
any court or administrative agency which, if determined
adversely to it, would materially adversely affect the ability
of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under
any of the instruments referred to in clauses (1), (2), (3)
and (4) above; and
(10) both its chief executive office, and the place where
its records concerning the Engine and all its interests in, to
and under all documents relating to the Trust Estate (other
than such as may be maintained and held by the Indenture
Trustee pursuant to the Indenture), are located in Wilmington,
Delaware. Owner Trustee, in its individual capacity or as
Owner Trustee, agrees that it will not change the location of
such office to a location outside of Delaware, without prior
written notice to all parties hereto.
(c) The Owner Participant represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to carry
on its present business and operations and to own or lease its
properties, has, or had on the respective dates of execution
thereof, as the case may be, the corporate power and authority
to enter into and to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement and
the Amended and Restated Head Lease TIA; this Agreement, the
SLV Letter Agreement and Trust
- 29 -
<PAGE> 33
Supplement No. 2 have been duly authorized, executed and
delivered by it; and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties
hereto and thereto, this Agreement, the Trust Agreement, the
SLV Letter Agreement and the Amended and Restated Head Lease
TIA constitute the legal, valid and binding obligations of the
Owner Participant enforceable against it in accordance with
their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors
generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Amended and Restated Head Lease TIA
or any other Operative Document to which it is a party nor (B)
compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding on
the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the
equipment owned by the Owner Trustee), or (y) will contravene
the provisions of, or constitutes or has constituted or will
constitute a default under, its certificate of incorporation
or by-laws or any indenture, mortgage, contract or other
agreement or instrument to which the Owner Participant is a
party or by which it or any of its property may be bound or
affected, except where such contravention or default would not
result in any liability to any other party hereto or have a
material adverse effect on the rights or on the remedies of
the other parties hereto or on its ability to perform its
obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Amended and Restated Head Lease TIA (it
being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee
- 30 -
<PAGE> 34
other than the laws, rules or regulations relating to
engine lease transactions generally);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant before any court or administrative agency or
arbitrator which, if determined adversely to the Owner
Participant, would materially adversely affect the Owner
Participant's ability to perform its obligations under this
Agreement, the Trust Agreement, the SLV Letter Agreement or
the Amended and Restated Head Lease TIA; and
(5) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant (including for this purpose Liens
that would be Lessor's Liens but for the first proviso in the
definition of Lessor's Liens).
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly organized,
validly existing and in good standing under the federal laws
of the United States of America, and has the full corporate
power, authority and legal right under the federal laws of the
United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Intercreditor Agreement, and
this Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements and the
Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement will
have been, duly authorized, executed and delivered by the Pass
Through Trustee; this Agreement constitutes, and when executed
and delivered by the Pass Through Trustee, each of the Pass
Through Trust Agreements and the Intercreditor Agreement, will
constitute, the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
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<PAGE> 35
(3) none of the execution, delivery and performance
by the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Intercreditor Agreement or this Agreement, the
purchase by the Pass Through Trustee of the Equipment Notes
pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Pass Through Trustee's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Pass Through Trustee and does not contravene or
result in any breach of, or constitute a default under, the
Pass Through Trustee's articles of association or by-laws or
any agreement or instrument to which the Pass Through Trustee
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust Agreements,
the Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any State of Connecticut governmental authority or
agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or
fiduciary powers;
(5) assuming that the trusts created by the Pass
Through Trust Agreements will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code for
federal income tax purposes, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection with the acquisition, possession or ownership by
the Pass Through Trustee of any of the Equipment Notes (other
than franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and
prior to the exercise of remedies upon the occurrence of an
Indenture Event of Default, there are no Taxes payable by the
Pass Through Trustee imposed by the State of Connecticut or
any political subdivision or taxing authority thereof in
connection
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<PAGE> 36
with the execution, delivery and performance by the Pass
Through Trustee of this Agreement, any of the Pass Through
Trust Agreements or the Intercreditor Agreement (other than
franchise or other Taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by
any of the Pass Through Trust Agreements), and such trusts
will not be subject to any Taxes imposed by the State of
Connecticut or any political subdivision or taxing authority
thereof; upon the exercise of remedies following the
occurrence of an Indenture Event of Default, there will be no
Taxes payable by the Pass Through Trustee imposed by the State
of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery
and performance by the Pass Through Trustee of this Agreement,
any of the Pass Through Trust Agreements or the Intercreditor
Agreement (other than franchise or other Taxes based on or
measured by any fees or compensation received by the Pass
Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust
Agreements), and the trusts created by the Pass Through Trust
Agreements will not be subject to any Taxes imposed by the
State of Connecticut or any political subdivision thereof,
solely because the Pass Through Trustee maintains an office
in, and administers the trusts created by the Pass Through
Trust Agreements in, the State of Connecticut;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not directly
or indirectly offered any Equipment Notes for sale to any
Person or solicited any offer to acquire any Equipment Notes
from any Person, nor has the Pass Through Trustee authorized
anyone to act on its behalf to offer directly or indirectly
any Equipment Notes for sale to any Person, or to solicit any
offer to acquire any Equipment Notes from any Person; and the
Pass Through Trustee is not in default under any Pass Through
Trust Agreement; and
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<PAGE> 37
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(e) The Subordination Agent represents and warrants
that:
(1) the Subordination Agent is a duly organized
national banking association, validly existing and in good
standing with the Comptroller of the Currency under the laws
of the United States of America and has the full corporate
power, authority and legal right under the laws of the United
States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement and
to perform its obligations under this Agreement, the Liquidity
Facilities and the Intercreditor Agreement;
(2) this Agreement has been, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement will have been,
duly authorized, executed and delivered by the Subordination
Agent; this Agreement constitutes, and when executed and
delivered by the Subordination Agent, each of the Liquidity
Facilities and the Intercreditor Agreement, will constitute,
the legal, valid and binding obligations of the Subordination
Agent enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(3) none of the execution, delivery and performance
by the Subordination Agent of each of the Liquidity
Facilities, the Intercreditor Agreement and this Agreement or
the performance by the Subordination Agent of this Agreement,
contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or
agency regulating the Subordination Agent's banking, trust or
fiduciary powers or any judgment or order applicable to or
binding on the Subordination Agent and do not contravene or
result in any breach of, or constitute a default under, the
Subordination Agent's articles of association or by-laws or
any agreement or instrument
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<PAGE> 38
to which the Subordination Agent is a party or by which
it or any of its properties may be bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement or this Agreement nor the consummation
by the Subordination Agent of any of the transactions
contemplated hereby or thereby requires the consent or
approval of, the giving of notice to, the registration with,
or the taking of any other action with respect to, any State
of Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery and performance by the Subordination Agent
of this Agreement, any of the Liquidity Facilities or the
Intercreditor Agreement (other than franchise or other taxes
based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities) solely because
the Subordination Agent maintains an office and administers
its trust business in the State of Connecticut, and there are
no Taxes payable by the Subordination Agent imposed by the
State of Connecticut or any political subdivision thereof in
connection with the acquisition, possession or ownership by
the Subordination Agent of any of the Equipment Notes solely
because the Subordination Agent maintains an office and
administers its trust business in the State of Connecticut
(other than franchise or other taxes based on or measured by
any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any court
or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
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<PAGE> 39
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any Person
or solicited any offer to acquire any Equipment Note from any
Person, nor has the Subordination Agent authorized anyone to
act on its behalf to offer directly or indirectly any
Equipment Note for sale to any Person, or to solicit any offer
to acquire any Equipment Note from any Person; and the
Subordination Agent is not in default under any Liquidity
Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common control
with the Owner Participant, the Owner Trustee, the
Underwriters or the Lessee.
(f) The Original Head Lessee represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Amended and Restated Head Lease TIA, the Amended
and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Original Head Lessee of this Agreement and each of the other
Original Head Lessee Transaction Documents nor (B) compliance
by it with all of the provisions hereof or thereof, (x) will
contravene any law or order of any court or governmental
authority or agency applicable to or binding on the Original
Head Lessee, or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
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<PAGE> 40
indenture, mortgage, contract or other agreement or instrument
to which the Original Head Lessee is a party or by which it or
any of its property may be bound or affected, except where
such contravention or default would not result in any
liability to any other party hereto or have a material adverse
effect on the rights or on the remedies of the other parties
hereto or on its ability to perform its obligations hereunder
or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Original Head Lessee of this
Agreement and each of the other Original Head Lessee
Transaction Documents;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Original Head Lessee before any court
or administrative agency or arbitrator which, if determined
adversely to the Original Head Lessee, would materially
adversely affect the Original Head Lessee's ability to perform
its obligations under this Agreement or any other Original
Head Lessee Transaction Documents;
(5) on the Restatement Date, the Trust Estate, the
Engine and each Part shall be free and clear of any and all
Sublessor's Liens (as defined in the Sublease);
(6) on the Delivery Date, the Owner Trustee received
good title to the Engine free and clear of all Liens, except
the rights of the Original Head Lessee under the Original
Lease, the rights of the Sublessee under the Sublease, the
Lien of the Original Indenture, the beneficial interest of the
Owner Participant in the Engine, and Permitted Liens under the
Original Lease;
(7) [Intentionally Omitted]; and
(8) except for the filing for recordation
pursuant to the Federal Aviation Act (with confidential
financial terms redacted) of Lease Amendment No. 1, the
Amended and Restated Lease, Lease Supplement No. 2,
Trust Supplement No. 2, the First Amended and Restated
Indenture and Indenture Supplement No. 2, and each of
the other documents referred to in Annex A hereto, all
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<PAGE> 41
with the FAA, the filing of a Uniform Commercial Code ("UCC")
amended financing statement with the Secretary of State of the
State of Delaware with regard to the Original Lease, the
filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States
of New York, Connecticut and Arizona, the filing of a
protective UCC financing statement with the Secretary of State
of the State of Arizona with respect to the Lease, the filing
of a UCC termination statement with the Secretary of State of
the State of Arizona with respect to the Sublease, and the
filing of a UCC termination statement with the Secretary of
State of the State of Delaware with respect to the Initial
Sublease Assignment (as defined in the Original Lease) all of
which financing and termination statements shall have been
duly effected as of the Restatement Date (and assignments
thereof and continuation statements at periodic intervals),
and other than the taking of possession by the Indenture
Trustee of the original counterparts of the Original Lease,
Lease Amendment No. 1, the Amended and Restated Lease, and all
Lease Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification
required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any
financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Engine as against
the Lessee and any third parties, or to perfect the security
interest in favor of the Indenture Trustee in the Owner
Trustee's interest in the Engine and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement; this Agreement has been duly authorized and
constitutes the legal, valid and binding obligations of the
Parent Guarantor enforceable against it in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a
proceeding at law or in equity;
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<PAGE> 42
(2) neither (A) the execution and delivery by the
Parent Guarantor of this Agreement nor (B) compliance by it
with all of the provisions hereof (x) will contravene any law
or order of any court or governmental authority or agency
applicable to or binding on the Parent Guarantor, or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its Memorandum
and Articles of Association or any indenture, mortgage,
contract or other agreement or instrument to which the Parent
Guarantor is a party or by which it or any of its property may
be bound or affected, except where such contravention or
default would not result in any liability to any other party
hereto or have a material adverse effect on the rights or on
the remedies of the other parties hereto or on its ability to
perform its obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by the Parent Guarantor of this
Agreement;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the
Engine and each Part shall be free and clear of any and all
Sublessor's Liens (as defined in the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty with respect to Section 9(f)(8)
shall be only for the benefit of the Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not directly or indirectly sell, assign, convey or otherwise
transfer (whether by operation of law, con-
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<PAGE> 43
solidation, merger, sale of assets or otherwise) any of its right, title or
interest in and to the Trust Estate, the Engine, the Lease, this Agreement, the
Trust Agreement, the Amended and Restated Head Lease TIA or any other Operative
Document or any proceeds therefrom or permit the transfer of any of its stock in
any transaction which has the practical effect of any of the foregoing; provided
that, and subject to the conditions set forth below, Owner Participant may
transfer to a Transferee (as defined below) all (but not less than all) of its
right (except for such rights accruing prior to transfer), title and interest as
an entirety in and to the Trust Estate, the Engine, this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party or by which Owner Participant is
bound. Each such transfer shall be subject to the following conditions, and
Owner Participant agrees for the express benefit of each party hereto that any
such transfer will comply with such conditions:
(i) the Person to whom such transfer is to be made (a
"Transferee") is either (A) a bank, trust company or other like
regulated financial institution with a combined capital, surplus and
undivided profits of, or a corporation with a tangible net worth of, in
either case at least $60,000,000, (B) any wholly-owned subsidiary of
such bank, trust company, financial institution or corporation if such
bank, trust company, financial institution or corporation furnishes to
Owner Trustee, Indenture Trustee, Original Head Lessee and Lessee an
agreement or agreements of such bank, financial institution or
corporation guaranteeing such subsidiary's obligations as Owner
Participant contained in this Agreement, the Trust Agreement, the
Amended and Restated Head Lease TIA and each other Operative Document
to which Owner Participant is a party or by which it is bound, which
guarantee shall be substantially in the form attached as Exhibit A
hereto or (C) a subsidiary of Owner Participant if Owner Participant
furnishes to Owner Trustee, Indenture Trustee, Original Head Lessee and
Lessee an agreement whereby Owner Participant will guarantee such
subsidiary's obligations as Owner Participant contained in this
Agreement, the Trust Agreement, the Amended and Restated Head Lease TIA
and each other Operative Document to which Owner Participant is a party
or by which it is bound, which guarantee shall be substantially in the
form attached as Exhibit A hereto;
(ii) Owner Trustee, Indenture Trustee, Original Head Lessee
and Lessee shall have received at least 15 days' prior written notice
of such transfer specifying the name and address of any proposed
transferee and specifying the facts necessary to determine whether such
proposed transferee qualifies as a "Transferee" under clause (i)
above and
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<PAGE> 44
does not violate clause (viii) below; provided that if such Transferee
is a subsidiary of Owner Participant, such notice may be given promptly
following rather than prior to such transfer if such Transferee meets
the net worth requirement set forth above on its own account without a
guaranty and otherwise meets the requirements of this Section 10;
(iii) [Intentionally Omitted];
(iv) such Transferee has the requisite power and authority
and legal right to enter into and carry out the transactions
contemplated hereby;
(v) such Transferee enters into an agreement in
substantially the form attached as Exhibit B hereto whereby such
Transferee confirms that it shall be deemed a party to this Agreement,
the Trust Agreement, the Amended and Restated Head Lease TIA and each
other Operative Document to which Owner Participant is a party or by
which Owner Participant is bound, and in which the transferee shall
agree to be bound by and undertake the obligations of Owner Participant
in the Operative Documents and shall make representations and
warranties comparable to those of Owner Participant contained herein;
(vi) such transfer does not violate any provision of the
Federal Aviation Act or any rules or regulations promulgated
thereunder, or create a relationship that would be in violation
thereof, or violate any provisions of the Securities Act or any other
applicable Federal, state or other law, rule or regulation;
(vii) such transfer does not violate any provision of
ERISA or any rules or regulations thereunder;
(viii) such Transferee is not an airline, a commercial air
carrier, an air freight forwarder, any Person engaged in the business
of parcel transport by air or a subsidiary or an Affiliate of such an
airline, a commercial air carrier, an air freight forwarder, Person
engaged in the business of parcel transport by air or other similar
Person;
(ix) an opinion of counsel of the Transferee confirming the
matters referred to in clauses (iv) and (vi) above (with appropriate
reliance on certificates of corporate officers or public officials as
to matters of fact) and confirming that the agreement referred to in
clause (v) above is the legal, valid, binding and enforceable
obligation of the Transferee and that the guarantee referred to in
clause (i)(B) or (C) above, if any, is the legal, valid, binding and
enforceable obligation of the Transferee's
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<PAGE> 45
guarantor shall be provided, at least 3 days prior to such transfer, to
Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee,
which shall be in form and substance reasonably satisfactory to each of
them; and
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Engine previously made by Owner Participant; and except as
the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to "Owner Participant" shall thereafter be deemed to include such
Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Amended and Restated Head
Lease TIA and under the other Operative Documents, except to the extent
expressly assumed by the Transferee in accordance with this Section 10,
provided, that notwithstanding such an assumption, in no event shall Owner
Participant be released from its obligations hereunder or under any of the other
Operative Documents with respect to claims under this Agreement or under the
Amended and Restated Head Lease TIA by or against Owner Participant which have
accrued or been made prior to the date of such transfer. The transferor Owner
Participant shall pay the reasonable expenses of each party hereto related to
any such transfer.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions of
clause (A) of paragraph (6) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease.
SECTION 11. [Reserved].
SECTION 12. Quiet Enjoyment. Each of the Trust Company, Owner
Trustee, Owner Participant (as to itself and as to Owner Trustee), Indenture
Trustee in its individual capacity and as Indenture Trustee and on behalf of the
Note Holders, the Pass Through Trustee and the Subordination Agent severally
covenants and agrees that during the Term, so long as no Lease Event of Default
shall have occurred and be continuing and the Lease shall not have been declared
or deemed in default, no action shall be taken or caused to be taken by it or a
Person lawfully claiming
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<PAGE> 46
by, through or on behalf of it to interfere with the right of Lessee or any
Permitted Sublessee to the possession, use, operation and quiet enjoyment of and
other rights with respect to the Engine under the Lease, and all rents,
revenues, profits and income therefrom, in accordance with the terms of the
Lease; provided that the Trust Company, Owner Trustee and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
Trustee, holders of any Equipment Notes, or any other Person lawfully claiming
by, through or on behalf of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Engine or any other portion
of the Trust Estate or the Indenture Estate. Each of Trust Company, Owner
Trustee and Owner Participant severally agrees that it will promptly, at its own
expense (and without any right of indemnification or reimbursement from Lessee),
take such action as may be necessary duly to discharge any such Lessor's Lien or
Head Lessor's Lien attributable to it and to make restitution to the Trust
Estate and the Indenture Estate for any diminution of the assets thereof
resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any such Lessor's Lien or Head
Lessor's Lien attributable to it. For all purposes of this Agreement and the
other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising as a
result of the nonpayment of any Tax imposed on or measured by the net income of
the Trust Estate or the trust created by the Trust Agreement that is not
indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Engine or any other portion of the Trust
Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through Trustee
and Subordination Agent severally agrees that it will promptly, at its own
expense (and without any right of indemnification or reimbursement from Lessee),
take such action as may be necessary duly to discharge any such Trustee's Lien
attributable to it and to make restitution to the Trust Estate and the Indenture
Estate for any diminution of the assets thereof resulting therefrom and will
indemnify and hold harmless Lessee
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<PAGE> 47
and each Indemnitee against any claims incurred or suffered by any such Person
and any reduction in amounts payable out of, or diminution in the assets of, the
Trust Estate or the Indenture Estate resulting from any such Trustee's Lien
attributable to it. For purposes of this paragraph, "Trustee's Lien" means any
Lien or disposition of title attributable to Indenture Trustee in its individual
capacity (and not as Indenture Trustee), Pass Through Trustee in its individual
capacity (and not as Pass Through Trustee) or Subordination Agent in its
individual capacity (and not as Subordination Agent) on or in respect of (as the
case may be) the Engine or any other portion of the Trust Estate or the Trust
Indenture Estate arising as a result of (i) Claims against such Person not
related to its interest in the Engine or the administration of the Trust Estate
or the Trust Indenture Estate pursuant to the Indenture, whether under Section
9-207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions
of such Person not contemplated hereunder or under the other Operative
Documents, or acts or omissions of such Person which are in violation of any of
the Operative Documents, or (iii) Taxes imposed on or Claims against such Person
which are excluded from indemnification by Lessee, or (iv) Claims against such
Person arising out of the voluntary or involuntary transfer by such Person of
all or any portion of its interest in the Engine, the Trust Estate, the Trust
Indenture Estate or the Operative Documents (except a Claim resulting from the
exercise of remedies under and in accordance with the Indenture or for a
transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Engine or any other portion of the Trust Estate or the
Indenture Estate. Each of the Original Head Lessee and Parent Guarantor
severally agrees that it will promptly, at its own expense (and without any
right of indemnification or reimbursement from Lessee), take such action as may
be necessary duly to discharge any such Sublessor's Lien attributable to it or
other Lien or disposition of title created by or through Original Head Lessee,
Parent Guarantor or any Affiliate of either thereof which would have constituted
a Sublessor's Lien had the Sublease remained in effect and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and each
Indemnitee against any claims incurred or suffered by any such Person and any
reduction in amounts payable out of, or diminution in the assets of, the Trust
Estate or the Indenture Estate resulting from any
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<PAGE> 48
such Sublessor's Lien attributable to it or other Lien or disposition of title
created by or through Original Head Lessee, Parent Guarantor or any Affiliate of
either thereof which would have constituted a Sublessor's Lien had the Sublease
remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to Original
Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees with
Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement except in accordance with the terms thereof, provided that any such
amendment, supplement or modification shall not adversely affect the Lessee, and
(iii) not to terminate or revoke the Trust Agreement except in accordance with
the terms thereof, provided that any such termination or revocation shall not
adversely affect the Lessee.
(b) Notwithstanding anything to the contrary in the Trust
Agreement or Section 14(a) hereof, but subject always to the provisions of
Section 14(c) hereof, Owner Participant shall not consent to or direct a change
in the situs of the Trust Estate so long as a successor Owner Trustee meeting
the requirements of the Trust Agreement is reasonably available at the present
situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head
Lessee and Lessee shall have been given 30 days' prior notice thereof and (B)
if, within 15 days after notice of such a proposed change is given to Lessee and
the Original Head Lessee, either (1) Lessee or Original Head Lessee delivers to
Owner Participant and Owner Trustee (at the expense of Owner Participant) an
opinion of counsel, which counsel shall be reasonably satisfactory to Owner
Participant and Owner Trustee, to the effect that such proposed change in the
situs of the Trust Estate would have an adverse effect on the rights or
obligations of Lessee or Original Head Lessee or (2) Lessee or Original Head
Lessee delivers to Owner Participant and Owner Trustee (at the expense of Owner
Participant) an opinion of
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<PAGE> 49
counsel, which counsel shall be reasonably satisfactory to Owner Participant and
Owner Trustee, to the effect that such proposed change in the situs of the Trust
Estate would cause an increase in the amount for which Lessee may be required to
indemnify any Person pursuant to the provisions of Section 10 of the Lease or
for which Original Head Lessee is required to indemnify any Person pursuant to
the provisions of the Amended and Restated Head Lease TIA, unless any and all
Persons entitled to indemnification pursuant to Section 10 of the Lease or
applicable provision of the Amended and Restated Head Lease TIA shall waive
indemnification under Section 10 of the Lease or applicable provision of the
Amended and Restated Head Lease TIA for any adverse tax or other consequences to
it of such a change in the situs of the Trust Estate, and (C) unless Indenture
Trustee receives from Owner Participant an opinion of counsel, which counsel
shall be reasonably satisfactory to Indenture Trustee, to the effect that such
proposed change in the situs of the Trust Estate would not have an adverse
effect on the validity or priority of the Lien of the Indenture and that such
Uniform Commercial Code and FAA filings as are required to maintain the validity
and priority of the Lien of Indenture have been made.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to any
Taxes for which it is indemnified pursuant to Section 10 of the Lease and if, as
a consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States of America from the state in which
it is then located, the situs of the trust shall be moved and Owner Participant
will take whatever action may be requested by Lessee that is reasonably
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification with respect to such change of situs and
request of Lessee as Original Head Lessee, Owner Participant or the Indenture
Trustee (subject to the exclusions set forth in Section 10(b) of the Lease and
the exclusions in the Amended and Restated Head Lease TIA) may reasonably
request, (B) promptly after notice thereof Owner Participant has not notified
Lessee and provided reasonable evidence of an adverse effect on Owner
Participant's rights or obligations under the Trust Agreement, (C) Indenture
Trustee shall have received an opinion of counsel selected by Lessee, which
counsel shall be reasonably satisfactory to Indenture Trustee, to the effect
that the validity and priority of the Lien of the Indenture Estate will not be
adversely affected by such action, and that such Uniform Commercial Code and FAA
filings as are required to maintain the validity and the priority of the Lien of
the Indenture have been made, (D) Owner Participant and Indenture Trustee shall
have received an opinion or opinions of counsel selected by Owner Participant to
the effect that, with customary exceptions, (I) the trust, as thus removed,
shall remain a validly established
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<PAGE> 50
trust, (II) any amendments to the Trust Agreement or the Indenture necessitated
by such removal shall have been duly authorized, executed and delivered by the
parties thereto and shall constitute the legal, valid and binding obligations of
such parties, enforceable in accordance with their terms, (III) if such removal
involves the replacement of Owner Trustee, an opinion of counsel to such
successor Owner Trustee in form and substance reasonably satisfactory to
Indenture Trustee and to Owner Participant covering the matters described in the
opinion described in Section 3(j) hereof, and (IV) covering such other matters
as Owner Participant or the Indenture Trustee may reasonably request, and (E)
Lessee shall indemnify and hold harmless on an after tax basis Owner Trustee,
Owner Participant and their respective Affiliates and Indenture Trustee against
any and all reasonable and actual costs and expenses including reasonable
attorneys' fees and disbursements, registration, recording or filing fees and
other Taxes incurred by Owner Trustee, Owner Participant and their respective
Affiliates, or Indenture Trustee in connection with such change of situs and
shall indemnify and hold harmless Owner Participant, Owner Trustee and their
respective Affiliates, and Indenture Trustee on an after tax basis (subject to
the exclusions set forth in Section 10(b) of the Lease and the Amended and
Restated Sublease TIA) from and against any increase in Taxes borne by such
Person that results from such change in situs. In no event shall any change in
situs of the trust affect Original Head Lessee's rights or obligations under the
Amended and Restated Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed by
Owner Participant, a successor Owner Trustee may be appointed, and a corporation
may become Owner Trustee under the Trust Agreement, only in accordance with the
provisions of Article X of the Trust Agreement. Owner Participant agrees
promptly to appoint a successor Owner Trustee in the event that Owner
Participant has actual knowledge that Owner Trustee is not in compliance with
its covenants contained herein. No successor Owner Trustee shall be appointed
unless Lessee and Indenture Trustee shall have given written consent thereto,
which consent shall not be unreasonably withheld. Owner Participant will not
instruct Owner Trustee to terminate any Operative Document or take any action
thereunder in violation of the terms thereof. Owner Participant shall not
transfer any interest in the Trust Estate except in compliance with Section 10
hereof and the Trust Company shall not permit Owner Trustee to engage in any
business other than owning and leasing the Engine as contemplated hereby. Lessee
shall pay expenses on an after tax basis relating to the resignation or, if
requested by Lessee, the removal of Owner Trustee, provided that the Owner
Participant shall pay expenses relating to the removal of the Owner Trustee, if
such removal was solely at the request of the Owner Participant.
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<PAGE> 51
SECTION 15. Certain Retained Rights and Releases. (a) Each of
Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees to
and confirms that they are bound by the terminations, assignments, delegations,
releases and amendments set forth in or contemplated by Lease Amendment No. 1
and the Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive the
termination of the Sublease: (i) Lessee, Original Head Lessee and Parent
Guarantor shall retain all rights, benefits, obligations and liabilities under
the Sublease, including that Sublessee shall remain liable for all of its
obligations under Sections 10 and 13 of the Sublease, with respect to the period
up to (but excluding) the Restatement Date and each of Parent Guarantor,
Original Head Lessee and Lessee shall retain all rights and liabilities under
any provision of the Sublease which by the express terms thereof survives the
termination or expiration thereof (including, without limitation, any such
liability arising from and including the Restatement Date under the Sublease in
respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), (ii) all
rights, benefits, obligations and liabilities under the Sublease TIA (which
rights, benefits, obligations and liabilities are amended and restated as of the
Restatement Date) and (iii) Original Head Lessee and Parent Guarantor shall
remain liable to Sublessee under the Sublease for Sublessor's Liens (as therein
defined); all of which rights, benefits, obligations and liabilities shall
expressly survive the termination of the Sublease. In furtherance of the
foregoing, it is agreed that Original Head Lessee shall continue to be liable to
the Sublessee as and to the extent provided hereunder for removal of Sublessor's
Liens.
(c) Each of the Lessee, Owner Trustee and Owner Participant
agree as among themselves that the following rights, benefits, obligations and
liabilities shall survive the termination of the Sublease: Lessee, and Owner
Trustee, Owner Participant and the other "Indemnitees" (as such term is defined
in the Sublease) other than Original Head Lessee and Parent Guarantor, shall
retain all rights, benefits, obligations and liabilities under the Sublease,
including that Sublessee shall remain liable for all of its obligations under
Sections 10 and 13 of the Sublease, with respect to the period up to (but
excluding) the Restatement Date and each of Lessee, Owner Trustee and Owner
Participant shall retain all rights and liabilities under any provision of the
Sublease which by the express terms thereof survives the termination thereof
(including, without limitation,
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<PAGE> 52
any such liability arising on or after the Restatement Date under the Sublease
in respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), all of
which rights, benefits, obligations and liabilities shall expressly survive the
termination of the Sublease. In furtherance of the foregoing, it is agreed by
Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease
are expressly made for the benefit of and shall be enforceable by each
Indemnitee (as such term is defined in the Sublease).
(d) Except with respect to the Sublease and the Sublease TIA
to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent Guarantor shall, as of the Restatement Date, have no
liabilities or obligations under the "Operative Documents" (as defined in the
Original Head Lease as in effect immediately prior to (but excluding) the
Restatement Date and excluding the Head Lease TIA (which rights, benefits,
obligations and liabilities are amended and restated as of the Restatement
Date)) and are released from all such obligations and liabilities, except the
Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease
Guaranty (i) shall continue to be liable to the parties hereto for the removal
of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in
the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner
Trustee, the Indenture Trustee and the Owner Participant agree as among
themselves and for the benefit of the other "Indemnitees" (as such term is
defined in the Original Head Lease) that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period up to (but excluding) the Restatement Date and under any
other provision of the Participation Agreement which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising from and including the Restatement Date under the
Participation Agreement in respect of the period up to (but excluding), or acts
or omissions or circumstances arising prior to (but excluding), the Restatement
Date) shall survive the termination of the Participation Agreement, the Original
Head Lease and the Parent Head Lease Guaranty (the foregoing surviving rights,
benefits, obligations and liabilities of Parent Guarantor and Original Head
Lessee, are, collectively, the "Retained Head Lease Rights and Obligations"). In
furtherance of the foregoing, the parties hereto consent and agree that the
Parent Guarantor is hereby released from any and all "Obligations" under and as
defined in the Parent Head Lease Guaranty, except in respect of the Retained
Head Lease Rights and Obligations and except in respect of the Amended and
Restated Head Lease TIA, the "Obligations" in respect of which shall continue in
full force and effect in accordance
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<PAGE> 53
with the Parent Head Lease Guaranty and are hereby ratified and confirmed by the
Parent Guarantor.
SECTION 16. Certain Additional Obligations of the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee. Each of Lessee,
Owner Trustee, Owner Participant and Indenture Trustee hereby covenants and
agrees for the benefit of each other that it will be bound by the terms of the
other Operative Documents to which it or its applicable trustee is a party, and
comply with and perform its agreements, covenants and indemnities set forth in
the other Operative Documents to which it or its applicable trustee is a party,
as amended, supplemented or otherwise modified from time to time as permitted
hereby.
SECTION 17. Lessee Protection of Title. Each of the Owner
Trustee and the Indenture Trustee agrees to execute and deliver such documents
or other instruments as the Lessee may reasonably request to enable the Lessee
to perform its obligations under Section 15 of the Lease for the benefit of such
Person.
SECTION 18. Jurisdictional and Related Matters.
(a) Jurisdiction. Each of Owner Participant, Owner Trustee,
Trust Company, Indenture Trustee, Original Head Lessee, Parent Guarantor and
Lessee (i) hereby irrevocably submits for itself and its property to the
nonexclusive jurisdiction of the courts of the State of New York in New York
County, and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Lease or any other Operative
Document or any of the transactions contemplated hereby or thereby, and (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, to the extent permitted by
applicable law, any immunity (including, without limitation, sovereign
immunity), that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper, or that
this Agreement, the Lease or any other Operative Document or any of the
transactions contemplated hereby or thereby may not be enforced in or by such
courts.
(b) Service of Process. Lessee generally consents to service
of process by registered mail, return receipt requested, addressed to it at 4000
East Sky Harbor Blvd., Phoenix, Arizona 85034 or such other office of Lessee as
from time to time may be designated by Lessee in writing to Owner Trustee,
Original Head Lessee, Owner Participant and Indenture Trustee. Parent Guarantor
hereby appoints Paul, Hastings, Janofsky & Walker LLP,
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<PAGE> 54
Attention: John Howitt/Leigh Ryan, located at 399 Park Avenue, New York, New
York 10022, as its agent for service of process, and covenants and agrees that
service of process in any suit, action or proceeding may be made upon it at the
office of such agent or such other office of Parent Guarantor or such other
agent, as from time to time may be designated by Parent Guarantor in writing to
Owner Trustee, Owner Participant and Indenture Trustee. Original Head Lessee
hereby generally consents to service of process by registered mail, return
receipt requested, addressed to it at c/o GPA Corporation, 83 Wooster Heights
Road, Danbury, Connecticut 06810 or such other office of Original Head Lessee as
from time to time may be designated by Original Head Lessee in writing to Owner
Trustee, Owner Participant and Indenture Trustee. Owner Participant generally
consents to service of process by registered mail, return receipt requested,
addressed to it at ___________________________________ or such other office of
Owner Participant as from time to time may be designated by Owner Participant in
writing to Owner Trustee, Original Head Lessee, Lessee and Indenture Trustee.
Owner Trustee generally consents to service of process by registered mail,
return receipt requested, addressed to it at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001 or such other office of Owner
Trustee as from time to time may be designated by Owner Trustee in writing to
Owner Participant, Original Head Lessee, Lessee and Indenture Trustee. Indenture
Trustee generally consents to service of process by registered mail, return
receipt requested, addressed to it at 777 Main Street CTMO 0238, Hartford,
Connecticut 06115 or such other office of Indenture Trustee as from time to time
may be designated in writing to Owner Participant, Original Head Lessee, Owner
Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of which has
not been stayed) against Owner Participant, Owner Trustee, Lessee, Original Head
Lessee, Parent Guarantor and Indenture Trustee obtained in any suit in the court
of the State of New York in New York County or in the United States District
Court for the Southern District of New York shall be conclusive, and, to the
extent permitted by applicable law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings against, Lessee or any of its
assets in the courts of any country or place where Lessee or such assets may be
found.
SECTION 19. Limitation on Recourse. The provisions of Section
2.03(a) of the Indenture are hereby incorporated herein by reference mutatis
mutandis as fully and with the same force and effect as if set forth in full.
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<PAGE> 55
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee, the
Parent Guarantor, Lessee, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, the Subordination Agent or the Indenture Trustee, at their
respective addresses or facsimile numbers set forth below the signatures of such
parties at the foot of this Agreement and any such notice shall become effective
when received.
SECTION 21. Expenses. (a) Subject to receipt by the Original
Head Lessee of invoices therefor in reasonable detail prior to the Restatement
Date, all of the reasonable out-of-pocket costs, fees and expenses incurred by
the Lessee, the Owner Trustee, the Owner Participant, the Pass Through Trustee,
the Subordination Agent, the Liquidity Provider, the Indenture Trustee and the
Original Certificate Holders in connection with the transactions contemplated by
this Agreement, the other Operative Documents, the Lease, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided therein)
shall be paid on or prior to the Closing by the Original Head Lessee, including,
without limitation:
(1) the reasonable fees, expenses and disbursements allocable
to the Equipment Notes issued under the Indenture of (A) Shipman &
Goodwin LLP, special counsel for the Pass Through Trustee, the
Subordination Agent and the Indenture Trustee, (B) Morris, James,
Hitchens & Williams, special counsel for the Owner Trustee, (C)
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City,
Oklahoma and (D) Milbank, Tweed, Hadley & McCloy, special counsel for
the Underwriters;
(2) the reasonable fees, expenses and disbursements of
Hunton & Williams, special counsel for the Owner
Participant;
(3) the fees, expenses and disbursements of Andrews &
Kurth L.L.P. and Latham & Watkins, special counsel for the
Lessee;
(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and
the Subordination Agent;
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<PAGE> 56
(6) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code financing statements in the United
States of America; and
(7) the reasonable fees, expenses and disbursements of White &
Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred to
in this Section 21.
(c) The Lessee agrees to pay the amounts it is
obligated to pay under Section 21(j) of the Lease.
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations and
warranties were made to the Liquidity Provider directly. The terms of this
Agreement shall inure to the benefit of the Liquidity Provider, its successors
and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations and warranties herein of the Original Head Lessee,
the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture Trustee, the
Owner Participant, the Subordination Agent and the Pass Through Trustee shall
survive the execution and delivery of this Agreement. This Agreement may be
executed in any number of counterparts (and each of the parties hereto shall not
be required to execute the same counterpart). Each counterpart of this
Agreement, including a signature page executed by each of the parties hereto,
shall be an original counterpart of this Agreement, but all of such counterparts
together shall constitute one instrument. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by each party hereto; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to each party
hereto. The index preceding this Agreement and the headings of the various
Sections of this Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of, the
Original Head Lessee and its successors and permitted assigns, the Parent
Guarantor and its successors and permitted assigns,
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<PAGE> 57
the Lessee and its successors and permitted assigns, the Pass Through Trustee
and its successors as Pass Through Trustee (and any additional trustee
appointed) under any of the Pass Through Trust Agreements, the Indenture Trustee
and its successors as Indenture Trustee (and any additional Indenture Trustee
appointed) under the Indenture, the Subordination Agent and its successors as
Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement, and the Owner Participant
and its successors and permitted assigns. No purchaser or holder of any
Equipment Notes shall be deemed to be a successor or assign of any holder of the
Original Certificates.
(b) Upon the release of the Engine from the lien of the
Indenture and the termination of the Indenture pursuant to and in accordance
with Section 10.01 thereof, each requirement in the Operative Documents that the
consent of Indenture Trustee be obtained or that the Indenture Trustee be given
notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the Indenture
Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement and
the Deed of Indemnity (as such terms are defined herein) shall not constitute
Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that this
Agreement shall be effective among all such parties on and as of the Restatement
Date.
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<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers there unto duly
authorized as of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:_______________________________________
Name:
Title:
Address: 4000 East Sky Harbor Blvd.
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telephone: (602) 693-5785
Telecopier: (602) 693-5904
Attention: Senior Vice President -
Legal Affairs
GPA LEASING USA I, INC.
By:_______________________________________
Name:
Title:
Address: c/o GPA Corporation
83 Wooster Heights Road
Danbury, Connecticut 06810
Telephone: (203) 830-4760
Telecopier: (203) 830-4764
Attention: Company Secretary
GPA GROUP plc
By:_______________________________________
Name:
Title:
Address: GPA House
Shannon, County Clare, Ireland
Telephone: 011-353-61360-051
Telecopier: 011-353-61360-000
Attention: Company Secretary
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<PAGE> 59
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner Trustee
By:_______________________________________
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust Administration
[_____________________________________]
By:_______________________________________
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Indenture Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
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<PAGE> 60
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Subordination Agent
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
FLEET NATIONAL BANK, not in its individual
capacity, except as otherwise provided
herein, but solely as Pass Through Trustee
By:_______________________________________
Name:
Title:
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
- 57 -
<PAGE> 61
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1D, dated November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1E, dated November 26, 1996.
<PAGE> 62
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Pass Through Principal Maturity Interest Purchase
Trusts Amount Date Rate Price
- ------------ --------- -------- -------- --------
<S> <C> <C> <C> <C>
Class A $ 1,343,995 02-Jul-2009 6.85% $ 1,343,995
Class B $ 503,996 02-Jan-2006 6.93% $ 503,996
Class C $ 524,996 02-Jan-2004 6.86% $ 524,996
Class D $ 489,995 02-Jul-2002 8.16% $ 489,995
Class E $ 1,458,204 02-Jan-2004 10.50% $ 1,458,204
</TABLE>
<PAGE> 63
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115,
Attn: Philip Kane, Corporate Trust Administration, Ref. AWA, for the account of
Fleet National Bank Account No. ABA #011900445, ACCT. # 0067548290.
<PAGE> 64
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1991 AWA-E3]
TRANSFEREE'S PARENT GUARANTEE [GPA 1991 AWA-E3], dated as of
____________ by _________________, a ________________________ corporation
("Guarantor") to and for the benefit of Indenture Trustee (individually and as
trustee), the Original Head Lessee, Owner Trustee and Lessee referred to in the
Refunding Agreement described below (collectively, together with their permitted
successors and assigns, "Beneficiaries" and, individually, a "Beneficiary").
WITNESSETH:
WHEREAS, _________________________________, a Delaware
corporation ("Transferor"), is the Owner Participant under that certain
Refunding Agreement [GPA 1991 AWA-E3], dated as of November 20, 1996 among
Lessee, Original Head Lessee, Parent Guarantor, Owner Trustee, Transferor, Pass
Through Trustee, Subordination Agent and Indenture Trustee, as amended, modified
or supplemented from time to time (the "Refunding Agreement");
WHEREAS, Transferor wishes to transfer, except to the extent
expressly reserved to Transferor, all of its right, title and interest in and to
the Refunding Agreement, the Trust Estate, the other Operative Documents to
which Transferor is a party, certain other agreements, instruments and documents
in its capacity as Owner Participant under the Refunding Agreement and all
proceeds therefrom as set forth in the Assignment and Assumption Agreement dated
the date hereof between Transferor and _____________________, a
________________________ corporation ("Transferee"); and
WHEREAS, the terms of the Refunding Agreement provide that the
aforementioned transfer is conditioned upon the execution and delivery of this
Guarantee by Guarantor;
NOW, THEREFORE, Guarantor hereby agrees with and for the
benefit of Beneficiaries as follows:
1. Definitions. As used in this Guarantee, terms
defined in the Refunding Agreement are used herein as therein
defined, unless otherwise defined herein.
2. Guarantee.
(a) Guarantor hereby unconditionally and irrevocably
guarantees to Beneficiaries and their respective successors, endorsees,
transferees and assigns, the prompt and complete payment by Transferee when due
(whether at the stated maturity,
<PAGE> 65
by acceleration or otherwise) of, and the faithful performance of, and
compliance with, all payment obligations of Transferee under the Refunding
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to which Owner Participant is a party and each other Operative Document
to which Transferee is a party or by which either is bound (collectively, the
"Relevant Documents"), strictly in accordance with the terms thereof and the
timely performance of all other obligations of Transferee thereunder (such
payment and other obligations, the "Obligations"), and Guarantor further agrees
to pay any and all expenses (including, without limitation, all fees and
disbursements of counsel) that may be paid or incurred by Beneficiaries in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, Guarantor under this Guarantee.
(b) No payment or payments made by Transferee, Guarantor, any
other guarantor or any other Person or received or collected by any Beneficiary
from Transferee, Guarantor, any other guarantor or any other person by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of
Guarantor hereunder until the Obligations are paid and performed in full.
(c) If for any reason any Obligation to be performed or
observed by Transferee (whether affirmative or negative in character) shall not
be observed or performed, or if any amount payable by Transferee referred to in
Section 1(a) hereof shall not be paid promptly when due and payable, Guarantor
shall promptly perform or observe or cause to be performed or observed each such
Obligation or undertaking and shall forthwith pay such amount at the place and
to the person or entity entitled thereto pursuant to the Relevant Documents
regardless of whether or not Lessee, Original Head Lessee, Owner Trustee, Pass
Through Trustee, Subordination Agent, Indenture Trustee, or anyone on behalf of
any of them shall have instituted any suit, action or proceeding or exhausted
its remedies or taken any steps to enforce any rights against Transferee or any
other person or entity to compel any such performance or to collect all or any
part of such amount pursuant to the provisions of the Relevant Documents or at
law or in equity, or otherwise, and regardless of any other condition or
contingency.
3. No Subrogation. Notwithstanding any payment or payments
made by Guarantor hereunder or any setoff or application of funds of Guarantor
by any Beneficiary, Guarantor shall not be entitled to be subrogated to any of
the rights of any Beneficiary against Transferee or any collateral, security or
guarantee or
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<PAGE> 66
right of set-off held by any Beneficiary for the payment of the Obligations, nor
shall Guarantor seek or be entitled to seek any reimbursement from Transferee in
respect of payments made by Guarantor hereunder, until all amounts and
performance owing to Beneficiaries by Transferee on account of the Obligations
are paid and performed in full.
4. Amendments, etc., with respect to the Obligations; Waiver
of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without notice
to or further assent by the Guarantor, any demand for payment or performance of
any of the Obligations made by any Beneficiary may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Beneficiary and any Relevant
Document and/or any collateral security document or other guarantee or document
in connection therewith, may be amended, modified, supplemented or terminated,
in whole or in part, as the parties thereto may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by any beneficiary for the payment or performance of the Obligations may be
sold, exchanged, waived, surrendered or released. No beneficiary shall have any
obligation to protect, secure, perfect or insure any lien at any time held by it
as security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against the Guarantor, a Beneficiary
may, but shall be under no obligation to, make a similar demand on the
Transferee or any other guarantor, and any failure by a Beneficiary to make any
such demand or to collect any payments from the Transferee or any such other
guarantor or any release of the Transferee or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of any Beneficiary against the Guarantor. For purposes hereof, "demand"
shall include the commencement and continuance of any legal proceedings. The
Guarantor represents and warrants that it owns, directly or indirectly, at least
the portion of the capital stock of the Transferee required by the Refunding
Agreement and that, except as otherwise provided in Section 5 hereof, its
obligations hereunder shall continue unimpaired, even if the Guarantor no longer
owns, directly or indirectly, such portion of the capital stock of the
Transferee.
5. Transfer of Interest in Transferee. Guarantor shall not
assign, convey or otherwise transfer to any person (a) any of its interest in
Transferee unless in connection therewith,
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<PAGE> 67
Guarantor assigns its rights and obligations hereunder to a guarantor which
meets the requirements of Section 10 of the Refunding Agreement; provided that
nothing contained in this Section 5 shall be construed to prohibit any merger,
consolidation or other corporate restructuring of Transferee or Guarantor so
long as the resulting corporation meets the requirements of Section 10 of the
Refunding Agreement and assumes the obligations of the corporation merged or
consolidated into.
6. Guarantee Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guarantee or acceptance of this Guarantee; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between the Transferee or the Guarantor and any Beneficiary shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Transferee
or the Guarantor with respect to the Obligations. The Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance (and not merely of
collectibility) without regard to (a) the validity, regularity or enforceability
of any Relevant Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) that may at any
time be available to or be asserted by the Transferee against any Beneficiary,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Transferee or the Guarantor) that constitutes, or might be construed to
constitute, an equitable or legal discharge of the Transferee for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Transferee or any other person or
entity or against any collateral security or guarantee for the Obligations or
any right of offset with respect thereto, and any failure by any Beneficiary to
pursue such other rights or remedies or to collect any payments from the
Transferee or any such other person or entity or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Transferee or any such other person or entity or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and
- 4 -
<PAGE> 68
remedies, whether express, implied or available as a matter of law, of any
Beneficiary against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Beneficiaries, and their respective successors, endorsees, transferees
and assigns, until all of the Obligations and the Obligations of the Guarantor
under this Agreement shall have been satisfied by payment and performance in
full. The Guarantor further agrees that, without limiting the generality of this
Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by
applicable law from exercising its remedies (or any of them) against the
Transferee under any Operative Document, such Beneficiary (or any assignee
thereof) shall be entitled to receive hereunder from the Guarantor, upon demand
therefor, the sums that would have otherwise been due from the Transferee had
such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any beneficiary upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made. The Guarantor shall not commence any "case" (as
defined in Title 11 of the United States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction or withholding,
and shall be made in U.S. Dollars. If any payment hereunder is subject to
deduction or withholding, Guarantor shall pay an additional amount such that,
after deduction of all amounts required to be deducted or withheld, the net
amount actually received will equal the amount that would have been received had
such deduction or withholding not been required.
9. Representations and Warranties. The Guarantor
hereby represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal
right to own and operate its property, to lease the property it
operates and to conduct the business in which it is currently engaged;
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<PAGE> 69
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its obligations
under, this Guarantee, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any requirement of law or contractual
obligation of the Guarantor and will not result in or require the
creation or imposition of any lien on any of the properties or revenues
of the Guarantor pursuant to any requirement of law or contractual
obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or governmental authority and no
consent of any other person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or enforceability
of this Guarantee;
(f) no litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
against any of its properties or revenues (i) with respect to this
Guarantee or any of the transactions contemplated hereby or (ii) that
could have a material adverse effect on the business, operations,
property or financial or other condition of the Guarantor;
[(g) the balance sheet of the Guarantor as at _________________ and
the related statement of income and retained earnings for the fiscal
year then ended (copies of which have heretofore been furnished to each
Beneficiary) have been prepared in accordance with generally accepted
accounting principles applied consistently throughout the period
involved, are complete and correct and present fairly the financial
condition of the Guarantor as at such date and the results of its
operations for such fiscal year; since such date there has been no
material adverse change in the business, operations, property or
financial or other condition of the Guarantor; the Guarantor has no
material contingent obligation, contingent liability or liability for
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<PAGE> 70
taxes, long-term lease or unusual forward or long-term commitment that
is not reflected in the foregoing statements or in the notes thereto;
and](1)
(h) the Guarantor is [type of legal personality] with a
[combined capital, surplus and undivided profits] [tangible net worth]
of at least $60,000,000.
10. Severability. Any provision of this Guarantee that 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.
11. No Waiver; Cumulative Remedies. No Beneficiary shall by
any act (except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of any
Beneficiary, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by a Beneficiary of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Beneficiary would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
12. Integration. This Guarantee represents the entire
agreement of Guarantor with respect to the subject matter hereof and there are
no promises or representations by any Beneficiary relative to the subject matter
hereof not reflected herein.
13. Amendments and Waivers. None of the terms or provisions of
this Guarantee may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by Guarantor and each Beneficiary.
14. Section Headings. The Section headings used in this
Guarantee are for convenience of reference only and not to
- -------------
(1) This representation is not applicable if Transferee is a
wholly-owned subsidiary of the Owner Participant.
- 7 -
<PAGE> 71
affect the construction hereof or be taken into consideration in
the interpretation hereof.
15. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of Guarantor and shall inure to the benefit of
Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing or by
telegraph, telex or telecopy and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, two days after deposit in the postal system, first class
postage pre-paid, or, in the case of telegraphic notice, when sent, answerback
received, addressed to (a) in the case of the Guarantor, the address provided on
the signature page hereof, and (b) in the case of any Beneficiary, the address
provided for such party in the Refunding Agreement.
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<PAGE> 72
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and the year first above written.
[NAME OF GUARANTOR]
By: __________________________
Title:
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<PAGE> 73
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1991 AWA-E3]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1991 AWA-E3]
("Assignment") dated as of _____________, between ______________, a ___________
corporation ("Assignor") and ________________, a __________ corporation
("Assignee") entered into for the benefit of Indenture Trustee, Owner Trustee,
Original Head Lessee and Lessee referred to in the Refunding Agreement mentioned
below.
WITNESSETH:
WHEREAS, the parties hereto desire to effect (a) the transfer
by Assignor to Assignee of all of the right, title and interest of the Assignor
(except as reserved below) in, under and with respect to, among other things,
(i) the Refunding Agreement, dated as of November 20, 1996, among American West
Airlines, Inc., Assignor, GPA Leasing USA I, Inc., GPA Group plc, Wilmington
Trust Company, as Owner Trustee, Fleet National Bank, as Pass Through Trustee,
______________________________, Fleet National Bank, as Subordination Agent, and
Fleet National Bank, as Indenture Trustee, as amended, modified or supplemented
from time to time (the "Refunding Agreement"), (ii) the Trust Agreement
identified in the Refunding Agreement, (iii) the Trust Estate (as defined in the
Trust Agreement), (iv) the Amended and Restated Head Lease TIA identified in the
Refunding Agreement, (v) the proceeds therefrom and (vi) the Indenture (as
defined in the Refunding Agreement) and (b) the assumption by Assignee of the
obligations of Assignor accruing thereunder;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the meaning ascribed thereto in the Refunding Agreement.
For purposes of this Assignment, the defined term "Operative Document" shall
have the meaning ascribed thereto in the Refunding Agreement and shall be deemed
to include the Amended and Restated Head Lease TIA.
2. Assignment. Assignor has sold, conveyed, assigned,
transferred and set over, and does hereby sell, convey, assign, transfer and set
over, unto Assignee, as of the date hereof, all of its right, title and interest
in, under and with respect to the Refunding Agreement, the Trust Agreement, the
Trust Estate, the Amended and Restated Head Lease TIA, the Indenture, all of the
other Operative Documents to which Assignor is a party or any other contract,
agreement, document or instrument relating to the Trust Estate by which Assignor
is bound, and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such
<PAGE> 74
rights of Assignor as have accrued to Assignor prior to the date hereof
(including specifically, but without limitation, the right to receive any
amounts due or accrued to Assignor under the Trust Agreement as of a date prior
to such date and the right to receive any indemnity payment pursuant to the
Refunding Agreement or the Lease with respect to events occurring prior to such
date).
3. Assumption. Assignee hereby undertakes all of the duties
and obligations of Assignor whenever accrued (other than duties and obligations
of Assignor required to be performed by it on or prior to the date hereof under
the Operative Documents to which Owner Participant is a party and any of the
other Operative Documents by which Assignor is bound or any other contract,
agreement, document or other instrument relating to the Trust Estate to which
Assignor is a party or by which it is bound), pursuant to the Trust Agreement
and any of the other Operative Documents by which Assignor is bound or any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound, and hereby confirms that
it shall be deemed a party to the Trust Agreement and shall be bound by each of
the other Operative Documents and each other contract, agreement, document or
other instrument relating to the Trust Estate to which Assignor is a party or by
which it is bound as if therein named as Trustor.
4. Release of Assignor. Except for liabilities not assumed as
provided in Section 3 hereof, upon the execution of this Assignment and
Assumption Agreement, Assignor shall have no further duty or obligation under
the Operative Documents to which Owner Participant is a party or under any of
the other Operative Documents by which Assignor is bound or under any other
contract, agreement, document or other instrument relating to the Trust Estate
to which Assignor is a party or by which it is bound; provided, however, that
Assignor shall in no event be released from any obligation under the Operative
Documents with respect to Claims or other claims thereunder by or against
Assignor which have accrued or been made prior to the date of transfer.
5. Appointment as Attorney-in-Fact. In furtherance of the
within assignment, Assignor hereby constitutes and appoints Assignee, and its
successors and assign, the true and lawful attorneys of Assignor, with full
power of substitution, in the name of Assignee or in the name of Assignor but on
behalf of and for the benefit of and at the expense of Assignee, to collect for
the account of Assignee all items sold, transferred or assigned to Assignee
pursuant hereto; to institute and prosecute, in the name of Assignor or
otherwise, but at the expense of Assignee, all proceedings that Assignee may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the items sold, transferred or assigned; to defend and
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<PAGE> 75
compromise at the expense of Assignee any and all actions, suits or proceedings
as to title to or interest in any of the property acquired by Assignee; and to
do all such acts and things in relation thereto at the expense of Assignee as
Assignee shall reasonably deem advisable. Assignor hereby acknowledges that this
appointment is coupled with an interest and is irrevocable by Assignor in any
manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay over
to Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Assignor that, under Section 2 hereof, belong to Assignee, and
Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents that it is
acquiring the Trust Estate interests and other interests hereby assigned to it
without a view to the distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents and
warrants that:
(a) it has all requisite power and authority and legal right
to enter into and carry out the transactions contemplated hereby and to
carry out and perform the transactions of Owner Participant as
contemplated by the Operative Documents;
(b) [Intentionally Omitted];
(c) on and as of the date hereof, the representations and
warranties of Owner Participant set forth in Section 9 of the Refunding
Agreement and as set forth in any other Agreement to which Owner
Participant is a party are true and correct as to Assignee;
(d) it is a permitted Transferee under Section 10 of
the Refunding Agreement;
(e) Assignee or its guarantor has a [combined capital, surplus
and undivided profits] [tangible net worth] of not less than
$60,000,000.
9. Governing Law. This Assignment and Assumption Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
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<PAGE> 76
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:___________________
Title:
[ASSIGNEE]
By:___________________
Title:
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<PAGE> 77
EXHIBIT C to
REFUNDING AGREEMENT
[INTENTIONALLY OMITTED]
<PAGE> 78
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[see attached]
<PAGE> 79
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) First Amended and Restated Trust Indenture and Security
Agreement [GPA 1991 AWA-E3] dated as of November 26,
1996 (the "Amended and Restated Indenture") between the
Owner Trustee and the Indenture Trustee, amending and
restating the Original Indenture with attached thereto
Trust Agreement and Indenture Supplement No. 2 [GPA
1991 AWA-E3] dated November 26, 1996 (the "Indenture
Supplement"), with respect to the Engine, which Amended
and Restated Indenture with the Indenture Supplement
attached was filed with the FAA at 12:21 p.m., C.S.T.
on November 26, 1996;
(b) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of November 26, 1996 (the "Lease
Amendment") among the Original Head Lessee, as
assignor, the Owner Trustee, as lessor, the Lessee, as
assignee, and the Indenture Trustee, which (i) assigns
all right, title and interest of the Original Head
Lessee in and to the Original Head Lease to the Lessee,
(ii) terminates the Sublease and (iii) releases the
Sublease Collateral Assignment, which Lease Amendment
was filed with the FAA at 12:22 p.m., C.S.T. on
November 26, 1996; and
(c) Amended and Restated Engine Lease Agreement [GPA 1991
AWA-E3] dated as of March 15, 1991 and amended and
restated as of November 26, 1996 (the "Amended and
Restated Lease") between the Owner Trustee, as lessor,
and the Lessee, as successor lessee, amending and
restating the Original Head Lease, with Lease
Supplement [GPA 1991 AWA-E3] No. 2 dated November 26,
1996 (the "Lease Supplement") between the Owner
Trustee, as lessor, and the Lessee, as successor
lessee, with respect to the Engine, attached thereto,
which Amended and Restated Lease with the Lease
Supplement attached was filed with the FAA at 12:23
p.m., C.S.T. on November 26, 1996.
Trust Agreement
Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991
between Wilmington Trust Company, as owner trustee, and ______________________,
as owner participant, as supplemented by Trust Agreement Supplement [GPA 1991
AWA-E3] No. 1 dated March 27, 1991, which were not filed with the FAA.
<PAGE> 80
Original Indenture
Trust Indenture and Security Agreement [GPA 1991 AWA- E3]
dated as of March 15, 1991 between Wilmington Trust Company, as owner trustee
under Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, and Fleet
National Bank (formerly known as Fleet National Bank of Connecticut, Shawmut
Bank Connecticut, National Association, and The Connecticut National Bank), as
indenture trustee, which was recorded by the Federal Aviation Administration on
March 28, 1991 and assigned Conveyance No. M25990, as supplemented and amended
by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Trust Indenture
Supplement No. 1 03/27/91 03/28/91 M25990
Amendment No. 1 to
Trust Indenture and
Security Agreement 03/27/92 04/30/92 DD002564
Amendment No. 2 to
Trust Indenture and as of
Security Agreement 07/29/93 08/11/93 F59684
</TABLE>
Original Head Lease
Engine Lease Agreement [GPA 1991 AWA-E3] dated as of March 15,
1991 between Wilmington Trust Company, as owner trustee under Trust Agreement
[GPA 1991 AWA-E3] dated as of March 15, 1991, as lessor, and GPA Leasing USA I,
Inc., as lessee, which was recorded by the Federal Aviation Administration on
March 28, 1991 and assigned Conveyance No. M25991, as supplemented by the
following described instrument:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- -------------
<S> <C> <C> <C>
Lease Supplement
[GPA 1991 AWA-E3]
No. 1 03/27/91 03/28/91 M25991
</TABLE>
Sublease
Engine Sublease Agreement [GPA 1990 AWA-E3] dated as of
December 12, 1990 between GPA Leasing USA I, Inc., as sublessor, and America
West Airlines, Inc., as sublessee, which was recorded by the Federal Aviation
Administration on February 19, 1991 and assigned
- 2 -
<PAGE> 81
Conveyance No. AA46489, as supplemented and amended by the following
described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Sublease Supplement
No. 1 02/08/91 02/19/91 AA46489
Amendment No. 1 to
Engine Sublease
Agreement [GPA 1990 as of
AWA-E3] 08/26/91 09/11/91 J68134
</TABLE>
Sublease Collateral Assignment
Assignment of Sublease [GPA 1991 AWA-E3] dated as of March 15,
1991 between GPA Leasing USA I, Inc., as assignor, and Wilmington Trust Company,
as owner trustee under Trust Agreement [GPA 1991 AWA-E3] dated as of March 15,
1991, as supplemented, as assignee, which was recorded by the Federal Aviation
Administration on March 28, 1991 and assigned Conveyance No. M25992.
- 3 -
<PAGE> 1
EXHIBIT 4.22
THE RIGHTS OF LESSOR UNDER THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT [GPA 1989 BN-5] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE
BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER
TRUST COMPANY, AS INDENTURE TRUSTEE UNDER A SECOND AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-5] DATED AS OF SEPTEMBER 22, 1989,
AMENDED AND RESTATED AS OF OCTOBER 1, 1991, AND FURTHER AMENDED AND RESTATED AS
OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF
ANY, THAT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES
CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN
EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND
RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL
BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE
CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST
COMPANY, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-5]
Dated as of September 22, 1989
Amended and Restated as of October 1, 1991
And Further Amended and Restated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1989 BN-5] dated
as of September 22, 1989, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 055
U.S. Registration No. N624AW
- --------------------------------------------------------------------------------
<PAGE> 2
SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
dated as of September 22, 1989, as amended and restated as of October 1, 1991,
and as further amended and restated as of November 26, 1996 is entered into
between WILMINGTON TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as Owner Trustee under a Trust
Agreement [GPA 1989 BN-5] dated as of September 22, 1989, as amended and with
its principal place of business at Rodney Square North, Wilmington, Delaware
19890 (together with its successors and permitted assigns, "Lessor"), and
AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive
office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with
its successors and permitted assigns, "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for
the convenience of the parties, restate in its entirety the Original Head Lease
(as hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises
herein contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease", "Equipment
Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass
Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past
Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company", and "Trust Indenture
Estate", shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have
<PAGE> 3
the meanings specified in the Intercreditor Agreement (as defined in the Pass
Through Trust Agreement); and the term "Lease Amendment No. 1" shall have the
meaning specified in the Refunding Agreement.
"Affiliate" shall mean, with respect to any specified
Person, any other Person which, directly or indirectly, owns or controls, is
controlled by or is under common control with such specified Person. Control
will be deemed to exist based on (i) ownership of 25% or more of the voting
securities of a Person or (ii) the power to direct or cause the direction of the
management and policies of a Person whether by contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and
described in Lease Supplement No. 1 (or any airframe from time to time
substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with
the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any
Engine substituted therefor hereunder) with respect to such Airframe, whether or
not any such initial or substituted Engines may from time to time no longer be
installed on the Airframe or may be installed on any other airframe, (ii) Parts
or components thereof, (iii) spare parts or ancillary equipment or devices
furnished therewith under this Lease (including any separate equipment described
on one or more Lease Supplements hereto), (iv) the Aircraft Records and
Documents and all other logs, manuals and records with respect to such Aircraft,
and (v) all substitutions, replacements and renewals of any and all thereof.
"Aircraft Records and Documents" shall mean the items
identified in Exhibit B hereto, all of which shall be maintained in the English
language.
"Airframe" shall mean (a) the Airbus Industrie model
A320-231 aircraft (except Engines or engines from time to time installed
thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee
hereunder, and any such model aircraft (except Engines or engines from time to
time installed thereon) which may from time to time be substituted for such
aircraft (except Engines or engines from time to time installed thereon)
pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same
shall be incorporated or installed on or attached to the Airframe, or so
- 2 -
<PAGE> 4
long as title thereto shall remain vested in Lessor in accordance with the terms
of Section 9 hereof after removal from the Airframe (or, so long as the Foreign
Lease Agreement is in effect, Foreign Lessor in accordance with Section 8 of the
Foreign Lease Agreement); provided, however, that at such time as an aircraft
(except Engines or engines from time to time installed thereon) shall be deemed
part of the property leased hereunder in substitution for the Airframe pursuant
to the applicable provisions hereof and the replacement Airframe shall have been
subjected to the Lien of the Indenture (if the Lien of the Indenture has not
been discharged) and shall be subject to the Foreign Lease Agreement, the
replaced Airframe shall cease to be the Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure
for determining the "fair market sales value" or "fair market rental value" of
the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18,
"fair market sales value" or "fair market rental value" shall mean the value
that would be obtained in an arm's-length transaction between an informed and
willing seller or lessor, as the case may be, and an informed and willing buyer
or lessee, as the case may be, both under no compulsion to sell and purchase or
to lease (and other than a lessee in possession or a used equipment scrap
dealer), as the case may be, as such value is determined by an appraisal which
assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is
unencumbered by this Lease (or any sublease) or any of the other Operative
Documents or any of the Financing Documents and the terms thereof; (ii) that
such Aircraft, Airframe, Engine or Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return
conditions specified in Section 16 and Exhibit E (whether or not in fact meeting
such conditions) and (iv) that Lessee has removed the Removable Parts entitled
to be removed under Section 9(b) (it being agreed that no such removal is
permitted in connection with an appraisal pursuant to Section 18) and replaced
any part which was removed from the Aircraft as a result of such Removable Part
being installed; provided, however, that costs of removal from the location of
current use and costs of sale shall not be a consideration in determining such
value except in connection with any determination of "fair market sales value"
or "fair market rental value" pursuant to Section 18; and provided, further,
that any determination of "fair market sales value" or "fair market rental
value" pursuant to Section 18 shall be on an "as is, where is" basis in its
actual condition and
- 3 -
<PAGE> 5
location subject to this Lease and any sublease and any and all Liens thereon
(other than a Lessor's Lien, Head Lessor's Lien or Lenders' Lien). Lessor and
Lessee shall, except for any appraisal pursuant to Section 18 in which case only
Lessor shall select such appraiser (which appraiser does not have to be
acceptable to Lessee), select an independent nationally-recognized aircraft
appraiser, mutually acceptable to each of them, who shall make the determination
as to the "fair market sales value" or "fair market rental value" of such
Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted.
If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within
ten (10) days, then each of Lessor and Lessee shall select an appraiser and such
determination shall be made by such appraisers (if either party shall fail to
appoint an appraiser within ten (10) days after notice from the other party of
the selection of its appraiser, then the appraisal made by the other party's
appraiser shall be determinative). If the two appraisers chosen pursuant to the
preceding sentence fail to agree upon a determination of the "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part
within twenty (20) days after their appointment, then such appraisers shall
mutually choose a third appraiser within ten (10) days thereafter, provided that
if such appraisers fail to mutually choose a third appraiser within said 10-day
period, such appointment shall be made by the American Arbitration Association
(or any successor) in New York, New York, and the three appraisers so chosen
shall each make such determination. The appraisal determined by each of the
three appraisers chosen pursuant to the preceding sentence shall be averaged and
the appraisal furthest from the average of the three appraisals shall be
disregarded. The appraisal determined by each of the two remaining appraisers
shall be averaged and such average shall be the appraised "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part.
Lessee shall bear all the fees and expenses of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance
broker of recognized responsibility and standing experienced in aircraft
insurance.
"Approved Insurers" shall mean any reputable and
creditworthy insurance company of recognized responsibility and standing
experienced in aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Aircraft
pursuant to Section 4(a)(i).
- 4 -
<PAGE> 6
"Basic Rent Payment Date" shall mean each day determined
in accordance with Exhibit C upon which a payment of Basic Rent becomes payable.
If a Basic Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Basic Rent Payment Date shall be made on the next
succeeding Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 3.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Hartford, Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which
was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation
(except the United States Government) domiciled in the United States of America
and holding a Certificate of Convenience and Necessity issued under Section
41102(a) of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States Government)
domiciled in the United States of America and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is a citizen of the United States
(as defined in Section 40102 of the Federal Aviation Act) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo so as to fall within the
purview of 11 U.S.C. Section1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil
Reserve Air Fleet Program administered by the United States Government and
authorized under 10 U.S.C. Section9511, et seq., as amended, or any
substantially similar or substitute program of the United States Government.
"Claims" shall have the meaning specified in Section 13.
- 5 -
<PAGE> 7
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commonly Controlled Person" shall mean an entity, whether
or not incorporated, which is under common control with Lessee within the
meaning of Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated
Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended
and restated as of December 30, 1988, in the form attached to the Purchase
Agreement.
"Default" shall mean an event or condition which would
constitute an Event of Default with the lapse of time or the giving of notice or
both.
"Delivery Date" shall mean September 25, 1989, being the
date the Aircraft was delivered to and accepted by the Original Head Lessee as
Lessee hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the
United States of America.
"Engine" shall mean (i) each of the two IAE Model V2500
engines listed by manufacturer's serial number in Lease Supplement No. 1 and
initially installed on the Airframe covered by such Lease Supplement, whether or
not from time to time thereafter no longer installed on the Airframe or
installed on any other aircraft or airframe, and (ii) any replacement engine
which may from time to time be substituted, pursuant to Section 6(a), 11(a),
11(b) or 16(c) hereof or, so long as the Foreign Lease Agreement is in effect,
in accordance with Section 10(b) of the Foreign Lease Agreement), for any Engine
leased hereunder; together in each case with any and all Parts incorporated or
installed in or attached thereto or any and all Parts removed therefrom so long
as title thereto after removal from such Engine shall remain vested in Lessor in
accordance with the terms of Section 9 hereof (or, so long as the Foreign Lease
Agreement is in effect, Foreign Lessor in accordance with Section 8 of the
Foreign Lease Agreement). Except as otherwise set forth herein, at such time as
a replacement engine shall be so substituted and leased hereunder and the
replacement engine shall have been subjected to the Lien of the Indenture (if
the Lien of the Indenture has not been discharged), such replaced Engine shall
cease to be an Engine hereunder. The term "Engines"
- 6 -
<PAGE> 8
means, as of any date of determination, both Engines then leased hereunder.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any
one or more clauses in Section 17.
"Event of Loss" shall mean any of the following events
with respect to the Aircraft, Airframe or either Engine: (a) the actual or
constructive total loss of such property or the use thereof due to theft or
disappearance for a period in excess of sixty (60) consecutive days; (b)
destruction or damage of such property that renders repair uneconomic or such
property permanently unfit for normal use by Lessee (or, if a Permitted Sublease
is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss
or disappearance of or damage to or destruction of such property which results
in an insurance settlement with respect to such property on the basis of an
actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any rule, regulation, order or
other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or
Engine in the normal course of Lessee's (or, if a Permitted Sublease is in
effect, the Permitted Sublessee's) business of air transportation of passengers
- 7 -
<PAGE> 9
shall have been prohibited for a period of six (6) consecutive months, unless
Lessee (or the Permitted Sublessee), prior to the expiration of such six-month
period, shall have undertaken and shall be diligently carrying forward all steps
which are necessary or desirable to permit such normal use of such item of
equipment by Lessee (or the Permitted Sublessee), or, in any event, if such
normal use shall have been so prohibited by any such Governmental Entity for a
period of twelve (12) consecutive months or is continuing on the last day of the
Term; or (h) as otherwise provided herein. An Event of Loss with respect to the
Aircraft shall be deemed to have occurred if an Event of Loss occurs with
respect to the Airframe which is a part of such Aircraft. An Event of Loss with
respect to an Engine shall not, absent an Event of Loss with respect to the
Airframe, be deemed an Event of Loss with respect to the Airframe.
"Excluded Property" shall have the meaning set forth in
Section 9(b) hereto.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administra- tion of
the United States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Bill
of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from
Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale
for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original
Head Lessee to Foreign Lessee, and (iii) the Bill of Sale for the Aircraft dated
the Delivery Date, from Foreign Lessee to Foreign Lessor.
"Federal Aviation Act" shall mean the sections of Title 49
of the United States Code relating to aviation, as amended and in effect from
time to time, or any similar legislation of the United States of America enacted
in substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal
year-end audited consolidated balance sheet and statements of income and cash
flow for the period then ending, copies of which for the fiscal year ending
December 31, 1995, have been provided to Lessor prior to the date hereof.
- 8 -
<PAGE> 10
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Foreign Lease
Documents, the Refunding Agreement, the Equipment Notes issued under the
Indenture, the Intercreditor Agreement, each Liquidity Facility, each
Pass-Through Trust Agreement and each supplement thereto and any other
agreement, document or certificate delivered or entered into in accordance with
the foregoing, as amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made mandatory
to the Aircraft by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Aircraft by the FAA.
"Foreign Lease Agreement" shall mean the Japanese Lease
Agreement, as defined in the Indenture.
"Foreign Lease Documents" shall mean the Japanese
Financing Documents, as defined in the Indenture.
"Foreign Lease Supplement" shall mean the Japanese Lease
Supplement, as defined in the Indenture.
"Foreign Lender" shall mean the Japanese Lender, as
defined in the Indenture.
"Foreign Lessee" shall mean Air Tara Caymans II, Limited.
"Foreign Lessor" shall mean the Japanese Lessor, as
defined in the Indenture.
"GAAP" shall mean United States generally accepted
accounting principles and practices consistently applied as in effect from time
to time, which shall include the official interpretations thereof by the
Financial Accounting
- 9 -
<PAGE> 11
Standards Board. All accounting terms not otherwise defined herein shall have
the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any
national government, political subdivision thereof, or local jurisdiction
therein; (ii) any board, commission, department, division, organ,
instrumentality, court, or agency of any thereof, however constituted; and (iii)
any association, organization, or institution of which any entity described in
(i) or (ii) above is a member or to whose jurisdiction any such entity is
subject or in whose activities any such entity is a participant but only to the
extent that any entity described in clause (i), (ii) or (iii) has jurisdiction
over Lessor, Lessee, Indenture Trustee, Note Holders, the Aircraft or its
operations.
"Head Lessor's Lien" shall mean a Lessor's Lien under and
as defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a
company organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Foreign Lessor, Foreign Lessee,
Foreign Lender, Lessor (in its individual capacity and as trustee under the
Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture
Estate, Indenture Trustee (in its individual capacity and as trustee under the
Indenture), each Pass-Through Trust, each Pass-Through Trustee (in its
individual capacity and as trustee under the Pass-Through Trusts), the
Subordination Agent and each Liquidity Provider, and their respective successors
and permitted assigns, and any combination thereof and their respective
officers, directors, agents, servants, subcontractors, employees, subsidiaries,
Affiliates, shareholders and partners.
"Indenture" shall mean the Second Amended and Restated
Trust Indenture and Security Agreement [GPA 1989 BN-5] dated as of September 22,
1989, amended and restated as of October 1, 1991, and further amended and
restated as of November 26, 1996, as the same may be further amended,
supplemented or modified from time to time, between Indenture Trustee and
Lessor. The term "Indenture" shall also include the Indenture Supplements
entered into pursuant to the terms of the Indenture.
- 10 -
<PAGE> 12
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
"Interest Rate" shall mean (i) with respect to the portion
of any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture, computed on the basis of a year of 360 days and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate from
time to time in effect from the date the amount becomes due to the date it is
paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as
the case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule,
decree, constitution, regulation, order, judgment or other directive of any
Governmental Entity; (ii) any treaty, pact, compact or other agreement to which
any Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease,"
"this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words
shall mean this Lease as originally executed and as amended, supplemented or
otherwise modified from time to time, including, without limitation, by one or
more Lease Supplements, as a whole and not to any particular Section or other
subdivision, and any reference to a "Section" or an "Exhibit" shall refer to a
Section or Exhibit of this Lease, as so amended, supplemented or modified,
unless expressly provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1,
Lease Supplement No. 2, Lease Supplement No. 3 and each subsequent Lease
Supplement entered into hereunder.
- 11 -
<PAGE> 13
"Lease Supplement No. 1" shall mean Lease Supplement [GPA
1989 BN-5] No. 1, dated September 25, 1989 between Lessor and Original Head
Lessee, as Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA
1989 BN-5] No. 2, dated October 24, 1991 between Lessor and Original Head
Lessee, as Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA
1989 BN-5] No. 3, (substantially in the form of Exhibit D-1 hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder).
"Lenders' Lien" shall mean any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims (as defined herein) against Indenture Trustee in its
individual capacity (and not as Indenture Trustee) not related to its interest
in the Aircraft or the administration of the Trust Estate or the Trust Indenture
Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the
Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture
Trustee in its individual capacity (and not as Indenture Trustee) not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of Indenture Trustee in its individual capacity (and not as Indenture
Trustee) which are in violation of any of the Operative Documents, or (iii)
Taxes imposed on or Claims against Indenture Trustee in its individual capacity
(and not as Indenture Trustee) which are excluded from indemnification by
Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) arising out of the voluntary or involuntary transfer
by Indenture Trustee in its individual capacity (and not as Indenture Trustee)
of all or any portion of its interest in the Aircraft, the Airframe, any Engine,
the Trust Estate, the Trust Indenture Estate or the Operative Documents (except
a Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals
hereto.
"Lessor" shall have the meaning set forth in the Recitals
hereto.
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<PAGE> 14
"Lessor's Lien" shall mean any Lien or disposition of
title affecting the Aircraft, the Airframe, any Engine or any Part arising as a
result of (i) any claim against Lessor, Owner Participant, Trust Company or any
of their Affiliates not related to, the transactions contemplated by this Lease
or the other Operative Documents, the Financing Documents or the Purchase
Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company
or any of their Affiliates not expressly contemplated by this Lease or the other
Operative Documents, the Financing Documents, the Foreign Lease Documents or the
Purchase Documents or not permitted without consent (which consent has not been
granted) by any party hereto or thereto or that is in violation of any term of
this Lease or the other Operative Documents, the Financing Documents or the
Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company,
Lessor or Owner Participant or any of their Affiliates or the consolidated group
of taxpayers of which any of them is a member which are not to be indemnified
against by Lessee under the Operative Documents, the Purchase Documents or the
Financing Documents or by Original Head Lessee under the Original Head Lease Tax
Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company,
Owner Participant or Lessor or any of their Affiliates arising out of the
transfer by Lessor of all or any part of their respective interest in the
Aircraft, the Airframe, either Engine, the Trust Estate or the Operative
Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9,
11, 16, 18, 19 (except Liens resulting from a transfer not permitted by such
Section) or 20 of this Lease or pursuant to Sections 10 and 11 of the Refunding
Agreement or similar types of provisions in the Foreign Lease Agreement;
provided, however, that there shall be excluded from this definition and Lessor
shall not be required to remove any Lien which would otherwise constitute a
Lessor's Lien, if it is being diligently contested in good faith so long as
neither such proceedings nor Lien involves a material danger of the sale,
forfeiture or loss of the Aircraft or adversely affects Lessee's rights under
Section 21(f); and provided, further, that Lessor's Liens shall not include the
Lien of the Indenture, Lenders' Liens, or Liens contemplated by the Foreign
Lease Documents.
"Lien" shall mean any mortgage, chattel mortgage, pledge,
lien, charge, encumbrance, lease, exercise of rights, security interest, lease
in the nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale
- 13 -
<PAGE> 15
agreement, equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft in effect on the date hereof or as modified with the approval of the
FAA without affecting, or any other FAA approved maintenance program which does
not affect, the return condition standards set forth in Section 16 and Exhibit E
or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air
Carrier, any other maintenance program for the Aircraft which is approved by the
aviation authority of the country of registry and complies with the requirements
applicable to maintenance of the Aircraft contained in the definition of Foreign
Air Carrier. The Maintenance Program shall encompass scheduled maintenance,
condition monitored maintenance, and on-condition maintenance of the Airframe,
Engines, and components of the Aircraft, including, but not limited to,
servicing, testing, preventive maintenance, repairs, structural inspections,
structure life improvements, system checks, overhauls, approved modifications,
service bulletins, engineering orders, airworthiness directives, and corrosion
control inspections and treatments. All modifications and supplements to the
Maintenance Program shall be provided to Lessor upon its reasonable request and
Lessor shall be given reasonable access to the Maintenance Program upon its
request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a
French societe a responsabilite limitee, which as of the date hereof is owned by
Airbus Industrie.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
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<PAGE> 16
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, the Tax Indemnification Agreement, the Financing Documents, that
certain letter agreement dated as of the Restatement Date, relating to
Stipulated Loss Values with respect to this Lease, and any other agreement,
document or certificate delivered or entered into pursuant to the foregoing, as
amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease
Agreement [GPA 1989 BN-5], with respect to the Aircraft, dated as of September
22, 1989, between Lessor, as lessor, and the Original Head Lessee, as lessee, as
amended, supplemented or otherwise modified and as in effect immediately prior
to the Restatement Date, as more particularly described in Annex I attached
hereto.
"Original Head Lease Tax Indemnification Agreement" shall
mean the Head Lease Tax Indemnification Agreement [GPA 1989 BN-5], dated as of
September 22, 1989, and amended and restated as of October 1, 1991, and amended
and restated as of the Restatement Date, between the Original Head Lessee and
Owner Participant, as the same may be amended, supplemented or otherwise
modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA I, Inc.,
a Connecticut corporation.
"Owner Participant" shall mean _______________
____________, a Delaware corporation, as Owner Participant under the Trust
Agreement, and its successors and permitted assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as
Owner Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
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<PAGE> 17
"Partial Assignment" shall mean the A320 Partial
Assignment, Assumption, Release and Amendment Agreement, dated as of December
30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as
amended, supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1989 BN-5], dated as of September 22, 1989 and amended as of
October 1, 1991, among Original Head Lessee, Parent, Owner Participant, Owner
Trustee, Indenture Trustee and the Lenders named therein, as amended,
supplemented or otherwise modified from time to time and as in effect
immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (excluding complete Engines or engines), including Buyer
Furnished Equipment, which may now or from time to time be incorporated or
installed in or attached to or were provided by the Manufacturer with the
Airframe or any Engine or so long as title thereto shall remain vested in Lessor
in accordance with the terms of Section 9 hereof after removal from such
Airframe or Engine (or so long as the Foreign Lease Agreement is in effect,
Foreign Lessor in accordance with Section 8 of the Foreign Lease Agreement).
Except as otherwise set forth herein, at such time as a replacement part shall
be substituted for a Part in accordance with Section 9 hereof, the Part so
replaced shall cease to be a Part hereunder.
"Payment Location" shall have the meaning set forth in
Exhibit C, as the same may be changed from time to time by Lessor as provided in
Section 4(c).
"Permitted Lien" shall mean any Lien referred to in
clauses (i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air
Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b)
the United States Government or an agency or instrumentality thereof which bears
the full faith and credit of the United States of America which has agreed (in
form and substance satisfactory to Lessor) that all of its indemnity obligations
which by the terms of this Lease
- 16 -
<PAGE> 18
are permitted in lieu of insurance shall be enforceable by and payable to Lessor
directly or (c) any other Person approved in writing by the Owner Participant
and the Indenture Trustee, which approval shall not be unreasonably withheld.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or association of which any of the above is a member or a
participant.
"Purchase Agreement" shall mean the Amended and Restated
Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and
restated as of December 30, 1988 (insofar as the same relates to Model A320
Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the
Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices
thereto, as partially assigned to Parent pursuant to the Partial Assignment, to
which Airbus Industrie, as guarantor, has consented, and as the same may from
time to time be further amended, supplemented or otherwise modified to the
extent permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement,
the Partial Assignment and any other agreement, document or certificate
delivered or entered into pursuant to the foregoing, as amended, supplemented or
otherwise modified.
"Removable Part" shall have the meaning set forth in
Section 9(b).
"Renewal Rent" shall mean the rent payable pursuant to
Section 20.
"Renewal Rent Payment Date" shall mean each day determined
in accordance with Exhibit C upon which a payment of Renewal Rent becomes
payable.
"Renewal Term" shall mean the period described in Section
20 following the end of the Basic Term if Lessee shall have exercised its
renewal option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case
may be, and Supplemental Rent, collectively.
- 17 -
<PAGE> 19
"Replacement Airframe" and "Replacement Engine" shall have
the meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee,
any of the Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer or Controller.
"Restricted Use Period" shall have the meaning specified
in Exhibit C.
"Return Occasion" shall mean the event that occurs when
possession of the Aircraft is to be returned from Lessee to Lessor at the end of
the Term of this Lease or upon Lessor taking possession pursuant to Section 18
or for any other reason.
"Specified Investments" shall mean (i) direct obligations
of the United States Government, the obligations of which bear the full faith
and credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an entity
referred to in clause (iii) above or another financial institution having a net
worth of at least $750,000,000 and having a rating of "B" or better from
Thompson BankWatch, Inc. is obligated to repurchase any such obligation not
later than ninety (90) days after the purchase of any such obligation; and (v)
money market funds which invest solely in obligations described in clause (i);
provided that if all of the above investments are unavailable, the entire
amounts to be invested may be used to purchase Federal funds from an entity
described in clause (iii) above; and provided further that no investment shall
be eligible as a "Specified Investment" unless the final maturity or date of
return of such investment is on or
- 18 -
<PAGE> 20
before the date which is ninety (90) days from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable
date during the Basic Term the amount set forth on Exhibit A hereto and,
thereafter, the amount described in Section 20 (ii) (it being understood and
agreed that the amounts set forth in Exhibit A take into account fully the
amount and application of each installment of Basic Rent or Renewal Rent on each
Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a
Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional
credit of such Basic Rent or Renewal Rent is to be made in respect thereof)
except as expressly provided herein on a Basic Rent Payment Date or a Renewal
Rent Payment Date. In the event that it is necessary to determine a separate
Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value
shall be based on the ratio that the original cost to Lessor of the Airframe or
such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for
the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth on, Exhibit
A hereto.
"Supplemental Agreement" shall mean the Supplemental
Agreement dated as of September 22, 1989 between Foreign Lessor and Foreign
Lessee (as the same may be amended, modified or supplemented from time to time).
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any
payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of
an amount equal to average daily Basic Rent or Renewal Rent in connection with
an extension of the Term of this Lease as a result of the need to correct any
failure of the Aircraft to satisfy the requirements of Section 16 hereof; (iv)
[Intentionally Left Blank]; (v) an amount equal to any payment due to Owner
Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi)
an amount equal to any payment due to Indenture Trustee in respect of fees or
expenses as provided in the Indenture and/or Section 21(j) hereof; (vii)
Lessor's pro rata share of any payment due to any Pass-Through Trustee in
respect of fees or expenses
- 19 -
<PAGE> 21
pursuant to the Pass-Through Trust Agreement; (viii) Lessor's pro rata share of
any payment due to the Subordination Agent in respect of fees, compensation,
costs or expenses pursuant to the Intercreditor Agreement and/or the Refunding
Agreement; (ix) an amount equal to the amount specified in clause (b) of the
fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent
permitted by applicable Law, interest at the Interest Rate (all computations of
interest under this Lease to be made on the basis of a 360-day year, as
applicable, and twelve 30- day months) calculated: (1) on any part of any
installment of Basic Rent or Renewal Rent, as the case may be, not paid on the
due date thereof for the period for which the same shall be overdue and (2) on
any Supplemental Rent not paid when due hereunder from and including the due
date until the same shall be paid. As used herein, "Lessor's pro rata share"
means as of any date of determination a fraction the numerator of which is the
aggregate Principal Amount then outstanding of the Equipment Notes issued under
the Indenture and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" issued under the Indentures (as
defined in the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-5], dated as of
September 22, 1989, as amended and restated as of October 1, 1991, and as
amended and restated as of the Restatement Date, between Original Head Lessee
and Lessee, as the same may be amended, supplemented or otherwise modified from
time to time.
"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Term" shall mean, collectively, the Basic Term specified
in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with
Section 20, the Renewal Term, for which the Aircraft is leased hereunder
pursuant to Section 2.
- 20 -
<PAGE> 22
"Trust Agreement" shall mean the Trust Agreement [GPA 1989
BN-5] dated as of September 22, 1989 as amended by Trust Supplement No. 1, as
further amended by Trust Supplement No. 2 and as further amended by Trust
Supplement No. 3, between Lessor, in its individual capacity, and Owner
Participant, as beneficiary, as the same may be amended, supplemented or
otherwise modified from time to time. The term "Trust Agreement" shall also
include the Trust Supplements.
"Trust Estate" shall have the meaning specified in the
Trust Agreement.
"Trust Supplements" shall mean Trust Supplement No. 1,
Trust Supplement No. 2, Trust Supplement No. 3 and each subsequent Trust
Supplement entered into thereunder and any further supplement to the Trust
Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement
Supplement [GPA 1989 BN-5] No. 1 dated the Delivery Date between Lessor and
Owner Participant for the purpose of bringing the Aircraft and the Original Head
Lease into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement
Supplement [GPA 1989 BN-5] No. 2 dated October 24, 1991 between Lessor and Owner
Participant.
"Trust Supplement No. 3" shall mean Trust Agreement
Supplement [GPA 1989 BN-5] No. 3 dated the Restatement Date between Lessor and
Owner Participant conforming the references in the Trust Agreement to this
Agreement.
"United States Government" shall mean the federal
government of the United States of America and any board, commission,
department, division, organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee
agrees to furnish the Aircraft or the Airframe and Engine or engines installed
thereon at that time to a third party pursuant to which such Aircraft or the
Airframe and Engine or engines (i) shall be operated solely by regular employees
of Lessee (or any Permitted Sublessee) possessing all current certificates and
licenses required under the Federal Aviation Act or, if the Aircraft is not
registered under the Federal Aviation Act, all certificates and licenses
required by the laws of the jurisdiction of registry (it is understood that
cabin attendants need not be
- 21 -
<PAGE> 23
regular employees of Lessee (or any Permitted Sublessee)) and Lessee (or any
Permitted Sublessee) otherwise maintains operational control and possession
thereof, and (ii) shall be maintained by Lessee (or any Permitted Sublessee) in
accordance with its normal maintenance practices and this Lease, and otherwise
the insurance required hereunder shall be maintained and the Aircraft shall be
used and operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to
lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft
from Lessor, on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term; Rental Period.
(a) Time of Delivery. The Aircraft was delivered to
Lessee, and Lessee accepted delivery of the Aircraft, on December 22, 1989.
(b) [Intentionally Left Blank.]
(c) Acceptance of Aircraft. The Aircraft leased hereunder
was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY
DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b)
HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for
all purposes of this Lease and Lessee's acceptance of the Aircraft was
conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all
respects satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall
commence on the Delivery Date and shall continue until the Expiration Date;
provided, however, that the Term of this Lease may be earlier terminated
pursuant to the provisions hereof.
(e) Rental Period. Lessor and Lessee agree that the period
between each Basic Rent Payment Date shall constitute a rental period for
purposes of Section 467 of the Code.
Section 4. Rent; Minimum Payments.
(a) Rent. Lessee covenants and agrees to pay the following
as Rent hereunder:
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<PAGE> 24
(i) Basic Rent. The Basic Rent, as set forth in Exhibit C
throughout the Basic Term hereof, in consecutive installments, in advance and
allocable to the rental period beginning on such date, as set forth on Schedule
I to Exhibit C, due and payable on each Basic Rent Payment Date; and
(ii) Supplemental Rent. Any and all Supplemental Rent,
which shall be due and payable within fifteen (15) days after demand unless
otherwise specifically provided. In the event of any failure on the part of
Lessee to pay any Supplemental Rent when due, Lessor shall have all rights,
powers and remedies provided for herein or by law or equity or otherwise in the
case of nonpayment of Basic Rent or Renewal Rent.
(b) Minimum Payments. Notwithstanding any provision in
this Lease or in any other Operative Document to the contrary, under all
circumstances and in any event, (i) the Stipulated Loss Value, together with the
payment of Supplemental Rent and all other Rent then due hereunder, as of any
time and as of the date of any payment thereof shall (both before and after
giving effect to any reductions therefrom) be in an amount at least sufficient
to pay in full as of such time or date the aggregate unpaid principal amount of
the Equipment Notes then outstanding and all accrued and unpaid interest
(assuming interest has been timely paid) thereon and (ii) Basic Rent payable on
any Basic Rent Payment Date shall at least equal the aggregate amount of
principal and interest due and payable on the Equipment Notes on such Basic Rent
Payment Date. It is agreed, however, that no installment of Basic Rent or
Stipulated Loss Value shall be increased or adjusted by reason of (A) any
attachment or diversion of Rent on account of any Lessor's Lien or Head Lessor's
Lien or any Lenders' Lien, (B) any modification of the terms of the Equipment
Notes or the other Financing Documents made without the prior written consent of
Lessee or (C) the acceleration of any Equipment Note due to the occurrence of
any "Indenture Event of Default" (as defined in the Indenture) which does not
constitute an Event of Default hereunder. It is further agreed that nothing in
this Lease or any other Operative Document shall be deemed to constitute a
guaranty of the value, utility or useful life of the Aircraft or a guaranty in
respect of interest, principal or any other amounts payable in respect of or
under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on
which a payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date
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<PAGE> 25
shall be due and payable on the next succeeding Business Day. All Basic Rent,
Renewal Rent and Supplemental Rent payable under this Lease shall be paid by
wire transfer in immediately available currency of the United States of America,
no later than 12:00 p.m. (noon), New York City time, on the date payable
hereunder, and, so long as the Lien of the Indenture shall not have been
discharged, to or as directed by Indenture Trustee in accordance with the
payment instructions set forth in Exhibit C hereto or at such other address in
The City of New York or Hartford, Connecticut as Indenture Trustee may direct by
thirty (30) days prior written notice to Lessee, except that all Excepted
Payments, and upon discharge of the Lien of the Indenture, all payments of Rent
thereafter made hereunder, shall be paid in such immediately available funds no
later than 12:00 p.m. (noon), New York City time, on the date payable hereunder,
to Lessor or to Owner Participant, as appropriate, in accordance with the
payment instructions set forth in Exhibit C or at such other address in The City
of New York as Lessor may direct by thirty (30) days prior written notice to
Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This
Lease is a net lease. Lessee's obligations to pay all Rent and to perform all
other obligations hereunder are absolute and unconditional and shall not be
affected or reduced by any circumstances, including, without limitation, (i) any
setoff, counterclaim, recoupment, defense, or other right which Lessee may have
against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any
Note Holder, any Manufacturer, any Person providing services with respect to the
Aircraft, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
limitation, any breach by Lessor of its representations, warranties or covenants
contained herein or in the other Operative Documents; (ii) any defect in the
title, airworthiness, eligibility for registration under the Federal Aviation
Act, condition, design, operation, or fitness for use of, or any damage to or
loss or destruction of, the Aircraft (subject to the provisions of Section
11(a)(ii) hereof), any interruption or cessation in the use of or possession
thereof by or availability to Lessee for any reason whatsoever, whether arising
out of or related to an act or omission of Lessee, Lessor, Original Head Lessee,
Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any
Person providing services with respect to the Aircraft or any other Person;
(iii) any Liens with respect to the Aircraft; (iv) the invalidity or
unenforceability or lack of due authorization or other
- 24 -
<PAGE> 26
infirmity of this Lease or any absence of right, power or authority of Lessor,
Original Head Lessee, Lessee or Indenture Trustee to enter into this Lease or
the Indenture, as the case may be; (v) any insolvency, bankruptcy,
reorganization, or similar proceedings by or against Lessor, Original Head
Lessee, Lessee, any Permitted Sublessee, Indenture Trustee or any Note Holder;
(vi) any Taxes or (vii) any other circumstance or happening of any nature
whatsoever, whether or not similar to any of the foregoing; it being the
expressed intention of Lessor and Lessee that all Rent payable hereunder shall
be payable in all events, unless the obligation to pay the same shall be
terminated pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Aircraft or any obligation imposed
upon Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be
terminated in whole or in part by operation of Law, except as specifically
provided herein, Lessee waives all rights (if any) to any diminution in its Rent
obligations hereunder and nonetheless agrees to pay to Indenture Trustee or
Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or
Renewal Rent, as the case may be, payment and any Supplemental Rent payment at
the time such payments would have become due and payable in accordance with the
terms hereof had this Lease not been terminated in whole or in part, and so long
as such payments are made and all other terms and conditions hereof are complied
with by Lessee, Lessor and Lessee will deem this Lease to remain in full force
and effect.
The foregoing shall not, however, be construed as a waiver
of Lessee's other rights to seek damages, specific performance, other remedies
at law or equity or any combination thereof, as against the Original Head
Lessee, Lessor, Indenture Trustee or any other Person having an
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<PAGE> 27
interest herein through the Original Head Lessee, Lessor, Indenture Trustee or
any other Person as shall be liable therefor, on account of any failure of the
Original Head Lessee, Lessor, Indenture Trustee or any other such Person to
perform its express obligations under this Lease and the other Operative
Documents, or to enforce any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE AIRCRAFT
WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS".
LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT
AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT
UNDER THIS LEASE OR BY ONE OF ITS AFFILIATES HAVING ACQUIRED THE AIRCRAFT OR
DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER
OR IN RELATION TO THIS LEASE, AND LESSOR HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE
OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR
USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER
CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR
WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY
THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR
ANY RISKS RELATING THERETO, (iii) ANY
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<PAGE> 28
INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING,
MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES
AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF
ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT,
EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER
IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: Lessor represents and warrants
that (x) on the Delivery Date, Lessor had, and on the Restatement Date Lessor
has, the right to lease the Aircraft hereunder, (y) on the Delivery Date the
Aircraft was, and on the Restatement Date the Aircraft is, free of Lessor's
Liens and Head Lessor's Liens, and (z) on the Restatement Date Lessor has such
title to the Aircraft as was transferred to it on the Delivery Date and (B)
Lessor covenants that it shall maintain such title to the Aircraft as was
transferred to it on the Delivery Date and shall not create, incur, assume or
suffer to exist any Lessor's Lien or Head Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor. Lessor
hereby represents and warrants, as of the Delivery Date and as of the
Restatement Date that its representations and warranties set forth in Section
9(b) of the Refunding Agreement were true when made and continue to be true and
correct.
(c) No Amendments to Financing Documents. Lessor covenants
and agrees that Lessor will not, without the prior written consent of Lessee,
amend, modify, supplement or waive any provision of any Financing Document in
such a way as to materially increase Lessee's obligations hereunder or
materially reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor
under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution
and delivery of this Lease and the delivery of the Aircraft and the Restatement
Date.
(d) Suppliers' Warranties. So long as a Default or an
Event of Default has not occurred and is continuing and provided that the
Aircraft continues to be maintained, modified and repaired as required
hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees
otherwise to make available to Lessee the right to exercise
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<PAGE> 29
in Lessee's name such rights as Lessor may have or may subsequently obtain (but
without representation or warranty by or recourse to Lessor) with respect to any
product warranty, service life policy, trademark, patent or copyright
infringement indemnity, or airframe or propulsion system performance guaranty,
of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or
vendor with respect thereto under the Purchase Agreement (except those which
were given directly to Parent, the Original Head Lessee or any of their
Affiliates and are not directly related to the operator's use of the Aircraft),
to the extent that the same may be assigned or otherwise made available to
Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense
and upon its request, to enforce such rights as Lessor may have with respect
thereto for the benefit of Lessee; provided, however, that upon and during the
continuance of a Default or an Event of Default, such assignment or other rights
which are otherwise made available to Lessee shall immediately and automatically
without further action be deemed cancelled and, to the extent of any remaining
interest held by Lessee, deemed reassigned to Lessor and all such rights shall
revert to Lessor automatically including all claims thereunder whether or not
perfected and all amounts payable shall be paid to and held by Lessor. In no
event, however, shall Lessee have any right to amend, supplement or otherwise
modify the Purchase Agreement (by change order or otherwise). In connection with
the foregoing, Lessee agrees to be bound by and comply with all applicable
terms, conditions and limitations of the provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL NOT
ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN
(EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE
IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT,
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE
INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no
Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is
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<PAGE> 30
otherwise in full compliance with Section 12, and so long as all necessary
approvals of the FAA and any other Governmental Entity having jurisdiction have
been obtained, then Lessee, without the prior written consent of Lessor, may,
only to the extent provided below and subject to the limitations of Sections
6(a)(ii) and 6(a)(iii) below:
(1) subject any Engine to a normal interchange,
maintenance, servicing or pooling agreement or similar arrangement
with a Permitted Sublessee, in each case customary in the airline
industry of which Lessee is a part and entered into in the
ordinary course of its business; provided that no transfer of the
registration of any Engine shall be effected in connection
therewith; and provided, further, that (A) no such agreement or
arrangement contemplates, results in or requires the transfer of
title to any Engine, and (B) if Lessor's title or Foreign Lessor's
(so long as the Foreign Lease Agreement is in effect) to any
Engine shall be divested under any such agreement or arrangement,
such divestiture shall be deemed to be an Event of Loss with
respect to such Engine and not an Event of Default and Lessee
shall comply with Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or
any Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for
testing, service, storage, repair, maintenance, inspection or
overhaul work on such Aircraft, Airframe or Engine or any part
thereof or for alterations or modifications in or additions to
such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe to
the United States of America or any instrumentality or agency
thereof pursuant to a sublease;
(4) (i) subject the Airframe to the Civil Reserve Air
Fleet Program and transfer possession of the Airframe or any
Engine to the United States Government pursuant to the Civil
Reserve Air Fleet Program, so long as Lessee shall promptly notify
Lessor upon transferring possession of the Airframe or any Engine
to the United States Government pursuant to the Civil Reserve Air
Fleet Program and provide Lessor with the name and address of the
Contracting Office
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<PAGE> 31
Representative for the Military Airlift Command of the United
States Air Force to whom notices must be given; or
(ii) subject the Airframe to (a) a service contract with
the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term,
or (b) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except (A)
Permitted Liens and Liens which apply only to engines (other than
the Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an
entirety) and (B) the rights of participants under normal
interchange agreements which are customary in the airline industry
and do not contemplate, permit, result in or require the transfer
of title to the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of
all Liens except the rights of the parties to the lease or
conditional sale or other security agreement covering such
airframe and except Liens of the type permitted by clauses (A) and
(B) of Section 6(a)(i)(5) and the Lien of any mortgage which
provides that each Engine leased to Lessee hereby shall not become
subject to the lien thereof or to any rights of any party
thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of
such Engine on any airframe subject to the Lien of such mortgage,
unless and until Lessee shall become the owner of such Engine and
Lessor shall have no further interest therein, all pursuant to the
express terms of this Lease; and (B) there shall be in effect a
written agreement of the lessor or secured party of such airframe
(which may be contained in the lease or conditional sale or other
security agreement covering such airframe) substantially similar
in effect to the agreement of Lessor in Section 6(b) below whereby
such lessor or secured party effectively and expressly agrees that
neither it nor its successors or assigns
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<PAGE> 32
will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any
time while such Engine is subject to this Lease or is owned by
Lessor, and a copy of such agreement shall be provided to Lessor
upon written request;
(7) install an Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional
sale or other security agreement under circumstances where neither
Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided
that such installation shall be deemed an Event of Loss with
respect to such Engine and Lessee shall comply with Section 11(b)
hereof in respect thereof, Lessor not intending hereby to waive
any right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section 11(b);
(8) enter into a Wet Lease for the Aircraft or the
Airframe and engines installed thereon in the ordinary course of
Lessee's business for a period not extending beyond the Term;
provided that if Lessee (or any Permitted Sublessee) shall enter
into any Wet Lease for a period of more than one year (including
renewal options) Lessee shall provide to Lessor written notice of
such Wet Lease (such notice to be given prior to entering into
such Wet Lease, if practicable, but in any event promptly after
entering into such Wet Lease); or
(9) sublease the Aircraft or the Airframe to any Permitted
Sublessee on the terms and conditions set forth in Section
6(a)(iii) below.
(ii) Certain Limitations on Transfers. With respect
to any transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession
by reason of a transfer permitted by Section 6(a) hereof (other
than the transfer of an Engine which is deemed to have been an
Event of Loss) shall be expressly subject and subordinate to all
the terms of this Lease and the Lien of the Indenture (if it has
not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and
Lessee shall remain primarily liable hereunder for the performance
of all of the terms of
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<PAGE> 33
this Lease to the same extent as if such transfer had not occurred
and no provision of this Lease shall be deemed a waiver of
Lessor's rights hereunder or under the other Operative Documents
nor discharge or diminish any of Lessee's obligations hereunder or
under the other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the
Aircraft, the Airframe or any Engine pursuant to the terms of this
Section 6(a) shall be permitted if such Wet Lease, Permitted
Sublease or other relinquishment of possession would cause the
Aircraft, the Airframe or such Engine to be "tax-exempt use
property" within the meaning of Section 168(h) of the Code or
cease to be "Section 38 property" within the meaning of Section
48(a) of the Code (as determined after the application of Section
47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend
beyond the Basic Term or the Renewal Term (if Lessee shall have
exercised its option to renew this Lease in accordance with the
terms hereof); and
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable.
(iii) Permitted Subleases. With respect to any
sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law)
or Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under
such sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the
date such sublease is entered into, (B) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier
(other than a Foreign Air Carrier principally based in Taiwan),
the United States maintains diplomatic relations with the country
in which such proposed Permitted Sublessee is principally based at
the time such sublease is entered
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<PAGE> 34
into (or, in the case of a sublease to a proposed Permitted
Sublessee principally based in Taiwan, maintains diplomatic
relations at least as good as those in effect on the Restatement
Date) and (C) in the event that the Permitted Sublessee under such
sublease is a Foreign Air Carrier, Lessor and the Indenture
Trustee shall have received an opinion of counsel to Lessee, in
form and substance reasonably satisfactory to Owner Participant
and the Indenture Trustee, to the effect that (I) the terms of the
proposed sublease will be legal, valid, binding and (subject to
customary exceptions in foreign opinions generally) enforceable
against the proposed Permitted Sublessee in the country in which
the Permitted Sublessee is principally based, (II) there exist no
possessory rights in favor of the Permitted Sublessee under such
sublease under the laws of such Permitted Sublessee's country of
domicile that would, upon bankruptcy or insolvency of or other
default by Lessee, prevent the return or repossession of the
Aircraft in accordance with the terms of this Lease, (III) (unless
Lessee shall have agreed or is required to provide insurance
covering the risk of requisition of use of the Aircraft by the
government of the country of such Permitted Sublessee's country of
domicile) the laws of such Permitted Sublessee's country of
domicile require fair compensation by the government of such
jurisdiction payable in currency freely convertible into dollars
for the loss of use of the Aircraft in the event of the
requisition by such government of such use, (IV) the Permitted
Sublessee is either not entitled to sovereign immunity, or has
effectively waived such sovereign immunity, with respect to its
rights and obligations under the proposed sublease; (V) the laws
of such Permitted Sublessee's country of domicile would give
recognition to Lessor's title to the Aircraft, to the registry of
the Aircraft in the name of the Lessor (or Lessee, as "lessee", or
the proposed Permitted Sublessee, as "sublessee", as appropriate)
and to the Lien of the Indenture; (VI) it is not necessary under
the laws of such Permitted Sublessee's country of domicile, solely
as a consequence of such subleasing and without giving effect to
any other activity of Owner Participant, Owner Trustee or
Indenture Trustee or any Affiliate thereof, as the case may be,
for the Owner Trustee, the Owner Participant or the Indenture
Trustee to qualify to do business in such jurisdiction; and (VII)
if the Owner Participant so requests, (x) under the laws of such
Permitted Sublessee's country of domicile there is no tort
liability of the owner of an aircraft not in
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<PAGE> 35
possession thereof (it being agreed that in the event this opinion
cannot be given in a form reasonably satisfactory to Owner
Participant, such opinion shall be waived if insurance reasonably
satisfactory to Owner Participant is provided to cover such risk),
and (y) such other matters as the Owner Participant reasonably
requests, provided, however, that no sublease shall extend beyond
the expiration of the Basic Term or any Renewal Term then in
effect.
The rights of any Permitted Sublessee shall be expressly
subject and subordinate to all the terms of this Lease and to the Lien of the
Indenture (if it has not been discharged), including, without limitation, the
covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights
to repossession pursuant to Section 18 hereof and to avoid or terminate such
Permitted Sublease upon such repossession, and Lessee shall remain primarily
liable hereunder for the performance of all of the terms of this Lease to the
same extent as if such Permitted Sublease had not occurred. No Permitted
Sublease shall in any way discharge or diminish any of Lessee's obligations to
Lessor hereunder or constitute a waiver of Lessor's rights or remedies
hereunder. Any Permitted Sublease shall expressly prohibit any further
sub-sublease by the Permitted Sublessee. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Permitted
Sublease hereunder (such notice to be given not later than ten Business Days
prior to entering into any Permitted Sublease with a Foreign Air Carrier and, if
practicable, not later than five days prior to entering into any Permitted
Sublease with any other proposed Permitted Sublessee, but, in the case of a
Permitted Sublease with a Permitted Sublessee other than a Foreign Air Carrier,
in any event promptly after entering to any such Permitted Sublease) and (ii) a
copy of each Permitted Sublease which has a term of more than three months.
(b) Reciprocal Recognition of Rights. In the event the
lessor or secured party of any airframe leased to Lessee (or a Permitted
Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a
conditional sale or other security agreement in accordance with Section
6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement
covering such airframe also covers an engine or engines owned by the lessor
under such lease or subject to a security interest in favor of the secured party
under such conditional sale or other security agreement, Lessor hereby agrees
for the benefit of such lessor or secured party that Lessor will not acquire or
claim, as
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<PAGE> 36
against such lessor or secured party, any right, title or interest in any such
engine as the result of such engine being installed on the Airframe at any time
while such engine is subject to such lease or conditional sale or other security
agreement and owned by such lessor or subject to a security interest in favor of
such secured party. Lessor also hereby agrees for the benefit of the mortgagee
under any mortgage complying with Section 6(a)(i)(6) hereof, relating to
installation of an Engine on an airframe leased to Lessee (or a Permitted
Sublessee), that Lessor will not acquire or claim, as against such mortgagee,
any right, title or interest in any engine subject to the lien of such mortgage
as the result of such engine being installed on the Airframe at any time while
such engine is subject to the lien of such mortgage.
(c) Lawful Insured Operations. Lessee will not permit the
Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used
or operated in violation of any Law of any Governmental Entity having
jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration issued by any such authority or any manufacturer's
specifications, service bulletins or other requirements, including, without
limitation, such of any manufacturer's requirements as may be applicable to keep
in full force and effect each material warranty, product or performance
guaranty, service life policy or the like, in each case, to the extent made
mandatory for Part 121 operators similarly situated to Lessee or the Permitted
Sublessee if the Aircraft is registered with the FAA, or the applicable laws of
any other jurisdiction in which the Aircraft may then be registered in
accordance with Section 11 of the Refunding Agreement, unless the validity
thereof is being contested in good faith and by appropriate proceedings, but
only so long as such proceedings do not involve any danger of sale, forfeiture
or loss of the Aircraft or impair the interest of Lessor therein or impair the
validity or priority of the Lien of the Indenture or result in a risk of
criminal liability of Lessor or Indenture Trustee and are not inconsistent with
any insurance required to be maintained by Lessee hereunder. In the event that
such Law or other requirement requires alteration of the Aircraft during the
Basic Term or then-current Renewal Term, Lessee shall comply therewith at its
sole expense and shall maintain the same in proper condition for operation under
such Laws and other requirements. Lessee shall not operate in any manner or
locate in any place the Aircraft, or suffer or permit the Aircraft to be
operated by a Permitted Sublessee or
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<PAGE> 37
otherwise in any manner or located by a Permitted Sublessee or otherwise in any
place (i) unless the Aircraft is covered by insurance or United States
Government indemnity as required by the provisions hereof or (ii) contrary to
the terms of such insurance or United States Government indemnity. Lessee also
agrees not to operate or locate the Aircraft or suffer or permit the Aircraft to
be operated or located in any area excluded from coverage by any insurance
policy issued pursuant to the requirements of this Lease or in any war zone
unless insured or indemnified by the United States of America therefor, except
in the case of operation pursuant to a sublease or contract with, or as a result
of a requisition (not constituting an Event of Loss) by, the United States of
America, and then only if Lessee has obtained insurance or an indemnity (in lieu
of such insurance) from the United States of America covering such risks, in the
amounts and otherwise as required by this Lease. Lessee shall in no event permit
the Aircraft, the Airframe or any Engine to be used, operated or maintained in
Japan.
(d) Maintenance. Lessee, at its own cost and expense,
shall: (i) perform or cause to be performed all service, repair, maintenance,
overhaul, inspections, alterations, modifications, and testing (A) in accordance
with good airline industry practice and in such manner to provide complete data
and documentation necessary to substantiate certification, (B) as may be
necessary and required under, and in compliance with, applicable Law, including,
without limitation, FAA rules, regulations and other requirements, the
Maintenance Program, airworthiness directives having a compliance date during
the Term, and the service bulletins and other requirements of any manufacturer,
including, without limitation, such requirements as may be applicable to keep in
full force and effect any and all material warranties, product and performance
guaranties, service life policies, indemnities or the like, (C) except during
any period that a Permitted Sublease is in effect, in the same manner and with
the same care, including regard for the status and technical condition of the
Aircraft, as shall be the case with respect to similar aircraft and engines
owned by Lessee without discrimination and as if Lessee owned the Aircraft and
was going to use the Aircraft in continued regular customer service after the
expiration of the Term, and consistent with good industry practice, and during
any period in which a Permitted Sublease is in effect, in the same manner and
with the same care, including regard for the status and technical condition of
the Aircraft, as shall be the case with respect to similar aircraft and engines
owned by such Permitted Sublessee
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<PAGE> 38
without discrimination and as if the Permitted Sublessee owned the Aircraft and
was going to use the Aircraft in continued regular customer service after the
expiration of the Permitted Sublease, and consistent with good industry
practice, provided, however, that in all circumstances the Aircraft shall be
maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance
standards required by, or substantially equivalent to those required by, the
central civil aviation authority of the country of registry and, to the extent
not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as
good a condition as when delivered to Lessee, ordinary wear and tear excepted,
and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to
be kept in such condition as is necessary to enable the airworthiness
certification of such Aircraft to be maintained in good standing at all times
under the Federal Aviation Act, or the applicable laws of any other jurisdiction
in which the Aircraft may be registered in accordance with Section 11 of the
Refunding Agreement (provided that if any grounding is fleetwide in nature and
so long as Lessee or a Permitted Sublessee is contesting in good faith such
grounding, Lessee shall not be deemed in violation of this maintenance
covenant); and (iii) maintain in English all records, logs and other materials
required by, and in a manner acceptable to, the FAA or any other Governmental
Entity having jurisdiction and as provided under the Maintenance Program and
Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the
Aircraft at all times, at its expense, to be duly registered during the
Restricted Use Period and, subject to Section 11 of the Refunding Agreement,
thereafter under the Federal Aviation Act in the name of Lessor or any successor
or assignee, so long as (i) while the Aircraft is registered under the Federal
Aviation Act, each of the Lessor or its successors or assigns is a "citizen of
the United States" as defined in Section 40102(a)(15) of the Federal Aviation
Act and (ii) the applicable parties to the Refunding Agreement cooperate with
Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not
register the Aircraft or permit the Aircraft to be registered under any laws
other than the Federal Aviation Act at any time except as provided in Section 11
of the Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this Lease
at all times. At any time after the Restricted Use Period, Lessor, upon
compliance with all of the terms of Section 11 of the Refunding Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions
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<PAGE> 39
reasonably required to change the registration of the Aircraft to another
country.
Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") in the
cockpit of the Aircraft and on each Engine showing title thereto and the Lien of
the Indenture as designated by Lessor and as Lessor may from time to time
reasonably request. Unless otherwise requested, upon delivery of the Aircraft,
Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a
location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and on each Engine (if not prohibited by
applicable Law), a Lease Identification in the form set forth in Exhibit C
hereto or with any other appropriate information in any other form subsequently
designated by Lessor to Lessee. Except as provided herein, Lessee will not allow
the name of any Person to be placed on the Aircraft or either Engine as a
designation that would be reasonably interpreted as a claim of ownership or
Lien; provided, however, that Lessee may cause the Airframe and Engines to have
placed thereon the customary colors and insignia of Lessee or any Permitted
Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to
Lessor, Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Aircraft as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause its Permitted Sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee on reasonable prior notice at reasonable times
to visit, inspect and survey the Aircraft (including, without limitation, going
on board the Aircraft, and inspecting the Aircraft during maintenance checks
when panels and bays are open and subject to view), its condition, use, and
operation, and the records maintained in connection therewith, and to visit and
inspect the properties and to discuss the affairs, finances and accounts of
Lessee with the principal officers of Lessee, provided, that so long as Lessor
does not believe a Default or Event of Default has occurred hereunder
inspections shall be performed during regularly scheduled maintenance checks of
the Aircraft. Each such inspection or survey shall be conducted so as to not
unreasonably interfere with the business of Lessee or the maintenance or
operation of the Aircraft. Upon
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<PAGE> 40
Lessor's, Owner Participant's or Indenture Trustee's request, Lessee will notify
such Person of the next scheduled maintenance check for the Airframe or any
Engine. Lessor, Owner Participant and Indenture Trustee shall have no duty to
make any such inspection and shall not incur any liability or obligation by
reason of not making any such inspection. Lessor's, Owner Participant's or
Indenture Trustee's failure to object to any condition or procedure observed or
observable in the course of an inspection hereunder shall not be deemed to waive
or modify any of the terms of this Lease with respect to such condition or
procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish
Lessor, until the expiration or other termination of the Term of this Lease, the
following:
(i) within sixty (60) days following the end of each
quarter of Lessee's fiscal year, except the last such quarter of such year,
commencing after the Restatement Date, a copy of Lessee's Quarterly Report on
Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no
longer files such report, an unaudited consolidated balance sheet of Lessee and
its consolidated subsidiaries prepared by it as of the close of the period
ended, together with the related statements of income and cash flows for such
period, and in each case certified by a Responsible Officer of Lessee as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close
of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such reports, an audited consolidated balance sheet, income statement, and cash
flow statement of Lessee and its consolidated subsidiaries, as of the close of
such fiscal year, and in each case as certified by independent public
accountants, including their certificate and accompanying comments, as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and
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practices, without qualification as to the scope of the audit or non-conformity
with GAAP;
(iii) promptly upon their becoming available, copies of
all reports on Form 8-K filed by Lessee under the Securities Exchange Act of
1934, as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of
insurance required to be maintained hereunder, a certificate signed by the
Approved Broker of Lessee as to the due compliance with the insurance provisions
of Section 12 hereof with respect to the Aircraft, together with certificates of
insurance evidencing such insurance and the opinion provided for in Section
12(f);
(v) within fifteen (15) days following the end of each
calendar month throughout the Term, an Airframe and Engine status report,
substantially in the form of Exhibit K hereto, including, without limitation,
(A) a summation of hours and cycles accumulated on the Airframe and Engines by
individual serial number during such preceding calendar month and (B) the
identity of the airframe (including the "N" number and, at Lessor's request,
ownership and lien interests in respect thereof) on which each Engine was
installed as of the end of each such calendar month, and, if Lessor so requests,
the location of any such airframe. The foregoing shall not be deemed to require
reports regarding hours or cycles on any Parts;
(vi) together with each set of financial statements
referred to in clauses (i) and (ii), a certificate signed by a Responsible
Officer of Lessee, to the effect that such officer has reviewed the relevant
terms of this Lease and has made, or caused to be made under his or her
supervision, a review of the transactions and condition of Lessee during the
accounting period covered by such financial statements, and that such review has
not disclosed the existence during such accounting period, nor does such officer
have any knowledge of the existence, as at the date of such certificate, of any
condition or event which constitutes a Default or an Event of Default, or, if
such condition or event which constitutes a Default or an Event of Default
existed or exists, specifying the nature and period of existence thereof and
what action Lessee has taken or is taking or proposes to take with respect
thereto;
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<PAGE> 42
(vii) as soon as practicable after becoming aware thereof,
notice of damage or destruction to the Aircraft, either Engine or any Part with
a repair or replacement cost (including labor charges) in excess of $1,000,000
or any incident required to be reported to the FAA or other Government Entity;
(viii) immediately after Lessee knows or should know of
the occurrence thereof, notice of a Default; and
(ix) promptly after Lessor's written request therefor,
notice of the time and location of upcoming C Checks, major Engine checks, major
Airframe structural checks and a description of modification of the Aircraft
required by an FAA airworthiness directive, a mandatory manufacturer service
bulletin or any other modification with a materials and labor cost in excess of
$1,000,000;
(x) together with each delivery of financial statements
pursuant to Section 8(a)(ii) above, a certificate signed by Lessee's auditors
thereon (i) briefly setting forth the scope of their examination (which shall
include a review of this Section, (ii) stating whether or not their examination
has disclosed the existence, during the fiscal year covered by such financial
statements, of any Default or Event of Default and, if their examination has
disclosed such a Default or Event of Default, specifying the nature and period
of existence thereof, and (iii) stating that they have examined the officer's
certificate delivered therewith pursuant to Section 8(a)(vi) above;
(xi) As soon as possible and in any event within thirty
(30) days after Lessee knows or has reason to know thereof, a certificate of a
Responsible Officer specifying:
(X) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan; or
(Y) the institution of proceedings or the taking or
expected taking of other action by PBGC or Lessee or any Commonly
Controlled Person to terminate, withdraw or partially withdraw
from any Plan and with respect to a multi-employer Plan, the
reorganization or insolvency of the Plan and in addition to such
notice, deliver to Lessor whichever of the following may be
applicable: (A) a certificate of a Responsible Officer setting
forth details as to such Reportable Event of the action that
Lessee or Commonly Controlled Person proposes to take with respect
thereto, together with a copy of any notice of such Reportable
Event that may be
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<PAGE> 43
required to be filed with PBGC, or (B) any notice delivered by
PBGC evidencing its intent to institute such proceedings or any
notice to PBGC that such plan is to be terminated, as the case may
be; and
(xii) from time to time such other information as Lessor
may reasonably request.
(b) Maintenance of Corporate Existence. Except as provided
in Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so
long as it shall be the Lessee under this Lease, a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and
Lessee is and shall maintain its status at all times as a Certificated Air
Carrier, including, without limitation, its status so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid
all Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal liability
on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate
or dissolve; and Lessee shall not consolidate with or merge into or with any
other corporation or other Person, and Lessee shall not convey, transfer, lease
or otherwise dispose of all or substantially all of its property and other
assets to, or, without the prior consent of Owner Participant, acquire all or
any substantial part of the property or other assets or capital stock of (if
such acquisition is analogous in purpose or effect to a consolidation or
merger), any corporation or other Person, unless:
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<PAGE> 44
(i) the Person formed by or surviving such consolidation
or merger or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
(the "Successor Entity"): (A) shall be a corporation organized and existing
under the laws of the United States of America or any State thereof or the
District of Columbia; (B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded to all or substantially all
of such property and other assets (including, without limitation, all or
substantially all of Lessee's property and other assets) as an entirety and,
unless the Owner Participant otherwise agrees, shall have a Net Worth of not
less than Lessee's Net Worth immediately prior to such transaction; (C) shall be
a "citizen of the United States" of America as defined in Section 40102(a)(15)
of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall
execute and deliver to Lessor such recordations and filings with any
Governmental Entity and such other documents as Lessor determines shall be
reasonably necessary or advisable (including, without limitation, to preserve
and protect the interests of the Lessor and the priority of the Lien of the
Indenture (if it has not been discharged)) to evidence, or in connection with,
such consolidation, merger, sale, lease, transfer or other disposition and an
agreement, in form and substance reasonably satisfactory to Lessor, which is a
legal, valid, binding and enforceable assumption by such Successor Entity of the
due and punctual performance and observance of each covenant and condition of
this Lease and the other Operative Documents to which Lessee is a party and
agreement to be bound thereby, and an officer's certificate to such effect, and
to the effect that the other requirements of this paragraph have been satisfied,
and a legal opinion from counsel to such effect and otherwise in such form and
substance reasonably satisfactory to Lessor; and
(ii) prior to and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing.
No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each
calendar year and within 60 days of a request by Lessor or Owner Participant, or
such shorter period as may be set forth in any written request by the Internal
Revenue Service for information or documents, Lessee shall furnish in
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<PAGE> 45
writing to Lessor or Owner Participant such information and documents (or copies
thereof) regarding the Aircraft as may be reasonably requested by Lessor or
Owner Participant or the Internal Revenue Service in order to permit Lessor to
file its federal and state income tax returns (or to permit the filing of the
federal and state income tax returns of any affiliated group of corporations
filing a consolidated return of which Lessor is a member), or to maintain or
defend any claims related thereto and promptly, after reasonable notice, furnish
to Lessor or Owner Participant such information as may be reasonably requested
by Lessor or Owner Participant or the applicable Governmental Entity as may be
required to enable Lessor or Owner Participant to file any reports required to
be filed by it with any Governmental Entity because of its ownership or other
interest in the Aircraft, the Airframe or the Engines.
(g) Place of Business. At all times while this Lease is in
effect, Lessee will not, without thirty (30) days prior written notice to Lessor
and Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the
Aircraft, Airframe or Engines only in commercial passenger operations and
related cargo operations. Unless Owner Participant otherwise agrees, during the
Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or
permit the Aircraft, Airframe or Engines to be used either "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code,
or in such manner that the percentage of the income, deduction or credit
attributable to the Aircraft, Airframe or Engines for federal income tax
purposes during any taxable year of the Lessor considered to be from foreign
sources exceeds the Maximum Foreign Use Percentage. In addition, until the
expiration of the Term or termination of the Foreign Lease Agreement, Lessee
will not locate, use or permit the use of the Aircraft in, to or from Japan.
Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft
to be operated in any member state of the European Union or other European
country, Lessee shall deliver to Lessor (i) a representation and warranty to the
effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute
with Eurocontrol or other relevant air traffic
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<PAGE> 46
control authority over delinquent charges payable by it and (ii) a letter from
Lessee (or any Permitted Sublessee) addressed to Eurocontrol or other relevant
air traffic control authority pursuant to which Lessee (or such Permitted
Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's request
from time to time, a statement of account of all sums due by Lessee (or such
Permitted Sublessee) to the authority in respect of all aircraft (including,
without limitation,the Aircraft) operated by Lessee (or such Permitted
Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would
not have entered into this Second Amended and Restated Aircraft Lease Agreement
unless it had available to it the benefits of a Lessor under Section 1110 of
Title 11 of the United States Code. Lessee covenants and agrees with Lessor that
to better ensure the availability of such benefits, Lessee shall support any
motion, petition or application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the
Aircraft under said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of said Section
1110 to be fulfilled in order to entitle Lessee to continued use and possession
of the Aircraft hereunder.
(j) Permits and Licenses. Lessee shall make or obtain, and
maintain in full force and effect, each and every consent, license, approval,
notice, registration, filing or other action with any Governmental Entity
necessary or advisable in connection with the operation or use of the Aircraft,
the Airframe, any Engine or Part or the execution, delivery or performance of
this Lease and the Operative Documents to which it is a party by Lessee or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During such
times that the Aircraft is registered under the Federal Aviation Act, Lessee
shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period
covered by the opinion of counsel rendered on the Restatement Date, any
opinion of counsel rendered pursuant to Section 11(C) of the Refunding
Agreement, and any opinion of counsel rendered pursuant to this Section
8(k)(i) and (Y) upon any change in Law that would render the opinion of
counsel rendered on the Restatement Date or such immediately preceding
opinion of counsel inaccurate, an opinion of counsel with
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<PAGE> 47
respect to Lessee and the FAA reasonably satisfactory to each
addressee of such opinion (which counsel may be internal legal
counsel of Lessee and FAA counsel) stating, in the opinion of such
counsel, that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i) the
appropriate Operative Documents and any supplements and amendments
thereto and (ii) such other appropriate documents, as is necessary
to maintain the perfection of Owner Trustee's title to and/or
interest in and Indenture Trustee's security interest in the
Aircraft and the Operative Documents for such period of time as
reflects the then-current applicable Law, reciting the details of
such actions; or
(2) at any time that an opinion is not required
pursuant to Section 8(k)(i)(1), annually, a certificate reasonably
satisfactory to each recipient thereof signed by a Responsible
Officer of Lessee certifying that no such action is necessary to
maintain the perfection of such title and/or interest and security
interest.
(ii) During such times that the Aircraft is registered
under any Laws other than the Federal Aviation Act, Lessee shall furnish to
Lessor and to Indenture Trustee annually (but in any case, (X) prior to the
expiration of the time period covered by any opinion of counsel rendered
pursuant to Section 11(C) of the Refunding Agreement and any opinion of counsel
rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in
Law that would render such immediately preceding opinion of counsel inaccurate),
an opinion of counsel reasonably satisfactory to each addressee of such opinion
stating, in the opinion of such counsel, that such action has been taken with
respect to the recording, filing, re-recording and refiling of (i) the
appropriate Operative Documents and any supplements and amendments thereto and
(ii) such other appropriate documents, as is necessary to maintain the
perfection of Owner Trustee's title to and/or interest in and Indenture
Trustee's security interest in the Aircraft and the Operative Documents for such
period of time as reflects the then-current applicable Law, reciting the details
of such actions.
(iii) Whether the Aircraft is registered under the Federal
Aviation Act or under any Laws other than the Federal Aviation Act, Lessee shall
furnish to Lessor annually a certificate (reasonably satisfactory to Lessor)
signed by a Responsible Officer of the Lessee certifying
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<PAGE> 48
that Lessee is in compliance with the provisions of the penultimate paragraph of
Section 9(b) regarding Excluded Property and any equipment or seats which such
Excluded Property replaces.
(l) Letter of Credit. (X) As security for its obligations
to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or
more irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof shall be
available for drawdown thereunder and payable in New York, New York, on first
demand by Lessor at any time, if accompanied by its statement (i) that a Default
under Section 17(e), (f) or (g) or an Event of Default has occurred or (ii) that
the letter of credit will expire within twenty (20) days from the date of
demand, which amount may be applied, retained or utilized as provided in clause
(Y);
(ii) be maintained in full force and effect at all times
until ninety-one (91) days after the end of the Term with a commercial bank
acceptable to Lessor, in its sole and absolute discretion, having a long-term
unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the
issuing bank's credit rating is lower than such rating, Lessee shall replace
such Letter of Credit issuer within five (5) Business Days of any such reduction
in rating with a commercial bank meeting such rating requirement), provided,
that a Letter of Credit in the form set forth in Exhibit D-2 issued by The
Industrial Bank of Japan, Limited will be acceptable to Lessor for so long as
The Industrial Bank of Japan, Limited maintains a long-term unsecured debt
rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferable and
assignable; and
(iv) permit partial drawings. If the Letter of Credit is
still in effect at the end of the Term, then Lessor shall return the Letter of
Credit to Lessee or terminate it.
(Y) If an Event of Default has occurred and is
continuing, in addition to any other rights or
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remedies Lessor may have hereunder, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to
draw on the Letter of Credit and, with respect to amounts so
drawn, hold same as security for Lessee's obligations under this
Lease, retain same for its own account and apply (including,
without limitation, by way of set off against) same, or such
amounts thereof as it may elect (it being understood that amounts
not so applied will be held as security for Lessee's obligations
under this Lease), to remedy any breach by Lessee of this Lease
and the other Operative Documents or to recompense Lessor for any
loss, damage, cost or expense or other Claim due or owing
hereunder; provided, however, that in the case of any drawing in
respect of any claim for payment of Rent, Lessee's right to apply
the same to such claim shall be limited to amounts ("Equity
Amounts") which would (absent an Event of Default) be
distributable under the Indenture at the time such payment is made
to Lessor, Owner Participant or any of their respective Affiliates
(and shall not include any amounts distributable to Indenture
Trustee in its individual capacity or to the Note Holders). If
Lessor draws on the Letter of Credit because the Letter of Credit
will expire within twenty (20) days from the date of demand, then
Lessor may elect in its sole and absolute discretion to apply such
amounts in satisfaction of any Equity Amounts which would have
been or would become distributable under the Indenture to Lessor
or Owner Participant if Lessee were fully to perform its
obligations under the Lease on a timely basis in the inverse order
of which such obligations would be distributable; and provided
further, that the amount of Lessee's obligations in respect of
Equity Amounts that shall be satisfied by such application shall
equal (i) that amount from the proceeds of the Letter of Credit
which this Lessor elects to apply (the "Applied Amount") in
satisfaction of Lessee's obligations in respect of Equity Amounts
(such obligations to be satisfied by application of the Applied
Amount being referred to as the "Satisfied Obligations") plus (ii)
an amount equal to interest at the Applicable Rate on the Applied
Amount from the date of application of the Applied Amount to the
date on which the Satisfied Obligations otherwise would have been
due (with "Applicable Rate" meaning a per annum rate of interest
computed on the basis of a year of 365 or 366 days, as the case
may be, and actual number of days elapsed equal to the rate for
U.S. Treasury bills with a maturity that most closely corresponds
to the remaining
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<PAGE> 50
Term, it being agreed that in no event shall the Applicable Rate
exceed the lowest Debt Rate (as defined in the Indenture) provided
in any Equipment Note). Lessee shall not be obligated to reinstate
the amount of the Letter of Credit to the extent proceeds thereof
are applied in satisfaction of Lessee's obligations in the manner
provided in the immediately preceding proviso. If (a) the Lessor
shall hold any proceeds of the Letter of Credit as security for
Lessee's obligations to Lessor a Letter of Credit with a face
amount available for drawdown in an amount equal to the amount of
the proceeds so held by Lessor and otherwise meeting the
requirements of this Section 8(1), Lessor shall pay such proceeds
to Lessee for Lessee's own account.
(m) ERISA. Lessee will not, nor will it permit any of its
subsidiaries to, (a) terminate, within the meaning of Title IV of ERISA, any
Plan so as to result in any material liability to the PBGC, (b) engage in any
"prohibited transaction" (as defined in Section 4975 of the Code) involving any
Plan that would result in material liability for an excise tax or civil penalty
in connection therewith, (c) incur or suffer to exist any material "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Plan, or (d) allow or suffer to exist any event or condition with
respect to ERISA, which would be likely to have a material adverse effect on
Lessee's condition (financial or otherwise), business, operations or prospects
or on Lessor's interests, rights or remedies.
Section 9. Replacement of Parts; Alterations,
Modifications and Additions.
(a) Replacement of Parts. Lessee, at its own cost and
expense, will promptly replace, or cause to be replaced, all Parts which may
from time to time become worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever. In addition, in the ordinary course of maintenance, service, repair,
overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) may at its own cost and expense remove any Parts, whether
or not worn out, lost, stolen, destroyed, seized,
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<PAGE> 51
confiscated, damaged beyond repair or permanently rendered unfit for use,
provided that Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) shall replace at its own cost and expense such Parts as promptly as
possible. All replacement Parts shall be free and clear of all Liens (except for
pooling arrangements to the extent permitted by paragraph (c) of this Section
and Permitted Liens), be in at least the equivalent or better modification
status and service bulletin accomplishment status, be fully interchangeable as
to form, fit and function and shall be in as good operating condition as, and
have a value, remaining useful life and utility at least equal to, the Parts
replaced (assuming such replaced parts were in the condition and repair in which
they were required to be maintained by the terms hereof).
All Parts which are at any time removed from the Aircraft
shall remain the property of Lessor (provided that, so long as the Foreign Lease
Agreement is in effect, title to such Parts shall remain with Foreign Lessor),
subject to the Lien of the Indenture if it has not been discharged, and subject
to this Lease no matter where located until such time as such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Aircraft and which meet the requirements for replacement Parts specified
above. Immediately upon any replacement Part becoming incorporated or installed
in or attached to the Aircraft as above provided, or as provided in Section
9(c), without further act, (i) title to the removed Part shall thereupon vest in
Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner
Participant and Note Holders and shall no longer be deemed a Part hereunder,
(ii) title to such replacement Part shall thereupon vest in Lessor (or, so long
as the Foreign Lease Agreement is in effect, Foreign Lessor) and become subject
to the Lien of the Indenture if it has not been discharged, and (iii) such
replacement Part shall become subject to the Lien of the Indenture (if it has
not been discharged) and this Lease and be deemed a Part for all purposes hereof
to the same extent as the Part which it has replaced.
(b) Alterations, Modifications and Additions. Lessee, at
its own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine to the extent
made mandatory for Lessee in respect of the Aircraft, Engines or Parts from time
to time to meet the applicable standards of the FAA or under any Law of any
Governmental Entity having jurisdiction or issued by the manufacturer of the
Airframe, Engines or Parts. In addition, so long as no Default or Event of
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<PAGE> 52
Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is
in effect, a Permitted Sublessee), at its own expense, may from time to time
make such alterations and modifications in and additions to the Airframe and
either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may deem desirable in the proper conduct of its business, provided,
no such alteration, modification or addition diminishes the value, remaining
useful life or utility, or impairs the condition or airworthiness, of the
Airframe, either Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Airframe, Engines and
Parts were then of the value, utility and remaining useful life and in the
condition and airworthiness required by the terms of this Lease. Except as
otherwise provided herein, title to all Parts incorporated or installed in or
attached or added to the Aircraft as the result of such alteration, modification
or addition, shall immediately vest in Lessor (or, so long as the Foreign Lease
Agreement is in effect, Foreign Lessor) and become subject to the Lien of the
Indenture (if it has not been discharged) and this Lease, without the necessity
for any further act of transfer, document or notice. Notwithstanding the
foregoing sentence of this Section 9(b), Lessor agrees that so long as no
Default or Event of Default shall have occurred and be continuing Lessee (or, if
a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time
during the Term for the Aircraft, remove any Part of such Aircraft, provided,
that (i) such Part is in addition to, and not in replacement or substitution
for, any Part originally incorporated or installed in or attached to, or
delivered with, the Aircraft on the Delivery Date or any Part in replacement of,
or substitution for, any such originally incorporated, installed, attached or
delivered Part, (ii) such Part is not required to be incorporated or installed
in or attached or added to the Aircraft pursuant to the terms of Section 6 or
this Section 9 or to maintain the insurance required by Section 12 and (iii)
such Part can be removed from the Aircraft without causing any material damage
thereto and without diminishing or impairing the value, utility, remaining
useful life, condition or airworthiness which the Aircraft would have had at
such time had such alteration, modification or addition not occurred. Upon the
removal by Lessee of any such Part as provided in the preceding sentence, title
thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) and such Part shall no longer be deemed
part of the Aircraft (such a part is herein called a "Removable Part"). Any Part
not removed by Lessee as above provided prior to the return of the Aircraft to
Lessor
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<PAGE> 53
hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain
the property of Lessor (provided that, so long as the Foreign Lease Agreement is
in effect, title to such Parts shall remain with Foreign Lessor).
If any Removable Part is (i) owned by any third party and
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) subject to a conditional sale contract or other security
interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) pursuant to a lease which is subject to a security interest
in favor of any third party, then Lessor will not acquire or claim, as against
such lessor, conditional vendor or secured party, any right, title or interest
in any such Removable Part as the result of such Removable Part being installed
on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or
claim is subject to the express condition that such lessor, conditional vendor,
or secured party shall have agreed in writing (which agreement may be contained
in the lease, conditional sale agreement or security agreement) not to acquire
or claim, as against Lessor, any right, title or interest in the Aircraft, or
any Part other than its interest in such Removable Part by reason of such
Removable Part being installed thereon, and (B) any Removable Part not removed
by Lessee upon the termination or expiration of this Lease, at such time, shall
become the property of Lessor or Foreign Lessor, as the case may be, and be
subject to this Lease, and provided, further, that (1) if removal of any such
Part shall affect the operation of the Aircraft in any way whatsoever, Lessee
shall replace such Part with an owned Part of the same value, utility and
remaining useful life and (2) Lessee shall repair any unsightly area of the
Aircraft as a result of such removal and make all other repairs which are
advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) replaces a Part which is not required to be
replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) may remove the replacement Part so long as
it reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to form,
fit and function, has been overhauled, repaired and inspected by an agency
acceptable to the FAA or other Governmental Entity having jurisdiction, and is
in as good operating condition as, and has a utility, remaining useful
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life and a value at least equal to that of such Part when it was removed from
the Aircraft.
Notwithstanding any other provision hereof, and without
limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect,
Permitted Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic equipment (including seats with such equipment installed therein)
(any or all of which are hereafter referred to as "Excluded Property") in the
ordinary course of business, and Lessor shall not claim or acquire title thereto
and the rights of the owners thereof therein shall not constitute a default
hereunder; provided that (i) any such Excluded Property shall be removed prior
to the date of a Return Occasion without causing any damage to the Aircraft and
without diminishing or impairing the value, utility, remaining useful life or
condition which the Aircraft would have had at such time had such Excluded
Property not been installed, (ii) any equipment or seats which such Excluded
Property replaces shall be properly stored with the interests of Lessor and, if
the Lien of the Indenture is in effect, the Indenture Trustee, duly noted
thereon and acknowledged by any applicable bailee or warehouse, and properly
reinstalled on the Aircraft prior to the date of a Return Occasion, and (iii)
Lessee (or such Permitted Sublessee) shall make all repairs which are required
as a result of such removal and/or reinstallation.
In no event shall Lessor bear any liability or cost for
any alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Airframe or either
Engine as provided in Section 9(a) may so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom be subjected by
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a
normal pooling arrangement customary in the airline industry of which Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part
entered into in the ordinary course of Lessee's or such Permitted Sublessee's
business, provided the Part replacing such removed Part shall be incorporated or
installed in or attached to the Aircraft in accordance with Section 9(a) as
promptly as possible, and in any event within sixty (60) days, after the removal
of such removed Part. In addition, any Replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with
Section 9(a) may be owned by another Person subject to such
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a normal pooling agreement; provided, however, that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly
thereafter as possible, and in any event within sixty (60) days, either (i)
causes title to such replacement Part to vest with Lessor (or, so long as the
Foreign Lease Agreement is in effect, Foreign Lessor) in accordance with Section
9(a) (and to be subjected to the Lien of the Indenture if it has not been
discharged) by Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) acquiring title thereto for the benefit of Lessor (or, so long as the
Foreign Lease Agreement is in effect, Foreign Lessor) free and clear of all
Liens except Permitted Liens, whereupon such replacement Part shall become
subject to this Lease and the Lien of the Indenture (if in effect) without the
necessity for any further act, document or notice, or (ii) replaces such
replacement Part by incorporating or installing in or attaching to the Aircraft
a further replacement Part owned by Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) free and clear of all Liens other than Permitted
Liens and by causing title to such further replacement Part to vest in Lessor
(or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) as
above provided and to be subjected to the Lien of the Indenture if it has not
been discharged, whereupon such replacement Part shall become subject to this
Lease and the Lien of the Indenture (if in effect) without the necessity for any
further act, document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment of Basic
Rent hereunder shall be free and clear of, and without deduction for, any and
all withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such payments
of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the
net amount actually received by Lessor, after such deduction or withholding,
will be equal to all such amounts that would be received by Lessor if no such
deduction or withholding had been required, but only to the extent necessary to
ensure that the holders of the outstanding Equipment Notes receive such amount
as may be required by the Indenture provided that this limitation on the
gross-up shall be without derogation to Lessor's right to be indemnified
pursuant to the remainder of this Section 10. If Lessee pays any amount to
Lessor (or to any taxing authority for the account of Lessor) as a result of the
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application of the preceding sentence with respect to any withholding Tax which
is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor
(or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to
the extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant would be liable) shall reimburse Lessee for such withholding Tax
within 30 days of written notice accompanied by evidence of payment for such
withholding Taxes (exclusive of interest, penalties and additions to Tax) paid
by Lessee; provided that in any circumstance in which the Lessor is required to
reimburse the Lessee for any such withholding Taxes and the Lessee has not
received such reimbursement from Lessor or the Owner Participant, then to the
extent of such shortfall and so long as no Lease Event of Default has occurred
and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor
by reducing the succeeding payments of Rent payable to Lessor (other than any
portion of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder) until the aggregate amount
of reduction is equal to the sum of the amount of such shortfall and interest on
that amount at the Interest Rate from the date reimbursement is required to be
made until the date of such reduction in Rent. Except as provided in Section
10(b), and taking into account any payments received by Lessor pursuant to the
second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify
and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or
imposed, whether levied or imposed upon or with respect to or asserted against
any Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any Part
thereof or interest therein, or otherwise, by any Federal, state or local
government or taxing authority in the United States of America or by any foreign
government or any taxing authority or governmental subdivision of a foreign
country or of a territory or possession of the United States (each such
governmental subdivision or taxing authority referred to as a "Taxing
Authority"):
(i) upon or with respect to, based upon or measured by (A) the
Aircraft, the Airframe, any Engine or any Part thereof, or interest
therein, (B) the manufacture, purchase, ownership, delivery, leasing,
acceptance, rejection, assigning, possession, use, operation, location,
settlement of any insurance claim, sale, mortgaging, pledging,
financing, subleasing, rental, retirement, abandonment, registration,
re-registration, preparation, installation, modification, repair,
maintenance, replacement, transportation, storage, transfer of title,
return or other disposition
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of the Aircraft, the Airframe, any Engine or any Part thereof or
interest therein; or (C) the rentals, receipts, income or earnings
arising therefrom (including without limitation the Rent), or
(ii) upon or with respect to the Operative Documents
(including the Equipment Notes), any interest in any thereof, or any
future amendment, supplement, waiver or consent thereto requested by
Lessee with respect to any thereof, or the execution, delivery, or
performance of any thereof, or the acquisition or subsequent transfer
thereof or the issuance of the Equipment Notes or any other document
executed and delivered in connection with the consummation or
confirmation of the transactions contemplated by the Operative
Documents or any Indemnitee's interest in any of the foregoing, or the
execution, amendment, supplement, issuance, reissuance, refinancing or
delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property, or the
income or other proceeds received with respect to the property, held by
the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or premium
on, or other amounts payable with respect to the Equipment Notes,
whether as originally issued or pursuant to any refinancing,
modification or reissuance or any other obligation evidencing any new
loan, or
(v) otherwise with respect to or in connection with the
transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be subject to
indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, any Taxes imposed by the
Federal government of the United States of America upon or with respect
to, based on or measured by, the gross or net income, receipts,
capital, or net worth, franchises, excess profits or conduct of
business of such Indemnitee (other than Taxes included in the
calculation of an after-tax payment, or Taxes in the nature of sales or
use Taxes, license Taxes, value-added Taxes or property Taxes),
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(ii) In the case of any Indemnitee, Taxes on, based on, or
measured by the gross or net income, receipts, capital, or net worth,
franchises, excess profits or conduct of business of such Indemnitee
(including minimum taxes, withholding taxes and taxes on or measured by
any items of tax preference), imposed by any foreign, state or local
government or taxing authority (other than Taxes included in the
calculation of an after-tax payment, Taxes in the nature of sales
Taxes, use Taxes, property Taxes, value-added Taxes or rental Taxes,
and Covered Income Taxes described in subsection (c) of this Section
10),
(iii) In the case of any Indemnitee, Taxes which are the
direct result of gross negligence or willful misconduct of such
Indemnitee,
(iv) In the case of any Indemnitee, any Taxes imposed as a
result of a voluntary or involuntary bankruptcy of such Indemnitee
(other than, in the case of Owner Trustee, as a result of the
occurrence of an Event of Default) or any voluntary sale, transfer of
title, transfer or other disposition by such Indemnitee or a related
Indemnitee (for such purpose, Owner Trustee and Owner Participant are
related Indemnitees with respect to each other) of the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or any
interest in the Rent or part thereof or any interest in the Operative
Documents or part thereof, unless such sale, transfer or disposition
occurs in connection with (x) the transactions contemplated or effected
by the Refunding Agreement and the amendments to the Lease occurring in
connection therewith, (y) an Event of Default and the exercise by any
Indemnitee of its remedies under the Lease or the Indenture, as the
case may be, and (z) the substitution, pooling or interchange of the
Aircraft, the Airframe, any Engine or any Part pursuant to the terms of
the Lease; provided, however, that in all cases Owner Participant and
Owner Trustee shall consider in good faith such request as Lessee shall
make concerning the appropriate jurisdiction in which such sale,
transfer or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed as a result
of a transferee of such Indemnitee of any interest in the Aircraft, the
Airframe, any Engine or any Part or any interest in the Operative
Documents being a foreign entity or not having its principal office in
the United States,
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(vi) Any interest, penalties, fines and additions to tax
imposed on an Indemnitee (other than Taxes that are due and payable
with a return when properly filed) resulting from such Indemnitee's
failure to file returns that are timely and proper, provided such
failure was not attributable to such Indemnitee contesting any claim in
accordance with this Section 10 or to a failure by Lessee to satisfy
its obligations related to such return,
(vii) Taxes imposed on an Indemnitee as a result of a breach
of its representations, warranties or covenants contained in Sections
9(a), 9(b)(11), 9(c), 9(d), 9(e), 10, 12, or 16 of the Refunding
Agreement or Section 21(f) of this Agreement in any material respect or
from a failure by an Indemnitee to fulfill its contest obligations,
(viii) So long as no Event of Default shall have occurred and
be continuing, Taxes attributable to the Aircraft related to acts or
events occurring after the later of the termination of the Lease and
the redelivery of the Aircraft,
(ix) In the case of the Indenture Trustee, each Pass-Through
Trust, each Pass-Through Trustee (in its individual capacity), the
Subordination Agent and each Liquidity Provider, Taxes imposed with
respect to the Equipment Notes as a result of activities of such
Indemnitee unrelated to the transactions contemplated by the Operative
Documents, and
(x) In the case of each Pass-Through Trust, each Pass-
Through Trustee (in its individual capacity and as trustee under the
Pass-Through Trusts, the Subordination Agent and each Liquidity
Provider, United States withholding taxes imposed as a result of the
place of organization or other status of a holder of an interest in a
Pass-Through Trust.
Notwithstanding anything to the contrary contained in this
Section 10, the provisions of this Section 10(b) shall not apply to, and Lessee
shall hold each Indemnitee harmless against, and indemnify each Indemnitee on an
after-tax basis (as provided under Section 10(e)) for, any Taxes imposed by any
Taxing Authority with respect to any period beginning, or events or
circumstances occurring, on or after the Restatement Date, in connection with or
relating to the transactions undertaken pursuant to the Japanese Financing
Documents (and any other documents or
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agreements relating thereto unless such documents or agreements are or relate
solely to Operative Documents other than the Japanese Financing Documents)
including, without limitation, sales Taxes, value-added Taxes and any Taxes
required to be withheld and paid over to the United States Federal government
pursuant to Subtitle A of the 1986 Code or any successor provisions with respect
to any amounts paid or deemed to be paid to the Japanese Lessor by any
Indemnitee pursuant to the Japanese Financing Documents, but excluding any net
income taxes payable to the United States Federal government or any state or
local Taxing Authority as a consequence of a determination that the Lease is not
a true lease for Federal income tax purposes.
(c) Covered Income Tax. For purposes of clause (ii) of
subsection (b) of this Section 10, a Covered Income Tax includes:
(i) any Tax based on or measured by gross or net
income, capital or net worth, franchises, excess profits or conduct of
business imposed on an Indemnitee by a Taxing Authority in or of any
foreign jurisdiction or a territory or possession of the United States,
other than any such Tax which would not have been imposed in the
absence of such Indemnitee's (including for purposes of this
definition, all entities with which such Indemnitee is combined,
integrated, or consolidated in such Taxing Authority's jurisdiction)
engaging in business, maintaining an office or other place of business
or otherwise being located in such jurisdiction (other than merely by
reason of such Indemnitee's participation in the transactions
contemplated by the Operative Documents); and
(ii) a Tax imposed by any Taxing Authority other
than the Federal government of the United States of America based on,
or measured by gross income or receipts, to the extent such Tax is
attributable to the operation or registration of the Aircraft in such
jurisdiction or to the transactions contemplated by the Operative
Documents or is the result of the activities of Lessee or any Affiliate
of either thereof in such jurisdiction, including residence.
(d) Reports and Returns. In case any report or return is
required to be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner
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Participant or its permitted assigns and send a copy of such report or return to
Owner Trustee and Owner Participant or will notify Owner Trustee or Owner
Participant of such requirement and make such report or return in such manner as
shall be reasonably satisfactory to Owner Participant or Owner Trustee. If
actual notice is given by any taxing authority to an Indemnitee that a report or
return is required to be filed with respect to any such Taxes, the Indemnitee
shall promptly notify Lessee of such required report or return and Lessee shall
either file such report or return in the manner prescribed in the preceding
sentence, or shall use its best efforts to cause such report or return to be
filed by the appropriate entity. Each Indemnitee agrees to respond to any
reasonable request of Lessee for information not within Lessee's control and
within the control of and reasonably available to such Indemnitee with respect
to the filing of any such report or return, but Lessee agrees to pay any
reasonable costs, fees, disbursements or other charges of independent counsel or
independent accountants incurred in connection with such request.
(e) After-Tax Basis. Lessee further agrees that, with
respect to any payment or indemnity under this Section 10 and under Section 13
hereof, such payment or indemnity shall include the net amount necessary to hold
the recipient of the payment or indemnity harmless on an after-tax basis from
all Taxes required to be paid or credited by such recipient with respect to such
payment or indemnity under the laws of any Taxing Authority; provided, however,
that in the case of federal income taxes imposed on Owner Participant, such
Taxes shall be calculated on the basis of the assumption that Owner Participant
shall be subject to the highest federal corporate income tax rate applicable to
Owner Participant in the year of payment.
(f) Tax Benefit. If, by reason of any payment made to or
for the account of an Indemnitee by Lessee pursuant to this Section 10 or
Section 13 hereof, such Indemnitee subsequently actually realizes a tax
deduction or credit (including foreign tax credit and any reduction in Taxes)
not previously taken into account in computing the amount of such payment, such
Indemnitee shall promptly pay to Lessee, but only if there shall then be no
Lease Event of Default and if Lessee shall have made all payments then due and
owing to such Indemnitee under the Operative Documents, an amount equal to the
sum of (A) the actual reduction in Taxes, if any, realized by such Indemnitee
which is attributable to such deduction or credit and (B) the actual reduction
in Taxes realized by such Indemnitee as a result
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of any payment made by such Indemnitee pursuant to this sentence; provided,
however, that such Indemnitee shall not be obligated to make any payment
pursuant to this Section 10 or Section 13 hereof to the extent that the amount
calculated pursuant to (A) above would exceed (x) the amount of all prior
payments by Lessee to such Indemnitee, pursuant to this Section 10 or Section 13
hereof, net of any amount paid in respect of Taxes required to be paid by such
Indemnitee in respect of the receipt or accrual of such amounts received by such
Indemnitee from Lessee, less (y) the portion of all prior payments computed
pursuant to (A) above by such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee for
any Taxes which may be subject to indemnification by Lessee hereunder and if
such Indemnitee has notice thereof, such Indemnitee shall promptly notify
Lessee; provided that the failure to provide such notice shall not release
Lessee from any of its obligations hereunder except to the extent Lessee's right
to contest such claim is precluded thereby. Any amount payable as an indemnity
to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is
to be paid to such party directly, in immediately available funds, within thirty
(30) days after receipt of a written demand therefor from such Indemnitee or
Lessee, as the case may be, except in the case of a payment to an Indemnitee to
the extent that such Taxes are being contested in good faith pursuant to this
Section 10, in which event the payment of such indemnity shall be made by the
due date for the payment of any Taxes that are the subject of such contest
taking into account all extensions of the due date that are available as a
result of the contest. In the event an Indemnitee makes a tax payment with
respect to any such Taxes (other than with funds advanced to such Indemnitee on
an interest-free basis by Lessee pursuant to this Section 10), Lessee shall
reimburse the amount of such payment and also shall pay to the Indemnitee
interest on the amount of such payment by such Indemnitee at the Interest Rate
from the date of any such payment by such Indemnitee to the date of such
reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is
payable to Lessee under this Section 10, the Indemnitee owing such amount shall
pay interest on such amount at the Interest Rate from the date of receipt by
such Indemnitee of any amount giving rise to such obligation to pay Lessee until
the date of payment to Lessee.
(h) Contest. If reasonably requested by Lessee in writing,
an Indemnitee shall upon receipt of an indemnity reasonably satisfactory to it
and at the sole expense of
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Lessee (including, without limitation, payment on demand of all out-of-pocket
costs, expenses, additions to tax because of underpayments of estimated Taxes,
losses, legal and accounting and investigatory fees and disbursements,
penalties, and interest) in good faith contest or shall permit Lessee, if
desired by Lessee and such contest may be conducted in the name of Lessee
without involving Taxes of such Indemnitee not indemnified hereunder, to contest
in the name of Lessee and/or the Indemnitee, the validity, applicability or
amount of such Taxes by (x) resisting payment thereof if practicable, (y) not
paying the same except under protest, if protest is necessary and proper, and
(z) if payments be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings; provided, however, that, in
each such instance, such proceedings do not involve any substantial risk or
danger of the sale, forfeiture or loss of the Aircraft, and provided further
that the Indemnitee shall have the right to forego administrative proceedings
with respect to the claim and contest the claim in an appropriate court of its
choosing and provided further that the Indemnitee shall not be required to
undertake or allow in its name or on its behalf any contest unless the following
conditions are satisfied:
(i) no Event of Default has occurred and is continuing,
(ii) the amount of such Taxes shall be at least $50,000,
(iii) in the event an administrative proceeding is to be
appealed in a judicial proceeding, as for the first level of judicial
proceeding, Lessee shall have provided the Indemnitee with an opinion
of legal counsel selected by the Indemnitee and reasonably acceptable
to Lessee ("Tax Counsel") to the effect that a reasonable basis exists
to contest such claim (which opinion shall be obtained at Lessee's sole
cost and expense),
(iv) if such contest is to be initiated by the payment of, and
the claiming of a refund for, such Taxes, Lessee shall have advanced or
caused to be advanced to such Indemnitee sufficient funds (on an
interest-free basis) to make such payments and shall have agreed to
indemnify such Indemnitee against any adverse tax consequences of such
advance, and
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(v) in the event a judicial decision is to be
appealed, the amount of such Taxes is at least $150,000 and
the Indemnitee shall have received an opinion of Tax Counsel
(which opinion shall be obtained at Lessee's sole expense) to
the effect that it is more likely than not that the Indemnitee
will prevail, and in the event that the subject matter of the
contest is of a continuing nature and has previously been
decided adversely pursuant to the contest provisions of this
Section 10, there has been a change in the law (including,
without limitation, amendments to statutes or regulations,
administrative rulings and court decisions) after such claim
shall have been so previously decided and such Indemnitee
shall have received an opinion of Tax Counsel, which opinion
shall be obtained at Lessee's sole expense, to the effect
that, as a result of such change other than a change in
statutory law, it is more likely than not that the position
which such Indemnitee or Lessee, as the case may be, had
asserted in such previous contest would prevail and, in the
case of a statutory change in law, it is as likely as not that
the position will prevail.
(i) Refund. If any Indemnitee shall obtain a refund of all
or any part of any Taxes paid by Lessee or from an advance by Lessee, such
Indemnitee shall pay Lessee the amount of such refund together with any interest
paid thereon attributable to the Taxes paid or advanced by Lessee less the
amount of any Taxes payable by such Indemnitee in respect of the receipt of such
refund and interest after giving credit to Lessee for any savings by such
Indemnitee in respect to any such Taxes by reason of deductions, credits,
allocations or allowances in respect of the payment of any such Taxes; provided
that such amount shall not be payable before such time as Lessee shall have made
all payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default
under any of the above indemnification provisions of this Section 10 so long as
Lessee or the Indemnitee shall diligently prosecute such contest in accordance
with the provisions of this Section 10. Notwithstanding the foregoing, if a
claim is made against any Indemnitee for any Taxes which, if successful, would
result in the imposition
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of Taxes under circumstances which would require Lessee to indemnify such
Indemnitee, the Indemnitee shall be released from its responsibility to contest
such claim, or part thereof, if it agrees in writing not to seek indemnification
from Lessee in respect of the claim, or such part thereof to be contested. In
the event an Indemnitee fails to contest, or refuses to permit Lessee to
contest, a claim or part thereof which the Indemnitee has the obligation to
contest or to permit Lessee to contest under this Section 10, then Lessee shall
not be obligated to indemnify the Indemnitee for such claim or such part
thereof.
(k) Affiliated Group. In the event that the Indemnitee is
a member of an affiliated group (within the meaning of Section 1504(a) of the
Code) which files a consolidated Federal income tax return, the term
"Indemnitee" shall mean and include such affiliated group.
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe. Subject to
the other provisions of this Section 11, upon an Event of Loss with respect to
the Airframe or the Airframe and any Engines then installed thereon, Lessee
shall forthwith (and, in any event, within five (5) Business Days after such
occurrence) give Lessor written notice of such occurrence and within thirty (30)
days after such occurrence give Lessor written notice of its election, subject
to the terms hereof and of the Indenture, to perform one of the following two
options (it being agreed that if Lessee shall not have given Lessor notice of
such election within thirty (30) days after such occurrence, Lessee shall be
deemed to have elected to perform the option set forth in the following clause
(ii)), provided, that Lessee shall not have the right to select the option set
forth in clause (i) if a Default or an Event of Default shall have occurred and
be continuing at the time of such election or at the time of replacement or if
the Foreign Lease Agreement does not permit such replacement or requires the
payment of additional amounts thereunder (unless Lessee in its election pays
such amount due as a result thereof under the Foreign Lease Agreement):
(i) within one hundred twenty (120) days (the "Replacement
Period") after the date of the Event of Loss (but in no event later than the
last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as
provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture
if it has not been discharged, and to be leased by Lessee hereunder in
replacement of the Airframe and such
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Engines then installed thereon, title to (or, so long as the Foreign Lease
Agreement is in effect, beneficial ownership of) a replacement Airframe
(together with the same number of replacement Engines as the Engines), such
replacement Airframe and Engines (A) to be free and clear of all Liens (it being
understood that, upon such conveyance, such replacement Airframe and replacement
Engines may be subject to Permitted Liens), (B) to have a value, utility and
remaining useful life, determined in accordance with the Appraisal Procedure as
provided in Section 11(c) hereof, at least equal to, and to be in at least as
good operating condition as, the Airframe and the Engines, if any, so replaced
(assuming the Airframe and the Engines were maintained in accordance with the
requirements of this Agreement, whether or not they are in fact so maintained),
and (C) to be a like Airbus A320-231 model aircraft with equivalent or better
modification status and, in the case of Engines, in compliance with Section
11(b); provided that if Lessee shall not perform its obligation to effect such
replacement under this clause by the end of the Replacement Period, Lessee shall
then be deemed to have elected to comply, and shall comply, with the provisions
of clause (ii) of this Section 11(a); provided, further, that the payment
specified therein shall be deemed to have become due and payable on the
Stipulated Loss Value Date occurring on or immediately preceding the last day of
the Replacement Period. Upon compliance with the foregoing, Lessor will, subject
to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without
recourse, representation or warranty (except a warranty that such Airframe and
Engines are free and clear of Lessor's Liens and Head Lessor's Liens and any
Lien arising out of the Foreign Lease Agreement), all of Lessor's right, title
and interest, if any, in and to the Airframe and the Engines suffering the Event
of Loss as well as all of Lessor's right, title and interest in and to any
Engine constituting part of the Aircraft and replaced as provided above but not
installed thereon at the time of the Event of Loss. For all purposes hereof, a
replacement Airframe shall be deemed part of the property leased hereunder and
shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in
replacement of the Airframe or Engines under this Section 11(a)(i) shall result
in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or before one
hundred twenty (120) days after the date of the Event of Loss or, if earlier,
with respect to insurance proceeds, on the date on which insurance proceeds with
respect to the Event of Loss are received by the loss payee (but in no event
later than the last day of the Term) Lessee
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shall pay to Lessor in immediately available funds the sum of (A) the Stipulated
Loss Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value
Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each
Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to the
date of payment of such Stipulated Loss Value which has not been paid when due,
plus, if such Stipulated Loss Value Date is also a Basic Rent Payment Date or a
Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case
may be, payable by Lessee on such Stipulated Loss Value Date, and (B) all
Supplemental Rent payable, whereupon (1) the obligation of Lessee to pay Basic
Rent or Renewal Rent, as the case may be, hereunder with respect to the Aircraft
for any period commencing after the date on which such Stipulated Loss Value is
paid shall terminate; provided that Lessee shall remain liable for, and shall
pay on or before the date the Stipulated Loss Value and Supplemental Rent are
paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the
Aircraft due on or before the date of such payment of Stipulated Loss Value and
Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft,
and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee,
"AS IS, WHERE IS," without recourse, representation or warranty (except a
warranty that such Airframe and Engines are free and clear of Lessor's Liens,
Head Lessor's Liens and Liens arising out of the Foreign Lease Agreement), all
of Lessor's right, title and interest, if any, in and to the Airframe and
Engines suffering the Event of Loss, as well as all of Lessor's right, title and
interest, if any, in and to any Engine constituting part of the Aircraft but not
installed thereon at the time of the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon an Event
of Loss with respect to an Engine only, Lessee shall give Lessor prompt written
notice thereof and shall, at its own cost and expense, within sixty (60) days
after such occurrence (but in no event later than the last day of the Term), pay
all amounts due under the Foreign Lease Agreement as a result thereof and convey
or cause to be conveyed to Lessor as replacement for the Engine suffering an
Event of Loss, title to (or so long as the Foreign Lease Agreement is in effect,
beneficial ownership of) another IAE Model V2500 engine of like model and
equivalent or better modification status or, at Lessee's option, an IAE engine
of an improved model, in each such case which has a value, remaining useful life
and utility determined in accordance with the Appraisal Procedure at least equal
to such Engine and is suitable for installation and use on the Airframe without
diminishing the value, remaining useful life or
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utility of such Airframe, free of all Liens (it being understood that, upon such
conveyance, such replacement Engine may be subject to Permitted Liens) and being
in as good operating condition as (including no greater number of cycles or
hours than) the Engine being replaced assuming the Engine being replaced was
serviceable and otherwise in the condition and repair required by the terms
hereof immediately prior to the Event of Loss. Prior to or at the time of any
such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor
(or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor) with a
full warranty bill of sale, in form and substance reasonably satisfactory to
Lessor and Indenture Trustee, as applicable, with respect to such replacement
Engine; (ii) cause supplements, in form and substance reasonably satisfactory to
Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged), subjecting such replacement Engine to this Lease, the Indenture (if
in effect), the Foreign Lease Agreement (if then in effect) and the Trust
Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly
filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
with such evidence of title to or, so long as the Foreign Lease Agreement is in
effect, beneficial ownership of such Replacement Engine and of compliance with
the insurance provisions of Section 12 hereof with respect to such Replacement
Engine as Lessor or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request; (iv) furnish Owner Participant, Lessor and
Indenture Trustee (if the Lien of the Indenture has not been discharged) with an
opinion of Lessee's counsel addressed to such parties and to Lessor to the
effect that title to or, so long as the Foreign Lease Agreement is in effect,
beneficial ownership of such Replacement Engine has been duly conveyed to Lessor
free and clear of all Liens (except Permitted Liens), and is duly leased
hereunder and under the Foreign Lease Agreement (if in effect), and subject to
the Lien of the Indenture (if it has not been discharged), the instruments
subjecting such Replacement Engine to the Lien of the Indenture and the Lease,
and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the
case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Engine and the Lien of the
Indenture on such Replacement Engine; (v) furnish a
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<PAGE> 69
certificate signed by a Responsible Officer of Lessee certifying that, upon
consummation of such replacement, no Default or Event of Default will exist
hereunder; (vi) furnish such documents and evidence with respect to Lessee,
Lessor or Indenture Trustee (if the Lien of the Indenture has not been
discharged), as such parties or their respective counsel may reasonably request
in order to establish the consummation of the transactions contemplated by this
Section 11(b), the taking of all corporate proceedings in connection therewith
and compliance with the conditions set forth in this Section 11(b), in each case
in form and substance satisfactory to such party; (vii) furnish such Uniform
Commercial Code financing statements covering the Replacement Engine as may be
requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not
been discharged); (viii) furnish Owner Participant, at Lessee's election; (x) an
opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and
which opinion is reasonably satisfactory to Owner Participant to the effect that
such replacement will have no adverse tax consequences to Lessor and Owner
Participant or (y) an indemnity for any adverse tax consequences to Lessor and
Owner Participant; (ix) furnish the appraisal referred to above; and (x) furnish
Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee
specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by
Lessee with the terms of this Section 11(b), Lessor will, subject to the rights
of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse,
representation or warranty (except a warranty that such Engine is free and clear
of Lessor's Liens and any Lien arising out of the Foreign Lease Documents), all
of Lessor's right, title and interest, if any, in the Engine which suffered the
Event of Loss. For all purposes hereof, each such Replacement Engine shall be
deemed an "Engine" as defined herein and shall be deemed part of the same
Aircraft as was the Engine replaced thereof. No Event of Loss covered by this
Section 11(b) shall result in any reduction in Rent.
(c) Conveyance of Replacement Airframe. Prior to or at the
time of any conveyance of a replacement Airframe pursuant to Section 11(a)
above, Lessee, at its own cost and expense, will furnish Lessor with the
following documents which shall have been duly authorized, executed and
delivered by the respective parties thereto and shall be in full force and
effect on said date: (i) a full warranty bill of sale, in form and substance
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such
other form of bill of sale as may be
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approved by the FAA on said date), executed by the owner thereof, in favor of
Lessor (or, so long as the Foreign Lease Agreement is in effect, Foreign Lessor)
and, cause supplements, reasonably satisfactory to Owner Participant and
Indenture Trustee (if the Lien of the Indenture has not been discharged), to
this Lease, the Foreign Lease Agreement (if then in effect), the Indenture (if
then in effect) and the Trust Agreement (if then in effect), with respect to
such replacement Airframe and to be duly filed for recordation pursuant to the
Federal Aviation Act or other applicable Governmental Entity; (ii) the
certificate specified in Section 12(f) hereof demonstrating compliance with the
insurance requirements of Section 12 with respect to the replacement Airframe
and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner
Participant) of Lessee's counsel (and such other evidence of title as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request) to the effect that, upon such conveyance,
Lessor will acquire good title to, or, so long as the Foreign Lease Agreement is
in effect, beneficial ownership of, such replacement Airframe free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe may be subject to Permitted Liens), that such replacement Airframe will
be leased hereunder and under the Foreign Lease Agreement (if then in effect) to
the same extent as the Airframe replaced thereby and will be subject to the Lien
of the Indenture (if it has not been discharged), the instruments subjecting
such Replacement Airframe and Replacement Engine to the Lien of the Indenture
and the Lease, and subjecting to any relevant Assigned Sublease and Sublease
Assignment, as the case may be, have been duly filed for recordation pursuant to
the Federal Aviation Act or any other law then applicable to the registration of
the Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Airframe and Replacement
Engine and the Lien of the Indenture on such Replacement Airframe and
Replacement Engine; and that Lessor and Indenture Trustee, as the assignee of
Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United
States Code with respect to such replacement airframe and engines to the same
extent as with respect to the Airframe and Engines then installed thereon prior
to such replacement; (iv) a certificate signed by a Responsible Officer of
Lessee certifying that, upon consummation of such replacement, no Default or
Event of Default will exist hereunder; (v) such documents and
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<PAGE> 71
evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the
Lien of the Indenture has not been discharged), as such parties or their
respective counsel may reasonably request in order to establish the consummation
of the transactions contemplated by this Section 11(c), the taking of all
corporate proceedings in connection therewith and compliance with the conditions
set forth in this Section 11(c), in each case in form and substance satisfactory
to each such party, including evidence that the Aircraft of which the
replacement Airframe is a part has been duly certificated by the FAA as to type
and airworthiness in accordance with the terms of this Lease and application for
registration of such replacement Airframe in the name of Lessor has been duly
made with the FAA or other applicable Governmental Entity and Lessee has
temporary or permanent authority to operate the replacement Airframe; (vi)
furnish such Uniform Commercial Code financing statements covering the
replacement Airframe as may be requested by Lessor or Indenture Trustee; (vii)
furnish Owner Participant with an opinion of tax counsel mutually satisfactory
to Owner Participant and Lessee and which opinion is reasonably satisfactory to
Owner Participant to the effect that such replacement will have no adverse tax
consequences to Lessor and Owner Participant; (viii) an appraisal prepared in
accordance with the Appraisal Procedure which confirms that the replacement
Airframe and any replacement Engine has a value, utility and remaining useful
life at least equal to that of the Airframe and Engines which suffered the Event
of Loss assuming that the same were maintained in accordance with the
requirements of this Lease whether or not they are in fact so maintained; and
(ix) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to
Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance
by Lessee with the terms of this Section 11(c), Lessor will, subject to the
rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that such Airframe is free and
clear of Lessor's Liens, Head Lessor's Liens and any Lien arising out the
Foreign Lease Documents), all of Lessor's right, title and interest in and to
the Aircraft which suffered the Event of Loss. No Event of Loss with respect to
the Aircraft under the circumstances contemplated by the terms of this Section
11(c) shall result in any reduction in Rent.
For all purposes of this Lease, each such replacement
Aircraft (together with any Engines constituting part of the Aircraft being
replaced as to which an Event of Loss has not occurred) shall be deemed part of
the property
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leased hereunder and shall be deemed the "Aircraft" as defined herein.
(d) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(f) below, any payments (other than insurance
proceeds) received at any time by Lessor or Lessee from any Governmental Entity
or other Person with respect to an Event of Loss will be applied as follows
(after reimbursement of Lessor, Indenture Trustee and Owner Participant for
their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of
such payments as shall not exceed the Stipulated Loss Value required to be paid
by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in
reduction of Lessee's obligation to pay such Stipulated Loss Value if not
already paid by Lessee, or, if already paid by Lessee, shall (unless a Default
or an Event of Default shall have occurred and be continuing) be applied by
Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and the
balance, if any, of such payment remaining thereafter shall be paid over to, or
retained by, Lessor; or
(ii) if such payments are received as a result of an
Event of Loss with respect to the Airframe or an Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid over to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or
Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect
to the Event of Loss for which such payments are made and if no Default or Event
of Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect to the
Aircraft. Subject to Section 11(f) below, in the event of the requisition for
use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other
than a requisition constituting an Event of Loss), Lessee shall promptly notify
Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as if such
requisition had not occurred. All payments received by Lessor or Lessee from the
Governmental Entity for the use of
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such Airframe or Engine during the Term shall be paid over to, or retained by,
Lessee if no Default or Event of Default shall have occurred and be continuing;
and all other payments received by Lessor or Lessee from the Governmental Entity
shall be paid over to, or retained by, Lessor. If the Airframe and such Engines
or engines are not returned by the end of the Term, an Event of Loss shall be
deemed to have occurred on the last day of the Term and, on the last day of the
Term, Lessee shall either pay to Lessor the amount provided herein for an Event
of Loss to the Airframe and such Engines or engines on such date or provide a
replacement Aircraft and Engine on such date in the condition provided for in
Section 16. In the event of the requisition for use by the Governmental Entity
of any Engine without the requisition for use of the Airframe, Lessee will
replace such Engine hereunder by complying with the terms of Section 11(b) to
the same extent as if an Event of Loss had occurred with respect to such Engine,
and thereafter any payments received by Lessor or Lessee from the Governmental
Entity with respect to such requisition shall be paid over to, or retained by,
Lessee.
(f) Application in Default. Any amount referred to in
clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable
to Lessee shall not be paid to Lessee, or, if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such
payment or retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without limitation,
by reason of this Lease being declared or deemed in default. At such time as
there shall not be continuing any such Event of Default or Default, all such
amounts at the time held by Lessor or Indenture Trustee in excess of the amount,
if any, which Lessor or Indenture Trustee has elected for application as
provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own
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cost and expense, with Approved Insurers, comprehensive aircraft and general
public liability insurance (including, without limitation, contractual
liability, liability war risk and passenger legal liability but excluding
manufacturer's product liability insurance), and property damage insurance with
respect to the Aircraft, in an amount not less than three hundred fifty million
dollars ($350,000,000), combined single limit, per occurrence or such higher
amount, and of such type and terms, as are customarily carried by prudent
Certificated Air Carriers, similarly situated to Lessee, operating aircraft of
similar size and engines and as hereinafter provided. Each and any policy of
insurance carried in accordance with this Section 12(a), and each and any policy
obtained in substitution or replacement for any of such policies, (i) shall
designate Lessor (in both its individual and trustee capacity), Owner
Participant, Indenture Trustee (in both its individual and trustee capacity)
Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees and
their respective permitted assigns, as additional insureds as their interests
may appear (but without imposing upon any such Person any obligation imposed
upon the insured, including, without limitation, the liability to pay any
premiums for any such policies), (ii) shall expressly provide that, in respect
of the interests of Lessor, Owner Participant, Indenture Trustee, Foreign
Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees and their
respective permitted assigns, in such policies, the insurance shall not be
invalidated as to an insured by any act or omission of Lessee or any other
insured and shall insure Lessor, Owner Participant, Indenture Trustee and the
other Indemnitees and their respective permitted assigns, regardless as to any
insured of any breach or violation by Lessee or any other insured of any
warranty, declaration or condition contained in such policies, (iii) shall
provide that if such insurance is cancelled for any reason whatsoever, or is
changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender
and the other Indemnitees or if such insurance is allowed to lapse for
non-payment of premium, such cancellation, change or lapse shall not be
effective as to Lessor, Owner Participant, Indenture Trustee, Foreign Lessor,
Foreign Lessee, Foreign Lender and the other Indemnitees, and their respective
permitted assigns, until thirty (30) days, in each instance (seven (7) days or
such lesser period of time as is customarily available at the time in the case
of any war risk and allied perils coverage), after notice to Lessor, Owner
Participant, Indenture Trustee from such insurer or insurers, of such
prospective cancellation, change or lapse provided, however, that if any
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such notice period is not reasonably obtainable, such policies shall provide for
as long a period of prior notice as shall then be reasonably obtainable, (iv)
shall include coverage for any country in or over which the Aircraft is located
or operated, and (v) shall provide that, as against Lessor, Owner Participant,
Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other
Indemnitees, and their respective permitted assigns, each insurer shall waive
any rights of set-off, counterclaim or any other deduction, whether by
attachment or otherwise, and waives any rights it may have to be subrogated to
any right of any insured against Lessor, Owner Participant, Indenture Trustee,
Foreign Lessor, Foreign Lessee, Foreign Lender or the other Indemnitees, or
their respective permitted assigns, with respect to the Aircraft. Each liability
policy shall be primary without right of contribution from any other insurance
which may be carried by Lessor, Owner Participant, Indenture Trustee, Foreign
Lessor, Foreign Lessee, Foreign Lender or the other Indemnitees, or their
respective permitted assigns, and shall expressly provide that all of the
provisions thereof shall operate in the same manner as if there were a separate
policy covering each insured, provided, that such policies shall not operate to
increase the insurer's limit of liability. Lessee shall cause its insurers to
agree that the indemnity and hold harmless provisions of Section 13 are insured
as a contractual assumption of liability by Lessee's insurers, subject to the
terms, coverage, conditions, limitations and exclusions of the policy of
insurance. Without limiting the foregoing, the type and amount of the insurance
carried by Lessee hereunder shall be no less in amount and no less comprehensive
or favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees then that carried by Lessee with respect to other A320-231 aircraft
or similar-size aircraft owned or leased by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own
expense, will maintain in effect, or cause to be carried and maintained in
effect, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the consent of Lessee) covering the Aircraft,
and "all-risk" coverage including transit insurance with respect to Engines and
Parts while not installed on such Aircraft or an aircraft, which in each case
considering all policy terms, limitations and
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exclusions is of the type, terms and amount customarily maintained by prudent
Certificated Air Carriers similarly situated to Lessee and operating similar
size aircraft and engines and as hereinafter provided. Lessee shall also
maintain, or cause to be maintained, war risk and allied perils hull insurance
reasonably acceptable to Lessor with Approved Insurers if the Aircraft, Airframe
or Engines are operated on routes or kept in locations outside of the United
States of America. In addition, at least ten (10) Business Days (or, in the case
of an emergency, at least two (2) Business Days) prior to permitting the
Aircraft, Airframe or Engines to be operated or located outside of the United
States of America, other than in Canada or Mexico, Lessee shall notify Lessor
thereof. If Owner Participant or Indenture Trustee reasonably requests at any
time and if such insurance is then customarily being obtained by or for Persons
leasing or financing similarly-sized aircraft operating on similar routes to
operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is
in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay
or reimburse Lessor for political risk, repossession, expropriation,
confiscation and similar insurance as Lessor may arrange or cause to be
arranged. Anything herein to the contrary notwithstanding, at all times while
the Aircraft is subject to this Lease, the insurance required by this Section
12(b) shall be for an amount on an "agreed value" basis not less than the
Stipulated Loss Value from time to time determined for the Aircraft. Without
limiting the foregoing, the type and amount of insurance carried by Lessee
hereunder shall be no less comprehensive or favorable to Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees than that carried by
Lessee with respect to similar-size aircraft owned or leased by Lessee.
Each and any policy of insurance obtained and maintained
pursuant to this Section 12(b), and each and any policy obtained in substitution
or replacement for any such policies, (i) shall designate Lessor as owner of the
Aircraft, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns as additional insureds, as
their respective interests may appear (but without imposing upon Lessor, Owner
Participant, Indenture Trustee and their respective permitted assigns, any
obligation imposed upon the insured, including, without limitation, the
liability to
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pay any premiums for any such policies), (ii) shall expressly provide that, in
respect of the interests of such an additional insured and its permitted
assigns, in such policies, the insurance shall not be invalidated as to an
insured by any act or omission of Lessee or any other additional insured, and
shall insure each such additional insured and its permitted assigns, regardless
of any breach or violation of any warranty, declaration or condition contained
in such policies by the Lessee or another additional insured, (iii) shall
provide that if such insurance is cancelled for any reason whatsoever, or is
changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their respective
permitted assigns, or if such insurance is allowed to lapse, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee, the other Indemnitees or their respective permitted assigns,
until thirty (30) days (seven (7) days or such lesser period of time as is
customarily available at the time in the case of any war risks or allied perils
coverage) after written notice to Lessor, Owner Participant and Indenture
Trustee from such insurer or insurers, as the case may be, of such prospective
cancellation, change or lapse provided, however, that if any such notice period
is not reasonably obtainable, such policies shall provide for as long a period
of prior notice as shall then be reasonably obtainable, (iv) shall include
coverage for any country in or over which the Aircraft may at any time be
located or operated, (v) shall provide that, as against Lessor, Owner
Participant, Indenture Trustee, Foreign Lessor, the other Indemnitees and their
respective permitted assigns, each insurer shall waive any rights of set-off,
counterclaim or any other deduction, whether by attachment or otherwise, and
waives any rights it may have to be subrogated to any right of any insured
against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, and the
other Indemnitees and their respective permitted assigns, with respect to the
Aircraft, (vi) shall provide that in the event of any damage or loss which is an
Event of Loss hereunder and which results in a payment, such payment shall be
payable directly to Indenture Trustee as sole loss payee, so long as the Lien of
the Indenture shall not have been discharged and thereafter to Lessor, as sole
loss payee, and (vii) shall provide that in the event of any damage or loss
which is not an Event of Loss hereunder and which results in a payment, such
payment shall be payable directly to Indenture Trustee, as sole loss payee for
the account of all interests, so long as the Lien of the Indenture shall not
have been discharged and thereafter to Lessor, as sole loss payee for the
account of all interests.
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The insurance required under this Section 12(b) may incorporate deductible
amounts which shall not exceed one million dollars ($1,000,000).
Each of Lessor, Owner Participant and Foreign Lessor shall
have the right to carry additional and separate excess or contingent insurance
for its own benefit at its own expense, without, however, thereby limiting
Lessee's obligations under this Section 12, and Lessee shall not carry any such
insurance if it would conflict with or adversely affect other insurance carried
by Lessor, Foreign Lessor, or Owner Participant. Lessee shall have the right to
carry insurance in excess of the amounts required hereunder and the proceeds of
such excess insurance shall be payable to Lessee, provided, however, that such
insurance does not conflict with or adversely affect the insurance required
hereunder or any excess or contingent insurance carried by Lessor, Foreign
Lessor, or Owner Participant. Lessee shall give Lessor reasonable prior written
notice of any insurance to be carried by Lessee in addition to that required to
be carried by Lessee as provided herein.
(c) Application of Insurance Proceeds for an Event of
Loss. It is agreed that insurance payments which arise from insurance required
to be carried by Lessee pursuant to this Section 12 and received as the result
of the occurrence of an Event of Loss shall be applied as follows (after
reimbursement of Lessor, Owner Participant, Indenture Trustee and Foreign Lessor
for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of
such payments as shall not exceed the Stipulated Loss Value required to be paid
by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture
Trustee so long as the Lien of the Indenture has not been discharged and
thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value if not already paid by Lessee, or, if already paid by Lessee, shall
(unless a Default or an Event of Default shall have occurred and be continuing)
be applied by Indenture Trustee or Lessor, as the case may be, to reimburse
Lessee for its payment of such Stipulated Loss Value and the balance, if any, of
such payment remaining thereafter shall be paid over to, or retained by, Lessor;
or
(ii) if such payments are received as a result of an
Event of Loss with respect to the Airframe or an Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid
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over by the Indenture Trustee or Lessor, as the case may be, to, or retained by,
Lessee if Lessee shall have fully performed or, concurrently therewith fully
performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the
case may be, and of Section 15 hereof with respect to the Event of Loss for
which such payments are made and if no Default or Event of Default shall have
occurred and be continuing.
In the event that separate policies are maintained to
cover "all-risk" ground and flight aircraft, hull and war risks and allied
perils insurance, Lessee shall include a 50/50 provisional claims settlement
clause as contained in the policies of insurance maintained by Lessee with
respect to all other aircraft in Lessee's fleet, and a copy of the 50/50
provisional claims settlement clause in effect on the Restatement Date shall be
attached to the insurance certificate issued on the Restatement Date.
(d) Application of Insurance Proceeds for Other than an
Event of Loss. The insurance payments of any property damage loss to the
Airframe or any Engine not constituting an Event of Loss with respect thereto
will be applied in payment for the actual costs of repairs or for replacement
property which Lessee has incurred in accordance with the terms of Section 9, 11
or 12(c) of this Lease against such documentation evidencing payment by Lessee
as Lessor may reasonably request to reimburse Lessee for such repairs or
replacements already paid for by Lessee, and any balance remaining after
compliance with such Sections with respect to such loss shall be paid to Lessor.
Lessee shall be entitled to receive from the insurer any insurance proceeds not
in excess of five hundred thousand dollars ($500,000) as soon as such funds are
paid and shall promptly receive such additional insurance proceeds from the loss
payee upon invoices for repair work in progress, replacement parts which are
ordered or for work completed as provided above in this Section 12(d). Any
amount referred to in this Section 12(d) which is payable to Lessee shall not be
paid to Lessee if at the time of such payment any Default or Event of Default
shall have occurred and be continuing, but shall be held by Lessor as security
for the obligations of Lessee under this Lease or applied as provided in Section
12(e).
(e) Application in Default. Any amount referred to in
clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to
Lessee shall not be paid to Lessee, or if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the
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Lien of the Indenture shall not have been discharged, and thereafter to Lessor,
if at the time of such payment or retention a Default or an Event of Default
shall have occurred and be continuing. In such case, all such amounts shall be
paid to and held by Indenture Trustee so long as the Lien of the Indenture shall
not have been discharged, and thereafter held by Lessor as security for the
obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied
by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at
the time due hereunder, including, without limitation, by reason of this Lease
being declared or deemed declared in default, as Indenture Trustee or Lessor may
elect. At such time as there shall not be continuing any such Event of Default
or Default, all such amounts at the time held by Indenture Trustee or Lessor in
excess of the amount, if any, which Indenture Trustee or Lessor has elected for
application as provided above, shall be paid to Lessee.
(f) Certificates. On or before the Delivery Date, and
thereafter on any renewal by the Lessee of the insurance required hereby (but in
no event less than once in every twelve (12) month period), Lessee will furnish
to Lessor and Indenture Trustee a certificate executed and delivered by an
Approved Insurer or the Approved Broker, describing in reasonable detail, and in
accordance with customary practice, insurance carried on the Aircraft and Lessee
shall also furnish an opinion or report by the Approved Insurer or the Approved
Broker certifying that the insurance then maintained on the Aircraft complies
with the terms of this Lease. Lessee will cause the Approved Broker to agree to
advise Lessor, Owner Participant and Indenture Trustee in writing at least
thirty (30) days (seven (7) days or such lesser period of time as is customarily
available at the time in the case of any war risk and allied perils coverage)
prior to the expiration, non-renewal, termination or cancellation for any reason
(including, without limitation, failure to pay premium therefor) or material
modification of any such insurance; provided, however, that if any such notice
period is not reasonably obtainable, such Approved Broker shall provide for as
long a period of prior notice as shall then be reasonably obtainable.
In the event Lessee shall fail to maintain insurance as
herein provided, Lessor, Owner Participant or Indenture Trustee at their
respective options, may provide such insurance and, in such event, Lessee shall,
upon demand, reimburse Lessor, as Supplemental Rent, or any other such other
Person who may have provided such insurance, for the cost thereof.
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(g) Reinsurance. Lessee (or, if a Permitted Sublease is in
effect, the Permitted Sublessee) may carry primary insurance outside of the
aviation insurance markets in New York, London or Paris if the relevant primary
insurer shall have obtained reinsurance and such reinsurance will (i) be on the
same terms as the original insurance and will include the provisions required by
this Agreement, (ii) provide in case of any bankruptcy, insolvency, liquidation,
dissolution or similar proceedings of or affecting the original insurer that the
reinsurers' liability will be to make such payment as would have fallen due
under the relevant policy of reinsurance if the original insurer had
(immediately before such bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full under the original
insurance policies in respect of which the then relevant policy of reinsurance
has been effected; and (iii) contain a "cut-through" clause in the following
form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the
Reinsured hereby mutually agree that in the event of any claim arising under the
reinsurances in respect of a total loss or other claim where as provided by the
Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5] dated as of
October 1, 1991 as amended and restated as of November 26, 1996 and made between
Wilmington Trust Company, as Owner Trustee, and America West Airlines, Inc. such
claim is to be paid to the person named as sole loss payee under the primary
insurances, the Reinsurers will in lieu of payment to the original insured, its
successors in interest and assigns pay to the person named as sole loss payee
under the primary insurances effected by the original insured that portion of
any loss due for which the Reinsurers would otherwise be liable to pay the
original insurer (subject to proof of loss), it being understood and agreed that
any such payment by the Reinsurers will (to the extent of such payment) fully
discharge and release the Reinsurers from any and all further liability in
connection therewith."
(h) Storage. During any period that the Aircraft is in
storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu
of the insurance required by Sections 12(a) and (b) above, insurance otherwise
conforming with the provisions of said Sections 12(a) and (b) except that the
scope of the risk and the type of insurance, and the amount of the insurance in
the case of the insurance described in Section 12(a) above (but not the amount
of insurance to be carried under Section 12(b) above), shall be the same as from
time to time applicable to similar size passenger aircraft that comprise
Lessee's fleet in similar storage or grounding, and in any event (including,
without
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limitation, at any time when there shall be in existence a Permitted Sublease),
the same as from time to time customarily carried by similarly-situated, prudent
Certificated Air Carriers for passenger aircraft of similar size as the Aircraft
in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of
Default has occurred and is continuing, any amount held by Lessor or Indenture
Trustee, as the case may be, until application by Lessor or Indenture Trustee,
as the case may be, pursuant to this Section 12 shall be invested as provided in
Section 21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at
its expense the insurance described in Section 12(a) for three years after the
expiration or termination of the Basic Term or Renewal Term, if Lessee has
elected to renew the Lease in accordance with Section 20, covering each
Indemnitee as its interest may appear and specifically insuring the indemnity
contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of the
insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the extent and subject to the terms and conditions
specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and
hold harmless each Indemnitee on an after-tax basis, as provided in Section
10(e), within fifteen (15) days after demand from and against any and all
claims, damages (whether direct, indirect, incidental, special or
consequential), losses, charges, fees, liabilities, obligations, demands, suits,
judgments, actions and other legal proceedings (whether civil or criminal),
penalties, fines, other sanctions, and any reasonable costs and expenses, in
connection herewith, including, without limitation, reasonable attorney's fees
and expenses of whatever kind or nature (any and all of which are hereafter
referred to as "Claims") imposed on, or asserted by or against, or suffered or
incurred by, any Indemnitee from (and including) and after the Restatement Date,
including, without limitation, injury, death or property damage of passengers,
shippers and others, environmental control, noise and pollution regulations,
which in any way may result from, pertain to, or arise in any manner out of, or
are in any manner related to (1) the Operative Documents, the
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Purchase Documents or the Financing Documents, or any of the transactions
contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine
used in connection with the Airframe or any Part thereof, including, but not
limited to, (A) the importation, exportation, condition, manufacture, design,
purchase, ownership, registration, reregistration, deregistration (other than
any deregistration caused by the failure of the registered owner of the
Aircraft to be a "citizen of the United States" as defined under the Federal
Aviation Act and the regulations thereunder or to file the documentation
necessary to continue FAA registration of the Aircraft), delivery, non-
delivery, assignment, leasing, subleasing, sub-subleasing, acceptance,
rejection, possession, repossession, return, financing, Liens (excluding
Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien
of the Indenture), use, performance, modification, maintenance, overhaul,
operation, pooling, interchange, repair, testing, sale, return or other
disposition or application of the Aircraft, the Airframe, any Engine, any engine
used in connection with the Airframe or any Part (including, but not limited to,
latent and other defects whether or not discoverable by Lessee or Lessor, Claims
related to any actual or alleged violation of Law, loss or damage to any
property of passengers, shippers or otherwise or any Claim related to patent,
copyright, trademark or other infringement) either in the air or on the ground,
and, including, without limitation, any interest therein of an Indemnitee or
imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and
Lenders' Liens but including the Lien of the Indenture), or the rentals,
receipts or earnings therefrom (including, without limitation, the Rent and any
other amounts paid or payable with respect thereto); or (B) any defect in the
Aircraft, the Airframe, any Engine, any engine used in connection with the
Airframe or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine
or Part, or otherwise regardless of when such defect shall be discovered,
whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in
the possession of Lessee, and regardless of where such Aircraft, Airframe,
Engine, engine or Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or
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willful misconduct of such Indemnitee or any of its directors, officers,
employees, servants or agents (except any such gross negligence or willful
misconduct as may be attributed to an Indemnitee due to its interest in the
Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document
or any Financing Document), (ii) the material breach of any express
representation, warranty or covenant made by such Indemnitee herein or in any
other Operative Document, or the Financing Documents (not resulting from a
breach by Lessee of any of its representations, warranties or covenants in the
Operative Documents or in the Financing Documents), (iii) any Taxes, whether or
not Lessee is required to indemnify such Taxes under Section 10 hereof or the
Tax Indemnification Agreement (it being understood that Section 10 hereof and
the Tax Indemnification Agreement exclusively provide for Lessee's liability
with respect to Taxes), (iv) any Claim which relates solely to events which
occurred prior to (but excluding) the Restatement Date (other than Claims
related to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to Lessor in
accordance with the terms hereof and the Term of this Lease has been terminated
or has expired and the return is not related to an Event of Default, (vi) as to
such Indemnitee, an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the Aircraft, the Airframe, any Engine, or any Part, or in the
Financing Documents, the Purchase Documents or the Operative Documents, except
as contemplated under or pursuant to the Operative Documents, the Financing
Documents or the Purchase Documents and except as resulting from the exercise of
its remedies during the period while an Event of Default has occurred and is
continuing and prior to the time such Indemnitee has received payment of all
amounts owing to it hereunder and except any Claim which is alleged or does
relate to the period prior to such disposition or (vii) the authorization or
giving or withholding of any future amendments, supplements, waivers or consents
with respect to any of the Financing Documents, the Purchase Documents or the
Operative Documents, which amendments, supplements, waivers or consents were not
requested by Lessee or are not required to give effect to the provisions of the
Operative Documents, the Financing Documents or the Purchase Documents
(provided, however, in no event will Lessee be liable for any Claims resulting
from, pertaining to or arising from or related to Lessor's granting or creating
a Lessor's Lien or the granting or creation of a Head Lessor's Lien or an
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Original Head Lessee's Lien). Upon full payment of the indemnities herein,
Lessee shall be subrogated to all rights and remedies which such Indemnitee may
have against any third party against whom such Indemnitee has the right to
assert a Claim which arises under any action described in this Section 13
(except Claims under such Indemnitee's own insurance policies or under the
indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may result
from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as and to the extent such Indemnitee
is responsible under the Refunding Agreement for Claims related to such
deregistration), delivery, non-delivery, assignment, leasing, subleasing,
manufacture, acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Aircraft, the
Airframe, any Engine or any engine used in connection with the Airframe or any
Part thereof, either in the air or on the ground, or which may be caused by any
defect in such Aircraft, Airframe, Engine, engine or Part from the material or
any article used therein or from the design or testing thereof, or use thereof
or from any maintenance, service, repair, overhaul, or testing of such Aircraft,
Airframe, Engine, engine or Part, claims for infringement, loss of or injury to
any person, loss of or damage to any property or environmental damage,
regardless of when such defect may be discovered, whether or not such Aircraft,
Airframe, Engine, engine or Part is at the time in the possession of Lessee, and
regardless of the location of such Aircraft at any such time except to the
extent that such Claim results from (i) the gross negligence or willful
misconduct of such Indemnitee (except any such gross negligence or willful
misconduct as may be attributed to an Indemnitee due to its interest in the
Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document
or any Financing Document), (ii) the material breach of any of its express
representations, warranties or covenants hereunder, under any other Operative
Document or Financing Document (not resulting from a breach by Lessee of any of
its representations, warranties or covenants in the
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Operative Documents or in the Financing Documents), (iii) any Taxes, whether or
not Lessee is required to indemnify such Taxes under Section 10 hereof or the
Tax Indemnification Agreement (it being understood that Section 10 hereof and
the Tax Indemnification Agreement exclusively provide for Lessee's liability
with respect to Taxes), (iv) any Claim which relates solely to events which
occurred prior to (but excluding) the Restatement Date (other than Claims
related to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to Lessor in
accordance with the terms hereof and the Term of this Lease has been terminated
or has expired and the return is not related to an Event of Default, (vi) as to
such Indemnitee, an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the Aircraft, the Airframe, any Engine, or any Part, or in the
Financing Documents, the Purchase Documents or the Operative Documents, except
as contemplated under or pursuant to the Operative Documents, the Financing
Documents or the Purchase Documents and except as resulting from the exercise of
its remedies during the period while an Event of Default has occurred and is
continuing and prior to the time such Indemnitee has received payment of all
amounts owing to it hereunder and except any Claim which is alleged or does
relate to the period prior to such disposition, (vii) the authorization or
giving or withholding of any future amendments, supplements, waivers or consents
with respect to any of the Financing Documents, the Purchase Documents or the
Operative Documents, which amendments, supplements, waivers or consents were not
requested by Lessee or are not required to give effect to the provisions of the
Operative Documents the Financing Documents or the Purchase Documents or (viii)
a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such
Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense
and with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
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as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter
into a settlement or other compromise with respect to any Claim which Lessee or
such Indemnitee is defending hereunder in excess of $100,000 without the prior
written consent of the other, which consent shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense thereof
where Lessee has the right to control the defense thereof is materially
prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section.
Nothing in this Section shall be construed as a guaranty
by Lessee of payments due pursuant to any indebtedness incurred with respect to
the purchase of the Aircraft or of the residual value of the Aircraft.
Notwithstanding anything herein or in any other Operative
Document to the contrary, with respect to any Claim for which any Indemnitee is
entitled to indemnification under more than one provision of this Lease or any
other Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall
continue in full force and effect notwithstanding the
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expiration or other termination of this Lease and are expressly made for the
benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur,
assume, or suffer to exist any Lien on or with respect to the Aircraft, the
Airframe, any Engine or any Part thereof, title thereto, or any interest of
Lessor therein or in this Lease, except (i) the respective rights of Lessor,
Lessee, Owner Participant, Indenture Trustee, Foreign Lessor and any other
Indemnitee as herein provided or provided under the other Operative Documents or
the Financing Documents; (ii) Lessor's Liens, Head Lessor's Liens and (iii)
Liens for Taxes either not yet due or being diligently contested in good faith
by appropriate proceedings in accordance with Section 10 and so long as adequate
reserves are maintained with respect to such Liens and only so long as neither
such proceedings nor such Liens involve any material danger of the sale,
forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or any
interest of Lessor, Foreign Lessor or Indenture Trustee therein or any risk of
criminal liability of Lessor, Foreign Lessor or Indenture Trustee; (iv) inchoate
materialmen's, mechanics', workmen's, repairmen's employees', or other like
inchoate Liens arising in the ordinary course of business for sums not overdue
by more than 45 days or being diligently contested in good faith and only so
long as neither such proceedings nor any such Liens involve any material danger
of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any
Engine, or any interest of Lessor or Indenture Trustee therein; (v) the rights
of other Persons to the extent expressly permitted by the provisions of Section
6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee
(or any Permitted Sublessee) unless the judgment or award shall not, within
thirty (30) days after the entry thereof, have been discharged, vacated,
reversed, or execution thereof stayed pending appeal or shall not have been
discharged, vacated or reversed within thirty (30) days after the expiration of
such stay and only so long as such Liens shall not involve any material danger
of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any
Engine, or any interest of Lessor, Foreign Lessor or Indenture Trustee therein
and provided that the execution of such judgment or award or an attachment
relating thereto shall not have occurred within such thirty (30) day period;
and, (vii) any other Lien with respect to which Lessee (or a Permitted
Sublessee) shall have provided a bond adequate in the reasonable opinion of
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Indenture Trustee (if the Lien of the Indenture has not been discharged) and
Owner Participant. Lessee shall promptly, at its own expense, take or cause to
be taken such action as may be necessary to duly discharge any Lien (except for
the Liens referred to in clauses (i) through (vii) of this Section 14) directly
or indirectly created, incurred, assumed, or suffered to exist by Lessee if the
same shall arise at any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease,
the Indenture, the Trust Agreement, the Lease Supplement, Indenture Supplement
and Trust Supplement, and any other supplement from time to time required by the
terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement,
the Lease Supplement, Indenture Supplement, the Trust Supplement and such other
supplements to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor, Foreign Lessor or Indenture Trustee, Lessee shall, at its
own cost and expense (except it shall be at Lessor's expense if in connection
with a change in ownership of the Aircraft or any other transfer or assignment
by Lessor other than as contemplated hereunder or under the Financing Documents
or in connection with an Event of Default) and upon request by Lessor or Foreign
Lessor, cause any financing statements and any and all additional instruments
and other documents, so far as permitted by applicable Law, to be kept, filed,
and recorded and to be re-executed, refiled and re-recorded at all times in the
appropriate office pursuant or in relation to any applicable Laws of any
Governmental Entity, to protect and preserve the rights and interests of Lessor,
Foreign Lessor or Indenture Trustee hereunder, under the Indenture and in the
Aircraft, and Lessee shall furnish to Lessor, Foreign Lessor and Indenture
Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of
each such filing or refiling and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or cause
to be done, at Lessee's cost and expense (except it shall be at Lessor's expense
if in connection with a change in ownership of the Aircraft or any other
transfer or assignment by Lessor other than as contemplated hereunder or under
the Financing Documents or in connection with an Event of Default), any and all
acts and things within its control
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which may be required under the terms of the Mortgage Convention to protect and
preserve the title of Lessor, the Lien of the Indenture, this Lease, and the
interests of Lessor and Indenture Trustee within the jurisdiction of any
signatory which has ratified the Mortgage Convention in such jurisdiction and in
the territories thereof in which Lessee, any Permitted Sublessee or any wet
sublessee may operate the Aircraft, as Lessor may reasonably request. Lessee
shall also do or cause to be done, at its own expense (except it shall be at
Lessor's expense if in connection with a change in the ownership of the Aircraft
or any other transfer or assignment by Lessor other than as contemplated
hereunder or under the Financing Documents or in connection with an Event of
Default), any and all acts and things which may be required under the terms of
any other Law involving any jurisdiction in which Lessee, any Permitted
Sublessee or any wet lessee may operate the Aircraft, which Lessor may
reasonably request, to protect and preserve the title of the Lessor, this Lease,
the Indenture and Lessor's, Foreign Lessor's and Indenture Trustee's interest in
the Aircraft and under any of the Operative Documents or Financing Documents
within any such jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and
duly execute and deliver to Lessor or Indenture Trustee, as applicable, such
further documents and assurances and take such further actions as Owner
Participant or Indenture Trustee may from time to time reasonably request in
order to more effectively carry out the intent and purpose of this Lease and the
other Operative Documents and the Financing Documents and to protect the rights
and remedies created or intended to be created in favor of Lessor, Foreign
Lessor or Indenture Trustee hereunder and the other Operative Documents and the
Financing Documents including, without limitation, if reasonably requested by
Owner Participant or Indenture Trustee, at the expense of Lessee (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Aircraft or any other transfer or assignment by Lessor, Foreign Lessor or
Indenture Trustee other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), the execution and delivery
of supplements or amendments hereto in recordable form, subjecting to this
Lease, the Indenture, the Foreign Lease Documents and the other Financing
Documents, any replacement Aircraft or Engine and the recording or filing of
counterparts thereof in accordance with the laws of any appropriate
jurisdiction.
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Lessee's obligations under this Section 15 are subject to
the reasonable cooperation of the applicable parties.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at its own
expense and risk, shall return the Aircraft to Lessor (or any Person designated
by Lessor) in at least the condition specified in this Section and Exhibit E
hereto at any Lessee system location in the continental United States selected
by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may
agree, fully equipped with all required Engines, or other engines owned by
Lessee (which shall thereupon become Engines as hereinafter provided) meeting
the conditions specified in this Section and Exhibit E, duly installed thereon
by delivering the same to the Lessor at such location. Lessee shall comply with
Section 11(b) and this Section 16 with respect to any engines installed on the
Aircraft returned to Lessor hereunder and meeting the conditions described
herein which were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion
hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for
the Lien of the Indenture, Head Lessor's Liens, Original Head Lessee's Liens,
Lessor's Liens, Lenders' Liens and Liens arising out of the Foreign Lease
Agreement, (ii) duly certified as an airworthy aircraft by the FAA under Part
121 of the regulations promulgated under the Federal Aviation Act and with a
current and valid Airworthiness Certificate installed on the Aircraft, unless
such certificate shall have been suspended or revoked as a result of the
suspension or revocation of the registration of the Aircraft under the Federal
Aviation Act due to the ineligibility of the Aircraft to be registered in the
name of Lessor under the Federal Aviation Act (whether by means of a voting
trust agreement or otherwise) in which case the Aircraft shall nevertheless meet
all conditions for such certification and for the issuance of such certificate;
(iii) in full airworthy condition for over water and EROPS operation according
to the FAA standards required to allow the Aircraft to be operated under, and in
full compliance with, such Airworthiness Certificate and Part 121 of the
regulations promulgated under the Federal Aviation Act for such operation, such
compliance to be by means of such mechanical repairs or modifications or such
inspections as may be required thereby, but not by operational restrictions, by
logbook entries or other method of acceptance of such restrictions; (iv) in full
compliance
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with Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft
is a "citizen of the United States" within the meaning of Section 40102(a)(15)
of the Federal Aviation Act and reasonably cooperative with Lessee at Lessee's
expense with respect to effecting such registration, duly registered in the name
of the Lessor or other then owner of the Aircraft under the Federal Aviation
Act; (vi) in full compliance with the maintenance and operation provisions of
this Lease and all FAA airworthiness directives, mandatory service bulletins and
equivalent requirements which by their terms require compliance on or before the
last day of the Term (without regard to any deferral, waiver, deviation or
exemption granted by the FAA specifically to Lessee delaying such compliance);
(vii) in good and airworthy operating condition, and in the same condition
(including, without limitation, in a passenger configuration suitable for
passenger revenue service) as when delivered to Lessee hereunder, ordinary wear
and tear excepted, with no open or outstanding deferred maintenance items,
scheduled or unscheduled, with all systems and components fully serviceable and
operational and with no placards restricting operation or use, and (viii) with
all remaining warranties, indemnities, policies and guarantees referred to in
Section 5(d) made available to Lessor in a manner and by documents in form and
substance reasonably satisfactory to Lessor.
(c) Engines. In the event any engine not owned by Lessor
shall be installed on the Aircraft on any Return Occasion, without limiting
Lessee's obligations under the Tax Indemnification Agreement, such engine shall
be of the same model and equivalent modification status as the Engines or, at
Lessee's option, an IAE engine of an improved model suitable for installation
and use on the Airframe without diminishing the value, remaining useful life or
utility of such Airframe, in each such case having a value, remaining useful
life and utility at least equal to (as determined in accordance with the
Appraisal Procedure), and be in an operating condition as good as the Engines,
assuming the Engines were in the condition and repair as required by the terms
hereof immediately prior to such termination and shall conform to the return
condition requirements set forth in this Section 16 and Exhibit E, and Lessee,
at its own expense and concurrently with such delivery, shall cause such engine
to become an Engine by complying with Section 11(b) hereof. Lessee's obligation
to comply with the terms of this Section 16(c) shall be conditioned on Lessor's
transferring to Lessee all of Lessor's right, title and interest in and to any
Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS,"
without any
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representation, warranty or recourse of any kind whatsoever, express or implied,
except a warranty that such Engine is free and clear of Lessor's Liens, Liens
arising out of the Foreign Lease Agreement and Head Lessor's Liens.
(d) Records and Documents. Upon the return of the
Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and
inspection, modification, overhaul and other records, related to the Aircraft,
including, without limitation, those required to be maintained with respect
thereto under applicable rules and regulations of the FAA, together with a
detailed description of the Maintenance Program then applied to the Aircraft and
shall provide Lessor and its designees access to the Maintenance Program which
is sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft under
the Maintenance Program, in each case as Lessor may reasonably request, and all
documentation with respect to the Aircraft set forth on Exhibit B or otherwise
delivered to Lessee at delivery thereof, and (ii) all records necessary or
required by the FAA to certify and place the Aircraft on an FAA or other
country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee,
which must be updated to the latest revision status as of the last day of the
Term within such software base and all data therein or pertaining thereto shall
be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories,
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accumulated cycles or flight hours as applicable and remaining service lives on
a separate listing. All components and assemblies which are identified on the
maintenance records by part numbers and serial numbers other than the
manufacturer's shall be provided with interchange or cross reference listing
necessary to establish complete traceability. All documentation, flight, and
maintenance records as specified by United States Federal Aviation Regulations
91.173, 91.174, and each paragraph of regulation 121.380 which normally
accompany the transfer of an aircraft which has been operating in regulated
commercial air service, shall be delivered to Lessor with the Aircraft. Any
documents or records required to be delivered hereunder shall be in English.
(e) Condition of Aircraft. Upon any Return Occasion, (i)
Lessee shall return such Aircraft to Lessor in such condition that the Aircraft
shall also comply with each and every condition and requirement set forth
elsewhere in this Lease, including Exhibit E hereto and (ii) shall provide that
each oil tank on the Aircraft shall be full and the fuel tanks shall contain as
much fuel as such tanks contained at the time the Aircraft was accepted by
Lessee.
(f) Final Inspection. Upon any Return Occasion, Lessee
shall make the Aircraft available to Lessor at the location where the "block 'C'
Check" (or equivalent level designated check or checks) required hereunder to be
performed immediately prior to redelivery is to be performed for detailed
inspection of the documents referred to in paragraph (d) above and the Airframe,
Engines and Parts structure and parts, at Lessee's expense (excluding
compensation to representatives of Lessor), in order to verify that the
condition of such Aircraft complies with the requirements set forth above (such
inspection being hereinafter referred to as the "Final Inspection"). The Final
Inspection shall be combined with such "block 'C' Check" (or equivalent level
check or checks) and may include such other items as reasonably requested by
Lessor. Lessee shall give Lessor not less than thirty (30) days prior written
notice of the commencement date of such Final Inspection. The period allowed for
the Final Inspection shall be the same period during which such "block 'C'
Check" is being performed and shall have such duration as to permit the opening
of any areas of the Aircraft which are necessary or advisable to satisfy Lessor
as to compliance with the requirements of this Section 16 and Exhibit E. The
Final Inspection shall commence on the date so noticed which shall be on or
before the expiration of the Term with respect to the Aircraft and shall
continue on consecutive days until
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<PAGE> 95
all activity required above to be conducted has been concluded. To the extent
that any portion of the Final Inspection extends beyond the expiration of the
Term, unless Lessor has terminated the Lease pursuant to Section 18(f) hereof,
the Term with respect to the Aircraft undergoing the Final Inspection shall be
deemed to have been automatically extended, and all obligations (including,
without limitation, the obligation to pay Rent hereunder) continued, on a daily
basis until the Final Inspection shall have been concluded; provided, however,
that Lessee shall not be required to pay Rent with respect to the Aircraft
during the period of extension to the extent that Lessor is responsible for the
delay in completion of the Final Inspection. All storage expenses attributable
to any Term extension pursuant to the preceding sentence shall be payable by
Lessee, except that Lessee shall not be liable for any storage expenses which
are incurred after the sixtieth (60th) day after the Term to the extent that
storage continues thereafter due to Lessor's delay in completion of the Final
Inspection.
(g) Aircraft Records and Documents. In order to enable
Lessor to prepare for the Final Inspection of the Aircraft pursuant to
Subsection 16(f) above, Lessee agrees to make available to Lessor at a
maintenance base of Lessee with adequate facilities for short-term maintenance,
where the Final Inspection is to occur, not later than ten (10) days prior to
the commencement of such Final Inspection, the Aircraft Records and Documents
listed in Exhibit B hereto, together with such other documentation (including,
without limitation, original airworthiness directive compliance documents and
other work documents) regarding the condition, use, maintenance, or operation as
Lessor may reasonably request or require to substantiate the status of the
Aircraft.
(h) Corrections and Subsequent Corrections. To the extent
that the Aircraft or any Engine fails upon a Return Occasion to conform to any
requirement imposed by this Lease Lessor may, at its option, (i) continue the
Lease in effect in the manner provided for in Section 16(f) above with regard to
automatic extension until such time as such Aircraft is brought up to the
condition required by this Section 16, including Exhibit E, or (ii) accept the
return of such Aircraft and thereafter have any such nonconformance corrected,
at such time as Lessor may deem appropriate but not to commence later than
ninety (90) days following the return of such Aircraft, at commercial rates then
charged by the Person selected by Lessor to perform such correction. The Letter
of Credit shall not be released and any costs and expenses (including, materials
and labor) incurred by Lessor
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for such correction shall be indemnified by Lessee in favor of Lessor (and prior
to the end of the Term, Lessee shall make adequate provision to Lessor's
satisfaction in respect of such indemnity) and shall become Supplemental Rent
payable by Lessee within ten (10) days following the submission of a written
statement by Lessor to Lessee, identifying the items corrected and setting forth
the expense of such correction. Lessee's obligations to pay such Supplemental
Rent shall survive the Expiration Date or other termination of this Lease.
(i) Functional Flight Check. Immediately prior to the
expiration of the Term, Lessor will be permitted to conduct a non-commercial
functional flight check flight of no more than two (2) hours duration in
accordance with the Manufacturer's functional flight check procedures at
Lessee's expense to demonstrate the airworthiness of the Aircraft and proper
functioning of all systems and components. A qualified pilot and up to five (5)
other representatives selected by Lessor may take part in such flight to verify
compliance of the Aircraft with the requirements of this Lease, provided, that
Lessor shall be responsible for the charges of such qualified pilot and
representatives. Lessee may combine the functional flight check provided in this
Section 16(i) with the delivery flight specified in Section 16(a) and such
functional flight check shall include the landing. Any discrepancy or
malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any actions
to correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee shall, at
Lessee's expense, take such action as Lessor may reasonably request to assist
Lessor in obtaining any required documents in relation to the export of the
Aircraft from the United States (including, without limitation, a valid and
subsisting export certificate of airworthiness with respect to the Aircraft and
export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee shall
deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished
without charge by the manufacturer for installation on the Aircraft which have
not
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been so installed together with appropriate instructions for installation. In
the event such uninstalled kits were purchased or manufactured by Lessee, then
Lessor shall be advised of such kits by Lessee and have a right of first refusal
to purchase such kits at Lessee's cost for a period of ninety (90) days after
return.
(l) Storage Upon Return. Upon any Return Occasion, Lessee
shall, at Lessor's request and at Lessee's risk and expense, in addition to
other storage referred to above, arrange for the parking, storage and insurance
of the Aircraft for a period not exceeding sixty (60) days at such reasonable
location as Lessor requests where Lessee has or can arrange for storage. Lessee
shall pay or cause to be paid all costs and expenses for such parking, storage
and insurance.
(m) Resale/Release Cooperation. During the last twelve
(12) months of the Term, with reasonable notice and at reasonable times, Lessee
will cooperate, and cause any Permitted Sublessee to cooperate, in all
reasonable respects, with the efforts of Lessor to sell or lease the Aircraft
after the end of the Term, by permitting prospective purchasers or lessees,
except to the extent prohibited by applicable Law, to inspect the Aircraft and
the records relating thereto to the extent it does not unreasonably interfere
with the operation or maintenance of the Aircraft or the conduct of Lessee's
business.
Section 17. Events of Default.
Any one or more of the following occurrences or events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of Law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic
Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business
Days after the date on which such payment is due, or (ii) any other payment of
Supplemental Rent due hereunder within ten Business Days after the date on which
such payment is due and Lessee has received written demand therefor by the party
entitled thereto (provided that any failure of Lessee to pay to Lessor or the
Owner Participant when due any Excepted Payments (as defined in the Indenture)
shall not constitute an Event of Default unless notice is given by the Owner
Participant to Lessee
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<PAGE> 98
and the Indenture Trustee that such failure shall constitute an Event of
Default); or
(b) Lessee shall fail to obtain and maintain in full force
and effect any insurance required under the provisions of Section 12 hereof or
shall operate the Aircraft outside of the scope or in violation of the terms of
the insurance or United States Government indemnity coverage required to be
maintained with respect to such Aircraft; or
(c) Any representation or warranty made by Lessee in the
Operative Documents (other than the Trust Agreement, each Trust Supplement, the
Indenture, each Indenture Supplement, the Equipment Notes, the Intercreditor
Agreement, each Liquidity Facility, the Underwriting Agreement and the Tax
Indemnification Agreement) or in any certificate furnished by Lessee in
connection therewith is incorrect at the time made in any material respect and
such incorrectness shall not have been cured within thirty (30) days after the
receipt by Lessee of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant,
condition, or agreement to be performed or observed by it pursuant to this Lease
or any other Operative Document (other than the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the
Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement,
and the Tax Indemnification Agreement), and such failure shall continue uncured
for thirty (30) days after written notice thereof is given by Lessor or
Indenture Trustee to Lessee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under the first or second
sentence of Section 6(c), or Section 6(d), as such provisions of Section 6
relate to maintenance, service, repair or overhaul, or Section 9, and
notwithstanding the diligence of Lessee in attempting to cure such failure, such
failure is not cured within said thirty (30) day period but is curable with
future due diligence, there shall exist no Event of Default under this Section
17 so long as Lessee is proceeding with due diligence to cure such failure and
such failure is remedied not later than one hundred eighty (180) days after
receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a custodian,
receiver, trustee or liquidator of itself or all or any material part of
Lessee's property or Lessee's
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consolidated property, or Lessee admits in writing its inability to, or is
unable to, or does not, pay its debts generally as they come due, or makes a
general assignment for the benefit of creditors, or Lessee files a voluntary
petition in bankruptcy or a voluntary petition seeking reorganization in a
proceeding under any bankruptcy or insolvency Laws (as now or hereafter in
effect), or an answer admitting the material allegations of a petition filed
against Lessee in any such proceeding, or Lessee by voluntary petition, answer
or consent seeks relief under the provisions of any other bankruptcy, insolvency
or other similar Law providing for the reorganization or winding-up of
corporations, or provides for an agreement, composition, extension or adjustment
with its creditors, or any corporate action (including, without limitation, any
board of directors or shareholder action) is taken by Lessee in furtherance of
any of the foregoing, whether or not the same is fully effected or accomplished;
or
(f) An order, judgment or decree is entered by any court
appointing, without the consent of Lessee, a custodian, receiver, trustee or
liquidator of Lessee, or of all or any material part of Lessee's property, or
Lessee's consolidated property, or all or any material part of Lessee's property
or Lessee's consolidated property is sequestered, and any such order, judgment
or decree of appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of sixty (60) days after the date of entry
thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding
under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter
in effect) is filed and is not withdrawn or dismissed within sixty (60) days
thereafter or at any time an order for relief is granted in such proceeding, or
if, under the provisions of any Law providing for reorganization or winding-up
of corporations which may apply to Lessee, any court of competent jurisdiction
assumes jurisdiction over, or custody or control of, Lessee or of all or any
material part of Lessee's property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of sixty (60) days or at any time an order for relief
is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial
passenger Certificated Air Carrier or, except in either case in connection with
a labor dispute, announcement thereof or
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Lessee's suspension of its business as a commercial passenger Certificated Air
Carrier, or for any reason the preponderant business activity of Lessee shall
cease to be that of a commercial passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States air
carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act;
or
(j) if the existence, validity, enforceability or priority
of the rights or interests of Lessor under this Lease, or the rights or
ownership of Lessor of the Aircraft under this Lease in respect of the Aircraft
or the rights or interests of Note Holders under the Indenture are challenged by
Lessee or any Person claiming by, through or on behalf of Lessee unless Lessee
demonstrates that such a claim was not rightfully made by, through or on behalf
of Lessee.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any
time thereafter so long as the same shall be continuing, Lessor may, at its
option, declare by written notice to Lessee this Lease to be in default,
provided, however, that this Lease shall be deemed to be declared in default
automatically without the necessity of such written declaration upon the
occurrence of any Event of Default described in paragraph (e), (f) or (g) of
Section 17 hereof; and at any time thereafter, so long as any outstanding Event
of Default shall not have been remedied, Lessor may do one or more of the
following with respect to all or any part of the Airframe and any or all of the
Engines as Lessor in its sole discretion shall elect, to the extent permitted
by, and subject to compliance with any mandatory requirements of, applicable Law
then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's expense, immediately return the Aircraft to
Lessor in the manner specified in such notice, in which event such return shall
not be delayed for the purposes of complying with the return conditions
specified in Section 16 and Exhibit E hereof (none of which conditions shall be
deemed to affect Lessor's possession of the Aircraft) or delayed for any other
reason; provided, however, that Lessee shall remain and be liable to Lessor for
amounts provided for herein or other damages resulting from the Aircraft or any
Engine not being in the condition required by Section 16 and Exhibit E.
Notwithstanding the foregoing, at Lessor's option, Lessee
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shall be required thereafter to take such actions as would be required by the
provisions of this Lease if such Aircraft were being returned at the end of the
Term hereof with respect to such Aircraft. In addition, Lessor, at its option
and to the extent permitted by applicable Law, may enter upon the premises where
all or any part of the Aircraft is located to take immediate possession of and,
at Lessor's option, remove the same (and/or any engine which is not an Engine
but which is installed on the Airframe, subject to the rights of the owner,
lessor or secured party thereof) by summary proceedings or otherwise, all
without liability accruing to Lessor for or by reason of such entry or taking of
possession whether for the restoration of damage to property, or otherwise,
caused by such entry or taking, except direct damages to the extent caused by
Lessor's gross negligence or willful misconduct.
(b) Sell or cause to be sold, the Aircraft or any part
thereof, or Lessor's interest therein, at private or public sale, as Lessor in
its sole discretion may determine, or otherwise dispose of, hold, use, operate,
or lease to others, or keep idle the Aircraft, as Lessor in its sole discretion
may determine, all free and clear of any rights of Lessee or any Permitted
Sublessee and except as hereinafter set forth in this Section 18. Lessor may be
the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date specified for payment
in such notice), any unpaid Rent for the Aircraft to and including the
Stipulated Loss Value Date specified in such notice, plus whichever of the
following amounts as Lessor may specify, in its sole and absolute discretion, in
such notice: (i) an amount equal to the excess, if any, of the sum of the
Stipulated Loss Value for the Aircraft computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment
Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due
on such date, over the fair market sale value of the Aircraft as of the date
specified in such notice or (ii) an amount equal to the excess, if any, of the
sum of the Stipulated Loss Value for
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the Aircraft computed as of the date specified in such notice plus, if such date
is a Basic Rent Payment Date or Renewal Rent Payment Date, an amount equal to
the Basic Rent or the Renewal Rent, as the case may be, due on such date, over
the fair market rental value of the Aircraft for the remainder of the Term as of
the date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above,
shall have sold the Aircraft, or its interest therein, Lessor, in lieu of
exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date immediately prior to the date such sale
occurs), any unpaid Rent for such Aircraft due to and including the date of
sale, plus the amount by which the Stipulated Loss Value of such Aircraft,
computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such
sale (after deducting all costs of such sale).
(e) In the event that Lessor, pursuant to paragraph (b)
above, shall have relet the Aircraft under a long term lease, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to such Aircraft,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
Lessor on such demand, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such
Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due
up to the date of reletting, plus the amount, if any, by which the aggregate
Basic Rent or Renewal Rent, as the case may be, for such Aircraft, which would
otherwise have become due over the Basic Term or Renewal Term, as the case may
be, discounted periodically (equal to installment frequency) to present worth as
of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate
basic rental payments to become due under the reletting from the date of such
reletting to the date upon which the Term for such Aircraft would have expired
but for Lessee's default, discounted periodically (equal to installment
frequency) to present worth as of the date of the reletting at the rate of 8.50%
per annum.
(f) Cancel, rescind and/or terminate this Lease by written
notice to Lessee which cancellation, rescission and/or termination shall be
effective upon dispatch, whereupon Lessee's right to possess and use the
Aircraft
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shall immediately cease, however, Lessee shall be and remain liable for damages
and losses suffered by Lessor and all other amounts payable by Lessee hereunder.
(g) Proceed by appropriate court action or actions, either
at law or in equity, to enforce any other remedy or right Lessor may have
hereunder, under the other Operative Documents, at law or in equity, including,
without limitation, proceed by court order to enforce performance by Lessee of
the applicable covenants of this Lease or to recover damages for the breach
thereof.
In addition to the foregoing, Lessee shall be liable
(without duplication of the remedies above and of Lessee's obligations under
Section 10 and Section 13 hereof and subject to the exclusions set forth
therein) for any and all unpaid Rent before, during or after the exercise of any
of the above mentioned remedies (including without limitation interest on unpaid
amounts with respect to all amounts not paid when due, including, without
limitation, any amounts payable pursuant to the foregoing provisions of this
Section 18), and, except as specified above until satisfaction of all of
Lessee's obligations to Lessor hereunder and for all legal fees and other costs
and expenses incurred by any Indemnitee by reason of the occurrence of any Event
of Default or the exercise of an Indemnitee's remedies with respect thereto,
including all costs and expenses incurred in connection with the return of the
Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in
placing the Aircraft in the condition and with airworthiness certification as
required by such Section and such Exhibit and costs and expenses related to the
Lease, the Refunding Agreement, the Indenture, the Pass-Through Trust
Agreements, the Intercreditor Agreement or each Liquidity Facility. All
liquidated damages payable pursuant to the foregoing shall bear interest, which
shall be payable on the date the payment of such liquidated damages is due at a
rate equal to the Interest Rate from and including the date due to and excluding
the date actually paid.
In effecting any repossession, Lessor, its representatives
and agents, to the extent permitted by applicable Law, (i) shall have the right
to enter upon any premises where it reasonably believes the Aircraft, the
Airframe, an Engine or Part to be located, (ii) shall not be liable, in
conversion or otherwise, for the taking of any personal property of Lessee which
is in or attached to the Aircraft, the Airframe, an Engine or Part which is
repossessed, (iii) shall not be liable or responsible, in
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any manner, for any damage or injury to any of Lessee's property in repossessing
and holding the Aircraft, the Airframe, an Engine or Part, except for direct
damages caused by Lessor's gross negligence or willful misconduct, and (iv)
shall have the right to maintain possession of and dispose of the Aircraft, the
Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's
control.
If requested by Lessor, Lessee shall, at its sole expense,
assemble and make the Aircraft, the Airframe, an Engine or Part available at a
place designated by Lessor in accordance with Section 16 and Exhibit E hereof.
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the
occurrence of an Event of Default, any rights in any warranty (express or
implied), service life policy, infringement indemnity, performance guaranty or
the like heretofore made available to Lessee or otherwise held by Lessee shall
without further act, notice or writing be deemed automatically cancelled and
shall be enforceable solely by and for the benefit of, and assigned to, Lessor.
Lessee shall be liable to Lessor (without duplication) for all expenses,
disbursements, costs and fees incurred in (i) repossessing, storing, preserving,
shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 16 and Exhibit E hereof and
(ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease,
advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part
and selling or releasing the Aircraft, the airframe, an Engine or Part. Lessor
is hereby authorized and instructed, at its option, to make expenditures which
Lessor considers advisable to repair and restore the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 16 and Exhibit E hereof, all
at Lessee's sole expense.
For the purpose of this Section 18, the "fair market
rental value" or the "fair market sales value" of the Aircraft, Airframe, an
Engine or Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or
Part pursuant to this Section, Owner Participant may bid for and purchase such
property and Lessee agrees that the amounts paid therefor shall be used in the
computations contemplated herein and Lessee shall remain liable for any
deficiency.
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<PAGE> 105
No remedy referred to in this Section is intended to be
exclusive, but, to the extent permitted by Law, each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d) or (e) above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Aircraft leased hereunder or otherwise to more effectively carry out
Lessor's rights and remedies and to file said documents for recordation with the
FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
Section 19. Alienation.
(a) Lessor Assignments. In addition, and subject, to the
transactions contemplated by Section 19(b), Lessor shall not assign or transfer
any interest of Lessor in this Lease and/or the Aircraft and/or the proceeds
hereof to any Person except as provided herein, in the Trust Agreement, in the
Indenture and in the Refunding Agreement.
Any such assignment shall be subject to the condition that
the transferee shall agree not to disturb the quiet enjoyment by Lessee of the
Aircraft as and to the extent so agreed by Lessor in Section 21(f).
(b) Security for Obligations. In order to secure the
Equipment Notes, Lessor has created, by the Indenture, a security interest in
the Trust Indenture Estate, including, without limitation, this Lease and all
Rent and other sums payable hereunder, except as provided in the Indenture and
subject in each case to Liens permitted hereunder. The Indenture provides, among
other things for the assignment by
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Lessor to Indenture Trustee of its right, title and interest in, to and under
this Lease, to the extent set forth in the Indenture, for the creation of a
first-mortgage lien on and perfected security interest in all of Lessor's right,
title and interest in and to the Aircraft in favor of Indenture Trustee. Lessee
hereby consents to such assignment and to the creation of such mortgage and
security interest and acknowledges receipt of copies of the Trust Agreement and
the Indenture, it being understood that such consent shall not affect any
requirement or the absence of any requirement for any consent under any other
circumstances. Until the Lien of the Indenture has been discharged, Lessee will
furnish to Indenture Trustee counterparts of all notices and other writings of
any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien
of the Indenture has been discharged, (a) Lessee shall make all payments of
Rent, Stipulated Loss Value and all other amounts payable hereunder (other than
Excepted Payments) to or as directed by Indenture Trustee as provided in
Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise
the rights of Lessor (but not Owner Participant) herein as and to the extent
provided herein or in the Indenture and any express reference to Indenture
Trustee in any Section of this Lease shall not give rise to any implication that
Indenture Trustee may not exercise the rights of Lessor in any other Section of
this Lease as and to the extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement
which require or permit action by, the payment of monies to, the consent or
approval of, the furnishing of any instrument or information to, or the
performance of any other obligation to, Indenture Trustee, shall not be
effective, and the Sections hereof containing such provisions shall be read as
though there were no such requirements or provisions and all moneys otherwise
payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee
shall have received from Indenture Trustee notice of discharge of the Lien of
the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee
under this Lease by a Permitted Sublessee shall constitute payment or
performance of such obligation by Lessee.
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Section 20. Renewal Option.
Lessee may renew this Lease as provided in the following
clause (i) and subject to the following clause (ii):
(i) Exercise of Renewal Option. Provided that
this Lease has not been previously terminated and that no Default or Event of
Default shall have occurred and be continuing at the time of the giving of
irrevocable notice hereinafter referred to in this clause (i) or at the time of
the commencement of the Renewal Term, Lessee, at its option, may renew this
Lease for one Renewal Term consisting of a period equal to five years. The right
to renew this Lease for such Renewal Term pursuant to this clause (i) shall be
exercised upon irrevocable notice from Lessee received by Lessor of Lessee's
election to so renew this Lease not less than twelve (12) months and not more
than twenty-four (24) months prior to the last day of the Basic Term. The
Renewal Rent for the Renewal Term shall be the "fair market rental value" of the
Aircraft for such Renewal Term (the "renewal fair market rental value") as
determined in accordance with the Appraisal Procedure. For purposes of this
paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier
than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to
exercise its option to extend the term of this Lease for the Renewal Term in
accordance with the provisions of this paragraph, all of Lessee's rights to
extend the Term for such Renewal Term shall expire. Lessee shall pay all
reasonable costs and expenses, including, without limitation, reasonable legal
fees and expenses, incurred by Lessor, Owner Participant and the Indenture
Trustee in connection with the exercise of such option.
(ii) Provisions Applicable During Renewal Term. All
provisions of this Lease, including, without limitation, as to Rent and
Stipulated Loss Value (which shall be, with appropriate adjustments, an amount
equal to the greater of 120% of the "fair market sales value" of the Aircraft as
of the first day of the Renewal Term as determined pursuant to the Appraisal
Procedure or the amount set forth on Exhibit A as of the end of the Basic Term),
shall remain in effect and be applicable during such Renewal Term, except that
Lessee shall pay to Lessor, semi-annually in advance as Renewal Rent on each
Renewal Rent Payment Date, the amount for such Renewal Term as determined in
accordance with clause (i) of this Section 20.
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Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any
provision of this Lease 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. To
the extent permitted by Law, Lessee hereby waives any provision of Law which
renders any provision hereof prohibited or unenforceable in any respect. No term
or provision of this Lease may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing expressed to be a supplement or
amendment to, or waiver or termination of this Lease signed by an officer of the
party against which the enforcement of the change, waiver, discharge, or
termination is sought. This Lease shall constitute an agreement of lease, and
nothing herein shall be construed as conveying to Lessee any right, title, or
interest in the Aircraft or any Engine or Part except as a lessee only. Without
limiting the foregoing, the parties hereto agree to treat this Agreement as a
lease for United States federal income tax purposes and Lessee will not file a
tax return which is inconsistent with the foregoing and nothing contained herein
shall be construed as an election by Lessor to treat Lessee as having acquired
the Aircraft for the purpose of the investment credit allowed by Section 38 of
the 1954 Code or any similar or successor statute. The headings in this Lease
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, WITHOUT
REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices required or permitted under the
terms and provisions hereof shall be in writing and shall be sent to Lessor or
Lessee at their respective addresses set forth in Exhibit C hereto (or such
other addresses as the parties may designate from time to time in writing).
Until such time as the Lien of the Indenture is discharged, all notices, reports
or other documents provided
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to Lessor or Lessee shall be provided concurrently to Indenture Trustee at such
address as Indenture Trustee may designate from time to time. All notices
hereunder shall become effective when received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails
to make any payment of Rent required to be made by it hereunder or fails to
perform or comply with any covenant, agreement, or obligation contained herein,
Lessor shall have the right but not the obligation to make such payment or
conform or comply with such agreement, covenant, or obligation, and the amount
of such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by or on behalf of Indenture Trustee on
the signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing and this Lease has not
been declared or deemed to be in default, Lessor shall not take or cause to be
taken any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Aircraft
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it and without interference from any Person
making a Claim concerning payment for or the ownership of Buyer Furnished
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Equipment with respect to the Aircraft, provided, that the foregoing shall not
be deemed to have modified the obligations of Lessee pursuant to Section 4(d)
hereof, which obligations remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as
provided in the Refunding Agreement, there has been no third party as agent
involved in this Lease and each indemnifies the other from liability for fees,
commissions, or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by
Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or
an Event of Default shall have occurred and be continuing, be invested as
provided below until paid to Lessee or applied by Lessor or Indenture Trustee to
the extent provided herein. Until paid to Lessee or applied as provided herein
or in the Indenture such monies shall be invested by Lessor or Indenture Trustee
from time to time at the expense of Lessee in Specified Investments, as directed
by Lessee in accordance with the provisions of Section 3.07 of the Indenture if
the Lien of the Indenture shall not have been discharged and thereafter as
provided below. There shall be promptly (but not more frequently than monthly)
remitted to Lessee any gain (including interest received) realized as the result
of any such investment (net of any fees, commissions and other reasonable
expenses, if any, incurred in connection with such investment) unless a Default
or an Event of Default shall have occurred and be continuing. Lessee will
promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor
or Indenture Trustee harmless from, on demand, the amount of any loss realized
as the result of any such investment (together with any Taxes, fees, commission
and other reasonable expenses, if any, incurred in connection with such
investment).
(i) Entire Agreement; Amendment. This Lease (including the
Exhibits hereto), any related letter agreements and the other Operative
Documents, the Financing Documents and the Purchase Documents (including the
Exhibits thereto) and all closing documents delivered in connection with any of
the foregoing embody the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof. This Lease may be changed,
waived, discharged, amended, revised or terminated only by an instrument in
writing signed by the party against which enforcement is sought.
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(j) Expenses. Without limiting Section 13 or 18, Lessee
agrees within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications thereof, or waivers or consents thereunder, and (iii) any Default
or Event of Default or the enforcement of any of Lessor's rights, remedies or
privileges hereunder or at law or in equity, but not Lessor's legal fees and
expenses in connection with the negotiation and execution of this Lease or the
other Operative Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
and take such other action not inconsistent with this Lease as Lessor reasonably
deems necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor
shall use its best efforts to have the Aircraft registered under the United
States Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process; Waiver
of Forum Non Conveniens; Waiver of Jury Trial. Lessee hereby irrevocably agrees
that any suit, action or proceeding related to this Lease or any of the other
Operative Documents to which it is a party or the subject matter hereof or
thereof or of any of the transactions contemplated hereby and thereby may be
instituted in, and submits for itself and its property to the non-exclusive
jurisdiction of, (i) the courts of the State of New York in New York County and
(ii) the United States District Court for the Southern District of New York.
Lessee represents and warrants that it is not currently entitled to, and agrees
that to the extent that Lessee hereinafter may acquire, any immunity (including,
without limitation, sovereign immunity) from jurisdiction of any court or from
any legal process, Lessee hereby, to the
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extent permitted by Law, waives such immunity, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of the above--
named courts that it is immune from any legal process (whether through service
or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Lease or any of the other
Operative Documents or the subject matter hereof or thereof or any of the
transactions contemplated hereby and thereby may not be enforced in or by such
courts. Lessee hereby generally consents to service of process by registered
mail, return receipt requested, addressed to it at its address set forth in
Exhibit C, or at such other office of Lessee as from time to time may be
designated by Lessee in writing to Lessor or Lessee, Foreign Lessor, Owner
Participant and Indenture Trustee. Lessee hereby agrees that its submission to
jurisdiction and its designation of service of process by mail set forth above
is made for the express benefit of Lessor, Foreign Lessor, Owner Participant,
Indenture Trustee, each Note Holder and their successors and assigns. EACH OF
LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE
RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims,
tort claims, breach of duty claims and other common law and statutory claims.
Lessor and Lessee represent and warrant that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with such legal counsel. THIS WAIVER IS
IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
(n) Limitation on Recourse. The parties hereto agree that
all statements, representations, covenants and agreements made by Lessor (when
made in its capacity as such and not in its individual capacity) contained in
this Agreement, unless expressly otherwise stated, are made and intended only
for the purpose of binding the Trust Estate and establishing the existence of
rights and remedies that can be exercised and enforced against the Trust Estate.
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Therefore, no recourse shall be had with respect to anything contained in this
Agreement (except for any express provisions that Lessor is responsible for in
its individual capacity), against Lessor in its individual capacity or against
any institution or person that becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them; provided that (i) this Section 21(n) shall not
be construed to prohibit any action or proceeding against any party hereto for
its own willful misconduct or grossly negligent conduct for which it would
otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of
the appointment of any successor Owner Trustee pursuant to the terms of the
Trust Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 14(d) of the Refunding Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree that
the Original Head Lease as amended and restated by this Second Amended and
Restated Aircraft Lease Agreement [GPA 1989 BN-5] (and as otherwise extended,
amended, modified, renewed or supplemented) shall be governed by Article 2-A of
the Uniform Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to
due authority, have each caused this Lease to be executed by their duly
authorized officers as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
otherwise expressly provided herein,
but solely as Owner Trustee
By:__________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:___________________________
Title:
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TABLE OF CONTENTS
Page
Section 1. Definitions..................................................... 1
Section 2. Agreement to Lease.............................................. 21
Section 3. Delivery and Acceptance; Term;
Rental Period................................................... 22
(a) Time of Delivery..................................................... 22
(b) [Intentionally Left Blank.].......................................... 22
(c) Acceptance of Aircraft............................................... 22
(d) Term of Lease........................................................ 22
(e) Rental Period........................................................ 22
Section 4. Rent; Minimum Payments.......................................... 22
(a) Rent................................................................. 22
(b) Minimum Payments..................................................... 23
(c) Date, Place and Method of Payment.................................... 23
(d) Prohibition Against Setoff, Counterclaim, Etc........................ 24
Section 5. Representations, Warranties and Covenants....................... 25
(a) Warranties and Disclaimer of Warranties.............................. 25
(b) Representations and Warranties of Lessor............................. 27
(c) No Amendments to Financing Documents................................. 27
(d) Suppliers' Warranties................................................ 27
Section 6. Possession and Use.............................................. 28
(a) Possession........................................................... 28
(b) Reciprocal Recognition of Rights..................................... 34
(c) Lawful Insured Operations............................................ 35
(d) Maintenance.......................................................... 36
(e) Registration and Insignia............................................ 37
Section 7. Inspection...................................................... 38
Section 8. Additional Covenants of Lessee.................................. 39
(a) Financial Information................................................ 39
(b) Maintenance of Corporate Existence................................... 41
(c) Maintenance of Status................................................ 42
(d) Payment of Taxes..................................................... 42
(e) Consolidation, Merger, Etc........................................... 42
(f) Information.......................................................... 43
(g) Place of Business.................................................... 44
(h) Certain Limitations on Use........................................... 44
(i) Section 1110......................................................... 45
(j) Permits and Licenses................................................. 45
(k) Security Opinion; Annual Certificate................................. 45
(l) Letter of Credit..................................................... 46
(m) ERISA................................................................ 48
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Page
Section 9. Replacement of Parts; Alterations,
Modifications and Additions.................................... 49
(a) Replacement of Parts................................................. 49
(b) Alterations, Modifications and Additions............................. 50
(c) Pooling.............................................................. 53
Section 10. General Tax Indemnification.................................... 53
(a) Indemnity............................................................ 53
(b) Exclusions........................................................... 56
(c) Covered Income Tax................................................... 58
(d) Reports and Returns.................................................. 59
(e) After-Tax Basis...................................................... 59
(f) Tax Benefit.......................................................... 60
(g) Payment.............................................................. 60
(h) Contest.............................................................. 61
(i) Refund............................................................... 62
(j) Diligence............................................................ 63
(k) Affiliated Group..................................................... 63
Section 11. Loss, Damage and Requisition................................... 63
(a) Event of Loss with Respect to the Airframe........................... 63
(b) Event of Loss with Respect to an Engine.............................. 66
(c) Conveyance of Replacement Airframe................................... 68
(d) Application of Proceeds and Payments................................. 70
(e) Requisition for Use by Government with
Respect to the Aircraft.............................................. 71
(f) Application in Default............................................... 71
Section 12. Insurance...................................................... 72
(a) Public Liability and Property Damage Insurance. ..................... 72
(b) Insurance Against Loss or Damage..................................... 74
(c) Application of Insurance Proceeds for an
Event of Loss........................................................ 76
(d) Application of Insurance Proceeds for Other
than an Event of Loss................................................ 77
(e) Application in Default............................................... 78
(f) Certificates......................................................... 78
(g) Reinsurance.......................................................... 79
(h) Storage.............................................................. 80
(i) Amounts Held......................................................... 80
(j) After the Term....................................................... 80
(k) Governmental Indemnity............................................... 80
Section 13. General Indemnity.............................................. 81
Section 14. Liens.......................................................... 86
Section 15. Protection of Title and Further Assurances..................... 87
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Page
Section 16. Return of Aircraft and Records............................... 89
(a) Return............................................................. 89
(b) Status Upon Return................................................. 90
(c) Engines............................................................ 91
(d) Records and Documents.............................................. 91
(e) Condition of Aircraft.............................................. 92
(f) Final Inspection................................................... 93
(g) Aircraft Records and Documents..................................... 93
(h) Corrections and Subsequent Corrections............................. 94
(i) Functional Flight Check............................................ 94
(j) Export Certificate of Airworthiness................................ 95
(k) Service Bulletin and Modification Kits............................. 95
(l) Storage Upon Return................................................ 95
(m) Resale/Release Cooperation......................................... 95
Section 17. Events of Default............................................ 96
Section 18. Remedies..................................................... 98
Section 19. Alienation................................................... 104
(a) Lessor Assignments................................................. 104
(b) Security for Obligations........................................... 104
Section 20. Renewal Option............................................... 105
Section 21. Miscellaneous................................................ 106
(a) Severability, Amendment, and Construction.......................... 106
(b) Governing Law...................................................... 107
(c) Notices............................................................ 107
(d) Lessor's Right to Perform for Lessee............................... 107
(e) Counterparts....................................................... 108
(f) Quiet Enjoyment.................................................... 108
(g) Brokers............................................................ 108
(h) Investment of Funds................................................ 108
(i) Entire Agreement; Amendment........................................ 109
(j) Expenses........................................................... 109
(k) Federal Bankruptcy Code............................................ 109
(l) U.S. Registration Number........................................... 110
(m) Submission to Jurisdiction; Service of Process;
Waiver of Forum Non Conveniens; Waiver of Jury
Trial.............................................................. 110
(n) Limitation on Recourse............................................. 111
(o) Successor Trustee.................................................. 111
(p) Article 2-A of the UCC............................................. 112
iii
<PAGE> 118
ANNEXES
Annex I - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D1 - Lease Supplement No. 3
Exhibit D2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Assignment of Permitted Sublease
iv
<PAGE> 1
EXHIBIT 4.23
THE RIGHTS OF LESSOR UNDER THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT [GPA 1989 BN-6] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE
BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER
TRUST COMPANY, AS INDENTURE TRUSTEE UNDER A SECOND AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-6] DATED AS OF SEPTEMBER 22, 1989,
AMENDED AND RESTATED AS OF OCTOBER 1, 1991, AND FURTHER AMENDED AND RESTATED AS
OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF
ANY, THAT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES
CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN
EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND
RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL
BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE
CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST
COMPANY, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-6]
Dated as of December 15, 1989
Amended and Restated as of October 1, 1991
And Further Amended and Restated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1989 BN-6] dated
as of December 15, 1989, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 65
U.S. Registration No. N626AW
- --------------------------------------------------------------------------------
<PAGE> 2
SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
dated as of December 15, 1989, as amended and restated as of October 1, 1991,
and as further amended and restated as of November 26, 1996 is entered into
between WILMINGTON TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as Owner Trustee under a Trust
Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as amended, and with
its principal place of business at Rodney Square North, Wilmington, Delaware
19890 (together with its successors and permitted assigns, "Lessor"), and
AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive
office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with
its successors and permitted assigns, "Lessee").
W I T N E S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for
the convenience of the parties, restate in its entirety the Original Head Lease
(as hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises
herein contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease", "Equipment
Notes," "Excepted Payments," "Indenture Supplement," "Note Holder," "Pass
Through Trust," "Pass Through Trust Agreement," "Pass Through Trustee," "Past
Due Rate," Principal Amount," "Refinancing Transaction," "Refunding Agreement,"
"Restatement Date," "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement," "Liquidity Facility," "Liquidity Provider" and
"Subordination Agent" shall have
<PAGE> 3
the meanings specified in the Intercreditor Agreement (as defined in the Pass
Through Trust Agreement); and the term "Lease Amendment No. 1" shall have the
meaning specified in the Refunding Agreement.
"Affiliate" shall mean, with respect to any specified
Person, any other Person which, directly or indirectly, owns or controls, is
controlled by or is under common control with such specified Person. Control
will be deemed to exist based on (i) ownership of 25% or more of the voting
securities of a Person or (ii) the power to direct or cause the direction of the
management and policies of a Person whether by contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and
described in Lease Supplement No. 1 (or any airframe from time to time
substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with
the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any
Engine substituted therefor hereunder) with respect to such Airframe, whether or
not any such initial or substituted Engines may from time to time no longer be
installed on the Airframe or may be installed on any other airframe, (ii) Parts
or components thereof, (iii) spare parts or ancillary equipment or devices
furnished therewith under this Lease (including any separate equipment described
on one or more Lease Supplements hereto), (iv) the Aircraft Records and
Documents and all other logs, manuals and records with respect to such Aircraft,
and (v) all substitutions, replacements and renewals of any and all thereof.
"Aircraft Records and Documents" shall mean the items
identified in Exhibit B hereto, all of which shall be maintained in the English
language.
"Airframe" shall mean (a) the Airbus Industrie model
A320-231 aircraft (except Engines or engines from time to time installed
thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee
hereunder, and any such model aircraft (except Engines or engines from time to
time installed thereon) which may from time to time be substituted for such
aircraft (except Engines or engines from time to time installed thereon)
pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same
shall be incorporated or installed on or attached to the Airframe, or so
- 2 -
<PAGE> 4
long as title thereto shall remain vested in Lessor in accordance with the terms
of Section 9 hereof after removal from the Airframe (or, so long as the Foreign
Lease Agreement is in effect, Foreign Lessor in accordance with Section 8 of the
Foreign Lease Agreement); provided, however, that at such time as an aircraft
(except Engines or engines from time to time installed thereon) shall be deemed
part of the property leased hereunder in substitution for the Airframe pursuant
to the applicable provisions hereof and the replacement Airframe shall have been
subjected to the Lien of the Indenture (if the Lien of the Indenture has not
been discharged) and shall be subject to the Foreign Lease Agreement, the
replaced Airframe shall cease to be the Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure
for determining the "fair market sales value" or "fair market rental value" of
the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18,
"fair market sales value" or "fair market rental value" shall mean the value
that would be obtained in an arm's-length transaction between an informed and
willing seller or lessor, as the case may be, and an informed and willing buyer
or lessee, as the case may be, both under no compulsion to sell and purchase or
to lease (and other than a lessee in possession or a used equipment scrap
dealer), as the case may be, as such value is determined by an appraisal which
assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is
unencumbered by this Lease (or any sublease) or any of the other Operative
Documents or any of the Financing Documents and the terms thereof; (ii) that
such Aircraft, Airframe, Engine or Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return
conditions specified in Section 16 and Exhibit E (whether or not in fact meeting
such conditions) and (iv) that Lessee has removed the Removable Parts entitled
to be removed under Section 9(b) (it being agreed that no such removal is
permitted in connection with an appraisal pursuant to Section 18) and replaced
any part which was removed from the Aircraft as a result of such Removable Part
being installed; provided, however, that costs of removal from the location of
current use and costs of sale shall not be a consideration in determining such
value except in connection with any determination of "fair market sales value"
or "fair market rental value" pursuant to Section 18; and provided, further,
that any determination of "fair market sales value" or "fair market rental
value" pursuant to Section 18 shall be on an "as is, where is" basis in its
actual condition and
- 3 -
<PAGE> 5
location subject to this Lease and any sublease and any and all Liens thereon
(other than a Lessor's Lien, Head Lessor's Lien or Lenders' Lien). Lessor and
Lessee shall, except for any appraisal pursuant to Section 18 in which case only
Lessor shall select such appraiser (which appraiser does not have to be
acceptable to Lessee), select an independent nationally-recognized aircraft
appraiser, mutually acceptable to each of them, who shall make the determination
as to the "fair market sales value" or "fair market rental value" of such
Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted.
If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within
ten (10) days, then each of Lessor and Lessee shall select an appraiser and such
determination shall be made by such appraisers (if either party shall fail to
appoint an appraiser within ten (10) days after notice from the other party of
the selection of its appraiser, then the appraisal made by the other party's
appraiser shall be determinative). If the two appraisers chosen pursuant to the
preceding sentence fail to agree upon a determination of the "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part
within twenty (20) days after their appointment, then such appraisers shall
mutually choose a third appraiser within ten (10) days thereafter, provided that
if such appraisers fail to mutually choose a third appraiser within said 10-day
period, such appointment shall be made by the American Arbitration Association
(or any successor) in New York, New York, and the three appraisers so chosen
shall each make such determination. The appraisal determined by each of the
three appraisers chosen pursuant to the preceding sentence shall be averaged and
the appraisal furthest from the average of the three appraisals shall be
disregarded. The appraisal determined by each of the two remaining appraisers
shall be averaged and such average shall be the appraised "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part.
Lessee shall bear all the fees and expenses of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance
broker of recognized responsibility and standing experienced in aircraft
insurance.
"Approved Insurers" shall mean any reputable and
creditworthy insurance company of recognized responsibility and standing
experienced in aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Aircraft
pursuant to Section 4(a)(i).
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<PAGE> 6
"Basic Rent Payment Date" shall mean each day determined
in accordance with Exhibit C upon which a payment of Basic Rent becomes payable.
If a Basic Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Basic Rent Payment Date shall be made on the next
succeeding Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 3.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Hartford, Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which
was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation
(except the United States Government) domiciled in the United States of America
and holding a Certificate of Convenience and Necessity issued under Section
41102(a) of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States Government)
domiciled in the United States of America and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is a citizen of the United States
(as defined in Section 40102 of the Federal Aviation Act) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo so as to fall within the
purview of 11 U.S.C. Section1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil
Reserve Air Fleet Program administered by the United States Government and
authorized under 10 U.S.C. Section9511, et seq., as amended, or any
substantially similar or substitute program of the United States Government.
"Claims" shall have the meaning specified in Section 13.
- 5 -
<PAGE> 7
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commonly Controlled Person" shall mean an entity, whether
or not incorporated, which is under common control with Lessee within the
meaning of Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated
Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended
and restated as of December 30, 1988, in the form attached to the Purchase
Agreement.
"Default" shall mean an event or condition which would
constitute an Event of Default with the lapse of time or the giving of notice or
both.
"Delivery Date" shall mean December 22, 1989, being the
date the Aircraft was delivered to and accepted by the Original Head Lessee as
Lessee hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the
United States of America.
"Engine" shall mean (i) each of the two IAE Model V2500
engines listed by manufacturer's serial number in Lease Supplement No. 1 and
initially installed on the Airframe covered by such Lease Supplement, whether or
not from time to time thereafter no longer installed on the Airframe or
installed on any other aircraft or airframe, and (ii) any replacement engine
which may from time to time be substituted, pursuant to Section 6(a), 11(a),
11(b) or 16(c) hereof (or, so long as the foreign Lease Agreement is in effect,
in accordance with Section 10(b) of the Foreign Lease Agreement), for any Engine
leased hereunder; together in each case with any and all Parts incorporated or
installed in or attached thereto or any and all Parts removed therefrom so long
as title thereto after removal from such Engine shall remain vested in Lessor in
accordance with the terms of Section 9 hereof (or, so long as the Foreign Lease
Agreement is in effect, Foreign Lessor in accordance with Section 8 of the
Foreign Lease Agreement). Except as otherwise set forth herein, at such time as
a replacement engine shall be so substituted and leased hereunder and the
replacement Engine shall have been subjected to the Lien of the Indenture (if
the Lien of the Indenture has not been discharged), such replaced Engine shall
cease to be an Engine hereunder. The term "Engines" means, as of any date of
determination, both Engines then leased hereunder.
- 6 -
<PAGE> 8
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any
one or more clauses in Section 17.
"Event of Loss" shall mean any of the following events
with respect to the Aircraft, Airframe or either Engine: (a) the actual or
constructive total loss of such property or the use thereof due to theft or
disappearance for a period in excess of sixty (60) consecutive days; (b)
destruction or damage of such property that renders repair uneconomic or such
property permanently unfit for normal use by Lessee (or, if a Permitted Sublease
is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss
or disappearance of or damage to or destruction of such property which results
in an insurance settlement with respect to such property on the basis of an
actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any rule, regulation, order or
other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or
Engine in the normal course of Lessee's (or, if a Permitted Sublease is in
effect, the Permitted Sublessee's) business of air transportation of passengers
shall have been prohibited for a period of six (6) consecutive months, unless
Lessee (or the Permitted Sublessee), prior to the expiration of such six-month
period, shall have
- 7 -
<PAGE> 9
undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit such normal use of such item of equipment by
Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall
have been so prohibited by any such Governmental Entity for a period of twelve
(12) consecutive months or is continuing on the last day of the Term; or (h) as
otherwise provided herein. An Event of Loss with respect to the Aircraft shall
be deemed to have occurred if an Event of Loss occurs with respect to the
Airframe which is a part of such Aircraft. An Event of Loss with respect to an
Engine shall not, absent an Event of Loss with respect to the Airframe, be
deemed an Event of Loss with respect to the Airframe.
"Excluded Property" shall have the meaning set forth in
Section 9(b) hereto.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administra- tion of
the United States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Bill
of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from
Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale
for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original
Head Lessee to Foreign Lessee, and (iii) the Bill of Sale for the Aircraft dated
the Delivery Date, from Foreign Lessee to Foreign Lessor.
"Federal Aviation Act" shall mean the sections of Title 49
of the United States Code relating to aviation, as amended and in effect from
time to time, or any similar legislation of the United States of America enacted
in substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal
year-end audited consolidated balance sheet and statements of income and cash
flow for the period then ending, copies of which for the fiscal year ending
December 31, 1995, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each
- 8 -
<PAGE> 10
Indenture Supplement, the Foreign Lease Documents, the Refunding Agreement, the
Equipment Notes issued under the Indenture, the Intercreditor Agreement, each
Liquidity Facility, each Pass-Through Trust Agreement and each supplement
thereto and any other agreement, document or certificate delivered or entered
into in accordance with the foregoing, as amended, supplemented or otherwise
modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made mandatory
to the Aircraft by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Aircraft by the FAA.
"Foreign Lease Agreement" shall mean the "Japanese Lease
Agreement," as defined in the Indenture.
"Foreign Lease Documents" shall mean the "Japanese
Financing Documents," as defined in the Indenture.
"Foreign Lease Supplement" shall mean the "Japanese Lease
Supplement," as defined in the Indenture.
"Foreign Lender" shall mean the "Japanese Lender," as
defined in the Indenture.
"Foreign Lessee" shall mean Air Tara Caymans II, Limited.
"Foreign Lessor" shall mean the "Japanese Lessor," as
defined in the Indenture.
"GAAP" shall mean United States generally accepted
accounting principles and practices consistently applied as in effect from time
to time, which shall include the official interpretations thereof by the
Financial Accounting Standards Board. All accounting terms not otherwise defined
herein shall have the meanings assigned to such terms in accordance with GAAP.
- 9 -
<PAGE> 11
"Governmental Entity" shall mean and include (i) any
national government, political subdivision thereof, or local jurisdiction
therein; (ii) any board, commission, department, division, organ,
instrumentality, court, or agency of any thereof, however constituted; and (iii)
any association, organization, or institution of which any entity described in
(i) or (ii) above is a member or to whose jurisdiction any such entity is
subject or in whose activities any such entity is a participant but only to the
extent that any entity described in clause (i), (ii) or (iii) has jurisdiction
over Lessor, Lessee, Indenture Trustee, Note Holders, the Aircraft or its
operations.
"Head Lessor's Lien" shall mean a Lessor's Lien under and
as defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a
company organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Foreign Lessor, Foreign Lessee,
Foreign Lender, Lessor (in its individual capacity and as trustee under the
Trust Agreement), the Trust Estate, Owner Participant, the Trust Indenture
Estate, Indenture Trustee (in its individual capacity and as trustee under the
Indenture), each Pass-Through Trust, each Pass-Through Trustee (in its
individual capacity and as trustee under the Pass-Through Trusts), the
Subordination Agent and each Liquidity Provider, and their respective successors
and permitted assigns, and any combination thereof and their respective
officers, directors, agents, servants, subcontractors, employees, subsidiaries,
Affiliates, shareholders and partners.
"Indenture" shall mean the Second Amended and Restated
Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as of December 15,
1989, amended and restated as of October 1, 1991, and further amended and
restated as of November 26, 1996, as the same may be further amended,
supplemented or modified from time to time, between Indenture Trustee and
Lessor. The term "Indenture" shall also include the Indenture Supplements
entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
"Interest Rate" shall mean (i) with respect to the portion
of any payment of Rent that may be required by the
- 10 -
<PAGE> 12
Indenture to be paid to the holders of any outstanding Equipment Notes issued
thereunder, a per annum rate of interest equal to the Past Due Rate applicable
thereto under and as defined in the Indenture, computed on the basis of a year
of 360 days and twelve 30-day months and (ii) with respect to any other amount,
a per annum rate of interest equal to the sum of the rate of interest publicly
announced by Citibank, N.A., at its principal office in New York City, as its
prime or similar base rate from time to time in effect from the date the amount
becomes due to the date it is paid in full, plus 2%, computed on the basis of a
year of 365 or 366 days, as the case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule,
decree, constitution, regulation, order, judgment or other directive of any
Governmental Entity; (ii) any treaty, pact, compact or other agreement to which
any Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease,"
"this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words
shall mean this Lease as originally executed and as amended, supplemented or
otherwise modified from time to time, including, without limitation, by one or
more Lease Supplements, as a whole and not to any particular Section or other
subdivision, and any reference to a "Section" or an "Exhibit" shall refer to a
Section or Exhibit of this Lease, as so amended, supplemented or modified,
unless expressly provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1,
Lease Supplement No. 2, Lease Supplement No. 3 and each subsequent Lease
Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA
1989 BN-6] No. 1, dated December 22, 1989 between Lessor and Original Head
Lessee, as Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA
1989 BN-6] No. 2, dated October 24, 1991 between Lessor and Original Head
Lessee, as Lessee.
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<PAGE> 13
"Lease Supplement No. 3" shall mean Lease Supplement [GPA
1989 BN-6] No. 3, substantially in the form of Exhibit D hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims (as defined herein) against Indenture Trustee in its
individual capacity (and not as Indenture Trustee) not related to its interest
in the Aircraft or the administration of the Trust Estate or the Trust Indenture
Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the
Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture
Trustee in its individual capacity (and not as Indenture Trustee) not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of Indenture Trustee in its individual capacity (and not as Indenture
Trustee) which are in violation of any of the Operative Documents, or (iii)
Taxes imposed on or Claims against Indenture Trustee in its individual capacity
(and not as Indenture Trustee) which are excluded from indemnification by
Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) arising out of the voluntary or involuntary transfer
by Indenture Trustee in its individual capacity (and not as Indenture Trustee)
of all or any portion of its interest in the Aircraft, the Airframe, any Engine,
the Trust Estate, the Trust Indenture Estate or the Operative Documents (except
a Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals
hereto.
"Lessor" shall have the meaning set forth in the Recitals
hereto.
"Lessor's Lien" shall mean any Lien or disposition of
title affecting the Aircraft, the Airframe, any Engine or any Part arising as a
result of (i) any claim against Lessor, Owner Participant, Trust Company or any
of their Affiliates not related to, the transactions contemplated by this Lease
or the other Operative Documents, the Financing Documents or the Purchase
Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company
or any of
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<PAGE> 14
their Affiliates not expressly contemplated by this Lease or the other Operative
Documents, the Financing Documents, the Foreign Lease Documents or the Purchase
Documents or not permitted without consent (which consent has not been granted)
by any party hereto or thereto or that is in violation of any term of this Lease
or the other Operative Documents, the Financing Documents or the Purchase
Documents; (iii) Taxes imposed against the Trust Estate, Trust Company, Lessor
or Owner Participant or any of their Affiliates or the consolidated group of
taxpayers of which any of them is a member which are not to be indemnified
against by Lessee under the Operative Documents, the Purchase Documents or the
Financing Documents or by Original Head Lessee under the Original Head Lease Tax
Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company,
Owner Participant or Lessor or any of their Affiliates arising out of the
transfer of all or any part of their respective interest in the Aircraft, the
Airframe, either Engine, the Trust Estate or the Operative Documents other than
any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19
(except Liens resulting from a transfer not permitted by such Section) or 20 of
this Lease or pursuant to Sections 10 and 11 of the Refunding Agreement or
similar types of provisions in the Foreign Lease Agreement; provided, however,
that there shall be excluded from this definition and Lessor shall not be
required to remove any Lien which would otherwise constitute a Lessor's Lien, if
it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Aircraft or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture, Lenders' Liens, or Liens contemplated by the Foreign Lease Documents.
"Lien" shall mean any mortgage, chattel mortgage, pledge,
lien, charge, encumbrance, lease, exercise of rights, security interest, lease
in the nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft in effect on the date
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<PAGE> 15
hereof or as modified with the approval of the FAA without affecting, or any
other FAA approved maintenance program which does not affect, the return
condition standards set forth in Section 16 and Exhibit E or (ii) if the
Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any other
maintenance program for the Aircraft which is approved by the aviation authority
of the country of registry and complies with the requirements applicable to
maintenance of the Aircraft contained in the definition of Foreign Air Carrier.
The Maintenance Program shall encompass scheduled maintenance, condition
monitored maintenance, and on-condition maintenance of the Airframe, Engines,
and components of the Aircraft, including, but not limited to, servicing,
testing, preventive maintenance, repairs, structural inspections, structure life
improvements, system checks, overhauls, approved modifications, service
bulletins, engineering orders, airworthiness directives, and corrosion control
inspections and treatments. All modifications and supplements to the Maintenance
Program shall be provided to Lessor upon its reasonable request and Lessor shall
be given reasonable access to the Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a
French societe a responsabilite limitee, which as of the date hereof is owned by
Airbus Industrie.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, the Tax Indemnification Agreement, the
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<PAGE> 16
Financing Documents, that certain letter agreement dated as of the Restatement
Date, relating to Stipulated Loss Values with respect to this Lease, and any
other agreement, document or certificate delivered or entered into pursuant to
the foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease
Agreement [GPA 1989 BN-6], with respect to the Aircraft, dated as of December
15, 1989, between Lessor, as lessor, and the Original Head Lessee, as lessee, as
amended, supplemented or otherwise modified and as in effect immediately prior
to the Restatement Date, as more particularly described in Annex I attached
hereto.
"Original Head Lease Tax Indemnification Agreement" shall
mean the Head Lease Tax Indemnification Agreement [GPA 1989 BN-6], dated as of
December 15, 1989, and amended and restated as of October 1, 1991, and amended
and restated as of the Restatement Date, between the Original Head Lessee and
Owner Participant, as the same may be amended, supplemented or otherwise
modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA I, Inc.,
a Connecticut corporation.
"Owner Participant" shall mean ________________
___________, a Delaware corporation, as Owner Participant under the Trust
Agreement, and its successors and permitted assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as
Owner Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial
Assignment, Assumption, Release and Amendment Agreement, dated as of December
30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as
amended, supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1989 BN-6], dated as of December 15, 1989 and amended as of
October 1, 1991, among Original Head Lessee, Parent, Owner Participant, Owner
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<PAGE> 17
Trustee, Indenture Trustee and the Lenders named therein, as amended,
supplemented or otherwise modified from time to time and as in effect
immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (excluding complete Engines or engines), including Buyer
Furnished Equipment, which may now or from time to time be incorporated or
installed in or attached to or were provided by the Manufacturer with the
Airframe or any Engine or so long as title thereto shall remain vested in Lessor
in accordance with the terms of Section 9 hereof after removal from such
Airframe or Engine (or so long as the Foreign Lease Agreement is in effect,
Foreign Lessor in accordance with Section 8 of the Foreign Lease Agreement).
Except as otherwise set forth herein, at such time as a replacement part shall
be substituted for a Part in accordance with Section 9 hereof, the Part so
replaced shall cease to be a Part hereunder.
"Payment Location" shall have the meaning set forth in
Exhibit C, as the same may be changed from time to time by Lessor as provided in
Section 4(c).
"Permitted Lien" shall mean any Lien referred to in
clauses (i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air
Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b)
the United States Government or an agency or instrumentality thereof which bears
the full faith and credit of the United States of America which has agreed (in
form and substance satisfactory to Lessor) that all of its indemnity obligations
which by the terms of this Lease are permitted in lieu of insurance shall be
enforceable by and payable to Lessor directly or (c) any other Person approved
in writing by the Owner Participant and the Indenture Trustee, which approval
shall not be unreasonably withheld.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or
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<PAGE> 18
association of which any of the above is a member or a participant.
"Purchase Agreement" shall mean the Amended and Restated
Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and
restated as of December 30, 1988 (insofar as the same relates to Model A320
Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the
Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices
thereto, as partially assigned to Parent pursuant to the Partial Assignment, to
which Airbus Industrie, as guarantor, has consented, and as the same may from
time to time be further amended, supplemented or otherwise modified to the
extent permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement,
the Partial Assignment and any other agreement, document or certificate
delivered or entered into pursuant to the foregoing, as amended, supplemented or
otherwise modified.
"Removable Part" shall have the meaning set forth in
Section 9(b).
"Renewal Rent" shall mean the rent payable pursuant to
Section 20.
"Renewal Rent Payment Date" shall mean each day determined
in accordance with Exhibit C upon which a payment of Renewal Rent becomes
payable.
"Renewal Term" shall mean the period described in Section
20 following the end of the Basic Term if Lessee shall have exercised its
renewal option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case
may be, and Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have
the meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee,
any of the Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer or Controller.
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<PAGE> 19
"Restricted Use Period" shall have the meaning specified
in Exhibit C.
"Return Occasion" shall mean the event that occurs when
possession of the Aircraft is to be returned from Lessee to Lessor at the end of
the Term of this Lease or upon Lessor taking possession pursuant to Section 18
or for any other reason.
"Specified Investments" shall mean (i) direct obligations
of the United States Government, the obligations of which bear the full faith
and credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an entity
referred to in clause (iii) above or another financial institution having a net
worth of at least $750,000,000 and having a rating of "B" or better from
Thompson BankWatch, Inc. is obligated to repurchase any such obligation not
later than ninety (90) days after the purchase of any such obligation; and (v)
money market funds which invest solely in obligations described in clause (i);
provided that if all of the above investments are unavailable, the entire
amounts to be invested may be used to purchase Federal funds from an entity
described in clause (iii) above; and provided further that no investment shall
be eligible as a "Specified Investment" unless the final maturity or date of
return of such investment is on or before the date which is ninety (90) days
from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable
date during the Basic Term the amount set forth on Exhibit A hereto and,
thereafter, the amount described in Section 20(ii) (it being understood and
agreed that the amounts set forth in Exhibit A take into account fully the
amount and application of each installment of Basic Rent or Renewal Rent on each
Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a
Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional
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<PAGE> 20
credit of such Basic Rent or Renewal Rent is to be made in respect thereof)
except as expressly provided herein on a Basic Rent Payment Date or a Renewal
Rent Payment Date. In the event that it is necessary to determine a separate
Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value
shall be based on the ratio that the original cost to Lessor of the Airframe or
such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for
the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth on, Exhibit
A hereto.
"Supplemental Agreement" shall mean the Supplemental
Agreement dated as of September 28, 1989 between Foreign Lessor and Foreign
Lessee (as the same may be amended, modified or supplemented from time to time).
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any
payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of
an amount equal to average daily Basic Rent or Renewal Rent in connection with
an extension of the Term of this Lease as a result of the need to correct any
failure of the Aircraft to satisfy the requirements of Section 16 hereof; (iv)
[Intentionally Left Blank]; (v) an amount equal to any payment due to Owner
Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi)
an amount equal to any payment due to Trustee in respect of fees or expenses as
provided in the Indenture and/or Section 21(j) hereof; (vii) Lessor's pro rata
share of any payment due to any PassThrough Trustee in respect of fees or
expenses pursuant to the Pass-Through Trust Agreement; (viii) Lessor's pro rata
share of any payment due to the Subordination Agent in respect of fees,
compensation, costs or expenses pursuant to the Intercreditor Agreement and/or
the Refunding Agreement; (ix) an amount equal to the amount specified in clause
(b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to the
extent permitted by applicable Law, interest at the Interest Rate (all
computations of interest under this Lease to be made on the basis of a 360-day
year, as applicable, and twelve 30-day months) calculated: (1) on any part of
any installment of Basic Rent or Renewal Rent, as the case may be, not paid on
the due date thereof for the
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<PAGE> 21
period for which the same shall be overdue and (2) on any Supplemental Rent not
paid when due hereunder from and including the due date until the same shall be
paid. As used herein, "Lessor's pro rata share" means as of any date of
determination a fraction the numerator of which is the aggregate Principal
Amount then outstanding of the Equipment Notes issued under the Indenture and
the denominator of which is the aggregate principal balance then outstanding of
all "Equipment Notes" issued under the Indentures (as defined in the
Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-6], dated as of
December 15, 1989, as amended and restated as of October 1, 1991, and as amended
and restated as of the Restatement Date, between Original Head Lessee and
Lessee, as the same may be amended, supplemented or otherwise modified from time
to time.
"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Term" shall mean, collectively, the Basic Term specified
in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with
Section 20, the Renewal Term, for which the Aircraft is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1989
BN-6] dated as of December 15, 1989 as amended by Trust Supplement No. 1, as
further amended by Trust Supplement No. 2 and as further amended by Trust
Supplement No. 3, between Lessor, in its individual capacity, and Owner
Participant, as beneficiary, as the same may be amended, supplemented or
otherwise modified from time to time. The term "Trust Agreement" shall also
include the Trust Supplements.
"Trust Estate" shall have the meaning specified in the
Trust Agreement.
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<PAGE> 22
"Trust Supplements" shall mean Trust Supplement No. 1,
Trust Supplement No. 2, Trust Supplement No. 3 and each subsequent Trust
Supplement entered into thereunder and any further supplement to the Trust
Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement
Supplement [GPA 1989 BN-6] No. 1 dated the Delivery Date between Lessor and
Owner Participant for the purpose of bringing the Aircraft and the Original Head
Lease into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement
Supplement [GPA 1989 BN-6] No. 2 dated October 24, 1991 between Lessor and Owner
Participant.
"Trust Supplement No. 3" shall mean Trust Agreement
Supplement [GPA 1989 BN-6] No. 3 dated the Restatement Date between Lessor and
Owner Participant conforming the references in the Trust Agreement to this
Agreement.
"United States Government" shall mean the federal
government of the United States of America and any board, commission,
department, division, organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee
agrees to furnish the Aircraft or the Airframe and Engine or engines installed
thereon at that time to a third party pursuant to which such Aircraft or the
Airframe and Engine or engines (i) shall be operated solely by regular employees
of Lessee (or any Permitted Sublessee) possessing all current certificates and
licenses required under the Federal Aviation Act or, if the Aircraft is not
registered under the Federal Aviation Act, all certificates and licenses
required by the laws of the jurisdiction of registry (it is understood that
cabin attendants need not be regular employees of Lessee (or any Permitted
Sublessee)) and Lessee (or any Permitted Sublessee) otherwise maintains
operational control and possession thereof, and (ii) shall be maintained by
Lessee (or any Permitted Sublessee) in accordance with its normal maintenance
practices and this Lease, and otherwise the insurance required hereunder shall
be maintained and the Aircraft shall be used and operated in accordance with
this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to
lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft
from Lessor, on the terms and subject to the conditions set forth in this Lease.
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<PAGE> 23
Section 3. Delivery and Acceptance; Term; Rental Period.
(a) Time of Delivery. The Aircraft was delivered to
Lessee, and Lessee accepted delivery of the Aircraft, on December 22, 1989.
(b) [Intentionally Left Blank]
(c) Acceptance of Aircraft. The Aircraft leased hereunder
was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY
DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b)
HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for
all purposes of this Lease and Lessee's acceptance of the Aircraft was
conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all
respects satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall
commence on the Delivery Date and shall continue until the Expiration Date;
provided, however, that the Term of this Lease may be earlier terminated
pursuant to the provisions hereof.
(e) Rental Period. Lessor and Lessee agree that the period
between each Basic Rent Payment Date shall constitute a rental period for
purposes of Section 467 of the Code.
Section 4. Rent; Minimum Payments.
(a) Rent. Lessee covenants and agrees to pay the following
as Rent hereunder:
(i) Basic Rent. The Basic Rent, as set forth in Exhibit
C throughout the Basic Term hereof, in consecutive installments, in advance and
allocable to the rental period beginning on such date, as set forth on Schedule
I to Exhibit C, due and payable on each Basic Rent Payment Date; and
(ii) Supplemental Rent. Any and all Supplemental Rent,
which shall be due and payable within fifteen (15) days after demand unless
otherwise specifically provided. In the event of any failure on the part of
Lessee to pay any Supplemental Rent when due, Lessor shall have all rights,
powers and remedies provided for herein or by law or
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<PAGE> 24
equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent.
(b) Minimum Payments. Notwithstanding any provision in
this Lease or in any other Operative Document to the contrary, under all
circumstances and in any event, (i) the Stipulated Loss Value, together with the
payment of Supplemental Rent and all other Rent then due hereunder, as of any
time and as of the date of any payment thereof shall (both before and after
giving effect to any reductions therefrom) be in an amount at least sufficient
to pay in full as of such time or date the aggregate unpaid principal amount of
the Equipment Notes then outstanding and all accrued and unpaid interest
(assuming interest has been timely paid) thereon and (ii) Basic Rent payable on
any Basic Rent Payment Date shall at least equal the aggregate amount of
principal and interest due and payable on the Equipment Notes on such Basic Rent
Payment Date. It is agreed, however, that no installment of Basic Rent or
Stipulated Loss Value shall be increased or adjusted by reason of (A) any
attachment or diversion of Rent on account of any Lessor's Lien or Head Lessor's
Lien or any Lenders' Lien, (B) any modification of the terms of the Equipment
Notes or the other Financing Documents made without the prior written consent of
Lessee or (C) the acceleration of any Equipment Note due to the occurrence of
any "Indenture Event of Default" (as defined in the Indenture) which does not
constitute an Event of Default hereunder. It is further agreed that nothing in
this Lease or any other Operative Document shall be deemed to constitute a
guaranty of the value, utility or useful life of the Aircraft or a guaranty in
respect of interest, principal or any other amounts payable in respect of or
under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on
which a payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in The City of New York or Hartford, Connecticut as Indenture
Trustee may direct by thirty (30) days prior written notice to Lessee, except
that all Excepted Payments, and upon discharge of the Lien of the
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<PAGE> 25
Indenture, all payments of Rent thereafter made hereunder, shall be paid in such
immediately available funds no later than 12:00 p.m. (noon), New York City time,
on the date payable hereunder, to Lessor or to Owner Participant, as
appropriate, in accordance with the payment instructions set forth in Exhibit C
or at such other address in The City of New York as Lessor may direct by thirty
(30) days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This
Lease is a net lease. Lessee's obligations to pay all Rent and to perform all
other obligations hereunder are absolute and unconditional and shall not be
affected or reduced by any circumstances, including, without limitation, (i) any
setoff, counterclaim, recoupment, defense, or other right which Lessee may have
against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any
Note Holder, any Manufacturer, any Person providing services with respect to the
Aircraft, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
limitation, any breach by Lessor of its representations, warranties or covenants
contained herein or in the other Operative Documents; (ii) any defect in the
title, airworthiness, eligibility for registration under the Federal Aviation
Act, condition, design, operation, or fitness for use of, or any damage to or
loss or destruction of, the Aircraft (subject to the provisions of Section
11(a)(ii) hereof), any interruption or cessation in the use of or possession
thereof by or availability to Lessee for any reason whatsoever, whether arising
out of or related to an act or omission of Lessee, Lessor, Original Head Lessee,
Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any
Person providing services with respect to the Aircraft or any other Person;
(iii) any Liens with respect to the Aircraft; (iv) the invalidity or
unenforceability or lack of due authorization or other infirmity of this Lease
or any absence of right, power or authority of Lessor, Original Head Lessee,
Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the
case may be; (v) any insolvency, bankruptcy, reorganization, or similar
proceedings by or against Lessor, Original Head Lessee, Lessee, any Permitted
Sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any
other circumstance or happening of any nature whatsoever, whether or not similar
to any of the foregoing; it being the expressed intention of Lessor and Lessee
that all Rent payable hereunder shall be payable in all events, unless the
obligation to pay the same shall be terminated pursuant to the express
provisions of this Agreement.
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<PAGE> 26
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Aircraft or any obligation imposed
upon Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be
terminated in whole or in part by operation of Law, except as specifically
provided herein, Lessee waives all rights (if any) to any diminution in its Rent
obligations hereunder and nonetheless agrees to pay to Indenture Trustee or
Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or
Renewal Rent, as the case may be, payment and any Supplemental Rent payment at
the time such payments would have become due and payable in accordance with the
terms hereof had this Lease not been terminated in whole or in part, and so long
as such payments are made and all other terms and conditions hereof are complied
with by Lessee, Lessor and Lessee will deem this Lease to remain in full force
and effect.
The foregoing shall not, however, be construed as a waiver
of Lessee's other rights to seek damages, specific performance, other remedies
at law or equity or any combination thereof, as against the Original Head
Lessee, Lessor, Indenture Trustee or any other Person having an interest herein
through the Original Head Lessee, Lessor, Indenture Trustee or any other Person
as shall be liable therefor, on account of any failure of the Original Head
Lessee, Lessor, Indenture Trustee or any other such Person to perform its
express obligations under this Lease and the other Operative Documents, or to
enforce any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE AIRCRAFT
WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS".
LESSEE EXPRESSLY AGREES THAT
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<PAGE> 27
IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO
HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE OR BY ONE OF
ITS AFFILIATES HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR
ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND
LESSOR HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED),
AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS
FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR
OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION
OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT,
INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY
ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM
COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF
USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY
WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY
SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER
INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER
PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF
LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES
AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR
DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR
BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER
CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF
THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE,
LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS
SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS
OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED
WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR OR ANY USE, EXCEPT THAT: Lessor represents and warrants that (x) on
the Delivery Date,
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<PAGE> 28
Lessor had, and on the Restatement Date Lessor has, the right to lease the
Aircraft hereunder, (y) on the Delivery Date the Aircraft was, and on the
Restatement Date the Aircraft is, free of Lessor's Liens and Head Lessor's
Liens, and (z) on the Restatement Date Lessor has such title to the Aircraft as
was transferred to it on the Delivery Date and (B) Lessor covenants that it
shall maintain such title to the Aircraft as was transferred to it on the
Delivery Date and shall not create, incur, assume or suffer to exist any
Lessor's Lien or Head Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor. Lessor
hereby represents and warrants, as of the Delivery Date and as of the
Restatement Date that its representations and warranties set forth in Section
9(b) of the Refunding Agreement were true when made and continue to be true and
correct.
(c) No Amendments to Financing Documents. Lessor covenants
and agrees that Lessor will not, without the prior written consent of Lessee,
amend, modify, supplement or waive any provision of any Financing Document in
such a way as to materially increase Lessee's obligations hereunder or
materially reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor
under Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution
and delivery of this Lease and the delivery of the Aircraft and the Restatement
Date.
(d) Suppliers' Warranties. So long as a Default or an
Event of Default has not occurred and is continuing and provided that the
Aircraft continues to be maintained, modified and repaired as required
hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees
otherwise to make available to Lessee the right to exercise in Lessee's name
such rights as Lessor may have or may subsequently obtain (but without
representation or warranty by or recourse to Lessor) with respect to any product
warranty, service life policy, trademark, patent or copyright infringement
indemnity, or airframe or propulsion system performance guaranty, of Airbus
Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor
with respect thereto under the Purchase Agreement (except those which were given
directly to Parent, the Original Head Lessee or any of their Affiliates and are
not directly related to the operator's use of the Aircraft), to the extent that
the same may be assigned or otherwise made available to Lessee, and Lessor
agrees to exert its reasonable efforts, at Lessee's expense and upon its
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<PAGE> 29
request, to enforce such rights as Lessor may have with respect thereto for the
benefit of Lessee; provided, however, that upon and during the continuance of a
Default or an Event of Default, such assignment or other rights which are
otherwise made available to Lessee shall immediately and automatically without
further action be deemed cancelled and, to the extent of any remaining interest
held by Lessee, deemed reassigned to Lessor and all such rights shall revert to
Lessor automatically including all claims thereunder whether or not perfected
and all amounts payable shall be paid to and held by Lessor. In no event,
however, shall Lessee have any right to amend, supplement or otherwise modify
the Purchase Agreement (by change order or otherwise). In connection with the
foregoing, Lessee agrees to be bound by and comply with all applicable terms,
conditions and limitations of the provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL NOT
ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN
(EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE
IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT,
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE
INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no
Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as all necessary approvals of the FAA
and any other Governmental Entity having jurisdiction have been obtained, then
Lessee, without the prior written consent of Lessor, may, only to the extent
provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii)
below:
(1) subject any Engine to a normal interchange,
maintenance, servicing or pooling agreement or similar arrangement
with a Permitted Sublessee, in each case customary in the airline
industry of which Lessee is a part and entered into in the
ordinary course of its business; provided that no transfer of the
registration of any Engine shall be effected in connection
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<PAGE> 30
therewith; and provided, further, that (A) no such agreement or
arrangement contemplates, results in or requires the transfer of
title to any Engine, and (B) if Lessor's title or Foreign Lessor's
(so long as the Foreign Lease Agreement is in effect) to any
Engine shall be divested under any such agreement or arrangement,
such divestiture shall be deemed to be an Event of Loss with
respect to such Engine and not an Event of Default and Lessee
shall comply with Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or
any Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for
testing, service, storage, repair, maintenance, inspection or
overhaul work on such Aircraft, Airframe or Engine or any part
thereof or for alterations or modifications in or additions to
such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe to
the United States of America or any instrumentality or agency
thereof pursuant to a sublease;
(4) (i) subject the Airframe to the Civil Reserve Air
Fleet Program and transfer possession of the Airframe or any
Engine to the United States Government pursuant to the Civil
Reserve Air Fleet Program, so long as Lessee shall promptly notify
Lessor upon transferring possession of the Airframe or any Engine
to the United States Government pursuant to the Civil Reserve Air
Fleet Program and provide Lessor with the name and address of the
Contracting Office Representative for the Military Airlift Command
of the United States Air Force to whom notices must be given; or
(ii) subject the Airframe to (a) a service contract with
the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term,
or (b) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all
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<PAGE> 31
Liens except (A) Permitted Liens and Liens which apply only to
engines (other than the Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other
than Parts) installed on such airframe (but not to the airframe as
an entirety) and (B) the rights of participants under normal
interchange agreements which are customary in the airline industry
and do not contemplate, permit, result in or require the transfer
of title to the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of
all Liens except the rights of the parties to the lease or
conditional sale or other security agreement covering such
airframe and except Liens of the type permitted by clauses (A) and
(B) of Section 6(a)(i)(5) and the Lien of any mortgage which
provides that each Engine leased to Lessee hereby shall not become
subject to the lien thereof or to any rights of any party
thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of
such Engine on any airframe subject to the Lien of such mortgage,
unless and until Lessee shall become the owner of such Engine and
Lessor shall have no further interest therein, all pursuant to the
express terms of this Lease; and (B) there shall be in effect a
written agreement of the lessor or secured party of such airframe
(which may be contained in the lease or conditional sale or other
security agreement covering such airframe) substantially similar
in effect to the agreement of Lessor in Section 6(b) below whereby
such lessor or secured party effectively and expressly agrees that
neither it nor its successors or assigns will acquire or claim any
right, title or interest in any Engine by reason of such Engine
being installed on such airframe at any time while such Engine is
subject to this Lease or is owned by Lessor, and a copy of such
agreement shall be provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional
sale or other security agreement under circumstances where neither
Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided
that such installation shall be deemed an Event of Loss with
respect to such Engine and Lessee shall comply with
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<PAGE> 32
Section 11(b) hereof in respect thereof, Lessor not intending
hereby to waive any right or interest it may have to or in such
Engine under applicable law until compliance by Lessee with such
Section 11(b);
(8) enter into a Wet Lease for the Aircraft or the
Airframe and engines installed thereon in the ordinary course of
Lessee's business for a period not extending beyond the Term;
provided that if Lessee (or any Permitted Sublessee) shall enter
into any Wet Lease for a period of more than one year (including
renewal options) Lessee shall provide to Lessor written notice of
such Wet Lease (such notice to be given prior to entering into
such Wet Lease, if practicable, but in any event promptly after
entering into such Wet Lease); or
(9) sublease the Aircraft or the Airframe to any Permitted
Sublessee on the terms and conditions set forth in Section
6(a)(iii) below.
(ii) Certain Limitations on Transfers. With respect
to any transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession
by reason of a transfer permitted by Section 6(a) hereof (other
than the transfer of an Engine which is deemed to have been an
Event of Loss) shall be expressly subject and subordinate to all
the terms of this Lease and the Lien of the Indenture (if it has
not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and
Lessee shall remain primarily liable hereunder for the performance
of all of the terms of this Lease to the same extent as if such
transfer had not occurred and no provision of this Lease shall be
deemed a waiver of Lessor's rights hereunder or under the other
Operative Documents nor discharge or diminish any of Lessee's
obligations hereunder or under the other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the
Aircraft, the Airframe or any Engine pursuant to the terms of this
Section 6(a) shall be permitted if such Wet Lease, Permitted
Sublease or other relinquishment of possession would cause the
Aircraft, the Airframe or such Engine to be "tax-exempt
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<PAGE> 33
use property" within the meaning of Section 168(h) of the Code or
cease to be "Section 38 property" within the meaning of Section
48(a) of the Code (as determined after the application of Section
47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend
beyond the Basic Term or the Renewal Term (if Lessee shall have
exercised its option to renew this Lease in accordance with the
terms hereof); and
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable.
(iii) Permitted Subleases. With respect to any
sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law)
or Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under
such sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the
date such sublease is entered into, (B) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier
(other than a Foreign Air Carrier principally based in Taiwan),
the United States maintains diplomatic relations with the country
in which such proposed Permitted Sublessee is principally based at
the time such sublease is entered into (or, in the case of a
sublease to a proposed Permitted Sublessee principally based in
Taiwan, maintains diplomatic relations at least as good as those
in effect on the Restatement Date) and (C) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier,
Lessor and the Indenture Trustee shall have received an opinion of
counsel to Lessee, in form and substance reasonably satisfactory
to Owner Participant and the Indenture Trustee, to the effect that
(I) the terms of the proposed sublease will be legal, valid,
binding and (subject to customary exceptions in foreign opinions
generally) enforceable against the proposed Permitted Sublessee in
the country in which the Permitted Sublessee is principally based,
(II) there exist no possessory rights in favor of the
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<PAGE> 34
Permitted Sublessee under such sublease under the laws of such
Permitted Sublessee's country of domicile that would, upon
bankruptcy or insolvency of or other default by Lessee, prevent
the return or repossession of the Aircraft in accordance with the
terms of this Lease, (III) (unless Lessee shall have agreed or is
required to provide insurance covering the risk of requisition of
use of the Aircraft by the government of the country of such
Permitted Sublessee's country of domicile) the laws of such
Permitted Sublessee's country of domicile require fair
compensation by the government of such jurisdiction payable in
currency freely convertible into dollars for the loss of use of
the Aircraft in the event of the requisition by such government of
such use, (IV) the Permitted Sublessee is either not entitled to
sovereign immunity, or has effectively waived such sovereign
immunity, with respect to its rights and obligations under the
proposed sublease; (V) the laws of such Permitted Sublessee's
country of domicile would give recognition to Lessor's title to
the Aircraft, to the registry of the Aircraft in the name of the
Lessor (or Lessee, as "lessee," or the proposed Permitted
Sublessee, as "sublessee," as appropriate) and to the Lien of the
Indenture; (VI) it is not necessary under the laws of such
Permitted Sublessee's country of domicile, solely as a consequence
of such subleasing and without giving effect to any other activity
of Owner Participant, Owner Trustee or Indenture Trustee or any
Affiliate thereof, as the case may be, for the Owner Trustee, the
Owner Participant or the Indenture Trustee to qualify to do
business in such jurisdiction; and (VII) if the Owner Participant
so requests, (x) under the laws of such Permitted Sublessee's
country of domicile there is no tort liability of the owner of an
aircraft not in possession thereof (it being agreed that in the
event this opinion cannot be given in a form reasonably
satisfactory to Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to Owner Participant is provided
to cover such risk), and (y) such other matters as the Owner
Participant reasonably requests, provided, however, that no
sublease shall extend beyond the expiration of the Basic Term or
any Renewal Term then in effect.
The rights of any Permitted Sublessee shall be expressly
subject and subordinate to all the terms of this Lease and to the Lien of the
Indenture (if it has not been discharged), including, without limitation, the
covenants contained in Sections 6(c), 6(d) and 6(e) hereof and
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<PAGE> 35
Lessor's rights to repossession pursuant to Section 18 hereof and to avoid or
terminate such Permitted Sublease upon such repossession, and Lessee shall
remain primarily liable hereunder for the performance of all of the terms of
this Lease to the same extent as if such Permitted Sublease had not occurred. No
Permitted Sublease shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or constitute a waiver of Lessor's rights or
remedies hereunder. Any Permitted Sublease shall expressly prohibit any further
sub-sublease by the Permitted Sublessee. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Permitted
Sublease hereunder (such notice to be given not later than ten Business Days
prior to entering into any Permitted Sublease with a Foreign Air Carrier and, if
practicable, not later than five days prior to entering into any Permitted
Sublease with any other proposed Permitted Sublessee, but, in the case of a
Permitted Sublease with a Permitted Sublessee other than a Foreign Air Carrier,
in any event promptly after entering to any such Permitted Sublease) and (ii) a
copy of each Permitted Sublease which has a term of more than three months.
(b) Reciprocal Recognition of Rights. In the event the
lessor or secured party of any airframe leased to Lessee (or a Permitted
Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to a
conditional sale or other security agreement in accordance with Section
6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement
covering such airframe also covers an engine or engines owned by the lessor
under such lease or subject to a security interest in favor of the secured party
under such conditional sale or other security agreement, Lessor hereby agrees
for the benefit of such lessor or secured party that Lessor will not acquire or
claim, as against such lessor or secured party, any right, title or interest in
any such engine as the result of such engine being installed on the Airframe at
any time while such engine is subject to such lease or conditional sale or other
security agreement and owned by such lessor or subject to a security interest in
favor of such secured party. Lessor also hereby agrees for the benefit of the
mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof, relating
to installation of an Engine on an airframe leased to Lessee (or a Permitted
Sublessee), that Lessor will not acquire or claim, as against such mortgagee,
any right, title or interest in any engine subject to the lien of such mortgage
as the result of such engine being installed on the Airframe at any time while
such engine is subject to the lien of such mortgage.
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<PAGE> 36
(c) Lawful Insured Operations. Lessee will not permit the
Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used
or operated in violation of any Law of any Governmental Entity having
jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration issued by any such authority or any manufacturer's
specifications, service bulletins or other requirements, including, without
limitation, such of any manufacturer's requirements as may be applicable to keep
in full force and effect each material warranty, product or performance
guaranty, service life policy or the like, in each case, to the extent made
mandatory for Part 121 operators similarly situated to Lessee or the Permitted
Sublessee if the Aircraft is registered with the FAA, or the applicable laws of
any other jurisdiction in which the Aircraft may then be registered in
accordance with Section 11 of the Refunding Agreement, unless the validity
thereof is being contested in good faith and by appropriate proceedings, but
only so long as such proceedings do not involve any danger of sale, forfeiture
or loss of the Aircraft or impair the interest of Lessor therein or impair the
validity or priority of the Lien of the Indenture or result in a risk of
criminal liability of Lessor or Indenture Trustee and are not inconsistent with
any insurance required to be maintained by Lessee hereunder. In the event that
such Law or other requirement requires alteration of the Aircraft during the
Basic Term or then-current Renewal Term, Lessee shall comply therewith at its
sole expense and shall maintain the same in proper condition for operation under
such Laws and other requirements. Lessee shall not operate in any manner or
locate in any place the Aircraft, or suffer or permit the Aircraft to be
operated by a Permitted Sublessee or otherwise in any manner or located by a
Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered
by insurance or United States Government indemnity as required by the provisions
hereof or (ii) contrary to the terms of such insurance or United States
Government indemnity. Lessee also agrees not to operate or locate the Aircraft
or suffer or permit the Aircraft to be operated or located in any area excluded
from coverage by any insurance policy issued pursuant to the requirements of
this Lease or in any war zone unless insured or indemnified by the United States
of America therefor, except in the case of operation pursuant to a sublease or
contract with, or as a result of a requisition (not constituting an Event of
Loss) by, the United States of America, and then only if Lessee has obtained
insurance or an indemnity (in lieu of such insurance) from the United States of
America covering such
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<PAGE> 37
risks, in the amounts and otherwise as required by this Lease. Lessee shall in
no event permit the Aircraft, the Airframe or any Engine to be used, operated or
maintained in Japan.
(d) Maintenance. Lessee, at its own cost and expense,
shall: (i) perform or cause to be performed all service, repair, maintenance,
overhaul, inspections, alterations, modifications, and testing (A) in accordance
with good airline industry practice and in such manner to provide complete data
and documentation necessary to substantiate certification, (B) as may be
necessary and required under, and in compliance with, applicable Law, including,
without limitation, FAA rules, regulations and other requirements, the
Maintenance Program, airworthiness directives having a compliance date during
the Term, and the service bulletins and other requirements of any manufacturer,
including, without limitation, such requirements as may be applicable to keep in
full force and effect any and all material warranties, product and performance
guaranties, service life policies, indemnities or the like, (C) except during
any period that a Permitted Sublease is in effect, in the same manner and with
the same care, including regard for the status and technical condition of the
Aircraft, as shall be the case with respect to similar aircraft and engines
owned by Lessee without discrimination and as if Lessee owned the Aircraft and
was going to use the Aircraft in continued regular customer service after the
expiration of the Term, and consistent with good industry practice, and during
any period in which a Permitted Sublease is in effect, in the same manner and
with the same care, including regard for the status and technical condition of
the Aircraft, as shall be the case with respect to similar aircraft and engines
owned by such Permitted Sublessee without discrimination and as if the Permitted
Sublessee owned the Aircraft and was going to use the Aircraft in continued
regular customer service after the expiration of the Permitted Sublease, and
consistent with good industry practice, provided, however, that in all
circumstances the Aircraft shall be maintained by Lessee (or any Permitted
Sublessee) in accordance with maintenance standards required by, or
substantially equivalent to those required by, the central civil aviation
authority of the country of registry and, to the extent not inconsistent
therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as
when delivered to Lessee, ordinary wear and tear excepted, and in good operating
condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such
condition as is necessary to enable the airworthiness certification of such
Aircraft to be maintained in good standing at all times
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<PAGE> 38
under the Federal Aviation Act, or the applicable laws of any other jurisdiction
in which the Aircraft may be registered in accordance with Section 11 of the
Refunding Agreement (provided that if any grounding is fleetwide in nature and
so long as Lessee or a Permitted Sublessee is contesting in good faith such
grounding, Lessee shall not be deemed in violation of this maintenance
covenant); and (iii) maintain in English all records, logs and other materials
required by, and in a manner acceptable to, the FAA or any other Governmental
Entity having jurisdiction and as provided under the Maintenance Program and
Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the
Aircraft at all times, at its expense, to be duly registered during the
Restricted Use Period and, subject to Section 11 of the Refunding Agreement,
thereafter under the Federal Aviation Act in the name of Lessor or any successor
or assignee, so long as (i) while the Aircraft is registered under the Federal
Aviation Act, each of the Lessor or its successors or assigns is a "citizen of
the United States" as defined in Section 40102(a)(15) of the Federal Aviation
Act and (ii) the applicable parties to the Refunding Agreement cooperate with
Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not
register the Aircraft or permit the Aircraft to be registered under any laws
other than the Federal Aviation Act at any time except as provided in Section 11
of the Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this Lease
at all times. At any time after the Restricted Use Period, Lessor, upon
compliance with all of the terms of Section 11 of the Refunding Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions reasonably required to change the registration of the Aircraft to
another country.
Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") in the
cockpit of the Aircraft and on each Engine showing title thereto and the Lien of
the Indenture as designated by Lessor and as Lessor may from time to time
reasonably request. Unless otherwise requested, upon delivery of the Aircraft,
Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a
location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and on each Engine (if not prohibited by
applicable Law), a Lease Identification in the form set forth in Exhibit C
hereto or with any other appropriate
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<PAGE> 39
information in any other form subsequently designated by Lessor to Lessee.
Except as provided herein, Lessee will not allow the name of any Person to be
placed on the Aircraft or either Engine as a designation that would be
reasonably interpreted as a claim of ownership or Lien; provided, however, that
Lessee may cause the Airframe and Engines to have placed thereon the customary
colors and insignia of Lessee or any Permitted Sublessee under a Permitted
Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to
Lessor, Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Aircraft as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause its Permitted Sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee on reasonable prior notice at reasonable times
to visit, inspect and survey the Aircraft (including, without limitation, going
on board the Aircraft, and inspecting the Aircraft during maintenance checks
when panels and bays are open and subject to view), its condition, use, and
operation, and the records maintained in connection therewith, and to visit and
inspect the properties and to discuss the affairs, finances and accounts of
Lessee with the principal officers of Lessee, provided, that so long as Lessor
does not believe a Default or Event of Default has occurred hereunder
inspections shall be performed during regularly scheduled maintenance checks of
the Aircraft. Each such inspection or survey shall be conducted so as to not
unreasonably interfere with the business of Lessee or the maintenance or
operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture
Trustee's request, Lessee will notify such Person of the next scheduled
maintenance check for the Airframe or any Engine. Lessor, Owner Participant and
Indenture Trustee shall have no duty to make any such inspection and shall not
incur any liability or obligation by reason of not making any such inspection.
Lessor's, Owner Participant's or Indenture Trustee's failure to object to any
condition or procedure observed or observable in the course of an inspection
hereunder shall not be deemed to waive or modify any of the terms of this Lease
with respect to such condition or procedure.
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Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish
Lessor, until the expiration or other termination of the Term of this Lease, the
following:
(i) within sixty (60) days following the end of each
quarter of Lessee's fiscal year, except the last such quarter of such year,
commencing after the Restatement Date, a copy of Lessee's Quarterly Report on
Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no
longer files such report, an unaudited consolidated balance sheet of Lessee and
its consolidated subsidiaries prepared by it as of the close of the period
ended, together with the related statements of income and cash flows for such
period, and in each case certified by a Responsible Officer of Lessee as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close
of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such reports, an audited consolidated balance sheet, income statement, and cash
flow statement of Lessee and its consolidated subsidiaries, as of the close of
such fiscal year, and in each case as certified by independent public
accountants, including their certificate and accompanying comments, as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices, without
qualification as to the scope of the audit or non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of
all reports on Form 8-K filed by Lessee under the Securities Exchange Act of
1934, as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of
insurance required to be maintained hereunder, a
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<PAGE> 41
certificate signed by the Approved Broker of Lessee as to the due compliance
with the insurance provisions of Section 12 hereof with respect to the Aircraft,
together with certificates of insurance evidencing such insurance and the
opinion provided for in Section 12(f);
(v) within fifteen (15) days following the end of each
calendar month throughout the Term, an Airframe and Engine status report,
substantially in the form of Exhibit K hereto, including, without limitation,
(A) a summation of hours and cycles accumulated on the Airframe and Engines by
individual serial number during such preceding calendar month and (B) the
identity of the airframe (including the "N" number and, at Lessor's request,
ownership and lien interests in respect thereof) on which each Engine was
installed as of the end of each such calendar month, and, if Lessor so requests,
the location of any such airframe. The foregoing shall not be deemed to require
reports regarding hours or cycles on any Parts;
(vi) together with each set of financial statements
referred to in clauses (i) and (ii), a certificate signed by a Responsible
Officer of Lessee, to the effect that such officer has reviewed the relevant
terms of this Lease and has made, or caused to be made under his or her
supervision, a review of the transactions and condition of Lessee during the
accounting period covered by such financial statements, and that such review has
not disclosed the existence during such accounting period, nor does such officer
have any knowledge of the existence, as at the date of such certificate, of any
condition or event which constitutes a Default or an Event of Default, or, if
such condition or event which constitutes a Default or an Event of Default
existed or exists, specifying the nature and period of existence thereof and
what action Lessee has taken or is taking or proposes to take with respect
thereto;
(vii) as soon as practicable after becoming aware
thereof, notice of damage or destruction to the Aircraft, either Engine or any
Part with a repair or replacement cost (including labor charges) in excess of
$1,000,000 or any incident required to be reported to the FAA or other
Government Entity;
(viii) immediately after Lessee knows or should know of
the occurrence thereof, notice of a Default; and
(ix) promptly after Lessor's written request therefor,
notice of the time and location of upcoming C Checks, major Engine checks, major
Airframe structural
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<PAGE> 42
checks and a description of modification of the Aircraft required by an FAA
airworthiness directive, a mandatory manufacturer service bulletin or any other
modification with a materials and labor cost in excess of $1,000,000;
(x) together with each delivery of financial statements
pursuant to Section 8(a)(ii) above, a certificate signed by Lessee's auditors
thereon (i) briefly setting forth the scope of their examination (which shall
include a review of this Section, (ii) stating whether or not their examination
has disclosed the existence, during the fiscal year covered by such financial
statements, of any Default or Event of Default and, if their examination has
disclosed such a Default or Event of Default, specifying the nature and period
of existence thereof, and (iii) stating that they have examined the officer's
certificate delivered therewith pursuant to Section 8(a)(vi) above;
(xi) As soon as possible and in any event within thirty
(30) days after Lessee knows or has reason to know thereof, a certificate of a
Responsible Officer specifying:
(X) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan; or
(Y) the institution of proceedings or the taking
or expected taking of other action by PBGC or Lessee or any
Commonly Controlled Person to terminate, withdraw or partially
withdraw from any Plan and with respect to a multi-employer Plan,
the reorganization or insolvency of the Plan and in addition to
such notice, deliver to Lessor whichever of the following may be
applicable: (A) a certificate of a Responsible Officer setting
forth details as to such Reportable Event of the action that
Lessee or Commonly Controlled Person proposes to take with respect
thereto, together with a copy of any notice of such Reportable
Event that may be required to be filed with PBGC, or (B) any
notice delivered by PBGC evidencing its intent to institute such
proceedings or any notice to PBGC that such plan is to be
terminated, as the case may be; and
(xii) from time to time such other information as Lessor
may reasonably request.
(b) Maintenance of Corporate Existence. Except as provided
in Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
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<PAGE> 43
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so
long as it shall be the Lessee under this Lease, a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and
Lessee is and shall maintain its status at all times as a Certificated Air
Carrier, including, without limitation, its status so as to fall within the
purview of 11 U.S.C. Section1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid
all Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal liability
on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate
or dissolve; and Lessee shall not consolidate with or merge into or with any
other corporation or other Person, and Lessee shall not convey, transfer, lease
or otherwise dispose of all or substantially all of its property and other
assets to, or, without the prior consent of Owner Participant, acquire all or
any substantial part of the property or other assets or capital stock of (if
such acquisition is analogous in purpose or effect to a consolidation or
merger), any corporation or other Person, unless:
(i) the Person formed by or surviving such consolidation
or merger or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
(the "Successor Entity"): (A) shall be a corporation organized and existing
under the laws of the United States of America or any State thereof or the
District of Columbia; (B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded to all or substantially all
of such property and other assets (including, without limitation, all or
substantially all of Lessee's property and other assets) as an entirety and,
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<PAGE> 44
unless the Owner Participant otherwise agrees, shall have a Net Worth of not
less than Lessee's Net Worth immediately prior to such transaction; (C) shall be
a "citizen of the United States" of America as defined in Section 40102(a)(15)
of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall
execute and deliver to Lessor such recordations and filings with any
Governmental Entity and such other documents as Lessor determines shall be
reasonably necessary or advisable (including, without limitation, to preserve
and protect the interests of the Lessor and the priority of the Lien of the
Indenture (if it has not been discharged)) to evidence, or in connection with,
such consolidation, merger, sale, lease, transfer or other disposition and an
agreement, in form and substance reasonably satisfactory to Lessor, which is a
legal, valid, binding and enforceable assumption by such Successor Entity of the
due and punctual performance and observance of each covenant and condition of
this Lease and the other Operative Documents to which Lessee is a party and
agreement to be bound thereby, and an officer's certificate to such effect, and
to the effect that the other requirements of this paragraph have been satisfied,
and a legal opinion from counsel to such effect and otherwise in such form and
substance reasonably satisfactory to Lessor; and
(ii) prior to and immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing.
No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each
calendar year and within 60 days of a request by Lessor or Owner Participant, or
such shorter period as may be set forth in any written request by the Internal
Revenue Service for information or documents, Lessee shall furnish in writing to
Lessor or Owner Participant such information and documents (or copies thereof)
regarding the Aircraft as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its federal and state income tax returns (or to permit the filing of the federal
and state income tax returns of any affiliated group of corporations filing a
consolidated return of which Lessor is a member), or to maintain or defend any
claims related thereto and promptly, after reasonable notice, furnish to Lessor
or Owner Participant such information as may be reasonably requested by Lessor
or Owner Participant or the applicable Governmental Entity as
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<PAGE> 45
may be required to enable Lessor or Owner Participant to file any reports
required to be filed by it with any Governmental Entity because of its ownership
or other interest in the Aircraft, the Airframe or the Engines.
(g) Place of Business. At all times while this Lease is in
effect, Lessee will not, without thirty (30) days prior written notice to Lessor
and Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the
Aircraft, Airframe or Engines only in commercial passenger operations and
related cargo operations. Unless Owner Participant otherwise agrees, during the
Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or
permit the Aircraft, Airframe or Engines to be used either "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code,
or in such manner that the percentage of the income, deduction or credit
attributable to the Aircraft, Airframe or Engines for federal income tax
purposes during any taxable year of the Lessor considered to be from foreign
sources exceeds the Maximum Foreign Use Percentage. In addition, until the
expiration of the Term or termination of the Foreign Lease Agreement, Lessee
will not locate, use or permit the use of the Aircraft in, to or from Japan.
Unless the Owner Participant otherwise agrees, prior to permitting the Aircraft
to be operated in any member state of the European Union or other European
country, Lessee shall deliver to Lessor (i) a representation and warranty to the
effect that Lessee (or any Permitted Sublessee) has no knowledge of any dispute
with Eurocontrol or other relevant air traffic control authority over delinquent
charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee)
addressed to Eurocontrol or other relevant air traffic control authority
pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee
to issue to Lessor, upon Lessor's request from time to time, a statement of
account of all sums due by Lessee (or such Permitted Sublessee) to the authority
in respect of all aircraft (including, without limitation,the Aircraft) operated
by Lessee (or such Permitted Sublessee).
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<PAGE> 46
(i) Section 1110. Lessee acknowledges that Lessor would
not have entered into this Second Amended and Restated Aircraft Lease Agreement
unless it had available to it the benefits of a Lessor under Section 1110 of
Title 11 of the United States Code. Lessee covenants and agrees with Lessor that
to better ensure the availability of such benefits, Lessee shall support any
motion, petition or application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the
Aircraft under said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of said Section
1110 to be fulfilled in order to entitle Lessee to continued use and possession
of the Aircraft hereunder.
(j) Permits and Licenses. Lessee shall make or obtain, and
maintain in full force and effect, each and every consent, license, approval,
notice, registration, filing or other action with any Governmental Entity
necessary or advisable in connection with the operation or use of the Aircraft,
the Airframe, any Engine or Part or the execution, delivery or performance of
this Lease and the Operative Documents to which it is a party by Lessee or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During such
times that the Aircraft is registered under the Federal Aviation Act, Lessee
shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time
period covered by the opinion of counsel rendered on the
Restatement Date, any opinion of counsel rendered pursuant to
Section 11(C) of the Refunding Agreement, and any opinion of
counsel rendered pursuant to this Section 8(k)(i) and (Y) upon any
change in Law that would render the opinion of counsel rendered on
the Restatement Date or such immediately preceding opinion of
counsel inaccurate, an opinion of counsel with respect to Lessee
and the FAA reasonably satisfactory to each addressee of such
opinion (which counsel may be internal legal counsel of Lessee and
FAA counsel) stating, in the opinion of such counsel, that such
action has been taken with respect to the recording, filing,
re-recording and refiling of (i) the appropriate Operative
Documents and any supplements and amendments thereto and (ii) such
other appropriate documents, as is necessary to maintain the
perfection of Owner Trustee's title to and/or interest in and
Indenture Trustee's security interest in the Aircraft
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<PAGE> 47
and the Operative Documents for such period of time as
reflects the then-current applicable Law, reciting the
details of such actions; or
(2) at any time that an opinion is not required
pursuant to Section 8(k)(i)(1), annually, a certificate
reasonably satisfactory to each recipient thereof signed by a
Responsible Officer of Lessee certifying that no such action
is necessary to maintain the perfection of such title and/or
interest and security interest.
(ii) During such times that the Aircraft is registered
under any Laws other than the Federal Aviation Act, Lessee shall furnish to
Lessor and to Indenture Trustee annually (but in any case, (X) prior to the
expiration of the time period covered by any opinion of counsel rendered
pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel
rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in
Law that would render such immediately preceding opinion of counsel inaccurate),
an opinion of counsel reasonably satisfactory to each addressee of such opinion
stating, in the opinion of such counsel, that such action has been taken with
respect to the recording, filing, re-recording and refiling of (i) the
appropriate Operative Documents and any supplements and amendments thereto and
(ii) such other appropriate documents, as is necessary to maintain the
perfection of Owner Trustee's title to and/or interest in and Indenture
Trustee's security interest in the Aircraft and the Operative Documents for such
period of time as reflects the then-current applicable Law, reciting the details
of such actions.
(iii) Whether the Aircraft is registered under the Federal
Aviation Act or under any Laws other than the Federal Aviation Act, Lessee shall
furnish to Lessor annually a certificate (reasonably satisfactory to Lessor)
signed by a Responsible Officer of the Lessee certifying that Lessee is in
compliance with the provisions of the penultimate paragraph of Section 9(b)
regarding Excluded Property and any equipment or seats which such Excluded
Property replaces.
(l) Letter of Credit. (X) As security for its obligations
to Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or
more irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal
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<PAGE> 48
provisions, with a face amount available for drawdown at all times equal to the
amount set forth on Exhibit C (the "Face Amount") which Letter of Credit shall:
(i) provide that the full amount thereof shall be
available for drawdown thereunder and payable in New York, New York, on first
demand by Lessor at any time, if accompanied by its statement (i) that a Default
under Section 17(e), (f) or (g) or an Event of Default has occurred or (ii) that
the letter of credit will expire within twenty (20) days from the date of
demand, which amount may be applied, retained or utilized as provided in clause
(Y);
(ii) be maintained in full force and effect at all times
until ninety-one (91) days after the end of the Term with a commercial bank
acceptable to Lessor, in its sole and absolute discretion, having a long-term
unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the
issuing bank's credit rating is lower than such rating, Lessee shall replace
such Letter of Credit issuer within five (5) Business Days of any such reduction
in rating with a commercial bank meeting such rating requirement), provided,
that a Letter of Credit in the form set forth in Exhibit D-2 issued by The
Industrial Bank of Japan, Limited will be acceptable to Lessor for so long as
The Industrial Bank of Japan, Limited maintains a long-term unsecured debt
rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferable and
assignable; and
(iv) permit partial drawings. If the Letter of Credit is
still in effect at the end of the Term, then Lessor shall return the Letter of
Credit to Lessee or terminate it.
(Y) If an Event of Default has occurred and is continuing, in addition to any
other rights or remedies Lessor may have hereunder, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to draw on the
Letter of Credit and, with respect to amounts so drawn, hold same as security
for Lessee's obligations under this Lease, retain same for its own account and
apply (including, without limitation, by way of set off against) same, or such
amounts thereof as it may elect (it being understood that amounts not so applied
will be held as security for Lessee's obligations under this Lease), to remedy
any breach by Lessee of this Lease and the other Operative Documents or to
recompense Lessor for any loss, damage, cost or expense or
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<PAGE> 49
other Claim due or owing hereunder; provided, however, that in the case of any
drawing in respect of any claim for payment of Rent, Lessee's right to apply the
same to such claim shall be limited to amounts ("Equity Amounts") which would
(absent an Event of Default) be distributable under the Indenture at the time
such payment is made to Lessor, Owner Participant or any of their respective
Affiliates (and shall not include any amounts distributable to Indenture Trustee
in its individual capacity or to the Note Holders). If Lessor draws on the
Letter of Credit because the Letter of Credit will expire within twenty (20)
days from the date of demand, then Lessor may elect in its sole and absolute
discretion to apply such amounts in satisfaction of any Equity Amounts which
would have been or would become distributable under the Indenture to Lessor or
Owner Participant if Lessee were fully to perform its obligations under the
Lease on a timely basis in the inverse order of which such obligations would be
distributable; and provided further, that the amount of Lessee's obligations in
respect of Equity Amounts that shall be satisfied by such application shall
equal (i) that amount from the proceeds of the Letter of Credit which this
Lessor elects to apply (the "Applied Amount") in satisfaction of Lessee's
obligations in respect of Equity Amounts (such obligations to be satisfied by
application of the Applied Amount being referred to as the "Satisfied
Obligations") plus (ii) an amount equal to interest at the Applicable Rate on
the Applied Amount from the date of application of the Applied Amount to the
date on which the Satisfied Obligations otherwise would have been due (with
"Applicable Rate" meaning a per annum rate of interest computed on the basis of
a year of 365 or 366 days, as the case may be, and actual number of days elapsed
equal to the rate for U.S. Treasury bills with a maturity that most closely
corresponds to the remaining Term, it being agreed that in no event shall the
Applicable Rate exceed the lowest Debt Rate (as defined in the Indenture)
provided in any Equipment Note). Lessee shall not be obligated to reinstate the
amount of the Letter of Credit to the extent proceeds thereof are applied in
satisfaction of Lessee's obligations in the manner provided in the immediately
preceding proviso. If (a) the Lessor shall hold any proceeds of the Letter of
Credit as security for Lessee's obligations to Lessor a Letter of Credit with a
face amount available for drawdown in an amount equal to the amount of the
proceeds so held by Lessor and otherwise meeting the requirements of this
Section 8(1), Lessor shall pay such proceeds to Lessee for Lessee's own account.
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<PAGE> 50
(m) ERISA. Lessee will not, nor will it permit any of its
subsidiaries to, (a) terminate, within the meaning of Title IV of ERISA, any
Plan so as to result in any material liability to the PBGC, (b) engage in any
"prohibited transaction" (as defined in Section 4975 of the Code) involving any
Plan that would result in material liability for an excise tax or civil penalty
in connection therewith, (c) incur or suffer to exist any material "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Plan, or (d) allow or suffer to exist any event or condition with
respect to ERISA, which would be likely to have a material adverse effect on
Lessee's condition (financial or otherwise), business, operations or prospects
or on Lessor's interests, rights or remedies.
Section 9. Replacement of Parts; Alterations,
Modifications and Additions.
(a) Replacement of Parts. Lessee, at its own cost and
expense, will promptly replace, or cause to be replaced, all Parts which may
from time to time become worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever. In addition, in the ordinary course of maintenance, service, repair,
overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) may at its own cost and expense remove any Parts, whether
or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use, provided that Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own
cost and expense such Parts as promptly as possible. All replacement Parts shall
be free and clear of all Liens (except for pooling arrangements to the extent
permitted by paragraph (c) of this Section and Permitted Liens), be in at least
the equivalent or better modification status and service bulletin accomplishment
status, be fully interchangeable as to form, fit and function and shall be in as
good operating condition as, and have a value, remaining useful life and utility
at least equal to, the Parts replaced (assuming such replaced parts were in the
condition and repair in which they were required to be maintained by the terms
hereof).
All Parts which are at any time removed from the Aircraft
shall remain the property of Lessor (provided that,
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so long as the Foreign Lease Agreement is in effect, title to such Parts shall
remain with Foreign Lessor), subject to the Lien of the Indenture if it has not
been discharged, and subject to this Lease no matter where located until such
time as such Parts shall be replaced by parts which have been incorporated or
installed in or attached to the Aircraft and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Aircraft as above
provided, or as provided in Section 9(c), without further act, (i) title to the
removed Part shall thereupon vest in Lessee free and clear of all rights of
Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no
longer be deemed a Part hereunder, (ii) title to such replacement Part shall
thereupon vest in Lessor (or, so long as the Foreign Lease Agreement is in
effect, Foreign Lessor) and become subject to the Lien of the Indenture if it
has not been discharged, and (iii) such replacement Part shall become subject to
the Lien of the Indenture (if it has not been discharged) and this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(b) Alterations, Modifications and Additions. Lessee, at
its own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine to the extent
made mandatory for Lessee in respect of the Aircraft, Engines or Parts from time
to time to meet the applicable standards of the FAA or under any Law of any
Governmental Entity having jurisdiction or issued by the manufacturer of the
Airframe, Engines or Parts. In addition, so long as no Default or Event of
Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is
in effect, a Permitted Sublessee), at its own expense, may from time to time
make such alterations and modifications in and additions to the Airframe and
either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may deem desirable in the proper conduct of its business, provided,
no such alteration, modification or addition diminishes the value, remaining
useful life or utility, or impairs the condition or airworthiness, of the
Airframe, either Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Airframe, Engines and
Parts were then of the value, utility and remaining useful life and in the
condition and airworthiness required by the terms of this Lease. Except as
otherwise provided herein, title to all Parts incorporated or installed in or
attached or added to the Aircraft as the result of such alteration, modification
or addition, shall immediately vest in Lessor (or, so long as the Foreign Lease
Agreement is in effect, Foreign Lessor) and become subject to the Lien of
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<PAGE> 52
the Indenture (if it has not been discharged) and this Lease, without the
necessity for any further act of transfer, document or notice. Notwithstanding
the foregoing sentence of this Section 9(b), Lessor agrees that so long as no
Default or Event of Default shall have occurred and be continuing Lessee (or, if
a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time
during the Term for the Aircraft, remove any Part of such Aircraft, provided,
that (i) such Part is in addition to, and not in replacement or substitution
for, any Part originally incorporated or installed in or attached to, or
delivered with, the Aircraft on the Delivery Date or any Part in replacement of,
or substitution for, any such originally incorporated, installed, attached or
delivered Part, (ii) such Part is not required to be incorporated or installed
in or attached or added to the Aircraft pursuant to the terms of Section 6 or
this Section 9 or to maintain the insurance required by Section 12 and (iii)
such Part can be removed from the Aircraft without causing any material damage
thereto and without diminishing or impairing the value, utility, remaining
useful life, condition or airworthiness which the Aircraft would have had at
such time had such alteration, modification or addition not occurred. Upon the
removal by Lessee of any such Part as provided in the preceding sentence, title
thereto shall, without further act, vest in Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) and such Part shall no longer be deemed
part of the Aircraft (such a part is herein called a "Removable Part"). Any Part
not removed by Lessee as above provided prior to the return of the Aircraft to
Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall
remain the property of Lessor (provided that, so long as the Foreign Lease
Agreement is in effect, title to such Parts shall remain with Foreign Lessor).
If any Removable Part is (i) owned by any third party and
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) subject to a conditional sale contract or other security
interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) pursuant to a lease which is subject to a security interest
in favor of any third party, then Lessor will not acquire or claim, as against
such lessor, conditional vendor or secured party, any right, title or interest
in any such Removable Part as the result of such Removable Part being installed
on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or
claim is subject to the express condition that such lessor, conditional vendor,
or secured party shall have agreed in writing (which agreement may be contained
in the lease, conditional sale agreement or security agreement) not
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to acquire or claim, as against Lessor, any right, title or interest in the
Aircraft, or any Part other than its interest in such Removable Part by reason
of such Removable Part being installed thereon, and (B) any Removable Part not
removed by Lessee upon the termination or expiration of this Lease, at such
time, shall become the property of Lessor or Foreign Lessor, as the case may be,
and be subject to this Lease, and provided, further, that (1) if removal of any
such Part shall affect the operation of the Aircraft in any way whatsoever,
Lessee shall replace such Part with an owned Part of the same value, utility and
remaining useful life and (2) Lessee shall repair any unsightly area of the
Aircraft as a result of such removal and make all other repairs which are
advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) replaces a Part which is not required to be
replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) may remove the replacement Part so long as
it reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to form,
fit and function, has been overhauled, repaired and inspected by an agency
acceptable to the FAA or other Governmental Entity having jurisdiction, and is
in as good operating condition as, and has a utility, remaining useful life and
a value at least equal to that of such Part when it was removed from the
Aircraft.
Notwithstanding any other provision hereof, and without
limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect,
Permitted Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic equipment (including seats with such equipment installed therein)
(any or all of which are hereafter referred to as "Excluded Property") in the
ordinary course of business, and Lessor shall not claim or acquire title thereto
and the rights of the owners thereof therein shall not constitute a default
hereunder; provided that (i) any such Excluded Property shall be removed prior
to the date of a Return Occasion without causing any damage to the Aircraft and
without diminishing or impairing the value, utility, remaining useful life or
condition which the Aircraft would have had at such time had such Excluded
Property not been installed, (ii) any equipment or seats which such Excluded
Property replaces shall be properly stored with the interests of Lessor and, if
the Lien of the Indenture is in effect, the Indenture Trustee, duly noted
thereon and acknowledged by any applicable bailee or warehouse, and properly
reinstalled on the Aircraft prior to the date of a
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Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all
repairs which are required as a result of such removal and/or reinstallation.
In no event shall Lessor bear any liability or cost for
any alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Airframe or either
Engine as provided in Section 9(a) may so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom be subjected by
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a
normal pooling arrangement customary in the airline industry of which Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part
entered into in the ordinary course of Lessee's or such Permitted Sublessee's
business, provided the Part replacing such removed Part shall be incorporated or
installed in or attached to the Aircraft in accordance with Section 9(a) as
promptly as possible, and in any event within sixty (60) days, after the removal
of such removed Part. In addition, any Replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with
Section 9(a) may be owned by another Person subject to such a normal pooling
agreement; provided, however, that Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee), at its own expense, as promptly thereafter as
possible, and in any event within sixty (60) days, either (i) causes title to
such replacement Part to vest with Lessor (or, so long as the Foreign Lease
Agreement is in effect, Foreign Lessor) in accordance with Section 9(a) (and to
be subjected to the Lien of the Indenture if it has not been discharged) by
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
acquiring title thereto for the benefit of Lessor (or, so long as the Foreign
Lease Agreement is in effect, Foreign Lessor) free and clear of all Liens except
Permitted Liens, whereupon such replacement Part shall become subject to this
Lease and the Lien of the Indenture (if in effect) without the necessity for any
further act, document or notice, or (ii) replaces such replacement Part by
incorporating or installing in or attaching to the Aircraft a further
replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) free and clear of all Liens other than Permitted Liens and
by causing title to such further replacement Part to vest in Lessor (or, so long
as the Foreign Lease Agreement is in effect, Foreign Lessor) as above provided
and to be subjected to the Lien of the Indenture if it has not been discharged,
whereupon such replacement Part shall become subject to this Lease and the
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Lien of the Indenture (if in effect) without the necessity for any further act,
document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment of Basic
Rent hereunder shall be free and clear of, and without deduction for, any and
all withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such payments
of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the
net amount actually received by Lessor, after such deduction or withholding,
will be equal to all such amounts that would be received by Lessor if no such
deduction or withholding had been required, but only to the extent necessary to
ensure that the holders of the outstanding Equipment Notes receive such amount
as may be required by the Indenture provided that this limitation on the
gross-up shall be without derogation to Lessor's right to be indemnified
pursuant to the remainder of this Section 10. If Lessee pays any amount to
Lessor (or to any taxing authority for the account of Lessor) as a result of the
application of the preceding sentence with respect to any withholding Tax which
is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor
(or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to
the extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant would be liable) shall reimburse Lessee for such withholding Tax
within 30 days of written notice accompanied by evidence of payment for such
withholding Taxes (exclusive of interest, penalties and additions to Tax) paid
by Lessee; provided that in any circumstance in which the Lessor is required to
reimburse the Lessee for any such withholding Taxes and the Lessee has not
received such reimbursement from Lessor or the Owner Participant, then to the
extent of such shortfall and so long as no Lease Event of Default has occurred
and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor
by reducing the succeeding payments of Rent payable to Lessor (other than any
portion of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder) until the aggregate amount
of reduction is equal to the sum of the amount of such shortfall and interest on
that amount at the Interest Rate from the date reimbursement is required to be
made until the date of such reduction in Rent. Except as provided in Section
10(b), and taking into account any payments received by Lessor pursuant to the
second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify
and hold each Indemnitee harmless from, any and
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<PAGE> 56
all Taxes, howsoever levied or imposed, whether levied or imposed upon or with
respect to or asserted against any Indemnitee, Lessee, the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or otherwise, by
any Federal, state or local government or taxing authority in the United States
of America or by any foreign government or any taxing authority or governmental
subdivision of a foreign country or of a territory or possession of the United
States (each such governmental subdivision or taxing authority referred to as a
"Taxing Authority"):
(i) upon or with respect to, based upon or measured by (A)
the Aircraft, the Airframe, any Engine or any Part thereof, or interest
therein, (B) the manufacture, purchase, ownership, delivery, leasing,
acceptance, rejection, assigning, possession, use, operation, location,
settlement of any insurance claim, sale, mortgaging, pledging,
financing, subleasing, rental, retirement, abandonment, registration,
reregistration, preparation, installation, modification, repair,
maintenance, replacement, transportation, storage, transfer of title,
return or other disposition of the Aircraft, the Airframe, any Engine
or any Part thereof or interest therein; or (C) the rentals, receipts,
income or earnings arising therefrom (including without limitation the
Rent), or
(ii) upon or with respect to the Operative Documents
(including the Equipment Notes), any interest in any thereof, or any
future amendment, supplement, waiver or consent thereto requested by
Lessee with respect to any thereof, or the execution, delivery, or
performance of any thereof, or the acquisition or subsequent transfer
thereof or the issuance of the Equipment Notes or any other document
executed and delivered in connection with the consummation or
confirmation of the transactions contemplated by the Operative
Documents or any Indemnitee's interest in any of the foregoing, or the
execution, amendment, supplement, issuance, reissuance, refinancing or
delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property, or the
income or other proceeds received with respect to the property, held by
the Indenture Trustee under the Indenture,
(iv) the payment of the principal of, or interest or premium
on, or other amounts payable with respect to the Equipment Notes,
whether as originally issued or pursuant to any refinancing,
modification or
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<PAGE> 57
reissuance or any other obligation evidencing any new loan, or
(v) otherwise with respect to or in connection with the
transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be subject to
indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, any Taxes imposed by the
Federal government of the United States of America upon or with respect
to, based on or measured by, the gross or net income, receipts,
capital, or net worth, franchises, excess profits or conduct of
business of such Indemnitee (other than Taxes included in the
calculation of an after-tax payment, or Taxes in the nature of sales or
use Taxes, license Taxes, value-added Taxes or property Taxes),
(ii) In the case of any Indemnitee, Taxes on, based on, or
measured by the gross or net income, receipts, capital, or net worth,
franchises, excess profits or conduct of business of such Indemnitee
(including minimum taxes, withholding taxes and taxes on or measured by
any items of tax preference), imposed by any foreign, state or local
government or taxing authority (other than Taxes included in the
calculation of an after-tax payment, Taxes in the nature of sales
Taxes, use Taxes, property Taxes, value-added Taxes or rental Taxes,
and Covered Income Taxes described in subsection (c) of this Section
10),
(iii) In the case of any Indemnitee, Taxes which are the
direct result of gross negligence or willful misconduct of such
Indemnitee,
(iv) In the case of any Indemnitee, any Taxes imposed as a
result of a voluntary or involuntary bankruptcy of such Indemnitee
(other than, in the case of Owner Trustee, as a result of the
occurrence of an Event of Default) or any voluntary sale, transfer of
title, transfer or other disposition by such Indemnitee or a related
Indemnitee (for such purpose, Owner Trustee and Owner Participant are
related Indemnitees with respect to each other) of the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or any
interest in the Rent or part thereof or any interest in the Operative
Documents or part thereof, unless such sale, transfer or disposition
occurs in connection with (x) the transactions
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<PAGE> 58
contemplated or effected by the Refunding Agreement and the amendments
to the Lease occurring in connection therewith, (y) an Event of Default
and the exercise by any Indemnitee of its remedies under the Lease or
the Indenture, as the case may be, and (z) the substitution, pooling or
interchange of the Aircraft, the Airframe, any Engine or any Part
pursuant to the terms of the Lease; provided, however, that in all
cases Owner Participant and Owner Trustee shall consider in good faith
such request as Lessee shall make concerning the appropriate
jurisdiction in which such sale, transfer or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed as
a result of a transferee of such Indemnitee of any interest in the
Aircraft, the Airframe, any Engine or any Part or any interest in the
Operative Documents being a foreign entity or not having its principal
office in the United States,
(vi) Any interest, penalties, fines and additions to
tax imposed on an Indemnitee (other than Taxes that are due and payable
with a return when properly filed) resulting from such Indemnitee's
failure to file returns that are timely and proper, provided such
failure was not attributable to such Indemnitee contesting any claim in
accordance with this Section 10 or to a failure by Lessee to satisfy
its obligations related to such return,
(vii) Taxes imposed on an Indemnitee as a result of a
breach of its representations, warranties or covenants contained in
Sections 9(a), 9(b)(11), 9(c), 9(d), 9(e), 10, 12, or 16 of the
Refunding Agreement or Section 21(f) of this Agreement in any material
respect or from a failure by an Indemnitee to fulfill its contest
obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft related
to acts or events occurring after the later of the termination of the
Lease and the redelivery of the Aircraft,
(ix) In the case of the Indenture Trustee, each
Pass-Through Trust, each Pass-Through Trustee (in its individual
capacity), the Subordination Agent and each Liquidity Provider, Taxes
imposed with respect to the Equipment Notes as a result of activities
of such Indemnitee unrelated to the transactions contemplated by the
Operative Documents, and
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<PAGE> 59
(x) In the case of each Pass-Through Trust, each
Pass-Through Trustee (in its individual capacity and as
trustee under the Pass-Through Trusts, the Subordination Agent
and each Liquidity Provider, United States withholding taxes
imposed as a result of the place of organization or other
status of a holder of an interest in a Pass-Through Trust.
Notwithstanding anything to the contrary contained in this
Section 10, the provisions of this Section 10(b) shall not apply to, and Lessee
shall hold each Indemnitee harmless against, and indemnify each Indemnitee on an
after-tax basis (as provided under Section 10(e)) for, any Taxes imposed by any
Taxing Authority with respect to any period beginning, or events or
circumstances occurring, on or after the Restatement Date, in connection with or
relating to the transactions undertaken pursuant to the Japanese Financing
Documents (and any other documents or agreements relating thereto unless such
documents or agreements are or relate solely to Operative Documents other than
the Japanese Financing Documents) including, without limitation, sales Taxes,
value-added Taxes and any Taxes required to be withheld and paid over to the
United States Federal government pursuant to Subtitle A of the 1986 Code or any
successor provisions with respect to any amounts paid or deemed to be paid to
the Japanese Lessor by any Indemnitee pursuant to the Japanese Financing
Documents, but excluding any net income taxes payable to the United States
Federal government or any state or local Taxing Authority as a consequence of a
determination that the Lease is not a true lease for Federal income tax
purposes.
(c) Covered Income Tax. For purposes of clause (ii) of
subsection (b) of this Section 10, a Covered Income Tax includes:
(i) any Tax based on or measured by gross or net
income, capital or net worth, franchises, excess profits or
conduct of business imposed on an Indemnitee by a Taxing
Authority in or of any foreign jurisdiction or a territory or
possession of the United States, other than any such Tax which
would not have been imposed in the absence of such
Indemnitee's (including for purposes of this definition, all
entities with which such Indemnitee is combined, integrated,
or consolidated in such Taxing Authority's jurisdiction)
engaging in business, maintaining an office or other place of
business or otherwise being located in such jurisdiction
(other than merely by reason of such Indemnitee's
participation in the transactions contemplated by the
Operative Documents); and
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(ii) a Tax imposed by any Taxing Authority other than
the Federal government of the United States of America based
on, or measured by gross income or receipts, to the extent
such Tax is attributable to the operation or registration of
the Aircraft in such jurisdiction or to the transactions
contemplated by the Operative Documents or is the result of
the activities of Lessee or any Affiliate of either thereof in
such jurisdiction, including residence.
(d) Reports and Returns. In case any report or return is
required to be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to Owner Trustee and Owner Participant or
will notify Owner Trustee or Owner Participant of such requirement and make such
report or return in such manner as shall be reasonably satisfactory to Owner
Participant or Owner Trustee. If actual notice is given by any taxing authority
to an Indemnitee that a report or return is required to be filed with respect to
any such Taxes, the Indemnitee shall promptly notify Lessee of such required
report or return and Lessee shall either file such report or return in the
manner prescribed in the preceding sentence, or shall use its best efforts to
cause such report or return to be filed by the appropriate entity. Each
Indemnitee agrees to respond to any reasonable request of Lessee for information
not within Lessee's control and within the control of and reasonably available
to such Indemnitee with respect to the filing of any such report or return, but
Lessee agrees to pay any reasonable costs, fees, disbursements or other charges
of independent counsel or independent accountants incurred in connection with
such request.
(e) After-Tax Basis. Lessee further agrees that, with
respect to any payment or indemnity under this Section 10 and under Section 13
hereof, such payment or indemnity shall include the net amount necessary to hold
the recipient of the payment or indemnity harmless on an after-tax basis from
all Taxes required to be paid or credited by such recipient with respect to such
payment or indemnity under the laws of any Taxing Authority; provided, however,
that in the case of federal income taxes imposed on Owner Participant, such
Taxes shall be calculated on the basis of the assumption that Owner Participant
shall be subject to the highest federal corporate income tax rate applicable to
Owner Participant in the year of payment.
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(f) Tax Benefit. If, by reason of any payment made to or
for the account of an Indemnitee by Lessee pursuant to this Section 10 or
Section 13 hereof, such Indemnitee subsequently actually realizes a tax
deduction or credit (including foreign tax credit and any reduction in Taxes)
not previously taken into account in computing the amount of such payment, such
Indemnitee shall promptly pay to Lessee, but only if there shall then be no
Lease Event of Default and if Lessee shall have made all payments then due and
owing to such Indemnitee under the Operative Documents, an amount equal to the
sum of (A) the actual reduction in Taxes, if any, realized by such Indemnitee
which is attributable to such deduction or credit and (B) the actual reduction
in Taxes realized by such Indemnitee as a result of any payment made by such
Indemnitee pursuant to this sentence; provided, however, that such Indemnitee
shall not be obligated to make any payment pursuant to this Section 10 or
Section 13 hereof to the extent that the amount calculated pursuant to (A) above
would exceed (x) the amount of all prior payments by Lessee to such Indemnitee,
pursuant to this Section 10 or Section 13 hereof, net of any amount paid in
respect of Taxes required to be paid by such Indemnitee in respect of the
receipt or accrual of such amounts received by such Indemnitee from Lessee, less
(y) the portion of all prior payments computed pursuant to (A) above by such
Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee for
any Taxes which may be subject to indemnification by Lessee hereunder and if
such Indemnitee has notice thereof, such Indemnitee shall promptly notify
Lessee; provided that the failure to provide such notice shall not release
Lessee from any of its obligations hereunder except to the extent Lessee's right
to contest such claim is precluded thereby. Any amount payable as an indemnity
to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is
to be paid to such party directly, in immediately available funds, within thirty
(30) days after receipt of a written demand therefor from such Indemnitee or
Lessee, as the case may be, except in the case of a payment to an Indemnitee to
the extent that such Taxes are being contested in good faith pursuant to this
Section 10, in which event the payment of such indemnity shall be made by the
due date for the payment of any Taxes that are the subject of such contest
taking into account all extensions of the due date that are available as a
result of the contest. In the event an Indemnitee makes a tax payment with
respect to any such Taxes (other than with funds advanced to such Indemnitee on
an interest-free basis by Lessee pursuant to this Section 10), Lessee shall
reimburse the amount of such payment and also shall pay to the Indemnitee
interest on the amount of such payment by such
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Indemnitee at the Interest Rate from the date of any such payment by such
Indemnitee to the date of such reimbursement by Lessee to the Indemnitee
hereunder. In the event an amount is payable to Lessee under this Section 10,
the Indemnitee owing such amount shall pay interest on such amount at the
Interest Rate from the date of receipt by such Indemnitee of any amount giving
rise to such obligation to pay Lessee until the date of payment to Lessee.
(h) Contest. If reasonably requested by Lessee in writing,
an Indemnitee shall upon receipt of an indemnity reasonably satisfactory to it
and at the sole expense of Lessee (including, without limitation, payment on
demand of all out-of-pocket costs, expenses, additions to tax because of
underpayments of estimated Taxes, losses, legal and accounting and investigatory
fees and disbursements, penalties, and interest) in good faith contest or shall
permit Lessee, if desired by Lessee and such contest may be conducted in the
name of Lessee without involving Taxes of such Indemnitee not indemnified
hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity,
applicability or amount of such Taxes by (x) resisting payment thereof if
practicable, (y) not paying the same except under protest, if protest is
necessary and proper, and (z) if payments be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings;
provided, however, that, in each such instance, such proceedings do not involve
any substantial risk or danger of the sale, forfeiture or loss of the Aircraft,
and provided further that the Indemnitee shall have the right to forego
administrative proceedings with respect to the claim and contest the claim in an
appropriate court of its choosing and provided further that the Indemnitee shall
not be required to undertake or allow in its name or on its behalf any contest
unless the following conditions are satisfied:
(i) no Event of Default has occurred and is
continuing,
(ii) the amount of such Taxes shall be at least
$50,000,
(iii) in the event an administrative proceeding is to
be appealed in a judicial proceeding, as for the first level
of judicial proceeding, Lessee shall have provided the
Indemnitee with an opinion of legal counsel selected by the
Indemnitee and reasonably acceptable to Lessee ("Tax Counsel")
to the effect that a reasonable basis exists to contest such
claim (which opinion shall be obtained at Lessee's sole cost
and expense),
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(iv) if such contest is to be initiated by the
payment of, and the claiming of a refund for, such Taxes,
Lessee shall have advanced or caused to be advanced to such
Indemnitee sufficient funds (on an interest-free basis) to
make such payments and shall have agreed to indemnify such
Indemnitee against any adverse tax consequences of such
advance, and
(v) in the event a judicial decision is to be
appealed, the amount of such Taxes is at least $150,000 and
the Indemnitee shall have received an opinion of Tax Counsel
(which opinion shall be obtained at Lessee's sole expense) to
the effect that it is more likely than not that the Indemnitee
will prevail, and in the event that the subject matter of the
contest is of a continuing nature and has previously been
decided adversely pursuant to the contest provisions of this
Section 10, there has been a change in the law (including,
without limitation, amendments to statutes or regulations,
administrative rulings and court decisions) after such claim
shall have been so previously decided and such Indemnitee
shall have received an opinion of Tax Counsel, which opinion
shall be obtained at Lessee's sole expense, to the effect
that, as a result of such change other than a change in
statutory law, it is more likely than not that the position
which such Indemnitee or Lessee, as the case may be, had
asserted in such previous contest would prevail and, in the
case of a statutory change in law, it is as likely as not that
the position will prevail.
(i) Refund. If any Indemnitee shall obtain a refund of all
or any part of any Taxes paid by Lessee or from an advance by Lessee, such
Indemnitee shall pay Lessee the amount of such refund together with any interest
paid thereon attributable to the Taxes paid or advanced by Lessee less the
amount of any Taxes payable by such Indemnitee in respect of the receipt of such
refund and interest after giving credit to Lessee for any savings by such
Indemnitee in respect to any such Taxes by reason of deductions, credits,
allocations or allowances in respect of the payment of any such Taxes; provided
that such amount shall not be payable before such time as Lessee shall have made
all payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
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(j) Diligence. Lessee shall not be deemed to be in default
under any of the above indemnification provisions of this Section 10 so long as
Lessee or the Indemnitee shall diligently prosecute such contest in accordance
with the provisions of this Section 10. Notwithstanding the foregoing, if a
claim is made against any Indemnitee for any Taxes which, if successful, would
result in the imposition of Taxes under circumstances which would require Lessee
to indemnify such Indemnitee, the Indemnitee shall be released from its
responsibility to contest such claim, or part thereof, if it agrees in writing
not to seek indemnification from Lessee in respect of the claim, or such part
thereof to be contested. In the event an Indemnitee fails to contest, or refuses
to permit Lessee to contest, a claim or part thereof which the Indemnitee has
the obligation to contest or to permit Lessee to contest under this Section 10,
then Lessee shall not be obligated to indemnify the Indemnitee for such claim or
such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is
a member of an affiliated group (within the meaning of Section 1504(a) of the
Code) which files a consolidated Federal income tax return, the term
"Indemnitee" shall mean and include such affiliated group.
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe. Subject to
the other provisions of this Section 11, upon an Event of Loss with respect to
the Airframe or the Airframe and any Engines then installed thereon, Lessee
shall forthwith (and, in any event, within five (5) Business Days after such
occurrence) give Lessor written notice of such occurrence and within thirty (30)
days after such occurrence give Lessor written notice of its election, subject
to the terms hereof and of the Indenture, to perform one of the following two
options (it being agreed that if Lessee shall not have given Lessor notice of
such election within thirty (30) days after such occurrence, Lessee shall be
deemed to have elected to perform the option set forth in the following clause
(ii)), provided, that Lessee shall not have the right to select the option set
forth in clause (i) if a Default or an Event of Default shall have occurred and
be continuing at the time of such election or at the time of replacement or if
the Foreign Lease Agreement does not permit such replacement or requires the
payment of additional amounts thereunder (unless Lessee in its election pays
such amount due as a result thereof under the Foreign Lease Agreement):
(i) within one hundred twenty (120) days (the "Replacement
Period") after the date of the Event of Loss
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(but in no event later than the last day of the Term) Lessee shall convey, or
cause to be conveyed to Lessor as provided in Section 11(c) hereof, to be
subjected to the Lien of the Indenture if it has not been discharged, and to be
leased by Lessee hereunder in replacement of the Airframe and such Engines then
installed thereon, title to (or, so long as the Foreign Lease Agreement is in
effect, beneficial ownership of) a replacement Airframe (together with the same
number of replacement Engines as the Engines), such replacement Airframe and
Engines (A) to be free and clear of all Liens (it being understood that, upon
such conveyance, such replacement Airframe and replacement Engines may be
subject to Permitted Liens), (B) to have a value, utility and remaining useful
life, determined in accordance with the Appraisal Procedure as provided in
Section 11(c) hereof, at least equal to, and to be in at least as good operating
condition as, the Airframe and the Engines, if any, so replaced (assuming the
Airframe and the Engines were maintained in accordance with the requirements of
this Agreement, whether or not they are in fact so maintained), and (C) to be a
like Airbus A320-231 model aircraft with equivalent or better modification
status and, in the case of Engines, in compliance with Section 11(b); provided
that if Lessee shall not perform its obligation to effect such replacement under
this clause by the end of the Replacement Period, Lessee shall then be deemed to
have elected to comply, and shall comply, with the provisions of clause (ii) of
this Section 11(a); provided, further, that the payment specified therein shall
be deemed to have become due and payable on the Stipulated Loss Value Date
occurring on or immediately preceding the last day of the Replacement Period.
Upon compliance with the foregoing, Lessor will, subject to the rights of any
insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that such Airframe and Engines are
free and clear of Lessor's Liens and Head Lessor's Liens and any Lien arising
out of the Foreign Lease Agreement), all of Lessor's right, title and interest,
if any, in and to the Airframe and the Engines suffering the Event of Loss as
well as all of Lessor's right, title and interest in and to any Engine
constituting part of the Aircraft and replaced as provided above but not
installed thereon at the time of the Event of Loss. For all purposes hereof, a
replacement Airframe shall be deemed part of the property leased hereunder and
shall be deemed the "Airframe" as defined herein. No Event of Loss resulting in
replacement of the Airframe or Engines under this Section 11(a)(i) shall result
in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or before one
hundred twenty (120) days after the date of the Event of Loss or, if earlier,
with respect to insurance
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proceeds, on the date on which insurance proceeds with respect to the Event of
Loss are received by the loss payee (but in no event later than the last day of
the Term) Lessee shall pay to Lessor in immediately available funds the sum of
(A) the Stipulated Loss Value of the Aircraft as shown on Exhibit A for such
Stipulated Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may
be, payable on each Basic Rent Payment Date or Renewal Rent Payment Date,
respectively, prior to the date of payment of such Stipulated Loss Value which
has not been paid when due, plus, if such Stipulated Loss Value Date is also a
Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent
or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss
Value Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation
of Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with
respect to the Aircraft for any period commencing after the date on which such
Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain
liable for, and shall pay on or before the date the Stipulated Loss Value and
Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the
case may be, for the Aircraft due on or before the date of such payment of
Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with
respect to such Aircraft, and (3) Lessor will, subject to the rights of any
insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that such Airframe and Engines are
free and clear of Lessor's Liens, Head Lessor's Liens and Liens arising out of
the Foreign Lease Agreement), all of Lessor's right, title and interest, if any,
in and to the Airframe and Engines suffering the Event of Loss, as well as all
of Lessor's right, title and interest, if any, in and to any Engine constituting
part of the Aircraft but not installed thereon at the time of the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon an Event
of Loss with respect to an Engine only, Lessee shall give Lessor prompt written
notice thereof and shall, at its own cost and expense, within sixty (60) days
after such occurrence (but in no event later than the last day of the Term), pay
all amounts due under the Foreign Lease Agreement as a result thereof and convey
or cause to be conveyed to Lessor as replacement for the Engine suffering an
Event of Loss, title to (or so long as the Foreign Lease Agreement is in effect,
beneficial ownership of) another IAE Model V2500 engine of like model and
equivalent or better modification status or, at Lessee's option, an IAE engine
of an improved model, in each such case which has a value, remaining useful life
and utility determined in accordance with the Appraisal Procedure at least equal
to such Engine and is suitable for installation and use on the Airframe
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without diminishing the value, remaining useful life or utility of such
Airframe, free of all Liens (it being understood that, upon such conveyance,
such replacement Engine may be subject to Permitted Liens) and being in as good
operating condition as (including no greater number of cycles or hours than) the
Engine being replaced assuming the Engine being replaced was serviceable and
otherwise in the condition and repair required by the terms hereof immediately
prior to the Event of Loss. Prior to or at the time of any such conveyance,
Lessee, at its own cost and expense, will (i) furnish Lessor (or, so long as the
Foreign Lease Agreement is in effect, Foreign Lessor) with a full warranty bill
of sale, in form and substance reasonably satisfactory to Lessor and Indenture
Trustee, as applicable, with respect to such replacement Engine; (ii) cause
supplements, in form and substance reasonably satisfactory to Lessor and
Indenture Trustee (if the Lien of the Indenture has not been discharged),
subjecting such replacement Engine to this Lease, the Indenture (if in effect),
the Foreign Lease Agreement (if then in effect) and the Trust Agreement (if in
effect), to be duly executed by Lessee, if applicable, and duly filed for
recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and
Indenture Trustee (if the Lien of the Indenture has not been discharged) with
such evidence of title to or, so long as the Foreign Lease Agreement is in
effect, beneficial ownership of such Replacement Engine and of compliance with
the insurance provisions of Section 12 hereof with respect to such Replacement
Engine as Lessor or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request; (iv) furnish Owner Participant, Lessor and
Indenture Trustee (if the Lien of the Indenture has not been discharged) with an
opinion of Lessee's counsel addressed to such parties and to Lessor to the
effect that title to or, so long as the Foreign Lease Agreement is in effect,
beneficial ownership of such Replacement Engine has been duly conveyed to Lessor
free and clear of all Liens (except Permitted Liens), and is duly leased
hereunder and under the Foreign Lease Agreement (if in effect), and subject to
the Lien of the Indenture (if it has not been discharged), the instruments
subjecting such Replacement Engine to the Lien of the Indenture and the Lease,
and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the
case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Engine and the Lien of the
Indenture on such Replacement Engine; (v) furnish a certificate signed by a
Responsible Officer of Lessee
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certifying that, upon consummation of such replacement, no Default or Event of
Default will exist hereunder; (vi) furnish such documents and evidence with
respect to Lessee, Lessor or Indenture Trustee (if the Lien of the Indenture has
not been discharged), as such parties or their respective counsel may reasonably
request in order to establish the consummation of the transactions contemplated
by this Section 11(b), the taking of all corporate proceedings in connection
therewith and compliance with the conditions set forth in this Section 11(b), in
each case in form and substance satisfactory to such party; (vii) furnish such
Uniform Commercial Code financing statements covering the Replacement Engine as
may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures
has not been discharged); (viii) furnish Owner Participant, at Lessee's
election, (x) an opinion of tax counsel mutually satisfactory to Owner
Participant and Lessee and which opinion is reasonably satisfactory to Owner
Participant to the effect that such replacement will have no adverse tax
consequences to Lessor and Owner Participant or (y) an indemnity for any adverse
tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal
referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the
opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the
Indenture. Upon full compliance by Lessee with the terms of this Section 11(b),
Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS,
WHERE IS" without recourse, representation or warranty (except a warranty that
such Engine is free and clear of Lessor's Liens, and any Lien arising out of the
Foreign Lease Documents), all of Lessor's right, title and interest, if any, in
the Engine which suffered the Event of Loss. For all purposes hereof, each such
Replacement Engine shall be deemed an "Engine" as defined herein and shall be
deemed part of the same Aircraft as was the Engine replaced thereof. No Event of
Loss covered by this Section 11(b) shall result in any reduction in Rent.
(c) Conveyance of Replacement Airframe. Prior to or at the
time of any conveyance of a replacement Airframe pursuant to Section 11(a)
above, Lessee, at its own cost and expense, will furnish Lessor with the
following documents which shall have been duly authorized, executed and
delivered by the respective parties thereto and shall be in full force and
effect on said date: (i) a full warranty bill of sale, in form and substance
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such
other form of bill of sale as may be approved by the FAA on said date), executed
by the owner thereof, in favor of Lessor (or, so long as the Foreign Lease
Agreement is in effect, Foreign Lessor) and, cause
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supplements, reasonably satisfactory to Owner Participant and Indenture Trustee
(if the Lien of the Indenture has not been discharged), to this Lease, the
Foreign Lease Agreement (if then in effect), the Indenture (if then in effect)
and the Trust Agreement (if then in effect), with respect to such replacement
Airframe and to be duly filed for recordation pursuant to the Federal Aviation
Act or other applicable Governmental Entity; (ii) the certificate specified in
Section 12(f) hereof demonstrating compliance with the insurance requirements of
Section 12 with respect to the replacement Airframe and Engines; (iii) an
opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of
Lessee's counsel (and such other evidence of title as Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged) may
reasonably request) to the effect that, upon such conveyance, Lessor will
acquire good title to, or, so long as the Foreign Lease Agreement is in effect,
beneficial ownership of, such replacement Airframe free and clear of all Liens
(it being understood that, upon such conveyance, such replacement Airframe may
be subject to Permitted Liens), that such replacement Airframe will be leased
hereunder and under the Foreign Lease Agreement (if then in effect) to the same
extent as the Airframe replaced thereby and will be subject to the Lien of the
Indenture (if it has not been discharged), the instruments subjecting such
Replacement Airframe and Replacement Engine to the Lien of the Indenture and the
Lease, and subjecting to any relevant Assigned Sublease and Sublease Assignment,
as the case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Airframe and Replacement
Engine and the Lien of the Indenture on such Replacement Airframe and
Replacement Engine; and that Lessor and Indenture Trustee, as the assignee of
Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United
States Code with respect to such replacement airframe and engines to the same
extent as with respect to the Airframe and Engines then installed thereon prior
to such replacement; (iv) a certificate signed by a Responsible Officer of
Lessee certifying that, upon consummation of such replacement, no Default or
Event of Default will exist hereunder; (v) such documents and evidence with
respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the
Indenture has not been discharged), as such parties or their respective counsel
may reasonably request in order to establish the consummation of the
transactions contemplated by this Section 11(c), the
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taking of all corporate proceedings in connection therewith and compliance with
the conditions set forth in this Section 11(c), in each case in form and
substance satisfactory to each such party, including evidence that the Aircraft
of which the replacement Airframe is a part has been duly certificated by the
FAA as to type and airworthiness in accordance with the terms of this Lease and
application for registration of such replacement Airframe in the name of Lessor
has been duly made with the FAA or other applicable Governmental Entity and
Lessee has temporary or permanent authority to operate the replacement Airframe;
(vi) furnish such Uniform Commercial Code financing statements covering the
replacement Airframe as may be requested by Lessor or Indenture Trustee, (vii)
furnish Owner Participant with an opinion of tax counsel mutually satisfactory
to Owner Participant and Lessee and which opinion is reasonably satisfactory to
Owner Participant to the effect that such replacement will have no adverse tax
consequences to Lessor and Owner Participant; (viii) an appraisal prepared in
accordance with the Appraisal Procedure which confirms that the replacement
Airframe and any replacement Engine has a value, utility and remaining useful
life at least equal to that of the Airframe and Engines which suffered the Event
of Loss assuming that the same were maintained in accordance with the
requirements of this Lease whether or not they are in fact so maintained; and
(ix) furnish Owner Trustee and Indenture Trustee with the opinion of counsel to
Lessee specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance
by Lessee with the terms of this Section 11(c), Lessor will, subject to the
rights of any insurers, transfer to Lessee "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that such Airframe is free and
clear of Lessor's Liens, Head Lessor's Liens and any Lien arising out the
Foreign Lease Documents), all of Lessor's right, title and interest in and to
the Aircraft which suffered the Event of Loss. No Event of Loss with respect to
the Aircraft under the circumstances contemplated by the terms of this Section
11(c) shall result in any reduction in Rent.
For all purposes of this Lease, each such replacement
Aircraft (together with any Engines constituting part of the Aircraft being
replaced as to which an Event of Loss has not occurred) shall be deemed part of
the property leased hereunder and shall be deemed the "Aircraft" as defined
herein.
(d) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(f) below, any payments (other
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than insurance proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of
such payments as shall not exceed the Stipulated Loss Value required to be paid
by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in
reduction of Lessee's obligation to pay such Stipulated Loss Value if not
already paid by Lessee, or, if already paid by Lessee, shall (unless a Default
or an Event of Default shall have occurred and be continuing) be applied by
Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and the
balance, if any, of such payment remaining thereafter shall be paid over to, or
retained by, Lessor; or
(ii) if such payments are received as a result of an
Event of Loss with respect to the Airframe or an Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid over to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or
Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect
to the Event of Loss for which such payments are made and if no Default or Event
of Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect to the
Aircraft. Subject to Section 11(f) below, in the event of the requisition for
use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other
than a requisition constituting an Event of Loss), Lessee shall promptly notify
Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as if such
requisition had not occurred. All payments received by Lessor or Lessee from the
Governmental Entity for the use of such Airframe or Engine during the Term shall
be paid over to, or retained by, Lessee if no Default or Event of Default shall
have occurred and be continuing; and all other payments received by Lessor or
Lessee from the Governmental Entity shall be paid over to, or retained by,
Lessor. If the Airframe and such Engines or engines are not returned by the end
of the Term, an Event of Loss shall be deemed to have occurred on the last day
of the Term and, on the last day of the Term, Lessee shall either pay to Lessor
the amount provided herein for an Event of Loss to the Airframe
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and such Engines or engines on such date or provide a replacement Aircraft and
Engine on such date in the condition provided for in Section 16. In the event of
the requisition for use by the Governmental Entity of any Engine without the
requisition for use of the Airframe, Lessee will replace such Engine hereunder
by complying with the terms of Section 11(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine, and thereafter any payments
received by Lessor or Lessee from the Governmental Entity with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application in Default. Any amount referred to in
clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable
to Lessee shall not be paid to Lessee, or, if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such
payment or retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without limitation,
by reason of this Lease being declared or deemed in default. At such time as
there shall not be continuing any such Event of Default or Default, all such
amounts at the time held by Lessor or Indenture Trustee in excess of the amount,
if any, which Lessor or Indenture Trustee has elected for application as
provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Aircraft, in an amount not less than three hundred
fifty million dollars ($350,000,000), combined single limit, per occurrence or
such higher amount, and of such type and terms, as are customarily carried by
prudent Certificated Air Carriers, similarly situated to Lessee, operating
aircraft of similar size and engines and as hereinafter provided. Each and any
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policy of insurance carried in accordance with this Section 12(a), and each and
any policy obtained in substitution or replacement for any of such policies, (i)
shall designate Lessor (in both its individual and trustee capacity), Owner
Participant, Indenture Trustee (in both its individual and trustee capacity)
Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees and
their respective permitted assigns, as additional insureds as their interests
may appear (but without imposing upon any such Person any obligation imposed
upon the insured, including, without limitation, the liability to pay any
premiums for any such policies), (ii) shall expressly provide that, in respect
of the interests of Lessor, Owner Participant, Indenture Trustee, Foreign
Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees and their
respective permitted assigns, in such policies, the insurance shall not be
invalidated as to an insured by any act or omission of Lessee or any other
insured and shall insure Lessor, Owner Participant, Indenture Trustee and the
other Indemnitees and their respective permitted assigns, regardless as to any
insured of any breach or violation by Lessee or any other insured of any
warranty, declaration or condition contained in such policies, (iii) shall
provide that if such insurance is cancelled for any reason whatsoever, or is
changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender
and the other Indemnitees or if such insurance is allowed to lapse for
non-payment of premium, such cancellation, change or lapse shall not be
effective as to Lessor, Owner Participant, Indenture Trustee, Foreign Lessor,
Foreign Lessee, Foreign Lender and the other Indemnitees, and their respective
permitted assigns, until thirty (30) days, in each instance (seven (7) days or
such lesser period of time as is customarily available at the time in the case
of any war risk and allied perils coverage), after notice to Lessor, Owner
Participant, Indenture Trustee from such insurer or insurers, of such
prospective cancellation, change or lapse provided, however, that if any such
notice period is not reasonably obtainable, such policies shall provide for as
long a period of prior notice as shall then be reasonably obtainable, (iv) shall
include coverage for any country in or over which the Aircraft is located or
operated, and (v) shall provide that, as against Lessor, Owner Participant,
Indenture Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender and the other
Indemnitees, and their respective permitted assigns, each insurer shall waive
any rights of set-off, counterclaim or any other deduction, whether by
attachment or otherwise, and waives any rights it may have to be subrogated to
any right of any insured against Lessor, Owner Participant, Indenture Trustee,
Foreign Lessor, Foreign Lessee, Foreign Lender or the other Indemnitees, or
their respective permitted
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assigns, with respect to the Aircraft. Each liability policy shall be primary
without right of contribution from any other insurance which may be carried by
Lessor, Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee,
Foreign Lender or the other Indemnitees, or their respective permitted assigns,
and shall expressly provide that all of the provisions thereof shall operate in
the same manner as if there were a separate policy covering each insured,
provided, that such policies shall not operate to increase the insurer's limit
of liability. Lessee shall cause its insurers to agree that the indemnity and
hold harmless provisions of Section 13 are insured as a contractual assumption
of liability by Lessee's insurers, subject to the terms, coverage, conditions,
limitations and exclusions of the policy of insurance. Without limiting the
foregoing, the type and amount of the insurance carried by Lessee hereunder
shall be no less in amount and no less comprehensive or favorable to Lessor,
Owner Participant, Indenture Trustee and the other Indemnitees then that carried
by Lessee with respect to other A320-231 aircraft or similar-size aircraft owned
or leased by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own
expense, will maintain in effect, or cause to be carried and maintained in
effect, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the consent of Lessee) covering the Aircraft,
and "all-risk" coverage including transit insurance with respect to Engines and
Parts while not installed on such Aircraft or an aircraft, which in each case
considering all policy terms, limitations and exclusions is of the type, terms
and amount customarily maintained by prudent Certificated Air Carriers similarly
situated to Lessee and operating similar size aircraft and engines and as
hereinafter provided. Lessee shall also maintain, or cause to be maintained, war
risk and allied perils hull insurance reasonably acceptable to Lessor with
Approved Insurers if the Aircraft, Airframe or Engines are operated on routes or
kept in locations outside of the United States of America. In addition, at least
ten (10) Business Days (or, in the case of an emergency, at least two (2)
Business Days) prior to permitting the Aircraft, Airframe or Engines to be
operated or located outside of the United States of America, other than in
Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or
Indenture Trustee reasonably requests at any time and if such insurance is then
customarily being obtained by or for
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Persons leasing or financing similarly-sized aircraft operating on similar
routes to operators located in the jurisdiction of Lessee's or, if a Permitted
Sublease is in effect, the Permitted Sublessee's jurisdiction of domicile,
Lessee shall pay or reimburse Lessor for political risk, repossession,
expropriation, confiscation and similar insurance as Lessor may arrange or cause
to be arranged. Anything herein to the contrary notwithstanding, at all times
while the Aircraft is subject to this Lease, the insurance required by this
Section 12(b) shall be for an amount on an "agreed value" basis not less than
the Stipulated Loss Value from time to time determined for the Aircraft. Without
limiting the foregoing, the type and amount of insurance carried by Lessee
hereunder shall be no less comprehensive or favorable to Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees than that carried by
Lessee with respect to similar-size aircraft owned or leased by Lessee.
Each and any policy of insurance obtained and maintained
pursuant to this Section 12(b), and each and any policy obtained in substitution
or replacement for any such policies, (i) shall designate Lessor as owner of the
Aircraft, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns as additional insureds, as
their respective interests may appear (but without imposing upon Lessor, Owner
Participant, Indenture Trustee and their respective permitted assigns, any
obligation imposed upon the insured, including, without limitation, the
liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of such an additional insured and its
permitted assigns, in such policies, the insurance shall not be invalidated as
to an insured by any act or omission of Lessee or any other additional insured,
and shall insure each such additional insured and its permitted assigns,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their respective
permitted assigns, or if such insurance is allowed to lapse, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee, the other Indemnitees or their respective permitted assigns,
until thirty (30) days
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(seven (7) days or such lesser period of time as is customarily available at the
time in the case of any war risks or allied perils coverage) after written
notice to Lessor, Owner Participant and Indenture Trustee from such insurer or
insurers, as the case may be, of such prospective cancellation, change or lapse
provided, however, that if any such notice period is not reasonably obtainable,
such policies shall provide for as long a period of prior notice as shall then
be reasonably obtainable, (iv) shall include coverage for any country in or over
which the Aircraft may at any time be located or operated, (v) shall provide
that, as against Lessor, Owner Participant, Indenture Trustee, Foreign Lessor,
the other Indemnitees and their respective permitted assigns, each insurer shall
waive any rights of set-off, counterclaim or any other deduction, whether by
attachment or otherwise, and waives any rights it may have to be subrogated to
any right of any insured against Lessor, Owner Participant, Indenture Trustee,
Foreign Lessor, and the other Indemnitees and their respective permitted
assigns, with respect to the Aircraft, (vi) shall provide that in the event of
any damage or loss which is an Event of Loss hereunder and which results in a
payment, such payment shall be payable directly to Indenture Trustee as sole
loss payee, so long as the Lien of the Indenture shall not have been discharged
and thereafter to Lessor, as sole loss payee, and (vii) shall provide that in
the event of any damage or loss which is not an Event of Loss hereunder and
which results in a payment, such payment shall be payable directly to Indenture
Trustee, as sole loss payee for the account of all interests, so long as the
Lien of the Indenture shall not have been discharged and thereafter to Lessor,
as sole loss payee for the account of all interests. The insurance required
under this Section 12(b) may incorporate deductible amounts which shall not
exceed one million dollars ($1,000,000).
Each of Lessor, Owner Participant and Foreign Lessor shall
have the right to carry additional and separate excess or contingent insurance
for its own benefit at its own expense, without, however, thereby limiting
Lessee's obligations under this Section 12, and Lessee shall not carry any such
insurance if it would conflict with or adversely affect other insurance carried
by Lessor, Foreign Lessor, or Owner Participant. Lessee shall have the right to
carry insurance in excess of the amounts required hereunder and the proceeds of
such excess insurance shall be payable to Lessee, provided, however, that such
insurance does not conflict with or adversely affect the insurance required
hereunder or any excess or contingent insurance carried by Lessor, Foreign
Lessor, or Owner Participant. Lessee shall give Lessor reasonable prior written
notice of
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any insurance to be carried by Lessee in addition to that required to be carried
by Lessee as provided herein.
(c) Application of Insurance Proceeds for an Event of
Loss. It is agreed that insurance payments which arise from insurance required
to be carried by Lessee pursuant to this Section 12 and received as the result
of the occurrence of an Event of Loss shall be applied as follows (after
reimbursement of Lessor, Owner Participant, Indenture Trustee and Foreign Lessor
for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of
such payments as shall not exceed the Stipulated Loss Value required to be paid
by Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture
Trustee so long as the Lien of the Indenture has not been discharged and
thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value if not already paid by Lessee, or, if already paid by Lessee, shall
(unless a Default or an Event of Default shall have occurred and be continuing)
be applied by Indenture Trustee or Lessor, as the case may be, to reimburse
Lessee for its payment of such Stipulated Loss Value and the balance, if any, of
such payment remaining thereafter shall be paid over to, or retained by, Lessor;
or
(ii) if such payments are received as a result of an
Event of Loss with respect to the Airframe or an Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid over by the Indenture Trustee or Lessor, as the case may be, to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b)
hereof, as the case may be, and of Section 15 hereof with respect to the Event
of Loss for which such payments are made and if no Default or Event of Default
shall have occurred and be continuing.
In the event that separate policies are maintained to
cover "all-risk" ground and flight aircraft, hull and war risks and allied
perils insurance, Lessee shall include a 50/50 provisional claims settlement
clause as contained in the policies of insurance maintained by Lessee with
respect to all other aircraft in Lessee's fleet, and a copy of the 50/50
provisional claims settlement clause in effect on the Restatement Date shall be
attached to the insurance certificate issued on the Restatement Date.
(d) Application of Insurance Proceeds for Other than an
Event of Loss. The insurance payments of any
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property damage loss to the Airframe or any Engine not constituting an Event of
Loss with respect thereto will be applied in payment for the actual costs of
repairs or for replacement property which Lessee has incurred in accordance with
the terms of Section 9, 11 or 12(c) of this Lease against such documentation
evidencing payment by Lessee as Lessor may reasonably request to reimburse
Lessee for such repairs or replacements already paid for by Lessee, and any
balance remaining after compliance with such Sections with respect to such loss
shall be paid to Lessor. Lessee shall be entitled to receive from the insurer
any insurance proceeds not in excess of five hundred thousand dollars ($500,000)
as soon as such funds are paid and shall promptly receive such additional
insurance proceeds from the loss payee upon invoices for repair work in
progress, replacement parts which are ordered or for work completed as provided
above in this Section 12(d). Any amount referred to in this Section 12(d) which
is payable to Lessee shall not be paid to Lessee if at the time of such payment
any Default or Event of Default shall have occurred and be continuing, but shall
be held by Lessor as security for the obligations of Lessee under this Lease or
applied as provided in Section 12(e).
(e) Application in Default. Any amount referred to in
clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to
Lessee shall not be paid to Lessee, or if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the
Lien of the Indenture shall not have been discharged, and thereafter to Lessor,
if at the time of such payment or retention a Default or an Event of Default
shall have occurred and be continuing. In such case, all such amounts shall be
paid to and held by Indenture Trustee so long as the Lien of the Indenture shall
not have been discharged, and thereafter held by Lessor as security for the
obligations of Lessee, or, at the option of Indenture Trustee or Lessor, applied
by Indenture Trustee or Lessor toward payment of any of Lessee's obligations at
the time due hereunder, including, without limitation, by reason of this Lease
being declared or deemed declared in default, as Indenture Trustee or Lessor may
elect. At such time as there shall not be continuing any such Event of Default
or Default, all such amounts at the time held by Indenture Trustee or Lessor in
excess of the amount, if any, which Indenture Trustee or Lessor has elected for
application as provided above, shall be paid to Lessee.
(f) Certificates. On or before the Delivery Date, and
thereafter on any renewal by the Lessee of the insurance required hereby (but in
no event less than once in every twelve (12) month period), Lessee will furnish
to Lessor and
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Indenture Trustee a certificate executed and delivered by an Approved Insurer or
the Approved Broker, describing in reasonable detail, and in accordance with
customary practice, insurance carried on the Aircraft and Lessee shall also
furnish an opinion or report by the Approved Insurer or the Approved Broker
certifying that the insurance then maintained on the Aircraft complies with the
terms of this Lease. Lessee will cause the Approved Broker to agree to advise
Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30)
days (seven (7) days or such lesser period of time as is customarily available
at the time in the case of any war risk and allied perils coverage) prior to the
expiration, non-renewal, termination or cancellation for any reason (including,
without limitation, failure to pay premium therefor) or material modification of
any such insurance; provided, however, that if any such notice period is not
reasonably obtainable, such Approved Broker shall provide for as long a period
of prior notice as shall then be reasonably obtainable.
In the event Lessee shall fail to maintain insurance as
herein provided, Lessor, Owner Participant or Indenture Trustee at their
respective options, may provide such insurance and, in such event, Lessee shall,
upon demand, reimburse Lessor, as Supplemental Rent, or any other such other
Person who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or, if a Permitted Sublease is in
effect, the Permitted Sublessee) may carry primary insurance outside of the
aviation insurance markets in New York, London or Paris if the relevant primary
insurer shall have obtained reinsurance and such reinsurance will (i) be on the
same terms as the original insurance and will include the provisions required by
this Agreement, (ii) provide in case of any bankruptcy, insolvency, liquidation,
dissolution or similar proceedings of or affecting the original insurer that the
reinsurers' liability will be to make such payment as would have fallen due
under the relevant policy of reinsurance if the original insurer had
(immediately before such bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full under the original
insurance policies in respect of which the then relevant policy of reinsurance
has been effected; and (iii) contain a "cut-through" clause in the following
form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the
Reinsured hereby mutually agree that in the event of any claim arising under the
reinsurances in respect of a total loss or other claim where as provided by the
Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6] dated as of
October 1, 1991 as amended and restated as of
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November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee,
and America West Airlines, Inc. such claim is to be paid to the person named as
sole loss payee under the primary insurances, the Reinsurers will in lieu of
payment to the original insured, its successors in interest and assigns pay to
the person named as sole loss payee under the primary insurances effected by the
original insured that portion of any loss due for which the Reinsurers would
otherwise be liable to pay the original insurer (subject to proof of loss), it
being understood and agreed that any such payment by the Reinsurers will (to the
extent of such payment) fully discharge and release the Reinsurers from any and
all further liability in connection therewith."
(h) Storage. During any period that the Aircraft is in
storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu
of the insurance required by Sections 12(a) and (b) above, insurance otherwise
conforming with the provisions of said Sections 12(a) and (b) except that the
scope of the risk and the type of insurance, and the amount of the insurance in
the case of the insurance described in Section 12(a) above (but not the amount
of insurance to be carried under Section 12(b) above), shall be the same as from
time to time applicable to similar size passenger aircraft that comprise
Lessee's fleet in similar storage or grounding, and in any event (including,
without limitation, at any time when there shall be in existence a Permitted
Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of
Default has occurred and is continuing, any amount held by Lessor or Indenture
Trustee, as the case may be, until application by Lessor or Indenture Trustee,
as the case may be, pursuant to this Section 12 shall be invested as provided in
Section 21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at
its expense the insurance described in Section 12(a) for three years after the
expiration or termination of the Basic Term or Renewal Term, if Lessee has
elected to renew the Lease in accordance with Section 20, covering each
Indemnitee as its interest may appear and specifically insuring the indemnity
contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of the
insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the
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<PAGE> 81
extent and subject to the terms and conditions specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and
hold harmless each Indemnitee on an after-tax basis, as provided in Section
10(e), within fifteen (15) days after demand from and against any and all
claims, damages (whether direct, indirect, incidental, special or
consequential), losses, charges, fees, liabilities, obligations, demands, suits,
judgments, actions and other legal proceedings (whether civil or criminal),
penalties, fines, other sanctions, and any reasonable costs and expenses, in
connection herewith, including, without limitation, reasonable attorney's fees
and expenses of whatever kind or nature (any and all of which are hereafter
referred to as "Claims") imposed on, or asserted by or against, or suffered or
incurred by, any Indemnitee from (and including) and after the Restatement Date,
including, without limitation, injury, death or property damage of passengers,
shippers and others, environmental control, noise and pollution regulations,
which in any way may result from, pertain to, or arise in any manner out of, or
are in any manner related to (1) the Operative Documents, the Purchase Documents
or the Financing Documents, or any of the transactions contemplated thereby; (2)
the Aircraft, the Airframe, any Engine or any engine used in connection with the
Airframe or any Part thereof, including, but not limited to, (A) the
importation, exportation, condition, manufacture, design, purchase, ownership,
registration, reregistration, deregistration (other than any deregistration
caused by the failure of the registered owner of the Aircraft to be a "citizen
of the United States" as defined under the Federal Aviation Act and the
regulations thereunder or to file the documentation necessary to continue FAA
registration of the Aircraft), delivery, nondelivery, assignment, leasing,
subleasing, sub-subleasing, acceptance, rejection, possession, repossession,
return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and
Lenders' Liens, but including the Lien of the Indenture), use, performance,
modification, maintenance, overhaul, operation, pooling, interchange, repair,
testing, sale, return or other disposition or application of the Aircraft, the
Airframe, any Engine, any engine used in connection with the Airframe or any
Part (including, but not limited to, latent and other defects whether or not
discoverable by Lessee or Lessor, Claims related to any actual or alleged
violation of Law, loss or damage to any property of passengers, shippers or
otherwise or any Claim related to patent, copyright, trademark or other
infringement) either in the air or on the ground, and,
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<PAGE> 82
including, without limitation, any interest therein of an Indemnitee or
imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and
Lenders' Liens but including the Lien of the Indenture), or the rentals,
receipts or earnings therefrom (including, without limitation, the Rent and any
other amounts paid or payable with respect thereto); or (B) any defect in the
Aircraft, the Airframe, any Engine, any engine used in connection with the
Airframe or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine
or Part, or otherwise regardless of when such defect shall be discovered,
whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in
the possession of Lessee, and regardless of where such Aircraft, Airframe,
Engine, engine or Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Aircraft, the Airframe, an Engine, any Operative Document,
any Purchase Document or any Financing Document), (ii) the material breach of
any express representation, warranty or covenant made by such Indemnitee herein
or in any other Operative Document, or the Financing Documents (not resulting
from a breach by Lessee of any of its representations, warranties or covenants
in the Operative Documents or in the Financing Documents), (iii) any Taxes,
whether or not Lessee is required to indemnify such Taxes under Section 10
hereof or the Tax Indemnification Agreement (it being understood that Section 10
hereof and the Tax Indemnification Agreement exclusively provide for Lessee's
liability with respect to Taxes), (iv) any Claim which relates solely to events
which occurred prior to (but excluding) the Restatement Date (other than Claims
related to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to Lessor in
accordance with the terms hereof and the Term of this Lease has been terminated
or has expired and the return is not related to an Event of Default, (vi) as to
such Indemnitee, an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the Aircraft, the
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<PAGE> 83
Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents, except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder and
except any Claim which is alleged or does relate to the period prior to such
disposition or (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or are
not required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents (provided, however, in no event
will Lessee be liable for any Claims resulting from, pertaining to or arising
from or related to Lessor's granting or creating a Lessor's Lien or the granting
or creation of a Head Lessor's Lien or an Original Head Lessee's Lien). Upon
full payment of the indemnities herein, Lessee shall be subrogated to all rights
and remedies which such Indemnitee may have against any third party against whom
such Indemnitee has the right to assert a Claim which arises under any action
described in this Section 13 (except Claims under such Indemnitee's own
insurance policies or under the indemnification provisions of any of the
Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may result
from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as and to the extent such Indemnitee
is responsible under the Refunding Agreement for Claims related to such
deregistration), delivery, non-delivery, assignment, leasing, subleasing,
manufacture, acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Aircraft, the
Airframe, any Engine or any engine used in connection with the Airframe or any
Part thereof, either in the air or on the ground, or which may be caused by any
defect in such Aircraft, Airframe, Engine, engine or Part from the material or
any article used therein
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<PAGE> 84
or from the design or testing thereof, or use thereof or from any maintenance,
service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine
or Part, claims for infringement, loss of or injury to any person, loss of or
damage to any property or environmental damage, regardless of when such defect
may be discovered, whether or not such Aircraft, Airframe, Engine, engine or
Part is at the time in the possession of Lessee, and regardless of the location
of such Aircraft at any such time except to the extent that such Claim results
from (i) the gross negligence or willful misconduct of such Indemnitee (except
any such gross negligence or willful misconduct as may be attributed to an
Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any
Operative Document, any Purchase Document or any Financing Document), (ii) the
material breach of any of its express representations, warranties or covenants
hereunder, under any other Operative Document or Financing Document (not
resulting from a breach by Lessee of any of its representations, warranties or
covenants in the Operative Documents or in the Financing Documents), (iii) any
Taxes, whether or not Lessee is required to indemnify such Taxes under Section
10 hereof or the Tax Indemnification Agreement (it being understood that Section
10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's
liability with respect to Taxes), (iv) any Claim which relates solely to events
which occurred prior to (but excluding) the Restatement Date (other than Claims
related to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to Lessor in
accordance with the terms hereof and the Term of this Lease has been terminated
or has expired and the return is not related to an Event of Default, (vi) as to
such Indemnitee, an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the Aircraft, the Airframe, any Engine, or any Part, or in the
Financing Documents, the Purchase Documents or the Operative Documents, except
as contemplated under or pursuant to the Operative Documents, the Financing
Documents or the Purchase Documents and except as resulting from the exercise of
its remedies during the period while an Event of Default has occurred and is
continuing and prior to the time such Indemnitee has received payment of all
amounts owing to it hereunder and except any Claim which is alleged or does
relate to the period prior to such disposition, (vii) the authorization or
giving or withholding of any future amendments, supplements, waivers or consents
with respect to any of the Financing Documents, the Purchase Documents or the
Operative Documents, which amendments, supplements, waivers or consents were not
requested by Lessee or are not
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required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head
Lessor's Lien or a Lenders' Lien attributable to such Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense
and with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter
into a settlement or other compromise with respect to any Claim which Lessee or
such Indemnitee is defending hereunder in excess of $100,000 without the prior
written consent of the other, which consent shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense thereof
where Lessee has the right to control the defense thereof is materially
prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section.
Nothing in this Section shall be construed as a guaranty
by Lessee of payments due pursuant to any
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<PAGE> 86
indebtedness incurred with respect to the purchase of the Aircraft or of the
residual value of the Aircraft.
Notwithstanding anything herein or in any other Operative
Document to the contrary, with respect to any Claim for which any Indemnitee is
entitled to indemnification under more than one provision of this Lease or any
other Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall
continue in full force and effect notwithstanding the expiration or other
termination of this Lease and are expressly made for the benefit of and shall be
enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur,
assume, or suffer to exist any Lien on or with respect to the Aircraft, the
Airframe, any Engine or any Part thereof, title thereto, or any interest of
Lessor therein or in this Lease, except (i) the respective rights of Lessor,
Lessee, Owner Participant, Indenture Trustee, Foreign Lessor and any other
Indemnitee as herein provided or provided under the other Operative Documents or
the Financing Documents; (ii) Lessor's Liens, Head Lessor's Liens and Lenders'
Liens; (iii) Liens for Taxes either not yet due or being diligently contested in
good faith by appropriate proceedings in accordance with Section 10 and so long
as adequate reserves are maintained with respect to such Liens and only so long
as neither such proceedings nor such Liens involve any material danger of the
sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine, or
any interest of Lessor, Foreign Lessor or Indenture Trustee therein or any risk
of criminal liability of Lessor, Foreign Lessor or Indenture Trustee; (iv)
inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other
like inchoate Liens arising in the ordinary course of business for sums not
overdue by more than 45 days or being diligently contested in good faith and
only so long as neither such proceedings nor any such Liens involve any material
danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or
any Engine, or any interest of Lessor or Indenture Trustee therein; (v) the
rights of other Persons to the extent expressly permitted by the provisions of
Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award
against Lessee (or any Permitted Sublessee) unless the judgment or award shall
not,
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within thirty (30) days after the entry thereof, have been discharged, vacated,
reversed, or execution thereof stayed pending appeal or shall not have been
discharged, vacated or reversed within thirty (30) days after the expiration of
such stay and only so long as such Liens shall not involve any material danger
of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any
Engine, or any interest of Lessor, Foreign Lessor or Indenture Trustee therein
and provided that the execution of such judgment or award or an attachment
relating thereto shall not have occurred within such thirty (30) day period;
and, (vii) any other Lien with respect to which Lessee (or a Permitted
Sublessee) shall have provided a bond adequate in the reasonable opinion of
Indenture Trustee (if the Lien of the Indenture has not been discharged) and
Owner Participant. Lessee shall promptly, at its own expense, take or cause to
be taken such action as may be necessary to duly discharge any Lien (except for
the Liens referred to in clauses (i) through (vii) of this Section 14) directly
or indirectly created, incurred, assumed, or suffered to exist by Lessee if the
same shall arise at any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease,
the Indenture, the Trust Agreement, the Lease Supplement, Indenture Supplement
and Trust Supplement, and any other supplement from time to time required by the
terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement,
the Lease Supplement, Indenture Supplement, the Trust Supplement and such other
supplements to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor, Foreign Lessor or Indenture Trustee, Lessee shall, at its
own cost and expense (except it shall be at Lessor's expense if in connection
with a change in ownership of the Aircraft or any other transfer or assignment
by Lessor other than as contemplated hereunder or under the Financing Documents
or in connection with an Event of Default), and upon request by Lessor or
Foreign Lessor cause any financing statements and any and all additional
instruments and other documents, so far as permitted by applicable Law, to be
kept, filed, and recorded and to be re-executed, refiled and re-recorded at all
times in the appropriate office pursuant or in relation to any applicable Laws
of any Governmental Entity, to protect and preserve the rights and interests of
Lessor, Foreign Lessor or Indenture Trustee hereunder, under the Indenture and
in the Aircraft, and Lessee shall furnish to Lessor, Foreign Lessor and
Indenture Trustee, evidence,
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reasonably satisfactory to Lessor and Indenture Trustee, of each such filing or
refiling and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or cause
to be done, at Lessee's cost and expense (except it shall be at Lessor's expense
if in connection with a change in ownership of the Aircraft or any other
transfer or assignment by Lessor other than as contemplated hereunder or under
the Financing Documents or in connection with an Event of Default), any and all
acts and things within its control which may be required under the terms of the
Mortgage Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease, and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Aircraft, as Lessor may
reasonably request. Lessee shall also do or cause to be done, at its own expense
(except it shall be at Lessor's expense if in connection with a change in the
ownership of the Aircraft or any other transfer or assignment by Lessor other
than as contemplated hereunder or under the Financing Documents or in connection
with an Event of Default), any and all acts and things which may be required
under the terms of any other Law involving any jurisdiction in which Lessee, any
Permitted Sublessee or any wet lessee may operate the Aircraft which Lessor may
reasonably request, to protect and preserve the title of the Lessor, this Lease,
the Indenture and Lessor's, Foreign Lessor's and Indenture Trustee's interest in
the Aircraft and under any of the Operative Documents or Financing Documents
within any such jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and
duly execute and deliver to Lessor or Indenture Trustee, as applicable, such
further documents and assurances and take such further actions as Owner
Participant or Indenture Trustee may from time to time reasonably request in
order to more effectively carry out the intent and purpose of this Lease and the
other Operative Documents and the Financing Documents and to protect the rights
and remedies created or intended to be created in favor of Lessor, Foreign
Lessor or Indenture Trustee hereunder and the other Operative Documents and the
Financing Documents including, without limitation, if reasonably requested by
Owner Participant or Indenture Trustee, at the expense of Lessee (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Aircraft or any other transfer or assignment by Lessor, Foreign Lessor or
Indenture Trustee other than as contemplated hereunder or under the Financing
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Documents or in connection with an Event of Default), the execution and delivery
of supplements or amendments hereto in recordable form, subjecting to this
Lease, the Indenture, the Foreign Lease Documents and the other Financing
Documents, any replacement Aircraft or Engine and the recording or filing of
counterparts thereof in accordance with the laws of any appropriate
jurisdiction.
Lessee's obligations under this Section 15 are subject to
the reasonable cooperation of the applicable parties.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at its own
expense and risk, shall return the Aircraft to Lessor (or any Person designated
by Lessor) in at least the condition specified in this Section and Exhibit E
hereto at any Lessee system location in the continental United States selected
by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may
agree, fully equipped with all required Engines, or other engines owned by
Lessee (which shall thereupon become Engines as hereinafter provided) meeting
the conditions specified in this Section and Exhibit E, duly installed thereon
by delivering the same to the Lessor at such location. Lessee shall comply with
Section 11(b) and this Section 16 with respect to any engines installed on the
Aircraft returned to Lessor hereunder and meeting the conditions described
herein which were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion
hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for
the Lien of the Indenture, Head Lessor's Liens, Original Head Lessee's Liens,
Lessor's Liens, Lenders' Liens and Liens arising out of the Foreign Lease
Agreement, (ii) duly certified as an airworthy aircraft by the FAA under Part
121 of the regulations promulgated under the Federal Aviation Act and with a
current and valid Airworthiness Certificate installed on the Aircraft, unless
such certificate shall have been suspended or revoked as a result of the
suspension or revocation of the registration of the Aircraft under the Federal
Aviation Act due to the ineligibility of the Aircraft to be registered in the
name of Lessor under the Federal Aviation Act (whether by means of a voting
trust agreement or otherwise) in which case the Aircraft shall nevertheless meet
all conditions for such certification and for the issuance of such certificate;
(iii) in full airworthy condition for over water and EROPS operation according
to the FAA standards required to allow the Aircraft to be operated under, and in
full compliance with, such Airworthiness Certificate and Part 121 of the
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regulations promulgated under the Federal Aviation Act for such operation, such
compliance to be by means of such mechanical repairs or modifications or such
inspections as may be required thereby, but not by operational restrictions, by
logbook entries or other method of acceptance of such restrictions; (iv) in full
compliance with Lessee's Maintenance Program; (v) to the extent the owner of the
Aircraft is a "citizen of the United States" within the meaning of Section
40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee
at Lessee's expense with respect to effecting such registration, duly registered
in the name of the Lessor or other then owner of the Aircraft under the Federal
Aviation Act; (vi) in full compliance with the maintenance and operation
provisions of this Lease and all FAA airworthiness directives, mandatory service
bulletins and equivalent requirements which by their terms require compliance on
or before the last day of the Term (without regard to any deferral, waiver,
deviation or exemption granted by the FAA specifically to Lessee delaying such
compliance); (vii) in good and airworthy operating condition, and in the same
condition (including, without limitation, in a passenger configuration suitable
for passenger revenue service) as when delivered to Lessee hereunder, ordinary
wear and tear excepted, with no open or outstanding deferred maintenance items,
scheduled or unscheduled, with all systems and components fully serviceable and
operational and with no placards restricting operation or use, and (viii) with
all remaining warranties, indemnities, policies and guarantees referred to in
Section 5(d) made available to Lessor in a manner and by documents in form and
substance reasonably satisfactory to Lessor.
(c) Engines. In the event any engine not owned by Lessor
shall be installed on the Aircraft on any Return Occasion, without limiting
Lessee's obligations under the Tax Indemnification Agreement, such engine shall
be of the same model and equivalent modification status as the Engines or, at
Lessee's option, an IAE engine of an improved model suitable for installation
and use on the Airframe without diminishing the value, remaining useful life or
utility of such Airframe, in each such case having a value, remaining useful
life and utility at least equal to (as determined in accordance with the
Appraisal Procedure), and be in an operating condition as good as the Engines,
assuming the Engines were in the condition and repair as required by the terms
hereof immediately prior to such termination and shall conform to the return
condition requirements set forth in this Section 16 and Exhibit E, and Lessee,
at its own expense and concurrently with such delivery, shall cause such engine
to become an Engine by complying with Section 11(b) hereof. Lessee's obligation
to comply with the terms
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of this Section 16(c) shall be conditioned on Lessor's transferring to Lessee
all of Lessor's right, title and interest in and to any Engine not installed on
the Aircraft at the Return Occasion "AS IS, WHERE IS," without any
representation, warranty or recourse of any kind whatsoever, express or implied,
except a warranty that such Engine is free and clear of Lessor's Liens, Liens
arising out of the Foreign Lease Agreement and Head Lessor's Liens.
(d) Records and Documents. Upon the return of the
Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and
inspection, modification, overhaul and other records, related to the Aircraft,
including, without limitation, those required to be maintained with respect
thereto under applicable rules and regulations of the FAA, together with a
detailed description of the Maintenance Program then applied to the Aircraft and
shall provide Lessor and its designees access to the Maintenance Program which
is sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft under
the Maintenance Program, in each case as Lessor may reasonably request, and all
documentation with respect to the Aircraft set forth on Exhibit B or otherwise
delivered to Lessee at delivery thereof, and (ii) all records necessary or
required by the FAA to certify and place the Aircraft on an FAA or other
country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee,
which must be updated to the latest revision status as of the last day of the
Term within such software base and all data therein or pertaining thereto shall
be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All
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components and assemblies identified with safe life limits shall be identified
with their service histories, accumulated cycles or flight hours as applicable
and remaining service lives on a separate listing. All components and assemblies
which are identified on the maintenance records by part numbers and serial
numbers other than the manufacturer's shall be provided with interchange or
cross reference listing necessary to establish complete traceability. All
documentation, flight, and maintenance records as specified by United States
Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation
121.380 which normally accompany the transfer of an aircraft which has been
operating in regulated commercial air service, shall be delivered to Lessor with
the Aircraft. Any documents or records required to be delivered hereunder shall
be in English.
(e) Condition of Aircraft. Upon any Return Occasion, (i)
Lessee shall return such Aircraft to Lessor in such condition that the Aircraft
shall also comply with each and every condition and requirement set forth
elsewhere in this Lease, including Exhibit E hereto and (ii) shall provide that
each oil tank on the Aircraft shall be full and the fuel tanks shall contain as
much fuel as such tanks contained at the time the Aircraft was accepted by
Lessee.
(f) Final Inspection. Upon any Return Occasion, Lessee
shall make the Aircraft available to Lessor at the location where the "block 'C'
Check" (or equivalent level designated check or checks) required hereunder to be
performed immediately prior to redelivery is to be performed for detailed
inspection of the documents referred to in paragraph (d) above and the Airframe,
Engines and Parts structure and parts, at Lessee's expense (excluding
compensation to representatives of Lessor), in order to verify that the
condition of such Aircraft complies with the requirements set forth above (such
inspection being hereinafter referred to as the "Final Inspection"). The Final
Inspection shall be combined with such "block 'C' Check" (or equivalent level
check or checks) and may include such other items as reasonably requested by
Lessor. Lessee shall give Lessor not less than thirty (30) days prior written
notice of the commencement date of such Final Inspection. The period allowed for
the Final Inspection shall be the same period during which such "block 'C'
Check" is being performed and shall have such duration as to permit the opening
of any areas of the Aircraft which are necessary or advisable to satisfy Lessor
as to compliance with the requirements of this Section 16 and Exhibit E. The
Final Inspection shall commence on the date so noticed which shall be on or
before the expiration of the Term with respect to the Aircraft and shall
continue on consecutive days until
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all activity required above to be conducted has been concluded. To the extent
that any portion of the Final Inspection extends beyond the expiration of the
Term, unless Lessor has terminated the Lease pursuant to Section 18(f) hereof,
the Term with respect to the Aircraft undergoing the Final Inspection shall be
deemed to have been automatically extended, and all obligations (including,
without limitation, the obligation to pay Rent hereunder) continued, on a daily
basis until the Final Inspection shall have been concluded; provided, however,
that Lessee shall not be required to pay Rent with respect to the Aircraft
during the period of extension to the extent that Lessor is responsible for the
delay in completion of the Final Inspection. All storage expenses attributable
to any Term extension pursuant to the preceding sentence shall be payable by
Lessee, except that Lessee shall not be liable for any storage expenses which
are incurred after the sixtieth (60th) day after the Term to the extent that
storage continues thereafter due to Lessor's delay in completion of the Final
Inspection.
(g) Aircraft Records and Documents. In order to enable
Lessor to prepare for the Final Inspection of the Aircraft pursuant to
Subsection 16(f) above, Lessee agrees to make available to Lessor at a
maintenance base of Lessee with adequate facilities for short-term maintenance,
where the Final Inspection is to occur, not later than ten (10) days prior to
the commencement of such Final Inspection, the Aircraft Records and Documents
listed in Exhibit B hereto, together with such other documentation (including,
without limitation, original airworthiness directive compliance documents and
other work documents) regarding the condition, use, maintenance, or operation as
Lessor may reasonably request or require to substantiate the status of the
Aircraft.
(h) Corrections and Subsequent Corrections. To the extent
that the Aircraft or any Engine fails upon a Return Occasion to conform to any
requirement imposed by this Lease Lessor may, at its option, (i) continue the
Lease in effect in the manner provided for in Section 16(f) above with regard to
automatic extension until such time as such Aircraft is brought up to the
condition required by this Section 16, including Exhibit E, or (ii) accept the
return of such Aircraft and thereafter have any such nonconformance corrected,
at such time as Lessor may deem appropriate but not to commence later than
ninety (90) days following the return of such Aircraft, at commercial rates then
charged by the Person selected by Lessor to perform such correction. The Letter
of Credit shall not be released and any costs and expenses (including, materials
and labor) incurred by Lessor for such correction shall be indemnified by Lessee
in favor of Lessor (and prior to the end of the Term, Lessee shall
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make adequate provision to Lessor's satisfaction in respect of such indemnity)
and shall become Supplemental Rent payable by Lessee within ten (10) days
following the submission of a written statement by Lessor to Lessee, identifying
the items corrected and setting forth the expense of such correction. Lessee's
obligations to pay such Supplemental Rent shall survive the Expiration Date or
other termination of this Lease.
(i) Functional Flight Check. Immediately prior to the
expiration of the Term, Lessor will be permitted to conduct a non-commercial
functional flight check flight of no more than two (2) hours duration in
accordance with the Manufacturer's functional flight check procedures at
Lessee's expense to demonstrate the airworthiness of the Aircraft and proper
functioning of all systems and components. A qualified pilot and up to five (5)
other representatives selected by Lessor may take part in such flight to verify
compliance of the Aircraft with the requirements of this Lease, provided, that
Lessor shall be responsible for the charges of such qualified pilot and
representatives. Lessee may combine the functional flight check provided in this
Section 16(i) with the delivery flight specified in Section 16(a) and such
functional flight check shall include the landing. Any discrepancy or
malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any actions
to correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee shall, at
Lessee's expense, take such action as Lessor may reasonably request to assist
Lessor in obtaining any required documents in relation to the export of the
Aircraft from the United States (including, without limitation, a valid and
subsisting export certificate of airworthiness with respect to the Aircraft and
export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee shall
deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished
without charge by the manufacturer for installation on the Aircraft which have
not been so installed together with appropriate instructions for installation.
In the event such uninstalled kits were purchased or manufactured by Lessee,
then Lessor shall be advised of such kits by Lessee and have a right of first
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refusal to purchase such kits at Lessee's cost for a period of ninety (90) days
after return.
(l) Storage Upon Return. Upon any Return Occasion, Lessee
shall, at Lessor's request and at Lessee's risk and expense, in addition to
other storage referred to above, arrange for the parking, storage and insurance
of the Aircraft for a period not exceeding sixty (60) days at such reasonable
location as Lessor requests where Lessee has or can arrange for storage. Lessee
shall pay or cause to be paid all costs and expenses for such parking, storage
and insurance.
(m) Resale/Release Cooperation. During the last twelve
(12) months of the Term, with reasonable notice and at reasonable times, Lessee
will cooperate, and cause any Permitted Sublessee to cooperate, in all
reasonable respects, with the efforts of Lessor to sell or lease the Aircraft
after the end of the Term, by permitting prospective purchasers or lessees,
except to the extent prohibited by applicable Law, to inspect the Aircraft and
the records relating thereto to the extent it does not unreasonably interfere
with the operation or maintenance of the Aircraft or the conduct of Lessee's
business.
Section 17. Events of Default.
Any one or more of the following occurrences or events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of Law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic
Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business
Days after the date on which such payment is due, or (ii) any other payment of
Supplemental Rent due hereunder within ten Business Days after the date on which
such payment is due and Lessee has received written demand therefor by the party
entitled thereto (provided that any failure of Lessee to pay to Lessor or the
Owner Participant when due any Excepted Payments (as defined in the Indenture)
shall not constitute an Event of Default unless notice is given by the Owner
Participant to Lessee and the Indenture Trustee that such failure shall
constitute an Event of Default); or
(b) Lessee shall fail to obtain and maintain in full force
and effect any insurance required under the provisions of Section 12 hereof or
shall operate the
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Aircraft outside of the scope or in violation of the terms of the insurance or
United States Government indemnity coverage required to be maintained with
respect to such Aircraft; or
(c) Any representation or warranty made by Lessee in the
Operative Documents (other than the Trust Agreement, each Trust Supplement, the
Indenture, each Indenture Supplement, the Equipment Notes, the Intercreditor
Agreement, each Liquidity Facility, the Underwriting Agreement and the Tax
Indemnification Agreement) or in any certificate furnished by Lessee in
connection therewith is incorrect at the time made in any material respect and
such incorrectness shall not have been cured within thirty (30) days after the
receipt by Lessee of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant,
condition, or agreement to be performed or observed by it pursuant to this Lease
or any other Operative Document (other than the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the
Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement,
and the Tax Indemnification Agreement), and such failure shall continue uncured
for thirty (30) days after written notice thereof is given by Lessor or
Indenture Trustee to Lessee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under the first or second
sentence of Section 6(c), or Section 6(d), as such provisions of Section 6
relate to maintenance, service, repair or overhaul, or Section 9, and
notwithstanding the diligence of Lessee in attempting to cure such failure, such
failure is not cured within said thirty (30) day period but is curable with
future due diligence, there shall exist no Event of Default under this Section
17 so long as Lessee is proceeding with due diligence to cure such failure and
such failure is remedied not later than one hundred eighty (180) days after
receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a custodian,
receiver, trustee or liquidator of itself or all or any material part of
Lessee's property or Lessee's consolidated property, or Lessee admits in writing
its inability to, or is unable to, or does not, pay its debts generally as they
come due, or makes a general assignment for the benefit of creditors, or Lessee
files a voluntary petition in bankruptcy or a voluntary petition seeking
reorganization in a proceeding under any bankruptcy or insolvency Laws (as now
or hereafter in effect), or an answer admitting the material allegations of a
petition
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filed against Lessee in any such proceeding, or Lessee by voluntary petition,
answer or consent seeks relief under the provisions of any other bankruptcy,
insolvency or other similar Law providing for the reorganization or winding-up
of corporations, or provides for an agreement, composition, extension or
adjustment with its creditors, or any corporate action (including, without
limitation, any board of directors or shareholder action) is taken by Lessee in
furtherance of any of the foregoing, whether or not the same is fully effected
or accomplished; or
(f) An order, judgment or decree is entered by any court
appointing, without the consent of Lessee, a custodian, receiver, trustee or
liquidator of Lessee, or of all or any material part of Lessee's property, or
Lessee's consolidated property, or all or any material part of Lessee's property
or Lessee's consolidated property is sequestered, and any such order, judgment
or decree of appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of sixty (60) days after the date of entry
thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding
under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter
in effect) is filed and is not withdrawn or dismissed within sixty (60) days
thereafter or at any time an order for relief is granted in such proceeding, or
if, under the provisions of any Law providing for reorganization or winding-up
of corporations which may apply to Lessee, any court of competent jurisdiction
assumes jurisdiction over, or custody or control of, Lessee or of all or any
material part of Lessee's property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of sixty (60) days or at any time an order for relief
is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial
passenger Certificated Air Carrier or, except in either case in connection with
a labor dispute, announcement thereof or Lessee's suspension of its business as
a commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States air
carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act;
or
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(j) if the existence, validity, enforceability or priority
of the rights or interests of Lessor under this Lease, or the rights or
ownership of Lessor of the Aircraft under this Lease in respect of the Aircraft
or the rights or interests of Note Holders under the Indenture are challenged by
Lessee or any Person claiming by, through or on behalf of Lessee unless Lessee
demonstrates that such a claim was not rightfully made by, through or on behalf
of Lessee.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any
time thereafter so long as the same shall be continuing, Lessor may, at its
option, declare by written notice to Lessee this Lease to be in default,
provided, however, that this Lease shall be deemed to be declared in default
automatically without the necessity of such written declaration upon the
occurrence of any Event of Default described in paragraph (e), (f) or (g) of
Section 17 hereof; and at any time thereafter, so long as any outstanding Event
of Default shall not have been remedied, Lessor may do one or more of the
following with respect to all or any part of the Airframe and any or all of the
Engines as Lessor in its sole discretion shall elect, to the extent permitted
by, and subject to compliance with any mandatory requirements of, applicable Law
then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's expense, immediately return the Aircraft to
Lessor in the manner specified in such notice, in which event such return shall
not be delayed for the purposes of complying with the return conditions
specified in Section 16 and Exhibit E hereof (none of which conditions shall be
deemed to affect Lessor's possession of the Aircraft) or delayed for any other
reason; provided, however, that Lessee shall remain and be liable to Lessor for
amounts provided for herein or other damages resulting from the Aircraft or any
Engine not being in the condition required by Section 16 and Exhibit E.
Notwithstanding the foregoing, at Lessor's option, Lessee shall be required
thereafter to take such actions as would be required by the provisions of this
Lease if such Aircraft were being returned at the end of the Term hereof with
respect to such Aircraft. In addition, Lessor, at its option and to the extent
permitted by applicable Law, may enter upon the premises where all or any part
of the Aircraft is located to take immediate possession of and, at Lessor's
option, remove the same (and/or any engine which is not an Engine but which is
installed on the Airframe, subject to the rights of the owner, lessor or secured
party thereof) by summary proceedings or otherwise, all without liability
accruing to Lessor for or by reason of such entry
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or taking of possession whether for the restoration of damage to property, or
otherwise, caused by such entry or taking, except direct damages to the extent
caused by Lessor's gross negligence or willful misconduct.
(b) Sell or cause to be sold, the Aircraft or any part
thereof, or Lessor's interest therein, at private or public sale, as Lessor in
its sole discretion may determine, or otherwise dispose of, hold, use, operate,
or lease to others, or keep idle the Aircraft, as Lessor in its sole discretion
may determine, all free and clear of any rights of Lessee or any Permitted
Sublessee and except as hereinafter set forth in this Section 18. Lessor may be
the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date specified for payment
in such notice), any unpaid Rent for the Aircraft to and including the
Stipulated Loss Value Date specified in such notice, plus whichever of the
following amounts as Lessor may specify, in its sole and absolute discretion, in
such notice: (i) an amount equal to the excess, if any, of the sum of the
Stipulated Loss Value for the Aircraft computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment
Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due
on such date, over the fair market sale value of the Aircraft as of the date
specified in such notice or (ii) an amount equal to the excess, if any, of the
sum of the Stipulated Loss Value for the Aircraft computed as of the date
specified in such notice plus, if such date is a Basic Rent Payment Date or
Renewal Rent Payment Date, an amount equal to the Basic Rent or the Renewal
Rent, as the case may be, due on such date, over the fair market rental value of
the Aircraft for the remainder of the Term as of the date specified in such
notice.
(d) In the event Lessor, pursuant to paragraph (b) above,
shall have sold the Aircraft, or its interest therein, Lessor, in lieu of
exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as
liquidated damages for loss of bargain and not as
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a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due
for the period commencing after the Stipulated Loss Value Date immediately prior
to the date such sale occurs), any unpaid Rent for such Aircraft due to and
including the date of sale, plus the amount by which the Stipulated Loss Value
of such Aircraft, computed as of such Stipulated Loss Value Date, exceeds the
net proceeds of such sale (after deducting all costs of such sale).
(e) In the event that Lessor, pursuant to paragraph (b)
above, shall have relet the Aircraft under a long term lease, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to such Aircraft,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
Lessor on such demand, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such
Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due
up to the date of reletting, plus the amount, if any, by which the aggregate
Basic Rent or Renewal Rent, as the case may be, for such Aircraft, which would
otherwise have become due over the Basic Term or Renewal Term, as the case may
be, discounted periodically (equal to installment frequency) to present worth as
of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate
basic rental payments to become due under the reletting from the date of such
reletting to the date upon which the Term for such Aircraft would have expired
but for Lessee's default, discounted periodically (equal to installment
frequency) to present worth as of the date of the reletting at the rate of 8.50%
per annum.
(f) Cancel, rescind and/or terminate this Lease by written
notice to Lessee which cancellation, rescission and/or termination shall be
effective upon dispatch, whereupon Lessee's right to possess and use the
Aircraft shall immediately cease, however, Lessee shall be and remain liable for
damages and losses suffered by Lessor and all other amounts payable by Lessee
hereunder.
(g) Proceed by appropriate court action or actions, either
at law or in equity, to enforce any other remedy or right Lessor may have
hereunder, under the other Operative Documents, at law or in equity, including,
without limitation, proceed by court order to enforce performance by Lessee of
the applicable covenants of this Lease or to recover damages for the breach
thereof.
In addition to the foregoing, Lessee shall be liable
(without duplication of the remedies above and of Lessee's obligations under
Section 10 and Section 13 hereof and subject to the exclusions set forth
therein) for any and
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all unpaid Rent before, during or after the exercise of any of the above
mentioned remedies (including without limitation interest on unpaid amounts with
respect to all amounts not paid when due, including, without limitation, any
amounts payable pursuant to the foregoing provisions of this Section 18), and,
except as specified above until satisfaction of all of Lessee's obligations to
Lessor hereunder and for all legal fees and other costs and expenses incurred by
any Indemnitee by reason of the occurrence of any Event of Default or the
exercise of an Indemnitee's remedies with respect thereto, including all costs
and expenses incurred in connection with the return of the Aircraft in
accordance with the terms of Section 16 and Exhibit E hereof or in placing the
Aircraft in the condition and with airworthiness certification as required by
such Section and such Exhibit and costs and expenses related to the Lease, the
Refunding Agreement, the Indenture, the Pass-Through Trust Agreements, the
Intercreditor Agreement or each Liquidity Facility. All liquidated damages
payable pursuant to the foregoing shall bear interest, which shall be payable on
the date the payment of such liquidated damages is due at a rate equal to the
Interest Rate from and including the date due to and excluding the date actually
paid.
In effecting any repossession, Lessor, its representatives
and agents, to the extent permitted by applicable Law, (i) shall have the right
to enter upon any premises where it reasonably believes the Aircraft, the
Airframe, an Engine or Part to be located, (ii) shall not be liable, in
conversion or otherwise, for the taking of any personal property of Lessee which
is in or attached to the Aircraft, the Airframe, an Engine or Part which is
repossessed, (iii) shall not be liable or responsible, in any manner, for any
damage or injury to any of Lessee's property in repossessing and holding the
Aircraft, the Airframe, an Engine or Part, except for direct damages caused by
Lessor's gross negligence or willful misconduct, and (iv) shall have the right
to maintain possession of and dispose of the Aircraft, the Airframe, an Engine
or Part on any premises owned by Lessee or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole expense,
assemble and make the Aircraft, the Airframe, an Engine or Part available at a
place designated by Lessor in accordance with Section 16 and Exhibit E hereof.
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the
occurrence of an Event of Default, any rights in any warranty (express or
implied), service life policy, infringement indemnity, performance guaranty or
the like heretofore made available to Lessee or
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otherwise held by Lessee shall without further act, notice or writing be deemed
automatically cancelled and shall be enforceable solely by and for the benefit
of, and assigned to, Lessor. Lessee shall be liable to Lessor (without
duplication) for all expenses, disbursements, costs and fees incurred in (i)
repossessing, storing, preserving, shipping, maintaining, repairing and
refurbishing the Aircraft, the Airframe, an Engine or Part to the condition
required by Section 16 and Exhibit E hereof and (ii) preparing the Aircraft, the
Airframe, an Engine or Part for sale or lease, advertising the sale or lease of
the Aircraft, the Airframe, an Engine or Part and selling or releasing the
Aircraft, the airframe, an Engine or Part. Lessor is hereby authorized and
instructed, at its option, to make expenditures which Lessor considers advisable
to repair and restore the Aircraft, the Airframe, an Engine or Part to the
condition required by Section 16 and Exhibit E hereof, all at Lessee's sole
expense.
For the purpose of this Section 18, the "fair market
rental value" or the "fair market sales value" of the Aircraft, Airframe, an
Engine or Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or
Part pursuant to this Section, Owner Participant may bid for and purchase such
property and Lessee agrees that the amounts paid therefor shall be used in the
computations contemplated herein and Lessee shall remain liable for any
deficiency.
No remedy referred to in this Section is intended to be
exclusive, but, to the extent permitted by Law, each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d) or (e) above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Aircraft leased hereunder or otherwise to more effectively
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carry out Lessor's rights and remedies and to file said documents for
recordation with the FAA, under the Uniform Commercial Code, and with any other
appropriate Governmental Entity, and otherwise act in Lessee's name and place
with respect to the Aircraft, provided that an Event of Default has occurred and
is continuing and this Lease has been declared or deemed to be in default.
Section 19. Alienation.
(a) Lessor Assignments. In addition, and subject, to the
transactions contemplated by Section 19(b), Lessor shall not assign or transfer
any interest of Lessor in this Lease and/or the Aircraft and/or the proceeds
hereof to any Person except as provided herein, in the Trust Agreement, in the
Indenture and in the Refunding Agreement.
Any such assignment shall be subject to the condition that
the transferee shall agree not to disturb the quiet enjoyment by Lessee of the
Aircraft as and to the extent so agreed by Lessor in Section 21(f).
(b) Security for Obligations. In order to secure the
Equipment Notes, Lessor has created, by the Indenture, a security interest in
the Trust Indenture Estate, including, without limitation, this Lease and all
Rent and other sums payable hereunder, except as provided in the Indenture and
subject in each case to Liens permitted hereunder. The Indenture provides, among
other things for the assignment by Lessor to Indenture Trustee of its right,
title and interest in, to and under this Lease, to the extent set forth in the
Indenture, for the creation of a first-mortgage lien on and perfected security
interest in all of Lessor's right, title and interest in and to the Aircraft in
favor of Indenture Trustee. Lessee hereby consents to such assignment and to the
creation of such mortgage and security interest and acknowledges receipt of
copies of the Trust Agreement and the Indenture, it being understood that such
consent shall not affect any requirement or the absence of any requirement for
any consent under any other circumstances. Until the Lien of the Indenture has
been discharged, Lessee will furnish to Indenture Trustee counterparts of all
notices and other writings of any kind required to be delivered hereunder by
Lessee to Lessor. Until the Lien of the Indenture has been discharged, (a)
Lessee shall make all payments of Rent, Stipulated Loss Value and all other
amounts payable hereunder (other than Excepted Payments) to or as directed by
Indenture Trustee as provided in Sections 4(c) and 4(d), and (b) Indenture
Trustee shall be entitled to exercise the rights of Lessor (but not Owner
Participant) herein as and to the extent provided herein or in the Indenture and
any express reference to Indenture Trustee in
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any Section of this Lease shall not give rise to any implication that Indenture
Trustee may not exercise the rights of Lessor in any other Section of this Lease
as and to the extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement
which require or permit action by, the payment of monies to, the consent or
approval of, the furnishing of any instrument or information to, or the
performance of any other obligation to, Indenture Trustee, shall not be
effective, and the Sections hereof containing such provisions shall be read as
though there were no such requirements or provisions and all moneys otherwise
payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee
shall have received from Indenture Trustee notice of discharge of the Lien of
the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee
under this Lease by a Permitted Sublessee shall constitute payment or
performance of such obligation by Lessee.
Section 20. Renewal Option.
Lessee may renew this Lease as provided in the following
clause (i) and subject to the following clause (ii):
(i) Exercise of Renewal Option. Provided that this
Lease has not been previously terminated and that no Default or Event of Default
shall have occurred and be continuing at the time of the giving of irrevocable
notice hereinafter referred to in this clause (i) or at the time of the
commencement of the Renewal Term, Lessee, at its option, may renew this Lease
for one Renewal Term consisting of a period equal to five years. The right to
renew this Lease for such Renewal Term pursuant to this clause (i) shall be
exercised upon irrevocable notice from Lessee received by Lessor of Lessee's
election to so renew this Lease not less than twelve (12) months and not more
than twenty-four (24) months prior to the last day of the Basic Term. The
Renewal Rent for the Renewal Term shall be the "fair market rental value" of the
Aircraft for such Renewal Term (the "renewal fair market rental value") as
determined in accordance with the Appraisal Procedure. For purposes of this
paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier
than nine (9) months prior to the end of the Basic
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Term. If Lessee shall fail to exercise its option to extend the term of this
Lease for the Renewal Term in accordance with the provisions of this paragraph,
all of Lessee's rights to extend the Term for such Renewal Term shall expire.
Lessee shall pay all reasonable costs and expenses, including, without
limitation, reasonable legal fees and expenses, incurred by Lessor, Owner
Participant and the Indenture Trustee in connection with the exercise of such
option.
(ii) Provisions Applicable During Renewal Term. All
provisions of this Lease, including, without limitation, as to Rent and
Stipulated Loss Value (which shall be, with appropriate adjustments, an amount
equal to the greater of 120% of the "fair market sales value" of the Aircraft as
of the first day of the Renewal Term as determined pursuant to the Appraisal
Procedure or the amount set forth on Exhibit A as of the end of the Basic Term),
shall remain in effect and be applicable during such Renewal Term, except that
Lessee shall pay to Lessor, semi-annually in advance as Renewal Rent on each
Renewal Rent Payment Date, the amount for such Renewal Term as determined in
accordance with clause (i) of this Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any
provision of this Lease 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. To
the extent permitted by Law, Lessee hereby waives any provision of Law which
renders any provision hereof prohibited or unenforceable in any respect. No term
or provision of this Lease may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing expressed to be a supplement or
amendment to, or waiver or termination of this Lease signed by an officer of the
party against which the enforcement of the change, waiver, discharge, or
termination is sought. This Lease shall constitute an agreement of lease, and
nothing herein shall be construed as conveying to Lessee any right, title, or
interest in the Aircraft or any Engine or Part except as a lessee only. Without
limiting the foregoing, the parties hereto agree to treat this Agreement as a
lease for United States federal income tax purposes and Lessee will not file a
tax return which is inconsistent with the foregoing and nothing contained herein
shall be construed as an election by Lessor to treat Lessee as having acquired
the Aircraft
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<PAGE> 106
for the purpose of the investment credit allowed by Section 38 of the 1954 Code
or any similar or successor statute. The headings in this Lease are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
(B) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, WITHOUT
REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices required or permitted under the
terms and provisions hereof shall be in writing and shall be sent to Lessor or
Lessee at their respective addresses set forth in Exhibit C hereto (or such
other addresses as the parties may designate from time to time in writing).
Until such time as the Lien of the Indenture is discharged, all notices, reports
or other documents provided to Lessor or Lessee shall be provided concurrently
to Indenture Trustee at such address as Indenture Trustee may designate from
time to time. All notices hereunder shall become effective when received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails
to make any payment of Rent required to be made by it hereunder or fails to
perform or comply with any covenant, agreement, or obligation contained herein,
Lessor shall have the right but not the obligation to make such payment or
conform or comply with such agreement, covenant, or obligation, and the amount
of such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall
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be identified as the counterpart containing the receipt therefor executed by or
on behalf of Indenture Trustee on the signature page thereof. Subject to the
preceding sentence, this Lease may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing and this Lease has not
been declared or deemed to be in default, Lessor shall not take or cause to be
taken any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Aircraft
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it and without interference from any Person
making a Claim concerning payment for or the ownership of Buyer Furnished
Equipment with respect to the Aircraft, provided, that the foregoing shall not
be deemed to have modified the obligations of Lessee pursuant to Section 4(d)
hereof, which obligations remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as
provided in the Refunding Agreement, there has been no third party as agent
involved in this Lease and each indemnifies the other from liability for fees,
commissions, or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by
Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or
an Event of Default shall have occurred and be continuing, be invested as
provided below until paid to Lessee or applied by Lessor or Indenture Trustee to
the extent provided herein. Until paid to Lessee or applied as provided herein
or in the Indenture such monies shall be invested by Lessor or Indenture Trustee
from time to time at the expense of Lessee in Specified Investments, as directed
by Lessee in accordance with the provisions of Section 3.07 of the Indenture if
the Lien of the Indenture shall not have been discharged and thereafter as
provided below. There shall be promptly (but not more frequently than monthly)
remitted to Lessee any gain (including interest received) realized as the result
of any such investment (net of any fees, commissions and other reasonable
expenses, if any, incurred in connection with such investment) unless a Default
or an Event of Default shall have occurred and be continuing. Lessee will
promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor
or Indenture Trustee harmless from, on demand,
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the amount of any loss realized as the result of any such investment (together
with any Taxes, fees, commission and other reasonable expenses, if any, incurred
in connection with such investment).
(i) Entire Agreement; Amendment. This Lease (including the
Exhibits hereto), any related letter agreements and the other Operative
Documents, the Financing Documents and the Purchase Documents (including the
Exhibits thereto) and all closing documents delivered in connection with any of
the foregoing embody the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof. This Lease may be changed,
waived, discharged, amended, revised or terminated only by an instrument in
writing signed by the party against which enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18, Lessee
agrees within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications thereof, or waivers or consents thereunder, and (iii) any Default
or Event of Default or the enforcement of any of Lessor's rights, remedies or
privileges hereunder or at law or in equity, but not Lessor's legal fees and
expenses in connection with the negotiation and execution of this Lease or the
other Operative Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
and take such other action not inconsistent with this Lease as Lessor reasonably
deems necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor
shall use its best efforts to have the Aircraft registered under the United
States Registration Number designated by Lessee.
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(m) Submission to Jurisdiction; Service of Process; Waiver
of Forum Non Conveniens; Waiver of Jury Trial. Lessee hereby irrevocably agrees
that any suit, action or proceeding related to this Lease or any of the other
Operative Documents to which it is a party or the subject matter hereof or
thereof or of any of the transactions contemplated hereby and thereby may be
instituted in, and submits for itself and its property to the non-exclusive
jurisdiction of, (i) the courts of the State of New York in New York County and
(ii) the United States District Court for the Southern District of New York.
Lessee represents and warrants that it is not currently entitled to, and agrees
that to the extent that Lessee hereinafter may acquire, any immunity (including,
without limitation, sovereign immunity) from jurisdiction of any court or from
any legal process, Lessee hereby, to the extent permitted by Law, waives such
immunity, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of the above-named courts that it is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Lease or any of the other Operative
Documents or the subject matter hereof or thereof or any of the transactions
contemplated hereby and thereby may not be enforced in or by such courts. Lessee
hereby generally consents to service of process by registered mail, return
receipt requested, addressed to it at its address set forth in Exhibit C, or at
such other office of Lessee as from time to time may be designated by Lessee in
writing to Lessor or Lessee, Foreign Lessor, Owner Participant and Indenture
Trustee. Lessee hereby agrees that its submission to jurisdiction and its
designation of service of process by mail set forth above is made for the
express benefit of Lessor, Foreign Lessor, Owner Participant, Indenture Trustee,
each Note Holder and their successors and assigns. EACH OF LESSEE AND LESSOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE
DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE
TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and other common law and statutory claims. Lessor and Lessee
represent and warrant that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with such legal counsel.
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THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
(n) Limitation on Recourse. The parties hereto agree that
all statements, representations, covenants and agreements made by Lessor (when
made in its capacity as such and not in its individual capacity) contained in
this Agreement, unless expressly otherwise stated, are made and intended only
for the purpose of binding the Trust Estate and establishing the existence of
rights and remedies that can be exercised and enforced against the Trust Estate.
Therefore, no recourse shall be had with respect to anything contained in this
Agreement (except for any express provisions that Lessor is responsible for in
its individual capacity), against Lessor in its individual capacity or against
any institution or person that becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them; provided that (i) this Section 21(n) shall not
be construed to prohibit any action or proceeding against any party hereto for
its own willful misconduct or grossly negligent conduct for which it would
otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of
the appointment of any successor Owner Trustee pursuant to the terms of the
Trust Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 14(d) of the Refunding Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree that
the Original Head Lease as amended and restated
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by this Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6]
(and as otherwise extended, amended, modified, renewed or supplemented) shall be
governed by Article 2-A of the Uniform Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Lease to be executed by their duly authorized
officers as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
otherwise expressly provided herein,
but solely as Owner Trustee
By:__________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:___________________________
Title:
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TABLE OF CONTENTS
Page
Section 1. Definitions..................................................... 1
Section 2. Agreement to Lease.............................................. 21
Section 3. Delivery and Acceptance; Term;
Rental Period............................................... 22
(a) Time of Delivery.................................................. 22
(b) [Intentionally Left Blank]........................................ 22
(c) Acceptance of Aircraft............................................ 22
(d) Term of Lease..................................................... 22
(e) Rental Period..................................................... 22
Section 4. Rent; Minimum Payments.......................................... 22
(a) Rent.............................................................. 22
(b) Minimum Payments.................................................. 23
(c) Date, Place and Method of Payment................................. 23
(d) Prohibition Against Setoff,
Counterclaim, Etc....................................... 24
Section 5. Representations, Warranties and Covenants....................... 25
(a) Warranties and Disclaimer of Warranties........................... 25
(b) Representations and Warranties of Lessor.......................... 27
(c) No Amendments to Financing Documents.............................. 27
(d) Suppliers' Warranties............................................. 27
Section 6. Possession and Use.............................................. 28
(a) Possession........................................................ 28
(b) Reciprocal Recognition of Rights.................................. 34
(c) Lawful Insured Operations......................................... 35
(d) Maintenance....................................................... 36
(e) Registration and Insignia......................................... 37
Section 7. Inspection...................................................... 38
Section 8. Additional Covenants of Lessee.................................. 39
(a) Financial Information............................................. 39
(b) Maintenance of Corporate Existence................................ 41
(c) Maintenance of Status............................................. 42
(d) Payment of Taxes.................................................. 42
(e) Consolidation, Merger, Etc........................................ 42
(f) Information....................................................... 43
(g) Place of Business................................................. 44
(h) Certain Limitations on Use........................................ 44
(i) Section 1110...................................................... 45
(j) Permits and Licenses.............................................. 45
(k) Security Opinion; Annual Certificate.............................. 45
(l) Letter of Credit.................................................. 46
(m) ERISA............................................................. 49
(i)
<PAGE> 114
Section 9. Replacement of Parts; Alterations,
Modifications and Additions................................. 49
(a) Replacement of Parts.............................................. 49
(b) Alterations, Modifications and Additions.......................... 50
(c) Pooling........................................................... 53
Section 10. General Tax Indemnity.......................................... 54
(a) Indemnity......................................................... 54
Section 11. Loss, Damage and Requisition................................... 64
(a) Event of Loss with Respect to the Airframe........................ 64
(b) Event of Loss with Respect to an Engine........................... 66
(c) Conveyance of Replacement Airframe................................ 68
(d) Application of Proceeds and Payments.............................. 70
(e) Requisition for Use by Government with
Respect to the Aircraft......................................... 71
(f) Application in Default............................................ 72
Section 12. Insurance...................................................... 72
(a) Public Liability and Property Damage
Insurance. ..................................................... 72
(b) Insurance Against Loss or Damage.................................. 74
(c) Application of Insurance Proceeds for an
Event of Loss................................................... 77
(d) Application of Insurance Proceeds for
Other than an Event of Loss..................................... 78
(e) Application in Default............................................ 78
(f) Certificates...................................................... 79
(g) Reinsurance....................................................... 79
(h) Storage........................................................... 80
(i) Amounts Held...................................................... 80
(j) After the Term.................................................... 81
(k) Governmental Indemnity............................................ 81
Section 13. General Indemnity.............................................. 81
Section 14. Liens.......................................................... 86
Section 15. Protection of Title and Further
Assurances................................................. 88
Section 16. Return of Aircraft and Records................................. 89
(a) Return............................................................ 89
(b) Status Upon Return................................................ 90
(c) Engines........................................................... 91
(d) Records and Documents............................................. 91
(e) Condition of Aircraft............................................. 93
(f) Final Inspection.................................................. 93
(g) Aircraft Records and Documents.................................... 94
(h) Corrections and Subsequent Corrections............................ 94
(i) Functional Flight Check........................................... 95
(j) Export Certificate of Airworthiness............................... 95
(ii)
<PAGE> 115
(k) Service Bulletin and Modification Kits........................... 95
(l) Storage Upon Return.............................................. 95
(m) Resale/Release Cooperation....................................... 96
Section 17. Events of Default............................................. 96
Section 18. Remedies...................................................... 99
Section 19. Alienation.................................................... 104
(a) Lessor Assignments............................................... 104
(b) Security for Obligations......................................... 104
Section 20. Renewal Option................................................ 105
Section 21. Miscellaneous................................................. 106
(a) Severability, Amendment, and Construction........................ 106
(b) Governing Law.................................................... 107
(c) Notices.......................................................... 107
(d) Lessor's Right to Perform for Lessee............................. 107
(e) Counterparts..................................................... 108
(f) Quiet Enjoyment.................................................. 108
(g) Brokers.......................................................... 108
(h) Investment of Funds.............................................. 109
(i) Entire Agreement; Amendment...................................... 109
(j) Expenses......................................................... 109
(k) Federal Bankruptcy Code.......................................... 110
(l) U.S. Registration Number......................................... 110
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non Conveniens;
Waiver of Jury Trial........................................... 110
(n) Limitation on Recourse........................................... 111
(o) Successor Trustee................................................ 112
(p) Article 2-A of the UCC........................................... 112
ANNEXES
ANNEX I - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
(iii)
<PAGE> 116
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Assignment of Permitted Sublease
(iv)
<PAGE> 1
EXHIBIT 4.24
THE RIGHTS OF LESSOR UNDER THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT [GPA 1989 BN-10] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE
BEEN ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
THE CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER
TRUST COMPANY, AS INDENTURE TRUSTEE UNDER A SECOND AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-10] DATED AS OF DECEMBER 19, 1989,
AMENDED AND RESTATED AS OF OCTOBER 1, 1991, AND FURTHER AMENDED AND RESTATED AS
OF NOVEMBER 26, 1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF
ANY, THAT THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES
CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN
EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND
RESTATED AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL
BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE
CHASE MANHATTAN BANK, AS SUCCESSOR IN INTEREST TO MANUFACTURERS HANOVER TRUST
COMPANY, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
- -------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-10]
Dated as of December 19, 1989
Amended and Restated as of October 1, 1991
And Further Amended and Restated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1989 BN-10] dated
as of December 19, 1989, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 77
U.S. Registration No. N631AW
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<PAGE> 2
SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS SECOND AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
dated as of December 19, 1989, as amended and restated as of October 1, 1991,
and as further amended and restated as of November 26, 1996 is entered into
between WILMINGTON TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as Owner Trustee under a Trust
Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as amended, and with
its principal place of business at Rodney Square North, Wilmington, Delaware
19890 (together with its successors and permitted assigns, "Lessor"), and
AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive
office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with
its successors and permitted assigns, "Lessee").
W I T N E S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease", "Equipment
Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass
Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past
Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility ", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as
<PAGE> 3
defined in the Pass Through Trust Agreement); and the term "Lease Amendment No.
1" shall have the meaning specified in the Refunding Agreement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or indirectly, owns or controls, is controlled
by or is under common control with such specified Person. Control will be deemed
to exist based on (i) ownership of 25% or more of the voting securities of a
Person or (ii) the power to direct or cause the direction of the management and
policies of a Person whether by contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and
described in Lease Supplement No. 1 (or any airframe from time to time
substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with
the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any
Engine substituted therefor hereunder) with respect to such Airframe, whether or
not any such initial or substituted Engines may from time to time no longer be
installed on the Airframe or may be installed on any other airframe, (ii) Parts
or components thereof, (iii) spare parts or ancillary equipment or devices
furnished therewith under this Lease (including any separate equipment described
on one or more Lease Supplements hereto), (iv) the Aircraft Records and
Documents and all other logs, manuals and records with respect to such Aircraft,
and (v) all substitutions, replacements and renewals of any and all thereof.
"Aircraft Records and Documents" shall mean the items
identified in Exhibit B hereto, all of which shall be maintained in the English
language.
"Airframe" shall mean (a) the Airbus Industrie model A320-231
aircraft (except Engines or engines from time to time installed thereon)
described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder,
and any such model aircraft (except Engines or engines from time to time
installed thereon) which may from time to time be substituted for such aircraft
(except Engines or engines from time to time installed thereon) pursuant to
Section 11(a)(i); and (b) any and all Parts so long as the same shall be
incorporated or installed on or attached to the Airframe, or so
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<PAGE> 4
long as title thereto shall remain vested in Lessor in accordance with the terms
of Section 9 hereof after removal from the Airframe; provided, however, that at
such time as an aircraft (except Engines or engines from time to time installed
thereon) shall be deemed part of the property leased hereunder in substitution
for the Airframe pursuant to the applicable provisions hereof and the
replacement Airframe shall have been subjected to the Lien of the Indenture (if
the Lien of the Indenture has not been discharged), the replaced Airframe shall
cease to be the Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair
market sales value" or "fair market rental value" shall mean the value that
would be obtained in an arm's-length transaction between an informed and willing
seller or lessor, as the case may be, and an informed and willing buyer or
lessee, as the case may be, both under no compulsion to sell and purchase or to
lease (and other than a lessee in possession or a used equipment scrap dealer),
as the case may be, as such value is determined by an appraisal which assumes:
(i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered
by this Lease (or any sublease) or any of the other Operative Documents or any
of the Financing Documents and the terms thereof; (ii) that such Aircraft,
Airframe, Engine or Part has been maintained in all respects in accordance with
the terms of this Lease (whether or not in fact in such condition), (iii) that
such Aircraft, Airframe, Engine or Part meets the return conditions specified in
Section 16 and Exhibit E (whether or not in fact meeting such conditions) and
(iv) that Lessee has removed the Removable Parts entitled to be removed under
Section 9(b) (it being agreed that no such removal is permitted in connection
with an appraisal pursuant to Section 18) and replaced any part which was
removed from the Aircraft as a result of such Removable Part being installed;
provided, however, that costs of removal from the location of current use and
costs of sale shall not be a consideration in determining such value except in
connection with any determination of "fair market sales value" or "fair market
rental value" pursuant to Section 18; and provided, further, that any
determination of "fair market sales value" or "fair market rental value"
pursuant to Section 18 shall be on an "as is, where is" basis in its actual
condition and location subject to this Lease and any sublease and any and all
Liens thereon (other than a Lessor's Lien, Head Lessor's
-3-
<PAGE> 5
Lien or Lenders' Lien). Lessor and Lessee shall, except for any appraisal
pursuant to Section 18 in which case only Lessor shall select such appraiser
(which appraiser does not have to be acceptable to Lessee), select an
independent nationally-recognized aircraft appraiser, mutually acceptable to
each of them, who shall make the determination as to the "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part
for which such appraisal is to be conducted. If Lessor and Lessee fail to agree
upon a mutually acceptable appraiser within ten (10) days, then each of Lessor
and Lessee shall select an appraiser and such determination shall be made by
such appraisers (if either party shall fail to appoint an appraiser within ten
(10) days after notice from the other party of the selection of its appraiser,
then the appraisal made by the other party's appraiser shall be determinative).
If the two appraisers chosen pursuant to the preceding sentence fail to agree
upon a determination of the "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after
their appointment, then such appraisers shall mutually choose a third appraiser
within ten (10) days thereafter, provided that if such appraisers fail to
mutually choose a third appraiser within said 10-day period, such appointment
shall be made by the American Arbitration Association (or any successor) in New
York, New York, and the three appraisers so chosen shall each make such
determination. The appraisal determined by each of the three appraisers chosen
pursuant to the preceding sentence shall be averaged and the appraisal furthest
from the average of the three appraisals shall be disregarded. The appraisal
determined by each of the two remaining appraisers shall be averaged and such
average shall be the appraised "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the
fees and expenses of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Aircraft
pursuant to Section 4(a)(i).
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<PAGE> 6
"Basic Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If
a Basic Rent Payment Date shall fall on a day which is not a Business Day, any
payment due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 3.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Hartford, Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which was
to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation (except
the United States Government) domiciled in the United States of America and
holding a Certificate of Convenience and Necessity issued under Section 41102(a)
of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States Government)
domiciled in the United States of America and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is a citizen of the United States
(as defined in Section 40102 of the Federal Aviation Act) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve
Air Fleet Program administered by the United States Government and authorized
under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar
or substitute program of the United States Government.
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<PAGE> 7
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commonly Controlled Person" shall mean an entity, whether or
not incorporated, which is under common control with Lessee within the meaning
of Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated
Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended
and restated as of December 30, 1988, in the form attached to the Purchase
Agreement.
"Default" shall mean an event or condition which would
constitute an Event of Default with the lapse of time or the giving of notice or
both.
"Delivery Date" shall mean December 22, 1989, being the date
the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee
hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United
States of America.
"Engine" shall mean (i) each of the two IAE Model V2500
engines listed by manufacturer's serial number in Lease Supplement No. 1 and
initially installed on the Airframe covered by such Lease Supplement, whether or
not from time to time thereafter no longer installed on the Airframe or
installed on any other aircraft or airframe, and (ii) any replacement engine
which may from time to time be substituted, pursuant to Section 6(a), 11(a),
11(b) or 16(c), for any Engine leased hereunder; together in each case with any
and all Parts incorporated or installed in or attached thereto or any and all
Parts removed therefrom so long as title thereto after removal from such Engine
shall remain vested in Lessor in accordance with the terms of Section 9 hereof.
Except as otherwise set forth herein, at such time as a replacement engine shall
be so substituted and leased hereunder and the replacement Engine shall have
been subjected to the Lien of the Indenture (if the Lien of the Indenture has
not been discharged), such replaced Engine shall cease to be an Engine
hereunder. The term "Engines" means, as of any date of determination, both
Engines then leased hereunder.
-6-
<PAGE> 8
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one
or more clauses in Section 17.
"Event of Loss" shall mean any of the following events with
respect to the Aircraft, Airframe or either Engine: (a) the actual or
constructive total loss of such property or the use thereof due to theft or
disappearance for a period in excess of sixty (60) consecutive days; (b)
destruction or damage of such property that renders repair uneconomic or such
property permanently unfit for normal use by Lessee (or, if a Permitted Sublease
is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss
or disappearance of or damage to or destruction of such property which results
in an insurance settlement with respect to such property on the basis of an
actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any rule, regulation, order or
other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or
Engine in the normal course of Lessee's (or, if a Permitted Sublease is in
effect, the Permitted Sublessee's) business of air transportation of passengers
shall have been prohibited for a period of six (6) consecutive months, unless
Lessee (or the Permitted Sublessee),
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<PAGE> 9
prior to the expiration of such six-month period, shall have undertaken and
shall be diligently carrying forward all steps which are necessary or desirable
to permit such normal use of such item of equipment by Lessee (or the Permitted
Sublessee), or, in any event, if such normal use shall have been so prohibited
by any such Governmental Entity for a period of twelve (12) consecutive months
or is continuing on the last day of the Term; or (h) as otherwise provided
herein. An Event of Loss with respect to the Aircraft shall be deemed to have
occurred if an Event of Loss occurs with respect to the Airframe which is a part
of such Aircraft. An Event of Loss with respect to an Engine shall not, absent
an Event of Loss with respect to the Airframe, be deemed an Event of Loss with
respect to the Airframe.
"Excluded Property" shall have the meaning set forth in
Section 9(b) hereto.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administration of the
United States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Bill of
Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from
Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale
for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original
Head Lessee to Lessor.
"Federal Aviation Act" shall mean the sections of Title 49 of
the United States Code relating to aviation, as amended and in effect from time
to time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal year-end
audited consolidated balance sheet and statements of income and cash flow for
the period then ending, copies of which for the fiscal year ending December 31,
1995, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each
-8-
<PAGE> 10
Indenture Supplement, the Refunding Agreement, the Equipment Notes issued under
the Indenture, the Intercreditor Agreement, each Liquidity Facility, each
Pass-Through Trust Agreement and each supplement thereto and any other
agreement, document or certificate delivered or entered into in accordance with
the foregoing, as amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made mandatory
to the Aircraft by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Aircraft by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, the Aircraft or its operations.
"Head Lessor's Lien" shall mean a Lessor's Lien under and as
defined in the Original Head Lease.
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<PAGE> 11
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and
as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the
Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture), each Pass-Through Trust, each Pass- Through
Trustee (in its individual capacity and as trustee under the Pass-Through
Trusts), the Subordination Agent and each Liquidity Provider, and their
respective successors and permitted assigns, and any combination thereof and
their respective officers, directors, agents, servants, subcontractors,
employees, subsidiaries, Affiliates, shareholders and partners.
"Indenture" shall mean the Second Amended and Restated Trust
Indenture and Security Agreement [GPA 1989 BN-10] dated as of December 19, 1989,
amended and restated as of October 1, 1991, and further amended and restated as
of November 26, 1996, as the same may be further amended, supplemented or
modified from time to time, between Indenture Trustee and Lessor. The term
"Indenture" shall also include the Indenture Supplements entered into pursuant
to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
"Interest Rate" shall mean (i) with respect to the portion of
any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture, computed on the basis of a year of 360 days and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate from
time to time in effect from the date the amount becomes due to the date it is
paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as
the case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or
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<PAGE> 12
other directive of any Governmental Entity; (ii) any treaty, pact, compact or
other agreement to which any Governmental Entity is a signatory or party; (iii)
any judicial or administrative interpretations of the application of any Law
described in (i) or (ii) above; and (iv) except where expressly excluded herein,
any amendment or revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as originally executed and as amended, supplemented or otherwise
modified from time to time, including, without limitation, by one or more Lease
Supplements, as a whole and not to any particular Section or other subdivision,
and any reference to a "Section " or an "Exhibit" shall refer to a Section or
Exhibit of this Lease, as so amended, supplemented or modified, unless expressly
provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1, Lease
Supplement No. 2, Lease Supplement No. 3 and each subsequent Lease Supplement
entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1989
BN-10] No. 1 dated December 22, 1989 between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1989
BN-10] No. 2 dated October 24, 1991 between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA 1989
BN-10] No. 3, substantially in the form of Exhibit D-1 hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims (as defined herein) against Indenture Trustee in its
individual capacity (and not as Indenture Trustee) not related to its interest
in the Aircraft or the
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<PAGE> 13
administration of the Trust Estate or the Trust Indenture Estate pursuant to the
Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or
otherwise, (ii) acts or omissions of Indenture Trustee in its individual
capacity (and not as Indenture Trustee) not contemplated hereunder or under the
other Operative Documents, or acts or omissions of Indenture Trustee in its
individual capacity (and not as Indenture Trustee) which are in violation of any
of the Operative Documents, or (iii) Taxes imposed on or Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
which are excluded from indemnification by Lessee, or (iv) Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
arising out of the voluntary or involuntary transfer by Indenture Trustee in its
individual capacity (and not as Indenture Trustee) of all or any portion of its
interest in the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust
Indenture Estate or the Operative Documents (except a Claim resulting from the
exercise of remedies under and in accordance with the Indenture or for a
transfer provided for in the Operative Documents).
"Lessee" shall have the meaning set forth in the
Recitals hereto.
"Lessor" shall have the meaning set forth in the
Recitals hereto.
"Lessor's Lien" shall mean any Lien or disposition
of title affecting the Aircraft, the Airframe, any Engine or any Part arising as
a result of (i) any claim against Lessor, Owner Participant, Trust Company or
any of their Affiliates not related to the transactions contemplated by this
Lease or the other Operative Documents, the Financing Documents or the Purchase
Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company
or any of their Affiliates not expressly contemplated by this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents or not
permitted without consent (which consent has not been granted) by any party
hereto or thereto or that is in violation of any term of this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents; (iii)
Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner
Participant or any of their Affiliates or the consolidated group of taxpayers of
which any of them is a member which are not to be indemnified against by Lessee
under the Operative Documents, the Purchase Documents or the Financing Documents
or by Original Head Lessee under the Original Head Lease Tax
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<PAGE> 14
Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company,
Owner Participant or Lessor or any of their Affiliates arising out of the
transfer of all or any part of their respective interest in the Aircraft, the
Airframe, either Engine, the Trust Estate or the Operative Documents other than
any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19
(except Liens resulting from a transfer not permitted by such Section ) or 20 of
this Lease or pursuant to Sections 10 and 11 of the Refunding Agreement;
provided, however, that there shall be excluded from this definition and Lessor
shall not be required to remove any Lien which would otherwise constitute a
Lessor's Lien, if it is being diligently contested in good faith so long as
neither such proceedings nor Lien involves a material danger of the sale,
forfeiture or loss of the Aircraft or adversely affects Lessee's rights under
Section 21(f); and provided, further, that Lessor's Liens shall not include the
Lien of the Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage,
pledge, lien, charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or claim of
any kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America
West Maintenance Program approved by the FAA for America West Airbus model
A320-231 aircraft in effect on the date hereof or as modified with the approval
of the FAA without affecting, or any other FAA approved maintenance program
which does not affect, the return condition standards set forth in Section 16
and Exhibit E or (ii) if the Aircraft is subject to a Permitted Sublease to a
Foreign Air Carrier, any other maintenance program for the Aircraft which is
approved by the aviation authority of the country of registry and complies with
the requirements applicable to maintenance of the Aircraft contained in the
definition of Foreign Air Carrier. The Maintenance Program shall encompass
scheduled maintenance, condition monitored maintenance, and on-condition
maintenance of the Airframe, Engines, and components of the Aircraft, including,
but not limited to, servicing, testing, preventive maintenance, repairs,
structural inspections, structure life improvements, system checks, overhauls,
approved
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<PAGE> 15
modifications, service bulletins, engineering orders, airworthiness directives,
and corrosion control inspections and treatments. All modifications and
supplements to the Maintenance Program shall be provided to Lessor upon its
reasonable request and Lessor shall be given reasonable access to the
Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a
French societe a responsabilite limitee, which as of the date hereof is owned by
Airbus Industrie.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, the Tax Indemnification Agreement, the Financing Documents, that
certain letter agreement dated as of the Restatement Date, relating to
Stipulated Loss Values with respect to this Lease, and any other agreement,
document or certificate delivered or entered into pursuant to the foregoing, as
amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease Agreement
[GPA 1989 BN-10], with respect to the Aircraft, dated as of December 19, 1989,
between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect immediately prior to the
Restatement Date, as more particularly described in Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall mean
the Head Lease Tax Indemnification Agreement [GPA 1989 BN-10], dated as of
December 19, 1989,
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<PAGE> 16
and amended and restated as of October 1, 1991, and amended and restated as of
the Restatement Date, between the Original Head Lessee and Owner Participant, as
the same may be amended, supplemented or otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc.,
a Connecticut corporation.
"Owner Participant" shall mean ________________ ____, a
Delaware corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as Owner
Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial Assignment,
Assumption, Release and Amendment Agreement, dated as of December 30, 1988,
among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended,
supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1989 BN-10], dated as of December 19, 1989 and amended as of
October 1, 1991, among Original Head Lessee, Parent, Owner Participant, Owner
Trustee, Indenture Trustee and the Lenders named therein, as amended,
supplemented or otherwise modified from time to time and as in effect
immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (excluding complete Engines or engines), including Buyer
Furnished Equipment, which may now or from time to time be incorporated or
installed in or attached to or were provided by the Manufacturer with the
Airframe or any Engine or so long as title thereto shall remain vested in Lessor
in accordance with the terms of Section 9 hereof after removal from such
Airframe or Engine. Except as otherwise set forth herein, at such time as a
replacement part shall be substituted for
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<PAGE> 17
a Part in accordance with Section 9 hereof, the Part so replaced shall cease to
be a Part hereunder.
"Payment Location" shall have the meaning set forth in Exhibit
C, as the same may be changed from time to time by Lessor as provided in Section
4(c).
"Permitted Lien" shall mean any Lien referred to in clauses
(i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier
or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United
States Government or an agency or instrumentality thereof which bears the full
faith and credit of the United States of America which has agreed (in form and
substance satisfactory to Lessor) that all of its indemnity obligations which by
the terms of this Lease are permitted in lieu of insurance shall be enforceable
by and payable to Lessor directly or (c) any other Person approved in writing by
the Owner Participant and the Indenture Trustee, which approval shall not be
unreasonably withheld.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or association of which any of the above is a member or a
participant.
"Purchase Agreement" shall mean the Amended and Restated
Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and
restated as of December 30, 1988 (insofar as the same relates to Model A320
Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the
Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices
thereto, as partially assigned to Parent pursuant to the Partial Assignment, to
which Airbus Industrie, as guarantor, has consented, and as the same may from
time to time be further amended, supplemented or otherwise modified to the
extent permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement, the
Partial Assignment and any other agreement,
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<PAGE> 18
document or certificate delivered or entered into pursuant to the foregoing, as
amended, supplemented or otherwise modified.
"Removable Part" shall have the meaning set forth in Section
9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section
20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
"Renewal Term" shall mean the period described in Section 20
following the end of the Basic Term if Lessee shall have exercised its renewal
option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may
be, and Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have the
meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee, any
of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer
or Controller.
"Restricted Use Period" shall have the meaning specified in
Exhibit C.
"Return Occasion" shall mean the event that occurs when
possession of the Aircraft is to be returned from Lessee to Lessor at the end of
the Term of this Lease or upon Lessor taking possession pursuant to Section 18
or for any other reason.
"Specified Investments" shall mean (i) direct obligations of
the United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding
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<PAGE> 19
$10,000,000 in principal amount or deposits at any given time for any one bank)
having a combined capital surplus and undivided income of at least $750,000,000
and having a rating of "B" or better from Thompson BankWatch, Inc.; (iv)
repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an entity
referred to in clause (iii) above or another financial institution having a net
worth of at least $750,000,000 and having a rating of "B" or better from
Thompson BankWatch, Inc. is obligated to repurchase any such obligation not
later than ninety (90) days after the purchase of any such obligation; and (v)
money market funds which invest solely in obligations described in clause (i);
provided that if all of the above investments are unavailable, the entire
amounts to be invested may be used to purchase Federal funds from an entity
described in clause (iii) above; and provided further that no investment shall
be eligible as a "Specified Investment" unless the final maturity or date of
return of such investment is on or before the date which is ninety (90) days
from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date
during the Basic Term the amount set forth on Exhibit A hereto and, thereafter,
the amount described in Section 20(ii) (it being understood and agreed that the
amounts set forth in Exhibit A take into account fully the amount and
application of each installment of Basic Rent or Renewal Rent on each Stipulated
Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent
Payment Date or Renewal Rent Payment Date) so that no additional credit of such
Basic Rent or Renewal Rent is to be made in respect thereof except as expressly
provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In
the event that it is necessary to determine a separate Stipulated Loss Value for
the Airframe or an Engine, such Stipulated Loss Value shall be based on the
ratio that the original cost to Lessor of the Airframe or such Engine bears to
Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth on, Exhibit
A hereto.
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<PAGE> 20
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any
payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of
an amount equal to average daily Basic Rent or Renewal Rent in connection with
an extension of the Term of this Lease as a result of the need to correct any
failure of the Aircraft to satisfy the requirements of Section 16 hereof; (iv)
[Intentionally Left Blank]; (v) an amount equal to any payment due to Owner
Trustee in respect of fees or expenses as provided in Section 21(j) hereof; (vi)
an amount equal to any payment due to Indenture Trustee in respect of fees or
expenses as provided in the Indenture and/or Section 21(j) hereof; (vii)
Lessor's pro rata share of any payment due to any Pass-Through Trustee in
respect of fees or expenses pursuant to the Pass-Through Trust Agreement; (viii)
Lessor's pro rata share of any payment due to the Subordination Agent in respect
of fees, compensation, costs or expenses pursuant to the Intercreditor Agreement
and/or the Refunding Agreement; (ix) an amount equal to the amount specified in
clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to
the extent permitted by applicable Law, interest at the Interest Rate (all
computations of interest under this Lease to be made on the basis of a 360-day
year, as applicable, and twelve 30-day months) calculated: (1) on any part of
any installment of Basic Rent or Renewal Rent, as the case may be, not paid on
the due date thereof for the period for which the same shall be overdue and (2)
on any Supplemental Rent not paid when due hereunder from and including the due
date until the same shall be paid. As used herein, "Lessor's pro rata share"
means as of any date of determination a fraction the numerator of which is the
aggregate Principal Amount then outstanding of the Equipment Notes issued under
the Indenture and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" issued under the Indentures (as
defined in the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-10], dated as of
December 19, 1989, as amended and restated as of October 1, 1991, and as amended
and restated as of the Restatement Date, between Original Head
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<PAGE> 21
Lessee and Lessee, as the same may be amended, supplemented or otherwise
modified from time to time.
"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Term" shall mean, collectively, the Basic Term specified in
Lease Supplement No. 3 and, if Lessee extends the Term in accordance with
Section 20, the Renewal Term, for which the Aircraft is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1989
BN-10] dated as of December 19, 1989 as amended by Trust Supplement No. 1, as
further amended by Trust Supplement No. 2 and as further amended by Trust
Supplement No. 3, between Lessor, in its individual capacity, and Owner
Participant, as beneficiary, as the same may be amended, supplemented or
otherwise modified from time to time. The term "Trust Agreement" shall also
include the Trust Supplements.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1, Trust
Supplement No. 2, Trust Supplement No. 3 and each subsequent Trust Supplement
entered into thereunder and any further supplement to the Trust Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement
[GPA 1989 BN-10] No. 1 dated the Delivery Date between Lessor and Owner
Participant for the purpose of bringing the Aircraft and the Original Head Lease
into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement
[GPA 1989 BN-10] No. 2 dated October 24, 1991 between Lessor and Owner
Participant.
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<PAGE> 22
"Trust Supplement No. 3" shall mean Trust Agreement Supplement
[GPA 1989 BN-10] No. 3 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government
of the United States of America and any board, commission, department, division,
organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees
to furnish the Aircraft or the Airframe and Engine or engines installed thereon
at that time to a third party pursuant to which such Aircraft or the Airframe
and Engine or engines (i) shall be operated solely by regular employees of
Lessee (or any Permitted Sublessee) possessing all current certificates and
licenses required under the Federal Aviation Act or, if the Aircraft is not
registered under the Federal Aviation Act, all certificates and licenses
required by the laws of the jurisdiction of registry (it is understood that
cabin attendants need not be regular employees of Lessee (or any Permitted
Sublessee)) and Lessee (or any Permitted Sublessee) otherwise maintains
operational control and possession thereof, and (ii) shall be maintained by
Lessee (or any Permitted Sublessee) in accordance with its normal maintenance
practices and this Lease, and otherwise the insurance required hereunder shall
be maintained and the Aircraft shall be used and operated in accordance with
this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease
the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from
Lessor, on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term; Rental Period.
(a) Time of Delivery. The Aircraft was delivered
to Lessee, and Lessee accepted delivery of the Aircraft, on
December 22, 1989.
(b) [Intentionally Left Blank.]
(c) Acceptance of Aircraft. The Aircraft leased
hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND
EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a)
AND (b) HEREOF.
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<PAGE> 23
Lessee hereby agrees that it has accepted the Aircraft for all
purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive
evidence that, as between Lessor and Lessee, the Aircraft was in all respects
satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall commence
on the Delivery Date and shall continue until the Expiration Date; provided,
however, that the Term of this Lease may be earlier terminated pursuant to the
provisions hereof.
(e) Rental Period. Lessor and Lessee agree that the period
between each Basic Rent Payment Date shall constitute a rental period for
purposes of Section 467 of the Code.
Section 4. Rent; Minimum Payments.
(a) Rent. Lessee covenants and agrees to pay the following as
Rent hereunder:
(i) Basic Rent. The Basic Rent, as set forth in Exhibit C
throughout the Basic Term hereof, in consecutive installments, in advance and
allocable to the rental period beginning on such date, as set forth on Schedule
I to Exhibit C, due and payable on each Basic Rent Payment Date; and
(ii) Supplemental Rent. Any and all Supplemental Rent, which
shall be due and payable within fifteen (15) days after demand unless otherwise
specifically provided. In the event of any failure on the part of Lessee to pay
any Supplemental Rent when due, Lessor shall have all rights, powers and
remedies provided for herein or by law or equity or otherwise in the case of
nonpayment of Basic Rent or Renewal Rent.
(b) Minimum Payments. Notwithstanding any provision in this
Lease or in any other Operative Document to the contrary, under all
circumstances and in any event, (i) the Stipulated Loss Value, together with the
payment of Supplemental Rent and all other Rent then due hereunder, as of any
time and as of the date of any payment thereof shall (both before and after
giving effect to any reductions therefrom) be in an amount at least sufficient
to pay in full as of such time or date the aggregate unpaid principal amount of
the Equipment Notes then outstanding and all
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<PAGE> 24
accrued and unpaid interest (assuming interest has been timely paid) thereon and
(ii) Basic Rent payable on any Basic Rent Payment Date shall at least equal the
aggregate amount of principal and interest due and payable on the Equipment
Notes on such Basic Rent Payment Date. It is agreed, however, that no
installment of Basic Rent or Stipulated Loss Value shall be increased or
adjusted by reason of (A) any attachment or diversion of Rent on account of any
Lessor's Lien or Head Lessor's Lien or any Lenders' Lien, (B) any modification
of the terms of the Equipment Notes or the other Financing Documents made
without the prior written consent of Lessee or (C) the acceleration of any
Equipment Note due to the occurrence of any "Indenture Event of Default" (as
defined in the Indenture) which does not constitute an Event of Default
hereunder. It is further agreed that nothing in this Lease or any other
Operative Document shall be deemed to constitute a guaranty of the value,
utility or useful life of the Aircraft or a guaranty in respect of interest,
principal or any other amounts payable in respect of or under the Equipment
Notes.
(c) Date, Place and Method of Payment. If any date on which a
payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in The City of New York or Hartford, Connecticut as Indenture
Trustee may direct by thirty (30) days prior written notice to Lessee, except
that all Excepted Payments, and upon discharge of the Lien of the Indenture, all
payments of Rent thereafter made hereunder, shall be paid in such immediately
available funds no later than 12:00 p.m. (noon), New York City time, on the date
payable hereunder, to Lessor or to Owner Participant, as appropriate, in
accordance with the payment instructions set forth in Exhibit C or at such other
address in The City of New York as Lessor may direct by thirty (30) days prior
written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This Lease
is a net lease. Lessee's obligations to pay all Rent and to perform all other
obligations hereunder are
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absolute and unconditional and shall not be affected or reduced by any
circumstances, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense, or other right which Lessee may have against Lessor,
Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder, any
Manufacturer, any Person providing services with respect to the Aircraft, or any
other Person, for any reason whatsoever (whether in connection with the
transactions contemplated hereby or otherwise), including, without limitation,
any breach by Lessor of its representations, warranties or covenants contained
herein or in the other Operative Documents; (ii) any defect in the title,
airworthiness, eligibility for registration under the Federal Aviation Act,
condition, design, operation, or fitness for use of, or any damage to or loss or
destruction of, the Aircraft (subject to the provisions of Section 11(a)(ii)
hereof), any interruption or cessation in the use of or possession thereof by or
availability to Lessee for any reason whatsoever, whether arising out of or
related to an act or omission of Lessee, Lessor, Original Head Lessee, Owner
Participant, Indenture Trustee, any Note Holder, any Manufacturer, any Person
providing services with respect to the Aircraft or any other Person; (iii) any
Liens with respect to the Aircraft; (iv) the invalidity or unenforceability or
lack of due authorization or other infirmity of this Lease or any absence of
right, power or authority of Lessor, Original Head Lessee, Lessee or Indenture
Trustee to enter into this Lease or the Indenture, as the case may be; (v) any
insolvency, bankruptcy, reorganization, or similar proceedings by or against
Lessor, Original Head Lessee, Lessee, any Permitted Sublessee, Indenture Trustee
or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening
of any nature whatsoever, whether or not similar to any of the foregoing; it
being the expressed intention of Lessor and Lessee that all Rent payable
hereunder shall be payable in all events, unless the obligation to pay the same
shall be terminated pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this
Agreement, Lessee hereby waives, to the extent permitted by applicable Law, any
and all rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, abate, cancel, quit,
reduce, defer, suspend or surrender this Lease or the Aircraft or any obligation
imposed upon Lessee hereunder or under the other Operative Documents (including,
without limitation, payment of Rent), except in accordance with the terms
hereof.
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<PAGE> 26
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law, except as specifically provided herein,
Lessee waives all rights (if any) to any diminution in its Rent obligations
hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as
provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal
Rent, as the case may be, payment and any Supplemental Rent payment at the time
such payments would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part, and so long as
such payments are made and all other terms and conditions hereof are complied
with by Lessee, Lessor and Lessee will deem this Lease to remain in full force
and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall
be liable therefor, on account of any failure of the Original Head Lessee,
Lessor, Indenture Trustee or any other such Person to perform its express
obligations under this Lease and the other Operative Documents, or to enforce
any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE
AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND
"WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS.
LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED
THE AIRCRAFT UNDER THIS LEASE OR BY ONE OF ITS AFFILIATES HAVING ACQUIRED THE
AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY
STATUS UNDER OR IN RELATION TO THIS LEASE, AND LESSOR HEREBY SPECIFICALLY
DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION,
DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A
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<PAGE> 27
PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL
OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS
WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT
LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM
NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE,
PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES,
RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH
GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE
SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON,
REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR
OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR
DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR
BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER
CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF
THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE,
LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS
SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS
OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED
WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR OR ANY USE, EXCEPT THAT: Lessor represents and warrants that (x) on
the Delivery Date Lessor had, and on the Restatement Date Lessor has, the right
to lease the Aircraft hereunder, (y) on the Delivery Date the Aircraft was, and
on the Restatement Date the Aircraft is, free of Lessor's Liens and Head
Lessor's Liens, and (z) on the Restatement Date Lessor has such title to the
Aircraft as was transferred to it on the Delivery Date and (B) Lessor covenants
that it shall maintain such title to the Aircraft as was transferred to it on
the Delivery Date and shall not
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create, incur, assume or suffer to exist any Lessor's Lien or Head Lessor's Lien
on the Aircraft.
(b) Representations and Warranties of Lessor.
Lessor hereby represents and warrants, as of the Delivery Date and as of the
Restatement Date that its representations and warranties set forth in Section
9(b) of the Refunding Agreement were true when made and continue to be true and
correct.
(c) No Amendments to Financing Documents. Lessor
covenants and agrees that Lessor will not, without the prior written consent of
Lessee, amend, modify, supplement or waive any provision of any Financing
Document in such a way as to materially increase Lessee's obligations hereunder
or materially reduce Lessee's rights hereunder.
The representations, warranties and covenants of
Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the
execution and delivery of this Lease and the delivery of the Aircraft and the
Restatement Date.
(d) Suppliers' Warranties. So long as a Default
or an Event of Default has not occurred and is continuing and provided that the
Aircraft continues to be maintained, modified and repaired as required
hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees
otherwise to make available to Lessee the right to exercise in Lessee's name
such rights as Lessor may have or may subsequently obtain (but without
representation or warranty by or recourse to Lessor) with respect to any product
warranty, service life policy, trademark, patent or copyright infringement
indemnity, or airframe or propulsion system performance guaranty, of Airbus
Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor
with respect thereto under the Purchase Agreement (except those which were given
directly to Parent, the Original Head Lessee or any of their Affiliates and are
not directly related to the operator's use of the Aircraft), to the extent that
the same may be assigned or otherwise made available to Lessee, and Lessor
agrees to exert its reasonable efforts, at Lessee's expense and upon its
request, to enforce such rights as Lessor may have with respect thereto for the
benefit of Lessee; provided, however, that upon and during the continuance of a
Default or an Event of Default, such assignment or other rights which are
otherwise made available to Lessee shall immediately and automatically without
further action be deemed cancelled and, to the extent of any remaining
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interest held by Lessee, deemed reassigned to Lessor and all such rights shall
revert to Lessor automatically including all claims thereunder whether or not
perfected and all amounts payable shall be paid to and held by Lessor. In no
event, however, shall Lessee have any right to amend, supplement or otherwise
modify the Purchase Agreement (by change order or otherwise). In connection with
the foregoing, Lessee agrees to be bound by and comply with all applicable
terms, conditions and limitations of the provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN
THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS
PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY
MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT,
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE
INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no
Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as all necessary approvals of the FAA
and any other Governmental Entity having jurisdiction have been obtained, then
Lessee, without the prior written consent of Lessor, may, only to the extent
provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii)
below:
(1) subject any Engine to a normal interchange,
maintenance, servicing or pooling agreement or similar arrangement
with a Permitted Sublessee, in each case customary in the airline
industry of which Lessee is a part and entered into in the
ordinary course of its business; provided that no transfer of the
registration of any Engine shall be effected in connection
therewith; and provided, further, that (A) no such agreement or
arrangement contemplates, results in or requires the transfer of
title to any Engine, and (B) if Lessor's title to any Engine shall
be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to
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such Engine and not an Event of Default and Lessee shall comply
with Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or
any Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for
testing, service, storage, repair, maintenance, inspection or
overhaul work on such Aircraft, Airframe or Engine or any part
thereof or for alterations or modifications in or additions to
such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe to
the United States of America or any instrumentality or agency
thereof pursuant to a sublease;
(4) (i) subject the Airframe to the Civil Reserve Air
Fleet Program and transfer possession of the Airframe or any
Engine to the United States Government pursuant to the Civil
Reserve Air Fleet Program, so long as Lessee shall promptly notify
Lessor upon transferring possession of the Airframe or any Engine
to the United States Government pursuant to the Civil Reserve Air
Fleet Program and provide Lessor with the name and address of the
Contracting Office Representative for the Military Airlift Command
of the United States Air Force to whom notices must be given; or
(ii) subject the Airframe to (a) a service contract with
the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term,
or (b) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except (A)
Permitted Liens and Liens which apply only to engines (other than
the Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an
entirety) and (B) the rights of participants under
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normal interchange agreements which are customary in the airline
industry and do not contemplate, permit, result in or require the
transfer of title to the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of
all Liens except the rights of the parties to the lease or
conditional sale or other security agreement covering such
airframe and except Liens of the type permitted by clauses (A) and
(B) of Section 6(a)(i)(5) and the Lien of any mortgage which
provides that each Engine leased to Lessee hereby shall not become
subject to the lien thereof or to any rights of any party
thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of
such Engine on any airframe subject to the Lien of such mortgage,
unless and until Lessee shall become the owner of such Engine and
Lessor shall have no further interest therein, all pursuant to the
express terms of this Lease; and (B) there shall be in effect a
written agreement of the lessor or secured party of such airframe
(which may be contained in the lease or conditional sale or other
security agreement covering such airframe) substantially similar
in effect to the agreement of Lessor in Section 6(b) below whereby
such lessor or secured party effectively and expressly agrees that
neither it nor its successors or assigns will acquire or claim any
right, title or interest in any Engine by reason of such Engine
being installed on such airframe at any time while such Engine is
subject to this Lease or is owned by Lessor, and a copy of such
agreement shall be provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional
sale or other security agreement under circumstances where neither
Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided
that such installation shall be deemed an Event of Loss with
respect to such Engine and Lessee shall comply with Section 11(b)
hereof in respect thereof, Lessor not intending hereby to waive
any right or interest it may have to or in such Engine under
applicable law until compliance by Lessee with such Section 11(b);
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<PAGE> 32
(8) enter into a Wet Lease for the Aircraft or the
Airframe and engines installed thereon in the ordinary course of
Lessee's business for a period not extending beyond the Term;
provided that if Lessee (or any Permitted Sublessee) shall enter
into any Wet Lease for a period of more than one year (including
renewal options) Lessee shall provide to Lessor written notice of
such Wet Lease (such notice to be given prior to entering into
such Wet Lease, if practicable, but in any event promptly after
entering into such Wet Lease); or
(9) sublease the Aircraft or the Airframe to any
Permitted Sublessee on the terms and conditions set forth in
Section 6(a)(iii) below.
(ii) Certain Limitations on Transfers. With respect to any
transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession
by reason of a transfer permitted by Section 6(a) hereof (other
than the transfer of an Engine which is deemed to have been an
Event of Loss) shall be expressly subject and subordinate to all
the terms of this Lease and the Lien of the Indenture (if it has
not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and
Lessee shall remain primarily liable hereunder for the performance
of all of the terms of this Lease to the same extent as if such
transfer had not occurred and no provision of this Lease shall be
deemed a waiver of Lessor's rights hereunder or under the other
Operative Documents nor discharge or diminish any of Lessee's
obligations hereunder or under the other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the
Aircraft, the Airframe or any Engine pursuant to the terms of this
Section 6(a) shall be permitted if such Wet Lease, Permitted
Sublease or other relinquishment of possession would cause the
Aircraft, the Airframe or such Engine to be "tax-exempt use
property" within the meaning of Section 168(h) of the Code or
cease to be "Section 38 property" within the meaning of Section
48(a) of the Code (as determined after the application of Section
47(a)(7) of the Code);
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(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend
beyond the Basic Term or the Renewal Term (if Lessee shall have
exercised its option to renew this Lease in accordance with the
terms hereof); and
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable.
(iii) Permitted Subleases. With respect to any sublease
pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or
Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under
such sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the
date such sublease is entered into, (B) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier
(other than a Foreign Air Carrier principally based in Taiwan),
the United States maintains diplomatic relations with the country
in which such proposed Permitted Sublessee is principally based at
the time such sublease is entered into (or, in the case of a
sublease to a proposed Permitted Sublessee principally based in
Taiwan, maintains diplomatic relations at least as good as those
in effect on the Restatement Date) and (C) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier,
Lessor and the Indenture Trustee shall have received an opinion of
counsel to Lessee, in form and substance reasonably satisfactory
to Owner Participant and the Indenture Trustee, to the effect that
(I) the terms of the proposed sublease will be legal, valid,
binding and (subject to customary exceptions in foreign opinions
generally) enforceable against the proposed Permitted Sublessee in
the country in which the Permitted Sublessee is principally based,
(II) there exist no possessory rights in favor of the Permitted
Sublessee under such sublease under the laws of such Permitted
Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee, prevent the return or
repossession
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of the Aircraft in accordance with the terms of this Lease, (III)
(unless Lessee shall have agreed or is required to provide
insurance covering the risk of requisition of use of the Aircraft
by the government of the country of such Permitted Sublessee's
country of domicile) the laws of such Permitted Sublessee's
country of domicile require fair compensation by the government of
such jurisdiction payable in currency freely convertible into
dollars for the loss of use of the Aircraft in the event of the
requisition by such government of such use, (IV) the Permitted
Sublessee is either not entitled to sovereign immunity, or has
effectively waived such sovereign immunity, with respect to its
rights and obligations under the proposed sublease; (V) the laws
of such Permitted Sublessee's country of domicile would give
recognition to Lessor's title to the Aircraft, to the registry of
the Aircraft in the name of the Lessor (or Lessee, as "lessee", or
the proposed Permitted Sublessee, as "sublessee", as appropriate)
and to the Lien of the Indenture; (VI) it is not necessary under
the laws of such Permitted Sublessee's country of domicile, solely
as a consequence of such subleasing and without giving effect to
any other activity of Owner Participant, Owner Trustee or
Indenture Trustee or any Affiliate thereof, as the case may be,
for the Owner Trustee, the Owner Participant or the Indenture
Trustee to qualify to do business in such jurisdiction; and (VII)
if the Owner Participant so requests, (x) under the laws of such
Permitted Sublessee's country of domicile there is no tort
liability of the owner of an aircraft not in possession thereof
(it being agreed that in the event this opinion cannot be given in
a form reasonably satisfactory to Owner Participant, such opinion
shall be waived if insurance reasonably satisfactory to Owner
Participant is provided to cover such risk), and (y) such other
matters as the Owner Participant reasonably requests, provided,
however, that no sublease shall extend beyond the expiration of
the Basic Term or any Renewal Term then in effect.
The rights of any Permitted Sublessee shall be expressly
subject and subordinate to all the terms of this Lease and to the Lien of the
Indenture (if it has not been discharged), including, without limitation, the
covenants contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights
to repossession pursuant to Section 18 hereof and to avoid or terminate such
Permitted Sublease upon such repossession, and Lessee shall remain primarily
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liable hereunder for the performance of all of the terms of this Lease to the
same extent as if such Permitted Sublease had not occurred. No Permitted
Sublease shall in any way discharge or diminish any of Lessee's obligations to
Lessor hereunder or constitute a waiver of Lessor's rights or remedies
hereunder. Any Permitted Sublease shall expressly prohibit any further
sub-sublease by the Permitted Sublessee. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Permitted
Sublease hereunder (such notice to be given not later than ten Business Days
prior to entering into any Permitted Sublease with a Foreign Air Carrier and, if
practicable, not later than five days prior to entering into any Permitted
Sublease with any other proposed Permitted Sublessee, but, in the case of a
Permitted Sublease with a Permitted Sublessee other than a Foreign Air Carrier,
in any event promptly after entering to any such Permitted Sublease) and (ii) a
copy of each Permitted Sublease which has a term of more than three months.
(b) Reciprocal Recognition of Rights. In the event the lessor
or secured party of any airframe leased to Lessee (or a Permitted Sublessee) or
owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or
other security agreement in accordance with Section 6(a)(i)(6) hereof, and the
lease or conditional sale or other security agreement covering such airframe
also covers an engine or engines owned by the lessor under such lease or subject
to a security interest in favor of the secured party under such conditional sale
or other security agreement, Lessor hereby agrees for the benefit of such lessor
or secured party that Lessor will not acquire or claim, as against such lessor
or secured party, any right, title or interest in any such engine as the result
of such engine being installed on the Airframe at any time while such engine is
subject to such lease or conditional sale or other security agreement and owned
by such lessor or subject to a security interest in favor of such secured party.
Lessor also hereby agrees for the benefit of the mortgagee under any mortgage
complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine
on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not
acquire or claim, as against such mortgagee, any right, title or interest in any
engine subject to the lien of such mortgage as the result of such engine being
installed on the Airframe at any time while such engine is subject to the lien
of such mortgage.
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<PAGE> 36
(c) Lawful Insured Operations. Lessee will not permit the
Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used
or operated in violation of any Law of any Governmental Entity having
jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration issued by any such authority or any manufacturer's
specifications, service bulletins or other requirements, including, without
limitation, such of any manufacturer's requirements as may be applicable to keep
in full force and effect each material warranty, product or performance
guaranty, service life policy or the like, in each case, to the extent made
mandatory for Part 121 operators similarly situated to Lessee or the Permitted
Sublessee if the Aircraft is registered with the FAA, or the applicable laws of
any other jurisdiction in which the Aircraft may then be registered in
accordance with Section 11 of the Refunding Agreement, unless the validity
thereof is being contested in good faith and by appropriate proceedings, but
only so long as such proceedings do not involve any danger of sale, forfeiture
or loss of the Aircraft or impair the interest of Lessor therein or impair the
validity or priority of the Lien of the Indenture or result in a risk of
criminal liability of Lessor or Indenture Trustee and are not inconsistent with
any insurance required to be maintained by Lessee hereunder. In the event that
such Law or other requirement requires alteration of the Aircraft during the
Basic Term or then-current Renewal Term, Lessee shall comply therewith at its
sole expense and shall maintain the same in proper condition for operation under
such Laws and other requirements. Lessee shall not operate in any manner or
locate in any place the Aircraft, or suffer or permit the Aircraft to be
operated by a Permitted Sublessee or otherwise in any manner or located by a
Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered
by insurance or United States Government indemnity as required by the provisions
hereof or (ii) contrary to the terms of such insurance or United States
Government indemnity. Lessee also agrees not to operate or locate the Aircraft
or suffer or permit the Aircraft to be operated or located in any area excluded
from coverage by any insurance policy issued pursuant to the requirements of
this Lease or in any war zone unless insured or indemnified by the United States
of America therefor, except in the case of operation pursuant to a sublease or
contract with, or as a result of a requisition (not constituting an Event of
Loss) by, the United States of America, and then only if Lessee has obtained
insurance or an indemnity (in lieu of such
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<PAGE> 37
insurance) from the United States of America covering such risks, in the amounts
and otherwise as required by this Lease.
(d) Maintenance. Lessee, at its own cost and expense, shall
(i) perform or cause to be performed all service, repair, maintenance, overhaul,
inspections, alterations, modifications, and testing (A) in accordance with good
airline industry practice and in such manner to provide complete data and
documentation necessary to substantiate certification, (B) as may be necessary
and required under, and in compliance with, applicable Law, including, without
limitation, FAA rules, regulations and other requirements, the Maintenance
Program, airworthiness directives having a compliance date during the Term, and
the service bulletins and other requirements of any manufacturer, including,
without limitation, such requirements as may be applicable to keep in full force
and effect any and all material warranties, product and performance guaranties,
service life policies, indemnities or the like, (C) except during any period
that a Permitted Sublease is in effect, in the same manner and with the same
care, including regard for the status and technical condition of the Aircraft,
as shall be the case with respect to similar aircraft and engines owned by
Lessee without discrimination and as if Lessee owned the Aircraft and was going
to use the Aircraft in continued regular customer service after the expiration
of the Term, and consistent with good industry practice, and during any period
in which a Permitted Sublease is in effect, in the same manner and with the same
care, including regard for the status and technical condition of the Aircraft,
as shall be the case with respect to similar aircraft and engines owned by such
Permitted Sublessee without discrimination and as if the Permitted Sublessee
owned the Aircraft and was going to use the Aircraft in continued regular
customer service after the expiration of the Permitted Sublease, and consistent
with good industry practice, provided, however, that in all circumstances the
Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in
accordance with maintenance standards required by, or substantially equivalent
to those required by, the central civil aviation authority of the country of
registry and, to the extent not inconsistent therewith, the FAA and (D) so as to
keep the Aircraft in as good a condition as when delivered to Lessee, ordinary
wear and tear excepted, and in good operating condition; (ii) keep the Aircraft
or cause the Aircraft to be kept in such condition as is necessary to enable the
airworthiness certification of such Aircraft to be maintained in good standing
at all times
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under the Federal Aviation Act, or the applicable laws of any other jurisdiction
in which the Aircraft may be registered in accordance with Section 11 of the
Refunding Agreement (provided that if any grounding is fleetwide in nature and
so long as Lessee or a Permitted Sublessee is contesting in good faith such
grounding, Lessee shall not be deemed in violation of this maintenance
covenant); and (iii) maintain in English all records, logs and other materials
required by, and in a manner acceptable to, the FAA or any other Governmental
Entity having jurisdiction and as provided under the Maintenance Program and
Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the Aircraft
at all times, at its expense, to be duly registered during the Restricted Use
Period and, subject to Section 11 of the Refunding Agreement, thereafter under
the Federal Aviation Act in the name of Lessor or any successor or assignee, so
long as (i) while the Aircraft is registered under the Federal Aviation Act,
each of the Lessor or its successors or assigns is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal Aviation Act and (ii)
the applicable parties to the Refunding Agreement cooperate with Lessee with
respect thereto as reasonably requested by Lessee. Lessee shall not register the
Aircraft or permit the Aircraft to be registered under any laws other than the
Federal Aviation Act at any time except as provided in Section 11 of the
Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this Lease
at all times. At any time after the Restricted Use Period, Lessor, upon
compliance with all of the terms of Section 11 of the Refunding Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions reasonably required to change the registration of the Aircraft to
another country.
Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") in the
cockpit of the Aircraft and on each Engine showing title thereto and the Lien of
the Indenture as designated by Lessor and as Lessor may from time to time
reasonably request. Unless otherwise requested, upon delivery of the Aircraft,
Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a
location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and on each Engine (if not prohibited by
applicable Law), a Lease Identification in the form set
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forth in Exhibit C hereto or with any other appropriate information in any other
form subsequently designated by Lessor to Lessee. Except as provided herein,
Lessee will not allow the name of any Person to be placed on the Aircraft or
either Engine as a designation that would be reasonably interpreted as a claim
of ownership or Lien; provided, however, that Lessee may cause the Airframe and
Engines to have placed thereon the customary colors and insignia of Lessee or
any Permitted Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor,
Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Aircraft as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause its Permitted Sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee on reasonable prior notice at reasonable times
to visit, inspect and survey the Aircraft (including, without limitation, going
on board the Aircraft, and inspecting the Aircraft during maintenance checks
when panels and bays are open and subject to view), its condition, use, and
operation, and the records maintained in connection therewith, and to visit and
inspect the properties and to discuss the affairs, finances and accounts of
Lessee with the principal officers of Lessee, provided, that so long as Lessor
does not believe a Default or Event of Default has occurred hereunder
inspections shall be performed during regularly scheduled maintenance checks of
the Aircraft. Each such inspection or survey shall be conducted so as to not
unreasonably interfere with the business of Lessee or the maintenance or
operation of the Aircraft. Upon Lessor's, Owner Participant's or Indenture
Trustee's request, Lessee will notify such Person of the next scheduled
maintenance check for the Airframe or any Engine. Lessor, Owner Participant and
Indenture Trustee shall have no duty to make any such inspection and shall not
incur any liability or obligation by reason of not making any such inspection.
Lessor's, Owner Participant's or Indenture Trustee's failure to object to any
condition or procedure observed or observable in the course of an inspection
hereunder shall not be deemed to waive or modify any of the terms of this Lease
with respect to such condition or procedure.
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Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish Lessor,
until the expiration or other termination of the Term of this Lease, the
following:
(i) within sixty (60) days following the end of each
quarter of Lessee's fiscal year, except the last such quarter of such year,
commencing after the Restatement Date, a copy of Lessee's Quarterly Report on
Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee no
longer files such report, an unaudited consolidated balance sheet of Lessee and
its consolidated subsidiaries prepared by it as of the close of the period
ended, together with the related statements of income and cash flows for such
period, and in each case certified by a Responsible Officer of Lessee as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close
of each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such reports, an audited consolidated balance sheet, income statement, and cash
flow statement of Lessee and its consolidated subsidiaries, as of the close of
such fiscal year, and in each case as certified by independent public
accountants, including their certificate and accompanying comments, as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices, without
qualification as to the scope of the audit or non-conformity with GAAP;
(iii) promptly upon their becoming available,
copies of all reports on Form 8-K filed by Lessee under the Securities Exchange
Act of 1934, as amended, and each other statement, report or circular (other
than the exhibits thereto and any registration statements on Form S-8 or its
equivalent) generally distributed to creditors or shareholders;
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(iv) prior to the expiration date of each policy of insurance
required to be maintained hereunder, a certificate signed by the Approved Broker
of Lessee as to the due compliance with the insurance provisions of Section 12
hereof with respect to the Aircraft, together with certificates of insurance
evidencing such insurance and the opinion provided for in Section 12(f);
(v) within fifteen (15) days following the end of each
calendar month throughout the Term, an Airframe and Engine status report,
substantially in the form of Exhibit K hereto, including, without limitation,
(A) a summation of hours and cycles accumulated on the Airframe and Engines by
individual serial number during such preceding calendar month and (B) the
identity of the airframe (including the "N" number and, at Lessor's request,
ownership and lien interests in respect thereof) on which each Engine was
installed as of the end of each such calendar month, and, if Lessor so requests,
the location of any such airframe. The foregoing shall not be deemed to require
reports regarding hours or cycles on any Parts;
(vi) together with each set of financial statements referred
to in clauses (i) and (ii), a certificate signed by a Responsible Officer of
Lessee, to the effect that such officer has reviewed the relevant terms of this
Lease and has made, or caused to be made under his or her supervision, a review
of the transactions and condition of Lessee during the accounting period covered
by such financial statements, and that such review has not disclosed the
existence during such accounting period, nor does such officer have any
knowledge of the existence, as at the date of such certificate, of any condition
or event which constitutes a Default or an Event of Default, or, if such
condition or event which constitutes a Default or an Event of Default existed or
exists, specifying the nature and period of existence thereof and what action
Lessee has taken or is taking or proposes to take with respect thereto;
(vii) as soon as practicable after becoming aware thereof,
notice of damage or destruction to the Aircraft, either Engine or any Part with
a repair or replacement cost (including labor charges) in excess of $1,000,000
or any incident required to be reported to the FAA or other Government Entity;
(viii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
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(ix) promptly after Lessor's written request therefor, notice
of the time and location of upcoming C Checks, major Engine checks, major
Airframe structural checks and a description of modification of the Aircraft
required by an FAA airworthiness directive, a mandatory manufacturer service
bulletin or any other modification with a materials and labor cost in excess of
$1,000,000;
(x) together with each delivery of financial statements
pursuant to Section 8(a)(ii) above, a certificate signed by Lessee's auditors
thereon (i) briefly setting forth the scope of their examination (which shall
include a review of this Section , (ii) stating whether or not their examination
has disclosed the existence, during the fiscal year covered by such financial
statements, of any Default or Event of Default and, if their examination has
disclosed such a Default or Event of Default, specifying the nature and period
of existence thereof, and (iii) stating that they have examined the officer's
certificate delivered therewith pursuant to Section 8(a)(vi) above;
(xi) As soon as possible and in any event within thirty (30)
days after Lessee knows or has reason to know thereof, a certificate of a
Responsible Officer specifying:
(X) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan; or
(Y) the institution of proceedings or the taking or expected
taking of other action by PBGC or Lessee or any Commonly Controlled Person to
terminate, withdraw or partially withdraw from any Plan and with respect to a
multi-employer Plan, the reorganization or insolvency of the Plan and in
addition to such notice, deliver to Lessor whichever of the following may be
applicable: (A) a certificate of a Responsible Officer setting forth details as
to such Reportable Event of the action that Lessee or Commonly Controlled Person
proposes to take with respect thereto, together with a copy of any notice of
such Reportable Event that may be required to be filed with PBGC, or (B) any
notice delivered by PBGC evidencing its intent to institute such proceedings or
any notice to PBGC that such plan is to be terminated, as the case may be; and
(xii) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as
provided in Section 8(e) below, during the term of this
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Lease, Lessee will preserve and maintain its corporate existence and its rights,
privileges, licenses and franchises material to Lessee's ability to perform its
obligations hereunder in each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so long
as it shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier, including,
without limitation, its status so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all
Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal liability
on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with or merge into or with any other
corporation or other Person, and Lessee shall not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and other assets
to, or, without the prior consent of Owner Participant, acquire all or any
substantial part of the property or other assets or capital stock of (if such
acquisition is analogous in purpose or effect to a consolidation or merger), any
corporation or other Person, unless:
(i) the Person formed by or surviving such consolidation or
merger or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
(the "Successor Entity"): (A) shall be a corporation organized and existing
under the laws of the United States of America or any State thereof or the
District of Columbia; (B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded to all
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or substantially all of such property and other assets (including, without
limitation, all or substantially all of Lessee's property and other assets) as
an entirety and, unless the Owner Participant otherwise agrees, shall have a Net
Worth of not less than Lessee's Net Worth immediately prior to such transaction;
(C) shall be a "citizen of the United States" of America as defined in Section
40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D)
shall execute and deliver to Lessor such recordations and filings with any
Governmental Entity and such other documents as Lessor determines shall be
reasonably necessary or advisable (including, without limitation, to preserve
and protect the interests of the Lessor and the priority of the Lien of the
Indenture (if it has not been discharged)) to evidence, or in connection with,
such consolidation, merger, sale, lease, transfer or other disposition and an
agreement, in form and substance reasonably satisfactory to Lessor, which is a
legal, valid, binding and enforceable assumption by such Successor Entity of the
due and punctual performance and observance of each covenant and condition of
this Lease and the other Operative Documents to which Lessee is a party and
agreement to be bound thereby, and an officer's certificate to such effect, and
to the effect that the other requirements of this paragraph have been satisfied,
and a legal opinion from counsel to such effect and otherwise in such form and
substance reasonably satisfactory to Lessor; and
(ii) prior to and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing.
No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each calendar
year and within 60 days of a request by Lessor or Owner Participant, or such
shorter period as may be set forth in any written request by the Internal
Revenue Service for information or documents, Lessee shall furnish in writing to
Lessor or Owner Participant such information and documents (or copies thereof)
regarding the Aircraft as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its federal and state income tax returns (or to permit the filing of the federal
and state income tax returns of any affiliated group of corporations filing a
consolidated return of which Lessor is a member), or to maintain or
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defend any claims related thereto and promptly, after reasonable notice, furnish
to Lessor or Owner Participant such information as may be reasonably requested
by Lessor or Owner Participant or the applicable Governmental Entity as may be
required to enable Lessor or Owner Participant to file any reports required to
be filed by it with any Governmental Entity because of its ownership or other
interest in the Aircraft, the Airframe or the Engines.
(g) Place of Business. At all times while this Lease is in
effect, Lessee will not, without thirty (30) days prior written notice to Lessor
and Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the Aircraft,
Airframe or Engines only in commercial passenger operations and related cargo
operations. Unless Owner Participant otherwise agrees, during the Restricted Use
Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the
Aircraft, Airframe or Engines to be used either "predominantly outside the
United States" within the meaning of Section 48(a)(2) of the Code. Unless the
Owner Participant otherwise agrees, prior to permitting the Aircraft to be
operated in any member state of the European Union or other European country,
Lessee shall deliver to Lessor (i) a representation and warranty to the effect
that Lessee (or any Permitted Sublessee) has no knowledge of any dispute with
Eurocontrol or other relevant air traffic control authority over delinquent
charges payable by it and (ii) a letter from Lessee (or any Permitted Sublessee)
addressed to Eurocontrol or other relevant air traffic control authority
pursuant to which Lessee (or such Permitted Sublessee) authorizes the addressee
to issue to Lessor, upon Lessor's request from time to time, a statement of
account of all sums due by Lessee (or such Permitted Sublessee) to the authority
in respect of all aircraft (including, without limitation,the Aircraft) operated
by Lessee (or such Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would not
have entered into this Second Amended and Restated Aircraft Lease Agreement
unless it had available to it the benefits of a Lessor under Section 1110 of
Title 11 of the
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United States Code. Lessee covenants and agrees with Lessor that to better
ensure the availability of such benefits, Lessee shall support any motion,
petition or application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the
Aircraft under said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of said Section
1110 to be fulfilled in order to entitle Lessee to continued use and possession
of the Aircraft hereunder.
(j) Permits and Licenses. Lessee shall make or obtain, and
maintain in full force and effect, each and every consent, license, approval,
notice, registration, filing or other action with any Governmental Entity
necessary or advisable in connection with the operation or use of the Aircraft,
the Airframe, any Engine or Part or the execution, delivery or performance of
this Lease and the Operative Documents to which it is a party by Lessee or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During such
times that the Aircraft is registered under the Federal Aviation Act, Lessee
shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period covered by
the opinion of counsel rendered on the Restatement Date,
any opinion of counsel rendered pursuant to Section 11(C)
of the Refunding Agreement, and any opinion of counsel
rendered pursuant to this Section 8(k)(i) and (Y) upon any
change in Law that would render the opinion of counsel
rendered on the Restatement Date or such immediately
preceding opinion of counsel inaccurate, an opinion of
counsel with respect to Lessee and the FAA reasonably
satisfactory to each addressee of such opinion (which
counsel may be internal legal counsel of Lessee and FAA
counsel) stating, in the opinion of such counsel, that
such action has been taken with respect to the recording,
filing, re-recording and refiling of (i) the appropriate
Operative Documents and any supplements and amendments
thereto and (ii) such other appropriate documents, as is
necessary to maintain the perfection of Owner Trustee's
title to and/or interest in and Indenture Trustee's
security interest in the Aircraft and the Operative
Documents for such period of time as
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reflects the then-current applicable Law, reciting
the details of such actions; or
(2) at any time that an opinion is not required pursuant to
Section 8(k)(i)(1), annually, a certificate reasonably
satisfactory to each recipient thereof signed by a
Responsible Officer of Lessee certifying that no such
action is necessary to maintain the perfection of such
title and/or interest and security interest.
(ii) During such times that the Aircraft is registered under any
Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to
Indenture Trustee annually (but in any case, (X) prior to the expiration of the
time period covered by any opinion of counsel rendered pursuant to Section 11(C)
of the Refunding Agreement and any opinion of counsel rendered pursuant to this
Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such
immediately preceding opinion of counsel inaccurate), an opinion of counsel
reasonably satisfactory to each addressee of such opinion stating, in the
opinion of such counsel, that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i) the appropriate Operative
Documents and any supplements and amendments thereto and (ii) such other
appropriate documents, as is necessary to maintain the perfection of Owner
Trustee's title to and/or interest in and Indenture Trustee's security interest
in the Aircraft and the Operative Documents for such period of time as reflects
the then-current applicable Law, reciting the details of such actions.
(iii) Whether the Aircraft is registered under the Federal
Aviation Act or under any Laws other than the Federal Aviation Act, Lessee shall
furnish to Lessor annually a certificate (reasonably satisfactory to Lessor)
signed by a Responsible Officer of the Lessee certifying that Lessee is in
compliance with the provisions of the penultimate paragraph of Section 9(b)
regarding Excluded Property and any equipment or seats which such Excluded
Property replaces.
(l) Letter of Credit. (X) As security for its
obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary
thereof, one or more irrevocable standby letters of credit, in form and
substance acceptable to Lessor in its sole and absolute discretion (the "Letter
of Credit"), including, without limitation, as to renewal
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provisions, with a face amount available for drawdown at all times equal to the
amount set forth on Exhibit C (the "Face Amount") which Letter of Credit shall:
(i) provide that the full amount thereof shall be available
for drawdown thereunder and payable in New York, New York, on first demand by
Lessor at any time, if accompanied by its statement (i) that a Default under
Section 17(e), (f) or (g) or an Event of Default has occurred or (ii) that the
letter of credit will expire within twenty (20) days from the date of demand,
which amount may be applied, retained or utilized as provided in clause (Y);
(ii) be maintained in full force and effect at all times until
ninety-one (91) days after the end of the Term with a commercial bank acceptable
to Lessor, in its sole and absolute discretion, having a long-term unsecured
debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing
bank's credit rating is lower than such rating, Lessee shall replace such Letter
of Credit issuer within five (5) Business Days of any such reduction in rating
with a commercial bank meeting such rating requirement), provided, that a Letter
of Credit in the form set forth in Exhibit D-2 issued by The Industrial Bank of
Japan, Limited will be acceptable to Lessor for so long as The Industrial Bank
of Japan, Limited maintains a long-term unsecured debt rating at least equal to
its rating on the date hereof;
(iii) be expressly designated as transferable and assignable;
and
(iv) permit partial drawings. If the Letter of Credit is still
in effect at the end of the Term, then Lessor shall return the Letter of Credit
to Lessee or terminate it.
(Y) If an Event of Default has occurred and is continuing, in addition to any
other rights or remedies Lessor may have hereunder, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to draw on the
Letter of Credit and, with respect to amounts so drawn, hold same as security
for Lessee's obligations under this Lease, retain same for its own account and
apply (including, without limitation, by way of set off against) same, or such
amounts thereof as it may elect (it being understood that amounts not so applied
will be held as security for Lessee's obligations under this Lease), to remedy
any breach by Lessee of this Lease and the other Operative Documents or to
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recompense Lessor for any loss, damage, cost or expense or other Claim due or
owing hereunder; provided, however, that in the case of any drawing in respect
of any claim for payment of Rent, Lessee's right to apply the same to such claim
shall be limited to amounts ("Equity Amounts") which would (absent an Event of
Default) be distributable under the Indenture at the time such payment is made
to Lessor, Owner Participant or any of their respective Affiliates (and shall
not include any amounts distributable to Indenture Trustee in its individual
capacity or to the Note Holders). If Lessor draws on the Letter of Credit
because the Letter of Credit will expire within twenty (20) days from the date
of demand, then Lessor may elect in its sole and absolute discretion to apply
such amounts in satisfaction of any Equity Amounts which would have been or
would become distributable under the Indenture to Lessor or Owner Participant if
Lessee were fully to perform its obligations under the Lease on a timely basis
in the inverse order of which such obligations would be distributable; and
provided further, that the amount of Lessee's obligations in respect of Equity
Amounts that shall be satisfied by such application shall equal (i) that amount
from the proceeds of the Letter of Credit which this Lessor elects to apply (the
"Applied Amount") in satisfaction of Lessee's obligations in respect of Equity
Amounts (such obligations to be satisfied by application of the Applied Amount
being referred to as the "Satisfied Obligations") plus (ii) an amount equal to
interest at the Applicable Rate on the Applied Amount from the date of
application of the Applied Amount to the date on which the Satisfied Obligations
otherwise would have been due (with "Applicable Rate" meaning a per annum rate
of interest computed on the basis of a year of 365 or 366 days, as the case may
be, and actual number of days elapsed equal to the rate for U.S. Treasury bills
with a maturity that most closely corresponds to the remaining Term, it being
agreed that in no event shall the Applicable Rate exceed the lowest Debt Rate
(as defined in the Indenture) provided in any Equipment Note). Lessee shall not
be obligated to reinstate the amount of the Letter of Credit to the extent
proceeds thereof are applied in satisfaction of Lessee's obligations in the
manner provided in the immediately preceding proviso. If (a) the Lessor shall
hold any proceeds of the Letter of Credit as security for Lessee's obligations
to Lessor a Letter of Credit with a face amount available for drawdown in an
amount equal to the amount of the proceeds so held by Lessor and otherwise
meeting the requirements of this Section 8(1), Lessor shall pay such proceeds to
Lessee for Lessee's own account.
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(m) ERISA. Lessee will not, nor will it permit any of its
subsidiaries to, (a) terminate, within the meaning of Title IV of ERISA, any
Plan so as to result in any material liability to the PBGC, (b) engage in any
"prohibited transaction" (as defined in Section 4975 of the Code) involving any
Plan that would result in material liability for an excise tax or civil penalty
in connection therewith, (c) incur or suffer to exist any material "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Plan, or (d) allow or suffer to exist any event or condition with
respect to ERISA, which would be likely to have a material adverse effect on
Lessee's condition (financial or otherwise), business, operations or prospects
or on Lessor's interests, rights or remedies.
Section 9. Replacement of Parts; Alterations, Modifications
and Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense,
will promptly replace, or cause to be replaced, all Parts which may from time to
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever.
In addition, in the ordinary course of maintenance, service, repair, overhaul or
testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may at its own cost and expense remove any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and
expense such Parts as promptly as possible. All replacement Parts shall be free
and clear of all Liens (except for pooling arrangements to the extent permitted
by paragraph (c) of this Section and Permitted Liens), be in at least the
equivalent or better modification status and service bulletin accomplishment
status, be fully interchangeable as to form, fit and function and shall be in as
good operating condition as, and have a value, remaining useful life and utility
at least equal to, the Parts replaced (assuming such replaced parts were in the
condition and repair in which they were required to be maintained by the terms
hereof).
All Parts which are at any time removed from the Aircraft
shall remain the property of Lessor, subject to the Lien of the Indenture if it
has not been discharged, and subject to this Lease no matter where located until
such time as such Parts shall be replaced by parts which have been incorporated
or installed in or attached to the Aircraft and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Aircraft as above
provided, or as provided in Section
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9(c), without further act, (i) title to the removed Part shall thereupon vest in
Lessee free and clear of all rights of Lessor, Indenture Trustee, Owner
Participant and Note Holders and shall no longer be deemed a Part hereunder,
(ii) title to such replacement Part shall thereupon vest in Lessor and become
subject to the Lien of the Indenture if it has not been discharged, and (iii)
such replacement Part shall become subject to the Lien of the Indenture (if it
has not been discharged) and this Lease and be deemed a Part for all purposes
hereof to the same extent as the Part which it has replaced.
(b) Alterations, Modifications and Additions. Lessee, at its
own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine to the extent
made mandatory for Lessee in respect of the Aircraft, Engines or Parts from time
to time to meet the applicable standards of the FAA or under any Law of any
Governmental Entity having jurisdiction or issued by the manufacturer of the
Airframe, Engines or Parts. In addition, so long as no Default or Event of
Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is
in effect, a Permitted Sublessee), at its own expense, may from time to time
make such alterations and modifications in and additions to the Airframe and
either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may deem desirable in the proper conduct of its business, provided,
no such alteration, modification or addition diminishes the value, remaining
useful life or utility, or impairs the condition or airworthiness, of the
Airframe, either Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Airframe, Engines and
Parts were then of the value, utility and remaining useful life and in the
condition and airworthiness required by the terms of this Lease. Except as
otherwise provided herein, title to all Parts incorporated or installed in or
attached or added to the Aircraft as the result of such alteration, modification
or addition, shall immediately vest in Lessor and become subject to the Lien of
the Indenture (if it has not been discharged) and this Lease, without the
necessity for any further act of transfer, document or notice. Notwithstanding
the foregoing sentence of this Section 9(b), Lessor agrees that so long as no
Default or Event of Default shall have occurred and be continuing Lessee (or, if
a Permitted Sublease is in effect, a Permitted Sublessee) may, at such time
during the Term for the Aircraft, remove any Part of such Aircraft, provided,
that (i) such Part is in addition to, and not in replacement or substitution
for, any Part originally incorporated or installed in or attached to, or
delivered with, the Aircraft on the Delivery Date or any Part in replacement of,
or substitution for, any such originally incorporated, installed, attached or
delivered Part, (ii) such Part is not required to be incorporated or installed
in or attached or
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added to the Aircraft pursuant to the terms of Section 6 or this Section 9 or to
maintain the insurance required by Section 12 and (iii) such Part can be removed
from the Aircraft without causing any material damage thereto and without
diminishing or impairing the value, utility, remaining useful life, condition or
airworthiness which the Aircraft would have had at such time had such
alteration, modification or addition not occurred. Upon the removal by Lessee of
any such Part as provided in the preceding sentence, title thereto shall,
without further act, vest in Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) and such Part shall no longer be deemed part of the
Aircraft (such a part is herein called a "Removable Part"). Any Part not removed
by Lessee as above provided prior to the return of the Aircraft to Lessor
hereunder, whether pursuant to Section 16, Section 18 or otherwise, shall remain
the property of Lessor.
If any Removable Part is (i) owned by any third party and
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) subject to a conditional sale contract or other security
interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) pursuant to a lease which is subject to a security interest
in favor of any third party, then Lessor will not acquire or claim, as against
such lessor, conditional vendor or secured party, any right, title or interest
in any such Removable Part as the result of such Removable Part being installed
on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or
claim is subject to the express condition that such lessor, conditional vendor,
or secured party shall have agreed in writing (which agreement may be contained
in the lease, conditional sale agreement or security agreement) not to acquire
or claim, as against Lessor, any right, title or interest in the Aircraft, or
any Part other than its interest in such Removable Part by reason of such
Removable Part being installed thereon, and (B) any Removable Part not removed
by Lessee upon the termination or expiration of this Lease, at such time, shall
become the property of Lessor and be subject to this Lease, and provided,
further, that (1) if removal of any such Part shall affect the operation of the
Aircraft in any way whatsoever, Lessee shall replace such Part with an owned
Part of the same value, utility and remaining useful life and (2) Lessee shall
repair any unsightly area of the Aircraft as a result of such removal and make
all other repairs which are advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) replaces a Part which
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is not required to be replaced under Section 9(a) or 9(b) hereof, Lessee (or, if
a Permitted Sublease is in effect, a Permitted Sublessee) may remove the
replacement Part so long as it reinstalls the original Part and such original
Part is free and clear of all Liens, other than Permitted Liens, is in at least
the same modification status and service bulletin accomplishment status, is
fully interchangeable as to form, fit and function, has been overhauled,
repaired and inspected by an agency acceptable to the FAA or other Governmental
Entity having jurisdiction, and is in as good operating condition as, and has a
utility, remaining useful life and a value at least equal to that of such Part
when it was removed from the Aircraft.
Notwithstanding any other provision hereof, and without
limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect,
Permitted Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic equipment (including seats with such equipment installed therein)
(any or all of which are hereafter referred to as "Excluded Property") in the
ordinary course of business, and Lessor shall not claim or acquire title thereto
and the rights of the owners thereof therein shall not constitute a default
hereunder; provided that (i) any such Excluded Property shall be removed prior
to the date of a Return Occasion without causing any damage to the Aircraft and
without diminishing or impairing the value, utility, remaining useful life or
condition which the Aircraft would have had at such time had such Excluded
Property not been installed, (ii) any equipment or seats which such Excluded
Property replaces shall be properly stored with the interests of Lessor and, if
the Lien of the Indenture is in effect, the Indenture Trustee, duly noted
thereon and acknowledged by any applicable bailee or warehouse, and properly
reinstalled on the Aircraft prior to the date of a Return Occasion, and (iii)
Lessee (or such Permitted Sublessee) shall make all repairs which are required
as a result of such removal and/or reinstallation.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Airframe or either
Engine as provided in Section 9(a) may so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom be subjected by
Lessee (or, if a Permitted Sublease is in effect, a Permitted
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Sublessee) to a normal pooling arrangement customary in the airline industry of
which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
is a part entered into in the ordinary course of Lessee's or such Permitted
Sublessee's business, provided the Part replacing such removed Part shall be
incorporated or installed in or attached to the Aircraft in accordance with
Section 9(a) as promptly as possible, and in any event within sixty (60) days,
after the removal of such removed Part. In addition, any Replacement Part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 9(a) may be owned by another Person subject to such a
normal pooling agreement; provided, however, that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly
thereafter as possible, and in any event within sixty (60) days, either (i)
causes title to such replacement Part to vest with Lessor in accordance with
Section 9(a) (and to be subjected to the Lien of the Indenture if it has not
been discharged) by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) acquiring title thereto for the benefit of Lessor free and
clear of all Liens except Permitted Liens, whereupon such replacement Part shall
become subject to this Lease and the Lien of the Indenture (if in effect)
without the necessity for any further act, document or notice, or (ii) replaces
such replacement Part by incorporating or installing in or attaching to the
Aircraft a further replacement Part owned by Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) free and clear of all Liens other than
Permitted Liens and by causing title to such further replacement Part to vest in
Lessor as above provided and to be subjected to the Lien of the Indenture if it
has not been discharged, whereupon such replacement Part shall become subject to
this Lease and the Lien of the Indenture (if in effect) without the necessity
for any further act, document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment
of Basic Rent hereunder shall be free and clear of, and without deduction for,
any and all withholdings on account of Taxes of any nature whatsoever, whether
or not an exclusion pursuant to Section 10(b) applies, except as required by
law. If any such deduction or withholding of Taxes is required with respect to
such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent
such that the net amount actually received by Lessor, after such deduction or
withholding, will be equal to all such
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amounts that would be received by Lessor if no such deduction or withholding had
been required, but only to the extent necessary to ensure that the holders of
the outstanding Equipment Notes receive such amount as may be required by the
Indenture provided that this limitation on the gross-up shall be without
derogation to Lessor's right to be indemnified pursuant to the remainder of this
Section 10. If Lessee pays any amount to Lessor (or to any taxing authority for
the account of Lessor) as a result of the application of the preceding sentence
with respect to any withholding Tax which is an excluded tax in respect of
Lessor pursuant to Section 10(b), then Lessor (or, in the case of Taxes imposed
on the Owner Trustee, the Owner Participant to the extent such Tax would give
rise to a Lessor's Lien for which the Owner Participant would be liable) shall
reimburse Lessee for such withholding Tax within 30 days of written notice
accompanied by evidence of payment for such withholding Taxes (exclusive of
interest, penalties and additions to Tax) paid by Lessee; provided that in any
circumstance in which the Lessor is required to reimburse the Lessee for any
such withholding Taxes and the Lessee has not received such reimbursement from
Lessor or the Owner Participant, then to the extent of such shortfall and so
long as no Lease Event of Default has occurred and is continuing, Lessee shall
be entitled to obtain reimbursement from Lessor by reducing the succeeding
payments of Rent payable to Lessor (other than any portion of Rent that may be
required by the Indenture to be paid to the holders of any outstanding Equipment
Notes issued thereunder) until the aggregate amount of reduction is equal to the
sum of the amount of such shortfall and interest on that amount at the Interest
Rate from the date reimbursement is required to be made until the date of such
reduction in Rent. Except as provided in Section 10(b), and taking into account
any payments received by Lessor pursuant to the second sentence of this Section
10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless
from, any and all Taxes, howsoever levied or imposed, whether levied or imposed
upon or with respect to or asserted against any Indemnitee, Lessee, the
Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or
otherwise, by any Federal, state or local government or taxing authority in the
United States of America or by any foreign government or any taxing authority or
governmental subdivision of a foreign country or of a territory or possession of
the United States (each such governmental subdivision or taxing authority
referred to as a "Taxing Authority"):
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(i) upon or with respect to, based upon or
measured by (A) the Aircraft, the Airframe, any Engine or any Part
thereof, or interest therein, (B) the manufacture, purchase,
ownership, delivery, leasing, acceptance, rejection, assigning,
possession, use, operation, location, settlement of any insurance
claim, sale, mortgaging, pledging, financing, subleasing, rental,
retirement, abandonment, registration, re-registration,
preparation, installation, modification, repair, maintenance,
replacement, transportation, storage, transfer of title, return or
other disposition of the Aircraft, the Airframe, any Engine or any
Part thereof or interest therein; or (C) the rentals, receipts,
income or earnings arising therefrom (including without limitation
the Rent), or
(ii) upon or with respect to the Operative
Documents (including the Equipment Notes), any interest in any
thereof, or any future amendment, supplement, waiver or consent
thereto requested by Lessee with respect to any thereof, or the
execution, delivery, or performance of any thereof, or the
acquisition or subsequent transfer thereof or the issuance of the
Equipment Notes or any other document executed and delivered in
connection with the consummation or confirmation of the
transactions contemplated by the Operative Documents or any
Indemnitee's interest in any of the foregoing, or the execution,
amendment, supplement, issuance, reissuance, refinancing or
delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property,
or the income or other proceeds received with respect to the
property, held by the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest
or premium on, or other amounts payable with respect to, the
Equipment Notes, whether as originally issued or pursuant to any
refinancing, modification or reissuance or any other obligation
evidencing any new loan, or
(v) otherwise with respect to or in connection
with the transactions contemplated by the Operative Documents.
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(b) Exclusions. The following Taxes shall not be
subject to indemnification under subsection (a) of this
Section 10:
(i) In the case of any Indemnitee, any Taxes
imposed by the Federal government of the United States of America
upon or with respect to, based on or measured by, the gross or net
income, receipts, capital, or net worth, franchises, excess
profits or conduct of business of such Indemnitee (other than
Taxes included in the calculation of an after-tax payment, or
Taxes in the nature of sales or use Taxes, license Taxes,
value-added Taxes or property Taxes),
(ii) In the case of any Indemnitee, Taxes on,
based on, or measured by the gross or net income, receipts,
capital, or net worth, franchises, excess profits or conduct of
business of such Indemnitee (including minimum taxes, withholding
taxes and taxes on or measured by any items of tax preference),
imposed by any foreign, state or local government or taxing
authority (other than Taxes included in the calculation of an
after-tax payment, Taxes in the nature of sales Taxes, use Taxes,
property Taxes, value-added Taxes or rental Taxes, and Covered
Income Taxes described in subsection (c) of this Section 10),
(iii) In the case of any Indemnitee, Taxes which
are the direct result of gross negligence or willful misconduct of
such Indemnitee,
(iv) In the case of any Indemnitee, any Taxes
imposed as a result of a voluntary or involuntary bankruptcy of
such Indemnitee (other than, in the case of Owner Trustee, as a
result of the occurrence of an Event of Default) or any voluntary
sale, transfer of title, transfer or other disposition by such
Indemnitee or a related Indemnitee (for such purpose, Owner
Trustee and Owner Participant are related Indemnitees with respect
to each other) of the Aircraft, the Airframe, any Engine or any
Part thereof or interest therein, or any interest in the Rent or
part thereof or any interest in the Operative Documents or part
thereof, unless such sale, transfer or disposition occurs in
connection with (x) the transactions contemplated or effected by
the Refunding Agreement and the amendments to the Lease occurring
in connection therewith, (y) an Event of Default and the exercise
by any Indemnitee of its remedies under the Lease or the
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Indenture, as the case may be, and (z) the substitution, pooling
or interchange of the Aircraft, the Airframe, any Engine or any
Part pursuant to the terms of the Lease; provided, however, that
in all cases Owner Participant and Owner Trustee shall consider in
good faith such request as Lessee shall make concerning the
appropriate jurisdiction in which such sale, transfer or
disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed
as a result of a transferee of such Indemnitee of any interest in
the Aircraft, the Airframe, any Engine or any Part or any interest
in the Operative Documents being a foreign entity or not having
its principal office in the United States,
(vi) Any interest, penalties, fines and additions
to tax imposed on an Indemnitee (other than Taxes that are due and
payable with a return when properly filed) resulting from such
Indemnitee's failure to file returns that are timely and proper,
provided such failure was not attributable to such Indemnitee
contesting any claim in accordance with this Section 10 or to a
failure by Lessee to satisfy its obligations related to such
return,
(vii) Taxes imposed on an Indemnitee as a result
of a breach of its representations, warranties or covenants
contained in Sections 9(a), 9(b)(11), 9(c), 9(d), 9(e), 10, 12 or
16 of the Refunding Agreement or Section 21 (f) of this Agreement
in any material respect or from a failure by an Indemnitee to
fulfill its contest obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft
related to acts or events occurring after the later of the
termination of the Lease and the redelivery of the Aircraft,
(ix) In the case of the Indenture Trustee, each
Pass-Through Trust, each Pass-Through Trustee (in its individual
capacity), the Subordination Agent and each Liquidity Provider,
Taxes imposed with respect to the Equipment Notes as a result of
activities of such Indemnitee unrelated to the transactions
contemplated by the Operative Documents, and
(x) In the case of each Pass-Through Trust,
each Pass-Through Trustee (in its individual capacity
and as trustee under the Pass-Through Trusts, the
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Subordination Agent and each Liquidity Provider, United States
withholding taxes imposed as a result of the place of organization
or other status of a holder of an interest in a Pass-Through
Trust.
(c) Covered Income Tax. For purposes of clause (ii) of
subsection (b) of this Section 10, a Covered Income Tax includes:
(i) any Tax based on or measured by gross or net
income, capital or net worth, franchises, excess profits or
conduct of business imposed on an Indemnitee by a Taxing Authority
in or of any foreign jurisdiction or a territory or possession of
the United States, other than any such Tax which would not have
been imposed in the absence of such Indemnitee's (including for
purposes of this definition, all entities with which such
Indemnitee is combined, integrated, or consolidated in such Taxing
Authority's jurisdiction) engaging in business, maintaining an
office or other place of business or otherwise being located in
such jurisdiction (other than merely by reason of such
Indemnitee's participation in the transactions contemplated by the
Operative Documents); and
(ii) a Tax imposed by any Taxing Authority other
than the Federal government of the United States of America based
on, or measured by gross income or receipts, to the extent such
Tax is attributable to the operation or registration of the
Aircraft in such jurisdiction or to the transactions contemplated
by the Operative Documents or is the result of the activities of
Lessee or any Affiliate of either thereof in such jurisdiction,
including residence.
(d) Reports and Returns. In case any report or return is
required to be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to Owner Trustee and Owner Participant or
will notify Owner Trustee or Owner Participant of such requirement and make such
report or return in such manner as shall be reasonably satisfactory to Owner
Participant or Owner Trustee. If actual notice is given by any taxing authority
to an Indemnitee that a report or return is required to be filed with respect to
any such Taxes, the
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Indemnitee shall promptly notify Lessee of such required report or return and
Lessee shall either file such report or return in the manner prescribed in the
preceding sentence, or shall use its best efforts to cause such report or return
to be filed by the appropriate entity. Each Indemnitee agrees to respond to any
reasonable request of Lessee for information not within Lessee's control and
within the control of and reasonably available to such Indemnitee with respect
to the filing of any such report or return, but Lessee agrees to pay any
reasonable costs, fees, disbursements or other charges of independent counsel or
independent accountants incurred in connection with such request.
(e) After-Tax Basis. Lessee further agrees that,
with respect to any payment or indemnity under this Section 10 and under Section
13 hereof, such payment or indemnity shall include the net amount necessary to
hold the recipient of the payment or indemnity harmless on an after-tax basis
from all Taxes required to be paid or credited by such recipient with respect to
such payment or indemnity under the laws of any Taxing Authority; provided,
however, that in the case of federal income taxes imposed on Owner Participant,
such Taxes shall be calculated on the basis of the assumption that Owner
Participant shall be subject to the highest federal corporate income tax rate
applicable to Owner Participant in the year of payment.
(f) Tax Benefit. If, by reason of any payment
made to or for the account of an Indemnitee by Lessee pursuant to this Section
10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax
deduction or credit (including foreign tax credit and any reduction in Taxes)
not previously taken into account in computing the amount of such payment, such
Indemnitee shall promptly pay to Lessee, but only if there shall then be no
Lease Event of Default and if Lessee shall have made all payments then due and
owing to such Indemnitee under the Operative Documents, an amount equal to the
sum of (A) the actual reduction in Taxes, if any, realized by such Indemnitee
which is attributable to such deduction or credit and (B) the actual reduction
in Taxes realized by such Indemnitee as a result of any payment made by such
Indemnitee pursuant to this sentence; provided, however, that such Indemnitee
shall not be obligated to make any payment pursuant to this Section 10 or
Section 13 hereof to the extent that the amount calculated pursuant to (A) above
would exceed (x) the amount of all prior payments by Lessee to such Indemnitee,
pursuant to this Section 10 or Section 13 hereof, net of any amount
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paid in respect of Taxes required to be paid by such Indemnitee in respect of
the receipt or accrual of such amounts received by such Indemnitee from Lessee,
less (y) the portion of all prior payments computed pursuant to (A) above by
such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any
Indemnitee for any Taxes which may be subject to indemnification by Lessee
hereunder and if such Indemnitee has notice thereof, such Indemnitee shall
promptly notify Lessee; provided that the failure to provide such notice shall
not release Lessee from any of its obligations hereunder except to the extent
Lessee's right to contest such claim is precluded thereby. Any amount payable as
an indemnity to any Indemnitee or any amount payable to Lessee pursuant to this
Section 10 is to be paid to such party directly, in immediately available funds,
within thirty (30) days after receipt of a written demand therefor from such
Indemnitee or Lessee, as the case may be, except in the case of a payment to an
Indemnitee to the extent that such Taxes are being contested in good faith
pursuant to this Section 10, in which event the payment of such indemnity shall
be made by the due date for the payment of any Taxes that are the subject of
such contest taking into account all extensions of the due date that are
available as a result of the contest. In the event an Indemnitee makes a tax
payment with respect to any such Taxes (other than with funds advanced to such
Indemnitee on an interest-free basis by Lessee pursuant to this Section 10),
Lessee shall reimburse the amount of such payment and also shall pay to the
Indemnitee interest on the amount of such payment by such Indemnitee at the
Interest Rate from the date of any such payment by such Indemnitee to the date
of such reimbursement by Lessee to the Indemnitee hereunder. In the event an
amount is payable to Lessee under this Section 10, the Indemnitee owing such
amount shall pay interest on such amount at the Interest Rate from the date of
receipt by such Indemnitee of any amount giving rise to such obligation to pay
Lessee until the date of payment to Lessee.
(h) Contest. If reasonably requested by Lessee
in writing, an Indemnitee shall upon receipt of an indemnity reasonably
satisfactory to it and at the sole expense of Lessee (including, without
limitation, payment on demand of all out-of-pocket costs, expenses, additions to
tax because of underpayments of estimated Taxes, losses, legal and accounting
and investigatory fees and disbursements, penalties, and interest) in good faith
contest or shall permit Lessee, if desired by Lessee and such contest may be
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conducted in the name of Lessee without involving Taxes of such Indemnitee not
indemnified hereunder, to contest in the name of Lessee and/or the Indemnitee,
the validity, applicability or amount of such Taxes by (x) resisting payment
thereof if practicable, (y) not paying the same except under protest, if protest
is necessary and proper, and (z) if payments be made, using reasonable efforts
to obtain a refund thereof in appropriate administrative and judicial
proceedings; provided, however, that, in each such instance, such proceedings do
not involve any substantial risk or danger of the sale, forfeiture or loss of
the Aircraft, and provided further that the Indemnitee shall have the right to
forego administrative proceedings with respect to the claim and contest the
claim in an appropriate court of its choosing and provided further that the
Indemnitee shall not be required to undertake or allow in its name or on its
behalf any contest unless the following conditions are satisfied:
(i) no Event of Default has occurred and is
continuing,
(ii) the amount of such Taxes shall be at
least $50,000,
(iii) in the event an administrative proceeding
is to be appealed in a judicial proceeding, as for the first level
of judicial proceeding, Lessee shall have provided the Indemnitee
with an opinion of legal counsel selected by the Indemnitee and
reasonably acceptable to Lessee ("Tax Counsel") to the effect that
a reasonable basis exists to contest such claim (which opinion
shall be obtained at Lessee's sole cost and expense),
(iv) if such contest is to be initiated by the
payment of, and the claiming of a refund for, such Taxes, Lessee
shall have advanced or caused to be advanced to such Indemnitee
sufficient funds (on an interest-free basis) to make such payments
and shall have agreed to indemnify such Indemnitee against any
adverse tax consequences of such advance, and
(v) in the event a judicial decision is to be
appealed, the amount of such Taxes is at least $150,000 and the
Indemnitee shall have received an opinion of Tax Counsel (which
opinion shall be obtained at Lessee's sole expense) to the effect
that it is more likely than not that the Indemnitee will prevail,
and
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in the event that the subject matter of the contest is of a
continuing nature and has previously been decided adversely
pursuant to the contest provisions of this Section 10, there has
been a change in the law (including, without limitation,
amendments to statutes or regulations, administrative rulings and
court decisions) after such claim shall have been so previously
decided and such Indemnitee shall have received an opinion of Tax
Counsel, which opinion shall be obtained at Lessee's sole expense,
to the effect that, as a result of such change other than a change
in statutory law, it is more likely than not that the position
which such Indemnitee or Lessee, as the case may be, had asserted
in such previous contest would prevail and, in the case of a
statutory change in law, it is as likely as not that the position
will prevail.
(i) Refund. If any Indemnitee shall obtain a refund of all or
any part of any Taxes paid by Lessee or from an advance by Lessee, such
Indemnitee shall pay Lessee the amount of such refund together with any interest
paid thereon attributable to the Taxes paid or advanced by Lessee less the
amount of any Taxes payable by such Indemnitee in respect of the receipt of such
refund and interest after giving credit to Lessee for any savings by such
Indemnitee in respect to any such Taxes by reason of deductions, credits,
allocations or allowances in respect of the payment of any such Taxes; provided
that such amount shall not be payable before such time as Lessee shall have made
all payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default
under any of the above indemnification provisions of this Section 10 so long as
Lessee or the Indemnitee shall diligently prosecute such contest in accordance
with the provisions of this Section 10. Notwithstanding the foregoing, if a
claim is made against any Indemnitee for any Taxes which, if successful, would
result in the imposition of Taxes under circumstances which would require Lessee
to indemnify such Indemnitee, the Indemnitee shall be released from its
responsibility to contest such claim, or part thereof, if it agrees in writing
not to seek indemnification from Lessee in respect of the claim, or such part
thereof to
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be contested. In the event an Indemnitee fails to contest, or refuses to permit
Lessee to contest, a claim or part thereof which the Indemnitee has the
obligation to contest or to permit Lessee to contest under this Section 10, then
Lessee shall not be obligated to indemnify the Indemnitee for such claim or such
part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a
member of an affiliated group (within the meaning of Section 1504(a) of the
Code) which files a consolidated Federal income tax return, the term
"Indemnitee" shall mean and include such affiliated group.
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe. Subject to the
other provisions of this Section 11, upon an Event of Loss with respect to the
Airframe or the Airframe and any Engines then installed thereon, Lessee shall
forthwith (and, in any event, within five (5) Business Days after such
occurrence) give Lessor written notice of such occurrence and within thirty (30)
days after such occurrence give Lessor written notice of its election, subject
to the terms hereof and of the Indenture, to perform one of the following two
options (it being agreed that if Lessee shall not have given Lessor notice of
such election within thirty (30) days after such occurrence, Lessee shall be
deemed to have elected to perform the option set forth in the following clause
(ii)), provided, that Lessee shall not have the right to select the option set
forth in clause (i) if a Default or an Event of Default shall have occurred and
be continuing at the time of such election or at the time of replacement:
(i) within one hundred twenty (120) days (the "Replacement
Period") after the date of the Event of Loss (but in no event later than the
last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as
provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture
if it has not been discharged, and to be leased by Lessee hereunder in
replacement of the Airframe and such Engines then installed thereon, title to a
replacement Airframe (together with the same number of replacement Engines as
the Engines), such replacement Airframe and Engines (A) to be free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe and replacement Engines may be subject to Permitted Liens), (B) to have
a value, utility and remaining useful life, determined in accordance with the
Appraisal Procedure
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as provided in Section 11(c) hereof, at least equal to, and to be in at least as
good operating condition as, the Airframe and the Engines, if any, so replaced
(assuming the Airframe and the Engines were maintained in accordance with the
requirements of this Agreement, whether or not they are in fact so maintained),
and (C) to be a like Airbus A320-231 model aircraft with equivalent or better
modification status and, in the case of Engines, in compliance with Section
11(b); provided that if Lessee shall not perform its obligation to effect such
replacement under this clause by the end of the Replacement Period, Lessee shall
then be deemed to have elected to comply, and shall comply, with the provisions
of clause (ii) of this Section 11(a); provided, further, that the payment
specified therein shall be deemed to have become due and payable on the
Stipulated Loss Value Date occurring on or immediately preceding the last day of
the Replacement Period. Upon compliance with the foregoing, Lessor will, subject
to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without
recourse, representation or warranty (except a warranty that such Airframe and
Engines are free and clear of Lessor's Liens and Head Lessor's Liens), all of
Lessor's right, title and interest, if any, in and to the Airframe and the
Engines suffering the Event of Loss as well as all of Lessor's right, title and
interest in and to any Engine constituting part of the Aircraft and replaced as
provided above but not installed thereon at the time of the Event of Loss. For
all purposes hereof, a replacement Airframe shall be deemed part of the property
leased hereunder and shall be deemed the "Airframe" as defined herein. No Event
of Loss resulting in replacement of the Airframe or Engines under this Section
11(a)(i) shall result in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or before one hundred
twenty (120) days after the date of the Event of Loss or, if earlier, with
respect to insurance proceeds, on the date on which insurance proceeds with
respect to the Event of Loss are received by the loss payee (but in no event
later than the last day of the Term) Lessee shall pay to Lessor in immediately
available funds the sum of (A) the Stipulated Loss Value of the Aircraft as
shown on Exhibit A for such Stipulated Loss Value Date, plus all Basic Rent or
Renewal Rent, as the case may be, payable on each Basic Rent Payment Date or
Renewal Rent Payment Date, respectively, prior to the date of payment of such
Stipulated Loss Value which has not been paid when due, plus, if such Stipulated
Loss Value Date is also a Basic Rent Payment Date or a Renewal Rent Payment
Date, the amount of Basic Rent or Renewal Rent, as the case may be, payable
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by Lessee on such Stipulated Loss Value Date, and (B) all Supplemental Rent
payable, whereupon (1) the obligation of Lessee to pay Basic Rent or Renewal
Rent, as the case may be, hereunder with respect to the Aircraft for any period
commencing after the date on which such Stipulated Loss Value is paid shall
terminate; provided that Lessee shall remain liable for, and shall pay on or
before the date the Stipulated Loss Value and Supplemental Rent are paid, all
payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due
on or before the date of such payment of Stipulated Loss Value and Supplemental
Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor
will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE
IS," without recourse, representation or warranty (except a warranty that such
Airframe and Engines are free and clear of Lessor's Liens and Head Lessor's
Liens), all of Lessor's right, title and interest, if any, in and to the
Airframe and Engines suffering the Event of Loss, as well as all of Lessor's
right, title and interest, if any, in and to any Engine constituting part of the
Aircraft but not installed thereon at the time of the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon an Event of
Loss with respect to an Engine only, Lessee shall give Lessor prompt written
notice thereof and shall, at its own cost and expense, within sixty (60) days
after such occurrence (but in no event later than the last day of the Term)
convey or cause to be conveyed to Lessor as replacement for the Engine suffering
an Event of Loss, title to another IAE Model V2500 engine of like model and
equivalent or better modification status or, at Lessee's option, an IAE engine
of an improved model, in each such case which has a value, remaining useful life
and utility determined in accordance with the Appraisal Procedure at least equal
to such Engine and is suitable for installation and use on the Airframe without
diminishing the value, remaining useful life or utility of such Airframe, free
of all Liens (it being understood that, upon such conveyance, such replacement
Engine may be subject to Permitted Liens) and being in as good operating
condition as (including no greater number of cycles or hours than) the Engine
being replaced assuming the Engine being replaced was serviceable and otherwise
in the condition and repair required by the terms hereof immediately prior to
the Event of Loss. Prior to or at the time of any such conveyance, Lessee, at
its own cost and expense, will (i) furnish Lessor with a full warranty bill of
sale, in form and substance reasonably satisfactory to Lessor and Indenture
Trustee, as applicable,
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with respect to such replacement Engine; (ii) cause supplements, in form and
substance reasonably satisfactory to Lessor and Indenture Trustee (if the Lien
of the Indenture has not been discharged), subjecting such replacement Engine to
this Lease, the Indenture (if in effect) and the Trust Agreement (if in effect),
to be duly executed by Lessee, if applicable, and duly filed for recordation
pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee
(if the Lien of the Indenture has not been discharged) with such evidence of
title to such Replacement Engine and of compliance with the insurance provisions
of Section 12 hereof with respect to such Replacement Engine as Lessor or
Indenture Trustee (if the Lien of the Indenture has not been discharged) may
reasonably request; (iv) furnish Owner Participant, Lessor and Indenture Trustee
(if the Lien of the Indenture has not been discharged) with an opinion of
Lessee's counsel addressed to such parties to the effect that title to such
Replacement Engine has been duly conveyed to Lessor free and clear of all Liens
(except Permitted Liens), and is duly leased hereunder and subject to the Lien
of the Indenture (if it has not been discharged), the instruments subjecting
such Replacement Engine to the Lien of the Indenture and the Lease, and
subjecting to any relevant Assigned Sublease and Sublease Agreement, as the case
may be, have been duly filed for recordation pursuant to the Federal Aviation
Act or any other law then applicable to the registration of the Aircraft, and no
further action, filing or recording of any document is necessary in order to
establish and perfect, in the United States and, if the Aircraft is registered
outside the United States, in the jurisdiction of registration, the legal title
to such Replacement Engine and the Lien of the Indenture on such Replacement
Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee
certifying that, upon consummation of such replacement, no Default or Event of
Default will exist hereunder; (vi) furnish such documents and evidence with
respect to Lessee, Lessor or Indenture Trustee (if the Lien of the Indenture has
not been discharged), as such parties or their respective counsel may reasonably
request in order to establish the consummation of the transactions contemplated
by this Section 11(b), the taking of all corporate proceedings in connection
therewith and compliance with the conditions set forth in this Section 11(b), in
each case in form and substance satisfactory to such party; (vii) furnish such
Uniform Commercial Code financing statements covering the Replacement Engine as
may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures
has not been discharged); (viii) furnish Owner Participant, at
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Lessee's election, (x) an opinion of tax counsel mutually satisfactory to Owner
Participant and Lessee and which opinion is reasonably satisfactory to Owner
Participant to the effect that such replacement will have no adverse tax
consequences to Lessor and Owner Participant or (y) an indemnity for any adverse
tax consequences to Lessor and Owner Participant; (ix) furnish the appraisal
referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the
opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the
Indenture. Upon full compliance by Lessee with the terms of this Section 11(b),
Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS,
WHERE IS" without recourse, representation or warranty (except a warranty that
such Engine is free and clear of Lessor's Liens and Head Lessor's Liens), all of
Lessor's right, title and interest, if any, in the Engine which suffered the
Event of Loss. For all purposes hereof, each such Replacement Engine shall be
deemed an "Engine" as defined herein and shall be deemed part of the same
Aircraft as was the Engine replaced thereof. No Event of Loss covered by this
Section 11(b) shall result in any reduction in Rent.
(c) Conveyance of Replacement Airframe. Prior to or at the
time of any conveyance of a replacement Airframe pursuant to Section 11(a)
above, Lessee, at its own cost and expense, will furnish Lessor with the
following documents which shall have been duly authorized, executed and
delivered by the respective parties thereto and shall be in full force and
effect on said date: (i) a full warranty bill of sale, in form and substance
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged) and an AC Form 8050-2 Bill of Sale (or such
other form of bill of sale as may be approved by the FAA on said date), executed
by the owner thereof, in favor of Lessor and, cause supplements, reasonably
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), to this Lease, the Indenture (if then in
effect) and the Trust Agreement (if then in effect), with respect to such
replacement Airframe and to be duly filed for recordation pursuant to the
Federal Aviation Act or other applicable Governmental Entity; (ii) the
certificate specified in Section 12(f) hereof demonstrating compliance with the
insurance requirements of Section 12 with respect to the replacement Airframe
and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner
Participant) of Lessee's counsel (and such other evidence of title as Owner
Participant or Indenture Trustee (if the Lien
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of the Indenture has not been discharged) may reasonably request) to the effect
that, upon such conveyance, Lessor will acquire good title to such replacement
Airframe free and clear of all Liens (it being understood that, upon such
conveyance, such replacement Airframe may be subject to Permitted Liens), that
such replacement Airframe will be leased hereunder to the same extent as the
Airframe replaced thereby and will be subject to the Lien of the Indenture (if
it has not been discharged), the instruments subjecting such Replacement
Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and
subjecting to any relevant Assigned Sublease and Sublease Assignment, as the
case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Airframe and Replacement
Engine and the Lien of the Indenture on such Replacement Airframe and
Replacement Engine; and that Lessor and Indenture Trustee, as the assignee of
Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United
States Code with respect to such replacement airframe and engines to the same
extent as with respect to the Airframe and Engines then installed thereon prior
to such replacement; (iv) a certificate signed by a Responsible Officer of
Lessee certifying that, upon consummation of such replacement, no Default or
Event of Default will exist hereunder; (v) such documents and evidence with
respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the
Indenture has not been discharged), as such parties or their respective counsel
may reasonably request in order to establish the consummation of the
transactions contemplated by this Section 11(c), the taking of all corporate
proceedings in connection therewith and compliance with the conditions set forth
in this Section 11(c), in each case in form and substance satisfactory to each
such party, including evidence that the Aircraft of which the replacement
Airframe is a part has been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of this Lease and application for
registration of such replacement Airframe in the name of Lessor has been duly
made with the FAA or other applicable Governmental Entity and Lessee has
temporary or permanent authority to operate the replacement Airframe; (vi)
furnish such Uniform Commercial Code financing statements covering the
replacement Airframe as may be requested by Lessor or Indenture Trustee, (vii)
furnish Owner Participant with an
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opinion of tax counsel mutually satisfactory to Owner Participant and Lessee and
which opinion is reasonably satisfactory to Owner Participant to the effect that
such replacement will have no adverse tax consequences to Lessor and Owner
Participant; (viii) an appraisal prepared in accordance with the Appraisal
Procedure which confirms that the replacement Airframe and any replacement
Engine has a value, utility and remaining useful life at least equal to that of
the Airframe and Engines which suffered the Event of Loss assuming that the same
were maintained in accordance with the requirements of this Lease whether or not
they are in fact so maintained and (ix) furnish Owner Trustee and Indenture
Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i)
of the Indenture. Upon full compliance by Lessee with the terms of this Section
11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee
"AS IS, WHERE IS," without recourse, representation or warranty (except a
warranty that such Airframe is free and clear of Lessor's Liens and Head
Lessor's Liens), all of Lessor's right, title and interest in and to the
Aircraft which suffered the Event of Loss. No Event of Loss with respect to the
Aircraft under the circumstances contemplated by the terms of this Section 11(c)
shall result in any reduction in Rent.
For all purposes of this Lease, each such replacement Aircraft
(together with any Engines constituting part of the Aircraft being replaced as
to which an Event of Loss has not occurred) shall be deemed part of the property
leased hereunder and shall be deemed the "Aircraft" as defined herein.
(d) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(f) below, any payments (other than insurance
proceeds) received at any time by Lessor or Lessee from any Governmental Entity
or other Person with respect to an Event of Loss will be applied as follows
(after reimbursement of Lessor, Indenture Trustee and Owner Participant for
their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value required to be paid by
Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Lessor in
reduction of Lessee's obligation to pay such Stipulated Loss Value if
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not already paid by Lessee, or, if already paid by Lessee, shall (unless a
Default or an Event of Default shall have occurred and be continuing) be applied
by Lessor to reimburse Lessee for its payment of such Stipulated Loss Value and
the balance, if any, of such payment remaining thereafter shall be paid over to,
or retained by, Lessor; or
(ii) if such payments are received as a result of
an Event of Loss with respect to the Airframe or an Engine which is being
replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments
shall be paid over to, or retained by, Lessee if Lessee shall have fully
performed or, concurrently therewith fully performs, the terms of Sections
11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15
hereof with respect to the Event of Loss for which such payments are made and if
no Default or Event of Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect
to the Aircraft. Subject to Section 11(f) below, in the event of the requisition
for use by a Governmental Entity of the Aircraft, the Airframe or an Engine
(other than a requisition constituting an Event of Loss), Lessee shall promptly
notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as if such
requisition had not occurred. All payments received by Lessor or Lessee from the
Governmental Entity for the use of such Airframe or Engine during the Term shall
be paid over to, or retained by, Lessee if no Default or Event of Default shall
have occurred and be continuing; and all other payments received by Lessor or
Lessee from the Governmental Entity shall be paid over to, or retained by,
Lessor. If the Airframe and such Engines or engines are not returned by the end
of the Term, an Event of Loss shall be deemed to have occurred on the last day
of the Term and, on the last day of the Term, Lessee shall either pay to Lessor
the amount provided herein for an Event of Loss to the Airframe and such Engines
or engines on such date or provide a replacement Aircraft and Engine on such
date in the condition provided for in Section 16. In the event of the
requisition for use by the Governmental Entity of any Engine without the
requisition for use of the Airframe, Lessee will replace such Engine hereunder
by complying with the terms of Section 11(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine, and thereafter any payments
received by Lessor or Lessee from the Governmental
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Entity with respect to such requisition shall be paid over to, or retained by,
Lessee.
(f) Application in Default. Any amount referred to in clause
(i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to
Lessee shall not be paid to Lessee, or, if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such
payment or retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without limitation,
by reason of this Lease being declared or deemed in default. At such time as
there shall not be continuing any such Event of Default or Default, all such
amounts at the time held by Lessor or Indenture Trustee in excess of the amount,
if any, which Lessor or Indenture Trustee has elected for application as
provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Aircraft, in an amount not less than three hundred
fifty million dollars ($350,000,000), combined single limit, per occurrence or
such higher amount, and of such type and terms, as are customarily carried by
prudent Certificated Air Carriers, similarly situated to Lessee, operating
aircraft of similar size and engines and as hereinafter provided. Each and any
policy of insurance carried in accordance with this Section 12(a), and each and
any policy obtained in substitution or replacement for any of such policies, (i)
shall designate Lessor (in both its individual and trustee capacity), Owner
Participant, Indenture Trustee (in both its individual and trustee capacity) and
the other Indemnitees and their
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respective permitted assigns, as additional insureds as their interests may
appear (but without imposing upon any such Person any obligation imposed upon
the insured, including, without limitation, the liability to pay any premiums
for any such policies), (ii) shall expressly provide that, in respect of the
interests of Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees and their respective permitted assigns, in such policies, the
insurance shall not be invalidated as to an insured by any act or omission of
Lessee or any other insured and shall insure Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, regardless as to any insured of any breach or violation by Lessee or
any other insured of any warranty, declaration or condition contained in such
policies, (iii) shall provide that if such insurance is cancelled for any reason
whatsoever, or is changed in any adverse way with respect to the interests of
Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if
such insurance is allowed to lapse for non-payment of premium, such
cancellation, change or lapse shall not be effective as to Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees, and their respective
permitted assigns, until thirty (30) days, in each instance (seven (7) days or
such lesser period of time as is customarily available at the time in the case
of any war risk and allied perils coverage), after notice to Lessor, Owner
Participant, Indenture Trustee from such insurer or insurers, of such
prospective cancellation, change or lapse provided, however, that if any such
notice period is not reasonably obtainable, such policies shall provide for as
long a period of prior notice as shall then be reasonably obtainable, (iv) shall
include coverage for any country in or over which the Aircraft is located or
operated, and (v) shall provide that, as against Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees, and their respective permitted
assigns, each insurer shall waive any rights of set-off, counterclaim or any
other deduction, whether by attachment or otherwise, and waives any rights it
may have to be subrogated to any right of any insured against Lessor, Owner
Participant, Indenture Trustee, or the other Indemnitees, or their respective
permitted assigns, with respect to the Aircraft. Each liability policy shall be
primary without right of contribution from any other insurance which may be
carried by Lessor, Owner Participant, Indenture Trustee or the other
Indemnitees, or their respective permitted assigns, and shall expressly provide
that all of the provisions thereof shall operate in the same manner as if there
were a separate policy covering each insured, provided, that such policies
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shall not operate to increase the insurer's limit of liability. Lessee shall
cause its insurers to agree that the indemnity and hold harmless provisions of
Section 13 are insured as a contractual assumption of liability by Lessee's
insurers, subject to the terms, coverage, conditions, limitations and exclusions
of the policy of insurance. Without limiting the foregoing, the type and amount
of the insurance carried by Lessee hereunder shall be no less in amount and no
less comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee
and the other Indemnitees then that carried by Lessee with respect to other
A320-231 aircraft or similar-size aircraft owned or leased by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own
expense, will maintain in effect, or cause to be carried and maintained in
effect, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the consent of Lessee) covering the Aircraft,
and "all-risk" coverage including transit insurance with respect to Engines and
Parts while not installed on such Aircraft or an aircraft, which in each case
considering all policy terms, limitations and exclusions is of the type, terms
and amount customarily maintained by prudent Certificated Air Carriers similarly
situated to Lessee and operating similar size aircraft and engines and as
hereinafter provided. Lessee shall also maintain, or cause to be maintained, war
risk and allied perils hull insurance reasonably acceptable to Lessor with
Approved Insurers if the Aircraft, Airframe or Engines are operated on routes or
kept in locations outside of the United States of America. In addition, at least
ten (10) Business Days (or, in the case of an emergency, at least two (2)
Business Days) prior to permitting the Aircraft, Airframe or Engines to be
operated or located outside of the United States of America, other than in
Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or
Indenture Trustee reasonably requests at any time and if such insurance is then
customarily being obtained by or for Persons leasing or financing
similarly-sized aircraft operating on similar routes to operators located in the
jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted
Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for
political risk,
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repossession, expropriation, confiscation and similar insurance as Lessor may
arrange or cause to be arranged. Anything herein to the contrary
notwithstanding, at all times while the Aircraft is subject to this Lease, the
insurance required by this Section 12(b) shall be for an amount on an "agreed
value" basis not less than the Stipulated Loss Value from time to time
determined for the Aircraft. Without limiting the foregoing, the type and amount
of insurance carried by Lessee hereunder shall be no less comprehensive or
favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees than that carried by Lessee with respect to similar-size aircraft
owned or leased by Lessee.
Each and any policy of insurance obtained and maintained
pursuant to this Section 12(b), and each and any policy obtained in substitution
or replacement for any such policies, (i) shall designate Lessor as owner of the
Aircraft, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns as additional insureds, as
their respective interests may appear (but without imposing upon Lessor, Owner
Participant, Indenture Trustee and their respective permitted assigns, any
obligation imposed upon the insured, including, without limitation, the
liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of such an additional insured and its
permitted assigns, in such policies, the insurance shall not be invalidated as
to an insured by any act or omission of Lessee or any other additional insured,
and shall insure each such additional insured and its permitted assigns,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their respective
permitted assigns, or if such insurance is allowed to lapse, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee, the other Indemnitees or their respective permitted assigns,
until thirty (30) days (seven (7) days or such lesser period of time as is
customarily available at the time in the case of any war
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risks or allied perils coverage) after written notice to Lessor, Owner
Participant and Indenture Trustee from such insurer or insurers, as the case may
be, of such prospective cancellation, change or lapse provided, however, that if
any such notice period is not reasonably obtainable, such policies shall provide
for as long a period of prior notice as shall then be reasonably obtainable,
(iv) shall include coverage for any country in or over which the Aircraft may at
any time be located or operated, (v) shall provide that, as against Lessor,
Owner Participant, Indenture Trustee the other Indemnitees and their respective
permitted assigns, each insurer shall waive any rights of set-off, counterclaim
or any other deduction, whether by attachment or otherwise, and waives any
rights it may have to be subrogated to any right of any insured against Lessor,
Owner Participant, Indenture Trustee and the other Indemnitees and their
respective permitted assigns, with respect to the Aircraft, (vi) shall provide
that in the event of any damage or loss which is an Event of Loss hereunder and
which results in a payment, such payment shall be payable directly to Indenture
Trustee as sole loss payee, so long as the Lien of the Indenture shall not have
been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall
provide that in the event of any damage or loss which is not an Event of Loss
hereunder and which results in a payment, such payment shall be payable directly
to Indenture Trustee, as sole loss payee for the account of all interests, so
long as the Lien of the Indenture shall not have been discharged and thereafter
to Lessor, as sole loss payee for the account of all interests. The insurance
required under this Section 12(b) may incorporate deductible amounts which shall
not exceed one million dollars ($1,000,000).
Each of Lessor and Owner Participant shall have the right to
carry additional and separate excess or contingent insurance for its own benefit
at its own expense, without, however, thereby limiting Lessee's obligations
under this Section 12, and Lessee shall not carry any such insurance if it would
conflict with or adversely affect other insurance carried by Lessor or Owner
Participant. Lessee shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to Lessee, provided, however, that such insurance does not conflict with
or adversely affect the insurance required hereunder or any excess or contingent
insurance carried by Lessor or Owner Participant. Lessee shall give Lessor
reasonable prior written notice of any insurance to be carried by Lessee in
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addition to that required to be carried by Lessee as provided herein.
(c) Application of Insurance Proceeds for an Event of Loss. It
is agreed that insurance payments which arise from insurance required to be
carried by Lessee pursuant to this Section 12 and received as the result of the
occurrence of an Event of Loss shall be applied as follows (after reimbursement
of Lessor, Owner Participant and Indenture Trustee for their reasonable
out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value required to be paid by
Lessee pursuant to Section 11(a)(ii) of this Lease shall be paid to Indenture
Trustee so long as the Lien of the Indenture has not been discharged and
thereafter to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value if not already paid by Lessee, or, if already paid by Lessee, shall
(unless a Default or an Event of Default shall have occurred and be continuing)
be applied by Indenture Trustee or Lessor, as the case may be, to reimburse
Lessee for its payment of such Stipulated Loss Value and the balance, if any, of
such payment remaining thereafter shall be paid over to, or retained by, Lessor;
or
(ii) if such payments are received as a result of an Event of
Loss with respect to the Airframe or an Engine which is being replaced pursuant
to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid
over by the Indenture Trustee or Lessor, as the case may be, to, or retained by,
Lessee if Lessee shall have fully performed or, concurrently therewith fully
performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the
case may be, and of Section 15 hereof with respect to the Event of Loss for
which such payments are made and if no Default or Event of Default shall have
occurred and be continuing.
In the event that separate policies are maintained to cover
"all-risk" ground and flight aircraft, hull and war risks and allied perils
insurance, Lessee shall include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by Lessee with respect to all
other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
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(d) Application of Insurance Proceeds for Other than an Event
of Loss. The insurance payments of any property damage loss to the Airframe or
any Engine not constituting an Event of Loss with respect thereto will be
applied in payment for the actual costs of repairs or for replacement property
which Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c)
of this Lease against such documentation evidencing payment by Lessee as Lessor
may reasonably request to reimburse Lessee for such repairs or replacements
already paid for by Lessee, and any balance remaining after compliance with such
Sections with respect to such loss shall be paid to Lessor. Lessee shall be
entitled to receive from the insurer any insurance proceeds not in excess of
five hundred thousand dollars ($500,000) as soon as such funds are paid and
shall promptly receive such additional insurance proceeds from the loss payee
upon invoices for repair work in progress, replacement parts which are ordered
or for work completed as provided above in this Section 12(d). Any amount
referred to in this Section 12(d) which is payable to Lessee shall not be paid
to Lessee if at the time of such payment any Default or Event of Default shall
have occurred and be continuing, but shall be held by Lessor as security for the
obligations of Lessee under this Lease or applied as provided in Section 12(e).
(e) Application in Default. Any amount referred to in clause
(ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee
shall not be paid to Lessee, or if it has been previously paid to or retained by
Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter to Lessor, if at the
time of such payment or retention a Default or an Event of Default shall have
occurred and be continuing. In such case, all such amounts shall be paid to and
held by Indenture Trustee so long as the Lien of the Indenture shall not have
been discharged, and thereafter held by Lessor as security for the obligations
of Lessee, or, at the option of Indenture Trustee or Lessor, applied by
Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the
time due hereunder, including, without limitation, by reason of this Lease being
declared or deemed declared in default, as Indenture Trustee or Lessor may
elect. At such time as there shall not be continuing any such Event of Default
or Default, all such amounts at the time held by Indenture Trustee or Lessor in
excess of the amount, if any, which Indenture Trustee or Lessor has elected for
application as provided above, shall be paid to Lessee.
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(f) Certificates. On or before the Delivery Date, and
thereafter on any renewal by the Lessee of the insurance required hereby (but in
no event less than once in every twelve (12) month period), Lessee will furnish
to Lessor and Indenture Trustee a certificate executed and delivered by an
Approved Insurer or the Approved Broker, describing in reasonable detail, and in
accordance with customary practice, insurance carried on the Aircraft and Lessee
shall also furnish an opinion or report by the Approved Insurer or the Approved
Broker certifying that the insurance then maintained on the Aircraft complies
with the terms of this Lease. Lessee will cause the Approved Broker to agree to
advise Lessor, Owner Participant and Indenture Trustee in writing at least
thirty (30) days (seven (7) days or such lesser period of time as is customarily
available at the time in the case of any war risk and allied perils coverage)
prior to the expiration, non-renewal, termination or cancellation for any reason
(including, without limitation, failure to pay premium therefor) or material
modification of any such insurance; provided, however, that if any such notice
period is not reasonably obtainable, such Approved Broker shall provide for as
long a period of prior notice as shall then be reasonably obtainable.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or, if a Permitted Sublease is in
effect, the Permitted Sublessee) may carry primary insurance outside of the
aviation insurance markets in New York, London or Paris if the relevant primary
insurer shall have obtained reinsurance and such reinsurance will (i) be on the
same terms as the original insurance and will include the provisions required by
this Agreement, (ii) provide in case of any bankruptcy, insolvency, liquidation,
dissolution or similar proceedings of or affecting the original insurer that the
reinsurers' liability will be to make such payment as would have fallen due
under the relevant policy of reinsurance if the original insurer had
(immediately before such bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full under the original
insurance policies in respect of which the then relevant policy of reinsurance
has been effected; and (iii) contain a
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"cut-through" clause in the following form (or otherwise, satisfactory to Owner
Participant): "The Reinsurers and the Reinsured hereby mutually agree that in
the event of any claim arising under the reinsurances in respect of a total loss
or other claim where as provided by the Amended and Restated Aircraft Lease
Agreement [GPA 1989 BN-10] dated as of December 19, 1989 as amended and restated
as of November 26, 1996 and made between Wilmington Trust Company, as Owner
Trustee, and America West Airlines, Inc. such claim is to be paid to the person
named as sole loss payee under the primary insurances, the Reinsurers will in
lieu of payment to the original insured, its successors in interest and assigns
pay to the person named as sole loss payee under the primary insurances effected
by the original insured that portion of any loss due for which the Reinsurers
would otherwise be liable to pay the original insurer (subject to proof of
loss), it being understood and agreed that any such payment by the Reinsurers
will (to the extent of such payment) fully discharge and release the Reinsurers
from any and all further liability in connection therewith."
(h) Storage. During any period that the Aircraft is in storage
or otherwise grounded, Lessee may carry or cause to be carried, in lieu of the
insurance required by Sections 12(a) and (b) above, insurance otherwise
conforming with the provisions of said Sections 12(a) and (b) except that the
scope of the risk and the type of insurance, and the amount of the insurance in
the case of the insurance described in Section 12(a) above (but not the amount
of insurance to be carried under Section 12(b) above), shall be the same as from
time to time applicable to similar size passenger aircraft that comprise
Lessee's fleet in similar storage or grounding, and in any event (including,
without limitation, at any time when there shall be in existence a Permitted
Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of Default
has occurred and is continuing, any amount held by Lessor or Indenture Trustee,
as the case may be, until application by Lessor or Indenture Trustee, as the
case may be, pursuant to this Section 12 shall be invested as provided in
Section 21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at its
expense the insurance described in Section 12(a) for three years after the
expiration or termination of
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the Basic Term or Renewal Term, if Lessee has elected to renew the Lease in
accordance with Section 20, covering each Indemnitee as its interest may appear
and specifically insuring the indemnity contained in Section 13 to the extent of
the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of the
insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the extent and subject to the terms and conditions
specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and hold
harmless each Indemnitee on an after-tax basis, as provided in Section 10(e),
within fifteen (15) days after demand from and against any and all claims,
damages (whether direct, indirect, incidental, special or consequential),
losses, charges, fees, liabilities, obligations, demands, suits, judgments,
actions and other legal proceedings (whether civil or criminal), penalties,
fines, other sanctions, and any reasonable costs and expenses, in connection
herewith, including, without limitation, reasonable attorney's fees and expenses
of whatever kind or nature (any and all of which are hereafter referred to as
"Claims") imposed on, or asserted by or against, or suffered or incurred by, any
Indemnitee from (and including) and after the Restatement Date, including,
without limitation, injury, death or property damage of passengers, shippers and
others, environmental control, noise and pollution regulations, which in any way
may result from, pertain to, or arise in any manner out of, or are in any manner
related to (1) the Operative Documents, the Purchase Documents or the Financing
Documents, or any of the transactions contemplated thereby; (2) the Aircraft,
the Airframe, any Engine or any engine used in connection with the Airframe or
any Part thereof, including, but not limited to, (A) the importation,
exportation, condition, manufacture, design, purchase, ownership, registration,
reregistration, deregistration (other than any deregistration caused by the
failure of the registered owner of the Aircraft to be a "citizen of the United
States" as defined under the Federal Aviation Act and the regulations thereunder
or to file the documentation necessary to continue FAA registration of the
Aircraft), delivery, non-delivery, assignment, leasing, subleasing,
sub-subleasing, acceptance, rejection, possession, repossession, return,
financing, Liens (excluding Lessor's Liens, Head Lessor's
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Liens and Lenders' Liens, but including the Lien of the Indenture), use,
performance, modification, maintenance, overhaul, operation, pooling,
interchange, repair, testing, sale, return or other disposition or application
of the Aircraft, the Airframe, any Engine, any engine used in connection with
the Airframe or any Part (including, but not limited to, latent and other
defects whether or not discoverable by Lessee or Lessor, Claims related to any
actual or alleged violation of Law, loss or damage to any property of
passengers, shippers or otherwise or any Claim related to patent, copyright,
trademark or other infringement) either in the air or on the ground, and,
including, without limitation, any interest therein of an Indemnitee or
imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and
Lenders' Liens but including the Lien of the Indenture), or the rentals,
receipts or earnings therefrom (including, without limitation, the Rent and any
other amounts paid or payable with respect thereto); or (B) any defect in the
Aircraft, the Airframe, any Engine, any engine used in connection with the
Airframe or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine
or Part, or otherwise regardless of when such defect shall be discovered,
whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in
the possession of Lessee, and regardless of where such Aircraft, Airframe,
Engine, engine or Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Aircraft, the Airframe, an Engine, any Operative Document,
any Purchase Document or any Financing Document), (ii) the material breach of
any express representation, warranty or covenant made by such Indemnitee herein
or in any other Operative Document, or the Financing Documents (not resulting
from a breach by Lessee of any of its representations, warranties or covenants
in the Operative Documents or in the Financing Documents), (iii) any Taxes,
whether or not Lessee is required to indemnify such Taxes under Section 10
hereof or the Tax Indemnification Agreement
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(it being understood that Section 10 hereof and the Tax Indemnification
Agreement exclusively provide for Lessee's liability with respect to Taxes),
(iv) any Claim which relates solely to events which occurred prior to (but
excluding) the Restatement Date (other than Claims related to the condition,
manufacture or design of the Aircraft) and any Claim concerning payment for or
the ownership of Buyer Furnished Equipment, (v) an underlying act which occurs
after the Aircraft has been returned to Lessor in accordance with the terms
hereof and the Term of this Lease has been terminated or has expired and the
return is not related to an Event of Default, (vi) as to such Indemnitee, an
underlying act which occurs after a disposition or other transfer (voluntary or
involuntary) by such Indemnitee of all or any part of its interest in the
Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents,
the Purchase Documents or the Operative Documents, except as contemplated under
or pursuant to the Operative Documents, the Financing Documents or the Purchase
Documents and except as resulting from the exercise of its remedies during the
period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
and except any Claim which is alleged or does relate to the period prior to such
disposition or (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or are
not required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents (provided, however, in no event
will Lessee be liable for any Claims resulting from, pertaining to or arising
from or related to Lessor's granting or creating a Lessor's Lien or the granting
or creation of a Head Lessor's Lien or an Original Head Lessee's Lien). Upon
full payment of the indemnities herein, Lessee shall be subrogated to all rights
and remedies which such Indemnitee may have against any third party against whom
such Indemnitee has the right to assert a Claim which arises under any action
described in this Section 13 (except Claims under such Indemnitee's own
insurance policies or under the indemnification provisions of any of the
Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way
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connected with injury to or death of personnel of Lessee or loss or damage to
property of Lessee or the loss of use of any property which may result from or
arise in any manner out of or in relation to the importation, exportation,
ownership, purchase, registration, reregistration, deregistration (except as to
Owner Participant or Lessor as and to the extent such Indemnitee is responsible
under the Refunding Agreement for Claims related to such deregistration),
delivery, non-delivery, assignment, leasing, subleasing, manufacture,
acceptance, rejection, possession, return, financing, performance, modification,
maintenance, condition, use, operation, pooling, interchange, repair, testing,
sale, return or other disposition of the Aircraft, the Airframe, any Engine or
any engine used in connection with the Airframe or any Part thereof, either in
the air or on the ground, or which may be caused by any defect in such Aircraft,
Airframe, Engine, engine or Part from the material or any article used therein
or from the design or testing thereof, or use thereof or from any maintenance,
service, repair, overhaul, or testing of such Aircraft, Airframe, Engine, engine
or Part, claims for infringement, loss of or injury to any person, loss of or
damage to any property or environmental damage, regardless of when such defect
may be discovered, whether or not such Aircraft, Airframe, Engine, engine or
Part is at the time in the possession of Lessee, and regardless of the location
of such Aircraft at any such time except to the extent that such Claim results
from (i) the gross negligence or willful misconduct of such Indemnitee (except
any such gross negligence or willful misconduct as may be attributed to an
Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any
Operative Document, any Purchase Document or any Financing Document), (ii) the
material breach of any of its express representations, warranties or covenants
hereunder, under any other Operative Document or Financing Document (not
resulting from a breach by Lessee of any of its representations, warranties or
covenants in the Operative Documents or in the Financing Documents), (iii) any
Taxes, whether or not Lessee is required to indemnify such Taxes under Section
10 hereof or the Tax Indemnification Agreement (it being understood that Section
10 hereof and the Tax Indemnification Agreement exclusively provide for Lessee's
liability with respect to Taxes), (iv) any Claim which relates solely to events
which occurred prior to (but excluding) the Restatement Date (other than Claims
related to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to
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Lessor in accordance with the terms hereof and the Term of this Lease has been
terminated or has expired and the return is not related to an Event of Default,
(vi) as to such Indemnitee, an underlying act which occurs after a disposition
or other transfer (voluntary or involuntary) by such Indemnitee of all or any
part of its interest in the Aircraft, the Airframe, any Engine, or any Part, or
in the Financing Documents, the Purchase Documents or the Operative Documents,
except as contemplated under or pursuant to the Operative Documents, the
Financing Documents or the Purchase Documents and except as resulting from the
exercise of its remedies during the period while an Event of Default has
occurred and is continuing and prior to the time such Indemnitee has received
payment of all amounts owing to it hereunder and except any Claim which is
alleged or does relate to the period prior to such disposition, (vii) the
authorization or giving or withholding of any future amendments, supplements,
waivers or consents with respect to any of the Financing Documents, the Purchase
Documents or the Operative Documents, which amendments, supplements, waivers or
consents were not requested by Lessee or are not required to give effect to the
provisions of the Operative Documents, the Financing Documents or the Purchase
Documents or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien
attributable to such Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense and
with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter
into a settlement or other compromise with respect to any Claim which Lessee or
such Indemnitee is defending hereunder in
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excess of $100,000 without the prior written consent of the other, which consent
shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense thereof
where Lessee has the right to control the defense thereof is materially
prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section .
Nothing in this Section shall be construed as a guaranty by
Lessee of payments due pursuant to any indebtedness incurred with respect to the
purchase of the Aircraft or of the residual value of the Aircraft.
Notwithstanding anything herein or in any other Operative
Document to the contrary, with respect to any Claim for which any Indemnitee is
entitled to indemnification under more than one provision of this Lease or any
other Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue in
full force and effect notwithstanding the expiration or other termination of
this Lease and are expressly made for the benefit of and shall be enforceable by
each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume,
or suffer to exist any Lien on or with respect to the Aircraft, the Airframe,
any Engine or any
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Part thereof, title thereto, or any interest of Lessor therein or in this Lease,
except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture
Trustee and any other Indemnitee as herein provided or provided under the other
Operative Documents or the Financing Documents; (ii) Lessor's Liens, Head
Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or
being diligently contested in good faith by appropriate proceedings in
accordance with Section 10 and so long as adequate reserves are maintained with
respect to such Liens and only so long as neither such proceedings nor such
Liens involve any material danger of the sale, forfeiture or loss of any of the
Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture
Trustee therein or any risk of criminal liability of Lessor or Indenture
Trustee; (iv) inchoate materialmen's, mechanics', workmen's, repairmen's
employees', or other like inchoate Liens arising in the ordinary course of
business for sums not overdue by more than 45 days or being diligently contested
in good faith and only so long as neither such proceedings nor any such Liens
involve any material danger of the sale, forfeiture or loss of any of the
Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture
Trustee therein; (v) the rights of other Persons to the extent expressly
permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out
of any judgment or award against Lessee (or any Permitted Sublessee) unless the
judgment or award shall not, within thirty (30) days after the entry thereof,
have been discharged, vacated, reversed, or execution thereof stayed pending
appeal or shall not have been discharged, vacated or reversed within thirty (30)
days after the expiration of such stay and only so long as such Liens shall not
involve any material danger of the sale, forfeiture or loss of any of the
Aircraft, the Airframe or any Engine, or any interest of Lessor or Indenture
Trustee therein and provided that the execution of such judgment or award or an
attachment relating thereto shall not have occurred within such thirty (30) day
period; and, (vii) any other Lien with respect to which Lessee (or a Permitted
Sublessee) shall have provided a bond adequate in the reasonable opinion of
Indenture Trustee (if the Lien of the Indenture has not been discharged) and
Owner Participant. Lessee shall promptly, at its own expense, take or cause to
be taken such action as may be necessary to duly discharge any Lien (except for
the Liens referred to in clauses (i) through (vii) of this Section 14) directly
or indirectly created, incurred, assumed, or suffered to exist by Lessee if the
same shall arise at any time.
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Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease, the
Indenture, the Trust Agreement, the Lease Supplement, Indenture Supplement and
Trust Supplement, and any other supplement from time to time required by the
terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement,
the Lease Supplement, Indenture Supplement, the Trust Supplement and such other
supplements to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and
expense (except it shall be at Lessor's expense if in connection with a change
in ownership of the Aircraft or any other transfer or assignment by Lessor other
than as contemplated hereunder or under the Financing Documents or in connection
with an Event of Default) and upon request by Lessor, cause any financing
statements and any and all additional instruments and other documents, so far as
permitted by applicable Law, to be kept, filed, and recorded and to be
re-executed, refiled and re-recorded at all times in the appropriate office
pursuant or in relation to any applicable Laws of any Governmental Entity, to
protect and preserve the rights and interests of Lessor or Indenture Trustee
hereunder, under the Indenture and in the Aircraft, and Lessee shall furnish to
Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and
Indenture Trustee, of each such filing or refiling and recordation and
re-recordation.
Without limiting the foregoing, Lessee shall do or cause to be
done, at Lessee's cost and expense (except it shall be at Lessor's expense if in
connection with a change in ownership of the Aircraft or any other transfer or
assignment by Lessor other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), any and all acts and
things within its control which may be required under the terms of the Mortgage
Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease, and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Aircraft, as Lessor may
reasonably request. Lessee shall also do or cause to be done, at its own expense
(except it shall be at Lessor's expense if in connection with a change
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in the ownership of the Aircraft or any other transfer or assignment by Lessor
other than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default), any and all acts and things which may be
required under the terms of any other Law involving any jurisdiction in which
Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft,
which Lessor may reasonably request, to protect and preserve the title of the
Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest
in the Aircraft and under any of the Operative Documents or Financing Documents
within any such jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and
duly execute and deliver to Lessor or Indenture Trustee, as applicable, such
further documents and assurances and take such further actions as Owner
Participant or Indenture Trustee may from time to time reasonably request in
order to more effectively carry out the intent and purpose of this Lease and the
other Operative Documents and the Financing Documents and to protect the rights
and remedies created or intended to be created in favor of Lessor or Indenture
Trustee hereunder and the other Operative Documents and the Financing Documents
including, without limitation, if reasonably requested by Owner Participant or
Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's
expense if in connection with a change in the ownership of the Aircraft or any
other transfer or assignment by Lessor or Indenture Trustee other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default), the execution and delivery of supplements or amendments
hereto in recordable form, subjecting to this Lease, the Indenture and the other
Financing Documents, any replacement Aircraft or Engine and the recording or
filing of counterparts thereof in accordance with the laws of any appropriate
jurisdiction.
Lessee's obligations under this Section 15 are subject to the
reasonable cooperation of the applicable parties.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at its own expense
and risk, shall return the Aircraft to Lessor (or any Person designated by
Lessor) in at least the condition specified in this Section and Exhibit E hereto
at any Lessee system location in the continental United States
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selected by Lessor, as Lessor may elect, or such other location as Lessor and
Lessee may agree, fully equipped with all required Engines, or other engines
owned by Lessee (which shall thereupon become Engines as hereinafter provided)
meeting the conditions specified in this Section and Exhibit E, duly installed
thereon by delivering the same to the Lessor at such location. Lessee shall
comply with Section 11(b) and this Section 16 with respect to any engines
installed on the Aircraft returned to Lessor hereunder and meeting the
conditions described herein which were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion
hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for
the Lien of the Indenture, Head Lessor's Liens, Original Head Lessee's Liens,
Lessor's Liens and Lenders' Liens, (ii) duly certified as an airworthy aircraft
by the FAA under Part 121 of the regulations promulgated under the Federal
Aviation Act and with a current and valid Airworthiness Certificate installed on
the Aircraft, unless such certificate shall have been suspended or revoked as a
result of the suspension or revocation of the registration of the Aircraft under
the Federal Aviation Act due to the ineligibility of the Aircraft to be
registered in the name of Lessor under the Federal Aviation Act (whether by
means of a voting trust agreement or otherwise) in which case the Aircraft shall
nevertheless meet all conditions for such certification and for the issuance of
such certificate; (iii) in full airworthy condition for over water and EROPS
operation according to the FAA standards required to allow the Aircraft to be
operated under, and in full compliance with, such Airworthiness Certificate and
Part 121 of the regulations promulgated under the Federal Aviation Act for such
operation, such compliance to be by means of such mechanical repairs or
modifications or such inspections as may be required thereby, but not by
operational restrictions, by logbook entries or other method of acceptance of
such restrictions; (iv) in full compliance with Lessee's Maintenance Program;
(v) to the extent the owner of the Aircraft is a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act and
reasonably cooperative with Lessee at Lessee's expense with respect to effecting
such registration, duly registered in the name of the Lessor or other then owner
of the Aircraft under the Federal Aviation Act; (vi) in full compliance with the
maintenance and operation provisions of this Lease and all FAA airworthiness
directives, mandatory service bulletins and equivalent requirements which by
their terms require compliance on or
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before the last day of the Term (without regard to any deferral, waiver,
deviation or exemption granted by the FAA specifically to Lessee delaying such
compliance); (vii) in good and airworthy operating condition, and in the same
condition (including, without limitation, in a passenger configuration suitable
for passenger revenue service) as when delivered to Lessee hereunder, ordinary
wear and tear excepted, with no open or outstanding deferred maintenance items,
scheduled or unscheduled, with all systems and components fully serviceable and
operational and with no placards restricting operation or use, and (viii) with
all remaining warranties, indemnities, policies and guarantees referred to in
Section 5(d) made available to Lessor in a manner and by documents in form and
substance reasonably satisfactory to Lessor.
(c) Engines. In the event any engine not owned by
Lessor shall be installed on the Aircraft on any Return Occasion, without
limiting Lessee's obligations under the Tax Indemnification Agreement, such
engine shall be of the same model and equivalent modification status as the
Engines or, at Lessee's option, an IAE engine of an improved model suitable for
installation and use on the Airframe without diminishing the value, remaining
useful life or utility of such Airframe, in each such case having a value,
remaining useful life and utility at least equal to (as determined in accordance
with the Appraisal Procedure), and be in an operating condition as good as the
Engines, assuming the Engines were in the condition and repair as required by
the terms hereof immediately prior to such termination and shall conform to the
return condition requirements set forth in this Section 16 and Exhibit E, and
Lessee, at its own expense and concurrently with such delivery, shall cause such
engine to become an Engine by complying with Section 11(b) hereof. Lessee's
obligation to comply with the terms of this Section 16(c) shall be conditioned
on Lessor's transferring to Lessee all of Lessor's right, title and interest in
and to any Engine not installed on the Aircraft at the Return Occasion "AS IS,
WHERE IS," without any representation, warranty or recourse of any kind
whatsoever, express or implied, except a warranty that such Engine is free and
clear of Lessor's Liens and Head Lessor's Liens.
(d) Records and Documents. Upon the return of the
Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and
inspection, modification, overhaul and other records, related to the Aircraft,
including, without limitation, those required to be maintained with respect
thereto under applicable rules and regulations of the FAA,
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together with a detailed description of the Maintenance Program then applied to
the Aircraft and shall provide Lessor and its designees access to the
Maintenance Program which is sufficient for a Person to maintain the Aircraft
under an FAA approved maintenance program after the Term or to transition
maintenance to another program, including, without limitation, another registry,
or, in the event an Event of Default shall have occurred, to continue to
maintain the Aircraft under the Maintenance Program, in each case as Lessor may
reasonably request, and all documentation with respect to the Aircraft set forth
on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all
records necessary or required by the FAA to certify and place the Aircraft on an
FAA or other country's, as the case may be, approved maintenance program. All of
the foregoing shall, at Lessee's expense, be up-to-date and in the latest
revision status as of the last day of the Term, including, without limitation,
all software and other electronically-held materials which have been supplied
by or on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head
Lessee, which must be updated to the latest revision status as of the last day
of the Term within such software base and all data therein or pertaining thereto
shall be deemed property of Lessor and shall be delivered to Lessor. If hard,
i.e., non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the maintenance records by part numbers and serial
numbers other than the manufacturer's shall be provided with interchange or
cross reference listing necessary to establish complete traceability. All
documentation, flight, and maintenance records as specified by United States
Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation
121.380 which normally accompany the transfer of an aircraft
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which has been operating in regulated commercial air service, shall be delivered
to Lessor with the Aircraft. Any documents or records required to be delivered
hereunder shall be in English.
(e) Condition of Aircraft. Upon any Return Occasion, (i)
Lessee shall return such Aircraft to Lessor in such condition that the Aircraft
shall also comply with each and every condition and requirement set forth
elsewhere in this Lease, including Exhibit E hereto and (ii) shall provide that
each oil tank on the Aircraft shall be full and the fuel tanks shall contain as
much fuel as such tanks contained at the time the Aircraft was accepted by
Lessee.
(f) Final Inspection. Upon any Return Occasion, Lessee shall
make the Aircraft available to Lessor at the location where the "block 'C'
Check" (or equivalent level designated check or checks) required hereunder to be
performed immediately prior to redelivery is to be performed for detailed
inspection of the documents referred to in paragraph (d) above and the Airframe,
Engines and Parts structure and parts, at Lessee's expense (excluding
compensation to representatives of Lessor), in order to verify that the
condition of such Aircraft complies with the requirements set forth above (such
inspection being hereinafter referred to as the "Final Inspection"). The Final
Inspection shall be combined with such "block 'C' Check" (or equivalent level
check or checks) and may include such other items as reasonably requested by
Lessor. Lessee shall give Lessor not less than thirty (30) days prior written
notice of the commencement date of such Final Inspection. The period allowed for
the Final Inspection shall be the same period during which such "block 'C'
Check" is being performed and shall have such duration as to permit the opening
of any areas of the Aircraft which are necessary or advisable to satisfy Lessor
as to compliance with the requirements of this Section 16 and Exhibit E. The
Final Inspection shall commence on the date so noticed which shall be on or
before the expiration of the Term with respect to the Aircraft and shall
continue on consecutive days until all activity required above to be conducted
has been concluded. To the extent that any portion of the Final Inspection
extends beyond the expiration of the Term, unless Lessor has terminated the
Lease pursuant to Section 18(f) hereof, the Term with respect to the Aircraft
undergoing the Final Inspection shall be deemed to have been automatically
extended, and all obligations (including, without limitation, the obligation to
pay Rent hereunder) continued, on a daily basis until the Final Inspection shall
have been
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concluded; provided, however, that Lessee shall not be required to pay Rent with
respect to the Aircraft during the period of extension to the extent that Lessor
is responsible for the delay in completion of the Final Inspection. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee, except that Lessee shall not be liable for any
storage expenses which are incurred after the sixtieth (60th) day after the Term
to the extent that storage continues thereafter due to Lessor's delay in
completion of the Final Inspection.
(g) Aircraft Records and Documents. In order to enable Lessor
to prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f)
above, Lessee agrees to make available to Lessor at a maintenance base of Lessee
with adequate facilities for short-term maintenance, where the Final Inspection
is to occur, not later than ten (10) days prior to the commencement of such
Final Inspection, the Aircraft Records and Documents listed in Exhibit B hereto,
together with such other documentation (including, without limitation, original
airworthiness directive compliance documents and other work documents) regarding
the condition, use, maintenance, or operation as Lessor may reasonably request
or require to substantiate the status of the Aircraft.
(h) Corrections and Subsequent Corrections. To the extent that
the Aircraft or any Engine fails upon a Return Occasion to conform to any
requirement imposed by this Lease Lessor may, at its option, (i) continue the
Lease in effect in the manner provided for in Section 16(f) above with regard to
automatic extension until such time as such Aircraft is brought up to the
condition required by this Section 16, including Exhibit E, or (ii) accept the
return of such Aircraft and thereafter have any such nonconformance corrected,
at such time as Lessor may deem appropriate but not to commence later than
ninety (90) days following the return of such Aircraft, at commercial rates then
charged by the Person selected by Lessor to perform such correction. The Letter
of Credit shall not be released and any costs and expenses (including, materials
and labor) incurred by Lessor for such correction shall be indemnified by Lessee
in favor of Lessor (and prior to the end of the Term, Lessee shall make adequate
provision to Lessor's satisfaction in respect of such indemnity) and shall
become Supplemental Rent payable by Lessee within ten (10) days following the
submission of a written statement by Lessor to Lessee, identifying the items
corrected and setting forth the expense of such correction. Lessee's obligations
to pay
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such Supplemental Rent shall survive the Expiration Date or other termination of
this Lease.
(i) Functional Flight Check. Immediately prior to the
expiration of the Term, Lessor will be permitted to conduct a non-commercial
functional flight check flight of no more than two (2) hours duration in
accordance with the Manufacturer's functional flight check procedures at
Lessee's expense to demonstrate the airworthiness of the Aircraft and proper
functioning of all systems and components. A qualified pilot and up to five (5)
other representatives selected by Lessor may take part in such flight to verify
compliance of the Aircraft with the requirements of this Lease, provided, that
Lessor shall be responsible for the charges of such qualified pilot and
representatives. Lessee may combine the functional flight check provided in this
Section 16(i) with the delivery flight specified in Section 16(a) and such
functional flight check shall include the landing. Any discrepancy or
malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any actions
to correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee shall, at
Lessee's expense, take such action as Lessor may reasonably request to assist
Lessor in obtaining any required documents in relation to the export of the
Aircraft from the United States (including, without limitation, a valid and
subsisting export certificate of airworthiness with respect to the Aircraft and
export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee shall
deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished
without charge by the manufacturer for installation on the Aircraft which have
not been so installed together with appropriate instructions for installation.
In the event such uninstalled kits were purchased or manufactured by Lessee,
then Lessor shall be advised of such kits by Lessee and have a right of first
refusal to purchase such kits at Lessee's cost for a period of ninety (90) days
after return.
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(l) Storage Upon Return. Upon any Return Occasion, Lessee
shall, at Lessor's request and at Lessee's risk and expense, in addition to
other storage referred to above, arrange for the parking, storage and insurance
of the Aircraft for a period not exceeding sixty (60) days at such reasonable
location as Lessor requests where Lessee has or can arrange for storage. Lessee
shall pay or cause to be paid all costs and expenses for such parking, storage
and insurance.
(m) Resale/Release Cooperation. During the last twelve (12)
months of the Term, with reasonable notice and at reasonable times, Lessee will
cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable
respects, with the efforts of Lessor to sell or lease the Aircraft after the end
of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Aircraft and the records
relating thereto to the extent it does not unreasonably interfere with the
operation or maintenance of the Aircraft or the conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic Rent,
Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days
after the date on which such payment is due, or (ii) any other payment of
Supplemental Rent due hereunder within ten Business Days after the date on which
such payment is due and Lessee has received written demand therefor by the party
entitled thereto (provided that any failure of Lessee to pay to Lessor or the
Owner Participant when due any Excepted Payments (as defined in the Indenture)
shall not constitute an Event of Default unless notice is given by the Owner
Participant to Lessee and the Indenture Trustee that such failure shall
constitute an Event of Default); or
(b) Lessee shall fail to obtain and maintain in full force and
effect any insurance required under the provisions of Section 12 hereof or shall
operate the
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Aircraft outside of the scope or in violation of the terms of the insurance or
United States Government indemnity coverage required to be maintained with
respect to such Aircraft; or
(c) Any representation or warranty made by Lessee in the
Operative Documents (other than the Trust Agreement, each Trust Supplement, the
Indenture, each Indenture Supplement, the Equipment Notes, the Intercreditor
Agreement, each Liquidity Facility, the Underwriting Agreement and the Tax
Indemnification Agreement) or in any certificate furnished by Lessee in
connection therewith is incorrect at the time made in any material respect and
such incorrectness shall not have been cured within thirty (30) days after the
receipt by Lessee of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant,
condition, or agreement to be performed or observed by it pursuant to this Lease
or any other Operative Document (other than the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Equipment Notes, the
Intercreditor Agreement, each Liquidity Facility, the Underwriting Agreement,
and the Tax Indemnification Agreement), and such failure shall continue uncured
for thirty (30) days after written notice thereof is given by Lessor or
Indenture Trustee to Lessee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under the first or second
sentence of Section 6(c), or Section 6(d), as such provisions of Section 6
relate to maintenance, service, repair or overhaul, or Section 9, and
notwithstanding the diligence of Lessee in attempting to cure such failure, such
failure is not cured within said thirty (30) day period but is curable with
future due diligence, there shall exist no Event of Default under this Section
17 so long as Lessee is proceeding with due diligence to cure such failure and
such failure is remedied not later than one hundred eighty (180) days after
receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a custodian,
receiver, trustee or liquidator of itself or all or any material part of
Lessee's property or Lessee's consolidated property, or Lessee admits in writing
its inability to, or is unable to, or does not, pay its debts generally as they
come due, or makes a general assignment for the benefit of creditors, or Lessee
files a voluntary petition in bankruptcy or a voluntary petition seeking
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reorganization in a proceeding under any bankruptcy or insolvency Laws (as now
or hereafter in effect), or an answer admitting the material allegations of a
petition filed against Lessee in any such proceeding, or Lessee by voluntary
petition, answer or consent seeks relief under the provisions of any other
bankruptcy, insolvency or other similar Law providing for the reorganization or
winding-up of corporations, or provides for an agreement, composition, extension
or adjustment with its creditors, or any corporate action (including, without
limitation, any board of directors or shareholder action) is taken by Lessee in
furtherance of any of the foregoing, whether or not the same is fully effected
or accomplished; or
(f) An order, judgment or decree is entered by any court
appointing, without the consent of Lessee, a custodian, receiver, trustee or
liquidator of Lessee, or of all or any material part of Lessee's property, or
Lessee's consolidated property, or all or any material part of Lessee's property
or Lessee's consolidated property is sequestered, and any such order, judgment
or decree of appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of sixty (60) days after the date of entry
thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding
under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter
in effect) is filed and is not withdrawn or dismissed within sixty (60) days
thereafter or at any time an order for relief is granted in such proceeding, or
if, under the provisions of any Law providing for reorganization or winding-up
of corporations which may apply to Lessee, any court of competent jurisdiction
assumes jurisdiction over, or custody or control of, Lessee or of all or any
material part of Lessee's property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of sixty (60) days or at any time an order for relief
is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial passenger
Certificated Air Carrier or, except in either case in connection with a labor
dispute, announcement thereof or Lessee's suspension of its business as a
commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
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(i) Lessee's loss or suspension of its United States air
carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act;
or
(j) if the existence, validity, enforceability or priority of
the rights or interests of Lessor under this Lease, or the rights or ownership
of Lessor of the Aircraft under this Lease in respect of the Aircraft or the
rights or interests of Note Holders under the Indenture are challenged by Lessee
or any Person claiming by, through or on behalf of Lessee unless Lessee
demonstrates that such a claim was not rightfully made by, through or on behalf
of Lessee.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor may, at its option,
declare by written notice to Lessee this Lease to be in default, provided,
however, that this Lease shall be deemed to be declared in default automatically
without the necessity of such written declaration upon the occurrence of any
Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof;
and at any time thereafter, so long as any outstanding Event of Default shall
not have been remedied, Lessor may do one or more of the following with respect
to all or any part of the Airframe and any or all of the Engines as Lessor in
its sole discretion shall elect, to the extent permitted by, and subject to
compliance with any mandatory requirements of, applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's expense, immediately return the Aircraft to
Lessor in the manner specified in such notice, in which event such return shall
not be delayed for the purposes of complying with the return conditions
specified in Section 16 and Exhibit E hereof (none of which conditions shall be
deemed to affect Lessor's possession of the Aircraft) or delayed for any other
reason; provided, however, that Lessee shall remain and be liable to Lessor for
amounts provided for herein or other damages resulting from the Aircraft or any
Engine not being in the condition required by Section 16 and Exhibit E.
Notwithstanding the foregoing, at Lessor's option, Lessee shall be required
thereafter to take such actions as would be required by the provisions of this
Lease if such Aircraft were being returned at the end of the Term hereof with
respect to such Aircraft. In addition, Lessor, at its
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option and to the extent permitted by applicable Law, may enter upon the
premises where all or any part of the Aircraft is located to take immediate
possession of and, at Lessor's option, remove the same (and/or any engine which
is not an Engine but which is installed on the Airframe, subject to the rights
of the owner, lessor or secured party thereof) by summary proceedings or
otherwise, all without liability accruing to Lessor for or by reason of such
entry or taking of possession whether for the restoration of damage to property,
or otherwise, caused by such entry or taking, except direct damages to the
extent caused by Lessor's gross negligence or willful misconduct.
(b) Sell or cause to be sold, the Aircraft or any part
thereof, or Lessor's interest therein, at private or public sale, as Lessor in
its sole discretion may determine, or otherwise dispose of, hold, use, operate,
or lease to others, or keep idle the Aircraft, as Lessor in its sole discretion
may determine, all free and clear of any rights of Lessee or any Permitted
Sublessee and except as hereinafter set forth in this Section 18. Lessor may be
the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date specified for payment
in such notice), any unpaid Rent for the Aircraft to and including the
Stipulated Loss Value Date specified in such notice, plus whichever of the
following amounts as Lessor may specify, in its sole and absolute discretion, in
such notice: (i) an amount equal to the excess, if any, of the sum of the
Stipulated Loss Value for the Aircraft computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment
Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due
on such date, over the fair market sale value of the Aircraft as of the date
specified in such notice or (ii) an amount equal to the excess, if any, of the
sum of the Stipulated Loss Value for the Aircraft computed as of the date
specified in such notice plus, if such date is a Basic Rent Payment Date or
Renewal Rent Payment Date, an amount equal to the Basic Rent
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or the Renewal Rent, as the case may be, due on such date, over the fair market
rental value of the Aircraft for the remainder of the Term as of the date
specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above,
shall have sold the Aircraft, or its interest therein, Lessor, in lieu of
exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date immediately prior to the date such sale
occurs), any unpaid Rent for such Aircraft due to and including the date of
sale, plus the amount by which the Stipulated Loss Value of such Aircraft,
computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such
sale (after deducting all costs of such sale).
(e) In the event that Lessor, pursuant to paragraph (b) above,
shall have relet the Aircraft under a long term lease, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to such Aircraft,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
Lessor on such demand, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such
Aircraft due after the time of reletting) any unpaid Rent for such Aircraft due
up to the date of reletting, plus the amount, if any, by which the aggregate
Basic Rent or Renewal Rent, as the case may be, for such Aircraft, which would
otherwise have become due over the Basic Term or Renewal Term, as the case may
be, discounted periodically (equal to installment frequency) to present worth as
of the date of reletting at the rate of 8.50% per annum, exceeds the aggregate
basic rental payments to become due under the reletting from the date of such
reletting to the date upon which the Term for such Aircraft would have expired
but for Lessee's default, discounted periodically (equal to installment
frequency) to present worth as of the date of the reletting at the rate of 8.50%
per annum.
(f) Cancel, rescind and/or terminate this Lease by written
notice to Lessee which cancellation, rescission and/or termination shall be
effective upon dispatch, whereupon Lessee's right to possess and use the
Aircraft shall immediately cease, however, Lessee shall be and remain
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liable for damages and losses suffered by Lessor and all other amounts payable
by Lessee hereunder.
(g) Proceed by appropriate court action or actions, either at
law or in equity, to enforce any other remedy or right Lessor may have
hereunder, under the other Operative Documents, at law or in equity, including,
without limitation, proceed by court order to enforce performance by Lessee of
the applicable covenants of this Lease or to recover damages for the breach
thereof.
In addition to the foregoing, Lessee shall be liable (without
duplication of the remedies above and of Lessee's obligations under Section 10
and Section 13 hereof and subject to the exclusions set forth therein) for any
and all unpaid Rent before, during or after the exercise of any of the above
mentioned remedies (including without limitation interest on unpaid amounts with
respect to all amounts not paid when due, including, without limitation, any
amounts payable pursuant to the foregoing provisions of this Section 18), and,
except as specified above until satisfaction of all of Lessee's obligations to
Lessor hereunder and for all legal fees and other costs and expenses incurred by
any Indemnitee by reason of the occurrence of any Event of Default or the
exercise of an Indemnitee's remedies with respect thereto, including all costs
and expenses incurred in connection with the return of the Aircraft in
accordance with the terms of Section 16 and Exhibit E hereof or in placing the
Aircraft in the condition and with airworthiness certification as required by
such Section and such Exhibit and costs and expenses related to the Lease, the
Refunding Agreement, the Indenture, the Pass-Through Trust Agreements, the
Intercreditor Agreement or each Liquidity Facility. All liquidated damages
payable pursuant to the foregoing shall bear interest, which shall be payable on
the date the payment of such liquidated damages is due at a rate equal to the
Interest Rate from and including the date due to and excluding the date actually
paid.
In effecting any repossession, Lessor, its representatives and
agents, to the extent permitted by applicable Law, (i) shall have the right to
enter upon any premises where it reasonably believes the Aircraft, the Airframe,
an Engine or Part to be located, (ii) shall not be liable, in conversion or
otherwise, for the taking of any personal property of Lessee which is in or
attached to the Aircraft, the Airframe, an Engine or Part which is repossessed,
(iii) shall not be liable or responsible, in
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any manner, for any damage or injury to any of Lessee's property in repossessing
and holding the Aircraft, the Airframe, an Engine or Part, except for direct
damages caused by Lessor's gross negligence or willful misconduct, and (iv)
shall have the right to maintain possession of and dispose of the Aircraft, the
Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's
control.
If requested by Lessor, Lessee shall, at its sole expense,
assemble and make the Aircraft, the Airframe, an Engine or Part available at a
place designated by Lessor in accordance with Section 16 and Exhibit E hereof.
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the
occurrence of an Event of Default, any rights in any warranty (express or
implied), service life policy, infringement indemnity, performance guaranty or
the like heretofore made available to Lessee or otherwise held by Lessee shall
without further act, notice or writing be deemed automatically cancelled and
shall be enforceable solely by and for the benefit of, and assigned to, Lessor.
Lessee shall be liable to Lessor (without duplication) for all expenses,
disbursements, costs and fees incurred in (i) repossessing, storing, preserving,
shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 16 and Exhibit E hereof and
(ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease,
advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part
and selling or releasing the Aircraft, the airframe, an Engine or Part. Lessor
is hereby authorized and instructed, at its option, to make expenditures which
Lessor considers advisable to repair and restore the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 16 and Exhibit E hereof, all
at Lessee's sole expense.
For the purpose of this Section 18, the "fair market rental
value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or
Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or Part
pursuant to this Section , Owner Participant may bid for and purchase such
property and Lessee agrees that the amounts paid therefor shall be used in the
computations contemplated herein and Lessee shall remain liable for any
deficiency.
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No remedy referred to in this Section is intended to be
exclusive, but, to the extent permitted by Law, each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d) or (e) above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Aircraft leased hereunder or otherwise to more effectively carry out
Lessor's rights and remedies and to file said documents for recordation with the
FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
Section 19. Alienation.
(a) Lessor Assignments. In addition, and subject, to the
transactions contemplated by Section 19(b), Lessor shall not assign or transfer
any interest of Lessor in this Lease and/or the Aircraft and/or the proceeds
hereof to any Person except as provided herein, in the Trust Agreement, in the
Indenture and in the Refunding Agreement.
Any such assignment shall be subject to the condition that the
transferee shall agree not to disturb the quiet enjoyment by Lessee of the
Aircraft as and to the extent so agreed by Lessor in Section 21(f).
(b) Security for Obligations. In order to secure the Equipment
Notes, Lessor has created, by the Indenture, a security interest in the Trust
Indenture Estate, including, without limitation, this Lease and all Rent and
other sums payable hereunder, except as provided in the Indenture and subject in
each case to Liens permitted hereunder. The
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Indenture provides, among other things for the assignment by Lessor to Indenture
Trustee of its right, title and interest in, to and under this Lease, to the
extent set forth in the Indenture, for the creation of a first-mortgage lien on
and perfected security interest in all of Lessor's right, title and interest in
and to the Aircraft in favor of Indenture Trustee. Lessee hereby consents to
such assignment and to the creation of such mortgage and security interest and
acknowledges receipt of copies of the Trust Agreement and the Indenture, it
being understood that such consent shall not affect any requirement or the
absence of any requirement for any consent under any other circumstances. Until
the Lien of the Indenture has been discharged, Lessee will furnish to Indenture
Trustee counterparts of all notices and other writings of any kind required to
be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has
been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss
Value and all other amounts payable hereunder (other than Excepted Payments) to
or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and
(b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but
not Owner Participant) herein as and to the extent provided herein or in the
Indenture and any express reference to Indenture Trustee in any Section of this
Lease shall not give rise to any implication that Indenture Trustee may not
exercise the rights of Lessor in any other Section of this Lease as and to the
extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement which
require or permit action by, the payment of monies to, the consent or approval
of, the furnishing of any instrument or information to, or the performance of
any other obligation to, Indenture Trustee, shall not be effective, and the
Sections hereof containing such provisions shall be read as though there were no
such requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received from
Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee under
this Lease by a Permitted Sublessee shall
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constitute payment or performance of such obligation by Lessee.
Section 20. Renewal Option.
Lessee may renew this Lease as provided in the following
clause (i) and subject to the following clause (ii):
(i) Exercise of Renewal Option. Provided that this Lease has
not been previously terminated and that no Default or Event of Default shall
have occurred and be continuing at the time of the giving of irrevocable notice
hereinafter referred to in this clause (i) or at the time of the commencement of
the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal
Term consisting of a period equal to five years. The right to renew this Lease
for such Renewal Term pursuant to this clause (i) shall be exercised upon
irrevocable notice from Lessee received by Lessor of Lessee's election to so
renew this Lease not less than twelve (12) months and not more than twenty-four
(24) months prior to the last day of the Basic Term. The Renewal Rent for the
Renewal Term shall be the "fair market rental value" of the Aircraft for such
Renewal Term (the "renewal fair market rental value") as determined in
accordance with the Appraisal Procedure. For purposes of this paragraph (i), the
Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months
prior to the end of the Basic Term. If Lessee shall fail to exercise its option
to extend the term of this Lease for the Renewal Term in accordance with the
provisions of this paragraph, all of Lessee's rights to extend the Term for such
Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses,
including, without limitation, reasonable legal fees and expenses, incurred by
Lessor, Owner Participant and the Indenture Trustee in connection with the
exercise of such option.
(ii) Provisions Applicable During Renewal Term. All provisions
of this Lease, including, without limitation, as to Rent and Stipulated Loss
Value (which shall be, with appropriate adjustments, an amount equal to the
greater of 120% of the "fair market sales value" of the Aircraft as of the first
day of the Renewal Term as determined pursuant to the Appraisal Procedure or the
amount set forth on Exhibit A as of the end of the Basic Term), shall remain in
effect and be applicable during such Renewal Term, except that Lessee shall pay
to Lessor, semi-annually in advance as Renewal Rent on each Renewal Rent Payment
Date, the amount for such
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Renewal Term as determined in accordance with clause (i) of this Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision
of this Lease 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. To the extent
permitted by Law, Lessee hereby waives any provision of Law which renders any
provision hereof prohibited or unenforceable in any respect. No term or
provision of this Lease may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing expressed to be a supplement or
amendment to, or waiver or termination of this Lease signed by an officer of the
party against which the enforcement of the change, waiver, discharge, or
termination is sought. This Lease shall constitute an agreement of lease, and
nothing herein shall be construed as conveying to Lessee any right, title, or
interest in the Aircraft or any Engine or Part except as a lessee only. Without
limiting the foregoing, the parties hereto agree to treat this Agreement as a
lease for United States federal income tax purposes and Lessee will not file a
tax return which is inconsistent with the foregoing and nothing contained herein
shall be construed as an election by Lessor to treat Lessee as having acquired
the Aircraft for the purpose of the investment credit allowed by Section 38 of
the 1954 Code or any similar or successor statute. The headings in this Lease
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED
IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices required or permitted under the terms
and provisions hereof shall be in writing and shall be sent to Lessor or Lessee
at their respective
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addresses set forth in Exhibit C hereto (or such other addresses as the parties
may designate from time to time in writing). Until such time as the Lien of the
Indenture is discharged, all notices, reports or other documents provided to
Lessor or Lessee shall be provided concurrently to Indenture Trustee at such
address as Indenture Trustee may designate from time to time. All notices
hereunder shall become effective when received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any covenant, agreement, or obligation contained herein, Lessor
shall have the right but not the obligation to make such payment or conform or
comply with such agreement, covenant, or obligation, and the amount of such
payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by or on behalf of Indenture Trustee on
the signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing and this Lease has not
been declared or deemed to be in default, Lessor shall not take or cause to be
taken any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Aircraft
hereunder, and all
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rents, revenues, profits and income therefrom, in accordance with the terms of
this Lease without interference from Lessor or any Person lawfully claiming by
or through it and without interference from any Person making a Claim concerning
payment for or the ownership of Buyer Furnished Equipment with respect to the
Aircraft, provided, that the foregoing shall not be deemed to have modified the
obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain
absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as provided
in the Refunding Agreement, there has been no third party as agent involved in
this Lease and each indemnifies the other from liability for fees, commissions,
or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by Lessor
or Indenture Trustee and are payable to Lessee shall, unless a Default or an
Event of Default shall have occurred and be continuing, be invested as provided
below until paid to Lessee or applied by Lessor or Indenture Trustee to the
extent provided herein. Until paid to Lessee or applied as provided herein or in
the Indenture such monies shall be invested by Lessor or Indenture Trustee from
time to time at the expense of Lessee in Specified Investments, as directed by
Lessee in accordance with the provisions of Section 3.07 of the Indenture if the
Lien of the Indenture shall not have been discharged and thereafter as provided
below. There shall be promptly (but not more frequently than monthly) remitted
to Lessee any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions and other reasonable expenses, if
any, incurred in connection with such investment) unless a Default or an Event
of Default shall have occurred and be continuing. Lessee will promptly pay to
Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture
Trustee harmless from, on demand, the amount of any loss realized as the result
of any such investment (together with any Taxes, fees, commission and other
reasonable expenses, if any, incurred in connection with such investment).
(i) Entire Agreement; Amendment. This Lease (including the
Exhibits hereto), any related letter agreements and the other Operative
Documents, the Financing Documents and the Purchase Documents (including the
Exhibits thereto) and all closing documents delivered in connection with any of
the foregoing embody the entire agreement and understanding among the parties
hereto with respect to the
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subject matter hereof. This Lease may be changed, waived, discharged, amended,
revised or terminated only by an instrument in writing signed by the party
against which enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18, Lessee agrees
within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications thereof, or waivers or consents thereunder, and (iii) any Default
or Event of Default or the enforcement of any of Lessor's rights, remedies or
privileges hereunder or at law or in equity, but not Lessor's legal fees and
expenses in connection with the negotiation and execution of this Lease or the
other Operative Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
and take such other action not inconsistent with this Lease as Lessor reasonably
deems necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor
shall use its best efforts to have the Aircraft registered under the United
States Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process; Waiver of
Forum Non Conveniens; Waiver of Jury Trial. Lessee hereby irrevocably agrees
that any suit, action or proceeding related to this Lease or any of the other
Operative Documents to which it is a party or the subject matter hereof or
thereof or of any of the transactions contemplated hereby and thereby may be
instituted in, and submits for itself and its property to the non-exclusive
jurisdiction of, (i) the courts of the State of New York in New York County and
(ii) the United
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States District Court for the Southern District of New York. Lessee represents
and warrants that it is not currently entitled to, and agrees that to the extent
that Lessee hereinafter may acquire, any immunity (including, without
limitation, sovereign immunity) from jurisdiction of any court or from any legal
process, Lessee hereby, to the extent permitted by Law, waives such immunity,
and agrees not to assert, by way of motion, as a defense, or otherwise, in any
such suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of the above-named courts that it is immune from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that this Lease or any of the other Operative Documents or the
subject matter hereof or thereof or any of the transactions contemplated hereby
and thereby may not be enforced in or by such courts. Lessee hereby generally
consents to service of process by registered mail, return receipt requested,
addressed to it at its address set forth in Exhibit C, or at such other office
of Lessee as from time to time may be designated by Lessee in writing to Lessor
or Lessee, Owner Participant and Indenture Trustee. Lessee hereby agrees that
its submission to jurisdiction and its designation of service of process by mail
set forth above is made for the express benefit of Lessor, Owner Participant,
Indenture Trustee, each Note Holder and their successors and assigns. EACH OF
LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE
RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims,
tort claims, breach of duty claims and other common law and statutory claims.
Lessor and Lessee represent and warrant that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with such legal counsel. THIS WAIVER IS
IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
(n) Limitation on Recourse. The parties hereto agree that all
statements, representations, covenants and
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agreements made by Lessor (when made in its capacity as such and not in its
individual capacity) contained in this Agreement, unless expressly otherwise
stated, are made and intended only for the purpose of binding the Trust Estate
and establishing the existence of rights and remedies that can be exercised and
enforced against the Trust Estate. Therefore, no recourse shall be had with
respect to anything contained in this Agreement (except for any express
provisions that Lessor is responsible for in its individual capacity), against
Lessor in its individual capacity or against any institution or person that
becomes a successor trustee or co-trustee or any officer, director, trustee,
servant or direct or indirect parent or controlling Person or Persons of any of
them; provided that (i) this Section 21(n) shall not be construed to prohibit
any action or proceeding against any party hereto for its own willful misconduct
or grossly negligent conduct for which it would otherwise be liable and (ii)
nothing contained in this Section 21(n) shall be construed to limit the exercise
and enforcement in accordance with the terms of this Agreement or such other
agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 21(n) shall survive the termination of this Agreement
and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the
case of the appointment of any successor Owner Trustee pursuant to the terms of
the Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the necessity of any consent or approval by
Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto
agree that the Original Head Lease as amended and restated by this Second
Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10] (and as otherwise
extended, amended, modified, renewed or supplemented) shall be governed by
Article 2-A of the Uniform Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Lease to be executed by their duly authorized
officers as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By:__________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:___________________________
Title:
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
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Section 1. Definitions........................................... 1
Section 2. Agreement to Lease.................................... 21
Section 3. Delivery and Acceptance; Term; Rental
Period..................................... 21
(a) Time of Delivery...................................... 21
(b) [Intentionally Left Blank.]........................... 21
(c) Acceptance of Aircraft................................ 21
(d) Term of Lease......................................... 22
(e) Rental Period......................................... 22
Section 4. Rent; Minimum Payments................................ 22
(a) Rent.................................................. 22
(b) Minimum Payments...................................... 22
(c) Date, Place and Method of Payment..................... 23
(d) Prohibition Against Setoff, Counterclaim, Etc......... 23
Section 5. Representations, Warranties and
Covenants.................................. 25
(a) Warranties and Disclaimer of Warranties............... 25
(b) Representations and Warranties of Lessor.............. 27
(c) No Amendments to Financing Documents.................. 27
(d) Suppliers' Warranties................................. 27
Section 6. Possession and Use.................................... 28
(a) Possession............................................ 28
(b) Reciprocal Recognition of Rights...................... 34
(c) Lawful Insured Operations............................. 35
(d) Maintenance........................................... 36
(e) Registration and Insignia............................. 37
Section 7. Inspection............................................ 38
Section 8. Additional Covenants of Lessee........................ 39
(a) Financial Information................................. 39
(b) Maintenance of Corporate Existence.................... 41
(c) Maintenance of Status................................. 42
(d) Payment of Taxes...................................... 42
(e) Consolidation, Merger, Etc............................ 42
(f) Information........................................... 43
</TABLE>
i
<PAGE> 115
<TABLE>
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(g) Place of Business..................................... 44
(h) Certain Limitations on Use............................ 44
(i) Section 1110.......................................... 44
(j) Permits and Licenses.................................. 45
(k) Security Opinion; Annual Certificate.................. 45
(l) Letter of Credit ..................................... 46
(m) ERISA................................................. 48
Section 9. Replacement of Parts; Alterations,
Modifications and Additions................ 49
(a) Replacement of Parts.................................. 49
(b) Alterations, Modifications and Additions.............. 50
(c) Pooling............................................... 52
Section 10. General Tax Indemnification........................... 53
(a) Indemnity............................................. 53
(b) Exclusions............................................ 56
(c) Covered Income Tax.................................... 58
(d) Reports and Returns................................... 58
(e) After-Tax Basis....................................... 59
(f) Tax Benefit........................................... 59
(g) Payment............................................... 60
(h) Contest............................................... 60
(i) Refund................................................ 62
(j) Diligence............................................. 62
(k) Affiliated Group...................................... 63
Section 11. Loss, Damage and Requisition.......................... 63
(a) Event of Loss with Respect to the Airframe............ 63
(b) Event of Loss with Respect to an Engine............... 65
(c) Conveyance of Replacement Airframe.................... 67
(d) Application of Proceeds and Payments.................. 69
(e) Requisition for Use by Government with
Respect to the Aircraft............................. 70
(f) Application in Default................................ 71
Section 12. Insurance............................................. 71
(a) Public Liability and Property Damage
Insurance. ......................................... 71
(b) Insurance Against Loss or Damage...................... 73
(c) Application of Insurance Proceeds for
an Event of Loss.................................... 76
(d) Application of Insurance Proceeds for
Other than an Event of Loss......................... 77
(e) Application in Default................................ 77
(f) Certificates.......................................... 78
</TABLE>
ii
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<TABLE>
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(g) Reinsurance........................................... 78
(h) Storage............................................... 79
(i) Amounts Held.......................................... 79
(j) After the Term........................................ 79
(k) Governmental Indemnity................................ 80
Section 13. General Indemnity..................................... 80
Section 14. Liens................................................. 85
Section 15. Protection of Title and Further
Assurances................................. 87
Section 16. Return of Aircraft and Records........................ 88
(a) Return................................................ 88
(b) Status Upon Return.................................... 89
(c) Engines............................................... 90
(d) Records and Documents................................. 90
(e) Condition of Aircraft................................. 92
(f) Final Inspection...................................... 92
(g) Aircraft Records and Documents........................ 93
(h) Corrections and Subsequent Corrections................ 93
(i) Functional Flight Check............................... 94
(j) Export Certificate of Airworthiness................... 94
(k) Service Bulletin and Modification Kits................ 94
(l) Storage Upon Return................................... 95
(m) Resale/Release Cooperation............................ 95
Section 17. Events of Default..................................... 95
Section 18. Remedies.............................................. 98
Section 19. Alienation............................................103
(a) Lessor Assignments....................................103
(b) Security for Obligations..............................103
Section 20. Renewal Option........................................105
Section 21. Miscellaneous.........................................106
(a) Severability, Amendment, and Construction.............106
(b) Governing Law.........................................106
(c) Notices...............................................106
(d) Lessor's Right to Perform for Lessee..................107
(e) Counterparts..........................................107
(f) Quiet Enjoyment.......................................107
(g) Brokers...............................................108
</TABLE>
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<TABLE>
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<S> <C>
(h) Investment of Funds...................................108
(i) Entire Agreement; Amendment...........................108
(j) Expenses..............................................109
(k) Federal Bankruptcy Code...............................109
(l) U.S. Registration Number..............................109
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non Conveniens;
Waiver of Jury Trial................................109
(n) Limitation on Recourse................................110
(o) Successor Trustee.....................................111
(p) Article 2-A of the UCC................................111
</TABLE>
ANNEXES
Annex I - Original Head Lease Description
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Schedule of Domiciles of Permitted Sublessees
Exhibit F-3 - Assignment of Permitted Sublease
iv
<PAGE> 1
EXHIBIT 4.25
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-12] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN
ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, THE
CHASE MANHATTAN BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-12] DATED AS OF NOVEMBER 26, 1996.
AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS AMENDED
AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS
DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART
OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE CHASE MANHATTAN
BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
- -------------------------------------------------------------------------------
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-12]
Dated as of December 19, 1989
Amended and Restated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1989 BN-12] dated
as of December 19, 1989, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 082
U.S. Registration No. N633AW
- -------------------------------------------------------------------------------
<PAGE> 2
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of December 19, 1989
and amended and restated as of November 26, 1996 is entered into between
WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise
expressly provided herein, but solely as Owner Trustee under a Trust Agreement
[GPA 1989 BN-12] dated as of December 19, 1989, as amended, and with its
principal place of business at Rodney Square North, Wilmington, Delaware 19890
(together with its successors and permitted assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors
and permitted assigns, "Lessee").
W I T N E S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease",
"Equipment Notes", "Excepted Payments", "Indenture Supplement", "Note Holder",
"Pass Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee",
"Past Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding
Agreement", "Restatement Date", "Sublease Assignment", "Trust Company" and
"Trust Indenture Estate" shall have the meanings specified in the Indenture; the
terms "Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as defined in the Pass Through Trust Agreement); and the term
<PAGE> 3
"Lease Amendment No. 1" shall have the meaning specified in the Refunding
Agreement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or indirectly, owns or controls, is controlled
by or is under common control with such specified Person. Control will be deemed
to exist based on (i) ownership of 25% or more of the voting securities of a
Person or (ii) the power to direct or elect or cause the direction or election
of the management and policies of a Person whether by contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and
described in Lease Supplement No. 1 (or any airframe from time to time
substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with
the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any
Engine substituted therefor hereunder) with respect to such Airframe, whether or
not any such initial or substituted Engines may from time to time no longer be
installed on the Airframe or may be installed on any other airframe, (ii) Parts
or components thereof, (iii) spare parts or ancillary equipment or devices
furnished therewith under this Lease (including any separate equipment described
on one or more Lease Supplements hereto), (iv) the Aircraft Records and
Documents and all other logs, manuals and records with respect to such Aircraft,
and (v) all substitutions, replacements and renewals of any and all thereof.
"Aircraft Records and Documents" shall mean the items
identified in Exhibit B hereto, all of which shall be maintained in the English
language.
"Airframe" shall mean (a) the Airbus Industrie model A320-231
aircraft (except Engines or engines from time to time installed thereon)
described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder,
and any such model aircraft (except Engines or engines from time to time
installed thereon) which may from time to time be substituted for such aircraft
(except Engines or engines from time to time installed thereon) pursuant to
Section 11(a)(i); and (b) any and all Parts so long as the same shall be
incorporated or installed on or attached to the Airframe, or so long as title
thereto shall remain vested in Lessor in
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<PAGE> 4
accordance with the terms of Section 9 hereof after removal from the Airframe;
provided, however, that at such time as an aircraft (except Engines or engines
from time to time installed thereon) shall be deemed part of the property leased
hereunder in substitution for the Airframe pursuant to the applicable provisions
hereof and the replacement Airframe shall have been subjected to the Lien of the
Indenture (if the Lien of the Indenture has not been discharged), the replaced
Airframe shall cease to be the Airframe hereunder.
"Appraisal Procedure" shall mean the following
procedure for determining the "fair market sales value" or "fair market rental
value" of the Aircraft, Airframe, an Engine or a Part. Except as provided in
Section 18, "fair market sales value" or "fair market rental value" shall mean
the value that would be obtained in an arm's-length transaction between an
informed and willing seller or lessor, as the case may be, and an informed and
willing buyer or lessee, as the case may be, both under no compulsion to sell
and purchase or to lease (and other than a lessee in possession or a used
equipment scrap dealer), as the case may be, as such value is determined by an
appraisal which assumes: (i) that such Aircraft, such Airframe, such Engine or
such Part is unencumbered by this Lease (or any sublease) or any of the other
Operative Documents or any of the Financing Documents and the terms thereof;
(ii) that such Aircraft, Airframe, Engine or Part has been maintained in all
respects in accordance with the terms of this Lease (whether or not in fact in
such condition), (iii) that such Aircraft, Airframe, Engine or Part meets the
return conditions specified in Section 16 and Exhibit E (whether or not in fact
meeting such conditions) and (iv) that Lessee has removed the Removable Parts
entitled to be removed under Section 9(b) (it being agreed that no such removal
is permitted in connection with an appraisal pursuant to Section 18) and
replaced any part which was removed from the Aircraft as a result of such
Removable Part being installed; provided, however, that costs of removal from
the location of current use and costs of sale shall not be a consideration in
determining such value except in connection with any determination of "fair
market sales value" or "fair market rental value" pursuant to Section 18; and
provided, further, that any determination of "fair market sales value" or "fair
market rental value" pursuant to Section 18 shall be on an "as is, where is"
basis in its actual condition and location subject to this Lease and any
sublease and any and all Liens thereon (other than a Lessor's Lien or Lenders'
Lien). Lessor and Lessee shall, except for any appraisal
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<PAGE> 5
pursuant to Section 18 in which case only Lessor shall select such appraiser
(which appraiser does not have to be acceptable to Lessee), select an
independent nationally-recognized aircraft appraiser, mutually acceptable to
each of them, who shall make the determination as to the "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part
for which such appraisal is to be conducted. If Lessor and Lessee fail to agree
upon a mutually acceptable appraiser within ten (10) days, then each of Lessor
and Lessee shall select an appraiser and such determination shall be made by
such appraisers (if either party shall fail to appoint an appraiser within ten
(10) days after notice from the other party of the selection of its appraiser,
then the appraisal made by the other party's appraiser shall be determinative).
If the two appraisers chosen pursuant to the preceding sentence fail to agree
upon a determination of the "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after
their appointment, then such appraisers shall mutually choose a third appraiser
within ten (10) days thereafter, provided that if such appraisers fail to
mutually choose a third appraiser within said 10-day period, such appointment
shall be made by the American Arbitration Association (or any successor) in New
York, New York, and the three appraisers so chosen shall each make such
determination. The appraisal determined by each of the three appraisers chosen
pursuant to the preceding sentence shall be averaged and the appraisal furthest
from the average of the three appraisals shall be disregarded. The appraisal
determined by each of the two remaining appraisers shall be averaged and such
average shall be the appraised "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the
fees and expenses of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Aircraft
pursuant to Section 4(a)(i).
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<PAGE> 6
"Basic Rent Payment Date" shall mean each day
determined in accordance with Exhibit C upon which a payment of Basic Rent
becomes payable. If a Basic Rent Payment Date shall fall on a day which is not a
Business Day, any payment due on such Basic Rent Payment Date shall be made on
the next succeeding Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 3.
"Business Day" shall mean any day other than a
Saturday, Sunday or other day on which banking institutions in New York, New
York or Hartford, Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which
was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation
(except the United States Government) domiciled in the United States of America
and holding a Certificate of Convenience and Necessity issued under Section
41102(a) of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States Government)
domiciled in the United States of America and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is a citizen of the United States
(as defined in Section 40102 of the Federal Aviation Act) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil
Reserve Air Fleet Program administered by the United States Government and
authorized under 10 U.S.C. Section 9511, et seq., as amended, or any
substantially similar or substitute program of the United States Government.
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<PAGE> 7
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as
amended and the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity,
whether or not incorporated, which is under common control with Lessee within
the meaning of Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and
Restated Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as
amended and restated as of December 30, 1988, in the form attached to the
Purchase Agreement.
"Default" shall mean an event or condition which
would constitute an Event of Default with the lapse of time or the giving of
notice or both.
"Delivery Date" shall mean December 28, 1989, being the
date the Aircraft was delivered to and accepted by the Original Head Lessee as
Lessee hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the
United States of America.
"Engine" shall mean (i) each of the two IAE Model V2500
engines listed by manufacturer's serial number in Lease Supplement No. 1 and
initially installed on the Airframe covered by such Lease Supplement, whether
or not from time to time thereafter no longer installed on the Airframe or
installed on any other aircraft or airframe, and (ii) any replacement engine
which may from time to time be substituted, pursuant to Section 6(a), 11(a),
11(b) or 16(c), for any Engine leased hereunder; together in each case with any
and all Parts incorporated or installed in or attached thereto or any and all
Parts removed therefrom so long as title thereto after removal from such Engine
shall remain vested in Lessor in accordance with the terms of Section 9 hereof.
Except as otherwise set forth herein, at such time as a replacement engine shall
be so substituted and leased hereunder and the replacement Engine shall have
been subjected to the Lien of the Indenture (if the Lien of the Indenture has
not been discharged), such replaced Engine shall cease to be an Engine
hereunder. The term "Engines"
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<PAGE> 8
means, as of any date of determination, both Engines then leased hereunder.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one
or more clauses in Section 17.
"Event of Loss" shall mean any of the following events with
respect to the Aircraft, Airframe or either Engine: (a) loss of such property or
the use thereof due to theft or disappearance for a period in excess of sixty
(60) consecutive days, but in no event later than the last day of the Term; (b)
destruction or damage of such property that renders repair uneconomic or such
property permanently unfit for normal use by Lessee (or, if a Permitted Sublease
is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss
or disappearance of or damage to or destruction of such property which results
in an insurance settlement with respect to such property on the basis of an
actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any law, rule, regulation,
order or other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or
Engine in the normal course of Lessee's (or, if a Permitted Sublease is in
effect, the Permitted
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<PAGE> 9
Sublessee's) business of air transportation of passengers shall have been
prohibited for a period of six (6) consecutive months, unless Lessee (or the
Permitted Sublessee), prior to the expiration of such six-month period, shall
have undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit such normal use of such item of equipment by
Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall
have been so prohibited by any such Governmental Entity for a period of twelve
(12) consecutive months or is continuing on the last day of the Term; or (h) as
otherwise provided herein. An Event of Loss with respect to the Aircraft shall
be deemed to have occurred if an Event of Loss occurs with respect to the
Airframe which is a part of such Aircraft. An Event of Loss with respect to an
Engine shall not, absent an Event of Loss with respect to the Airframe, be
deemed an Event of Loss with respect to the Airframe.
"Excluded Property" shall have the meaning set forth in
Section 9(b) hereto.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 2, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administration of the
United States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Bill of
Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from
Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale
for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original
Head Lessee to Lessor.
"Federal Aviation Act" shall mean the sections of Title 49 of
the United States Code relating to aviation, as amended and in effect from time
to time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal year-end
audited consolidated balance sheet and statements of income and cash flow for
the period then ending, copies of which for the fiscal year ending December 31,
1995, have been provided to Lessor prior to the date hereof.
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<PAGE> 10
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement,
the Equipment Notes issued under the Indenture, the Intercreditor Agreement,
each Liquidity Facility, each Pass Through Trust Agreement and each supplement
thereto and any certificate delivered or entered into in accordance with the
foregoing, as amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made mandatory
to the Aircraft by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Aircraft by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its
operations.
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<PAGE> 11
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and
as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the
Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee
(in its individual capacity and as trustee under the Pass Through Trusts), the
Subordination Agent and each Liquidity Provider, and their respective successors
and permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership), and any
combination thereof and their respective officers, directors, agents, servants,
employees, subsidiaries, Affiliates and shareholders.
"Indenture" shall mean the Amended and Restated Trust
Indenture and Security Agreement [GPA 1989 BN-12] dated as of December 19, 1989,
and amended and restated as of November 26, 1996, as the same may be further
amended, supplemented or modified from time to time, between Indenture Trustee
and Lessor. The term "Indenture" shall also include the Indenture Supplements
entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
"Interest Rate" shall mean (i) with respect to the portion of
any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture computed on the basis of a 360-day year and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate from
time to time in effect from the date the amount becomes due to the date it is
paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as
the case may be, and actual number of days elapsed.
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<PAGE> 12
"Law" shall mean and include (i) any statute, rule,
decree, constitution, regulation, order, judgment or other directive of any
Governmental Entity; (ii) any treaty, pact, compact or other agreement to which
any Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease,"
"this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words
shall mean this Lease as originally executed and as amended, supplemented or
otherwise modified from time to time, including, without limitation, by one or
more Lease Supplements, as a whole and not to any particular Section or other
subdivision, and any reference to a "Section " or an "Exhibit" shall refer to a
Section or Exhibit of this Lease, as so amended, supplemented or modified,
unless expressly provided to the contrary.
"Lease Identification" shall have the meaning set forth
in Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1,
Lease Supplement No. 2 and Lease Supplement No. 3 and each
subsequent Lease Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA
1989 BN-12] No. 1 dated the Delivery Date between Lessor and
Original Head Lessee, as Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA
1989 BN-12] No. 2 dated as of December 31, 1991 between Lessor and
Original Head Lessee, as Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA
1989 BN-12] No. 3, substantially in the form of Exhibit D-1 hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Aircraft or the
administration of the Trust Estate or the Trust Indenture Estate pursuant to the
Indenture, whether under Section 9-
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<PAGE> 13
207(2)(e) of the Uniform Commercial Code or otherwise, (ii) acts or omissions of
Indenture Trustee in its individual capacity (and not as Indenture Trustee) not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of Indenture Trustee in its individual capacity (and not as Indenture
Trustee) which are in violation of any of the Operative Documents, or (iii)
Taxes imposed on or Claims against Indenture Trustee in its individual capacity
(and not as Indenture Trustee) which are excluded from indemnification by
Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) arising out of the voluntary or involuntary transfer
by Indenture Trustee in its individual capacity (and not as Indenture Trustee)
of all or any portion of its interest in the Aircraft, the Airframe, any Engine,
the Trust Estate, the Trust Indenture Estate or the Operative Documents (except
a Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
"Lessee" shall have the meaning set forth in the
Recitals hereto.
"Lessor" shall have the meaning set forth in the
Recitals hereto.
"Lessor's Lien" shall mean any Lien or disposition
of title affecting the Aircraft, the Airframe, any Engine or any Part arising as
a result of (i) any claim against Lessor, Owner Participant, Trust Company or
any of their Affiliates not related to the transactions contemplated by this
Lease or the other Operative Documents, the Financing Documents or the Purchase
Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company
or any of their Affiliates not expressly contemplated by this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents or not
permitted without consent (which consent has not been granted) by any party
hereto or thereto or that is in violation of any term of this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents; (iii)
Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner
Participant or any of their Affiliates or the consolidated group of taxpayers of
which any of them is a member which are not to be indemnified against by Lessee
under the Operative Documents, the Purchase Documents or the Financing Documents
or by Original Head Lessee under the Original Head Lease Tax Indemnification
Agreement; (iv) claims against the Trust Estate, Trust Company, Owner
Participant or Lessor or any of
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<PAGE> 14
their Affiliates arising out of the transfer of all or any part of their
respective interest in the Aircraft, the Airframe, either Engine, the Trust
Estate, the Operative Documents or the Financing Documents other than any
transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or 20
(except Liens resulting from a transfer not permitted by such Section ) of this
Lease or pursuant to Section 10 of the Refunding Agreement; provided, however,
that there shall be excluded from this definition and Lessor shall not be
required to remove any Lien which would otherwise constitute a Lessor's Lien, if
it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Aircraft or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge,
lien, charge, encumbrance, lease, exercise of rights, security interest, lease
in the nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft in effect on the date hereof or as modified with the approval of the
FAA without affecting, or any other FAA approved maintenance program which does
not affect, the return condition standards set forth in Section 16 and Exhibit E
or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air
Carrier, any other maintenance program for the Aircraft which is approved by the
aviation authority of the country of registry and complies with the requirements
applicable to maintenance of the Aircraft contained in the definition of Foreign
Air Carrier. The Maintenance Program shall encompass scheduled maintenance,
condition monitored maintenance, and on-condition maintenance of the Airframe,
Engines, and components of the Aircraft, including, but not limited to,
servicing, testing, preventive maintenance, repairs, structural inspections,
structure life improvements, system checks, overhauls, approved modifications,
service bulletins, engineering orders,
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<PAGE> 15
airworthiness directives, and corrosion control inspections and treatments. All
modifications and supplements to the Maintenance Program shall be provided to
Lessor upon its reasonable request and Lessor shall be given reasonable access
to the Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a
French societe a responsabilite limitee, which as of the date hereof is owned by
Airbus Industrie.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, any sublease, the Tax Indemnification Agreement, the Financing
Documents, and any certificate delivered or entered into pursuant to the
foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease Agreement
[GPA 1989 BN-12], with respect to the Aircraft, dated as of December 19, 1989,
between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect immediately prior to the
Restatement Date, as more particularly described in Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall mean
the Head Lease Tax Indemnification
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<PAGE> 16
Agreement [GPA 1989 BN-12], dated as of December 19, 1989, and amended and
restated as of the Restatement Date, between the Original Head Lessee and Owner
Participant, as amended, supplemented or otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc.,
a Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as
defined in the Original Head Lease) as in effect immediately prior to the
Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft
Lease Agreement [GPA 1990 AWA-13] amended and restated as of the Restatement
Date between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA
1990 AWA-14] amended and restated as of the Restatement Date between Wilmington
Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as
Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15]
amended and restated as of the Restatement Date between Wilmington Trust Company
as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended
and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as
of the Restatement Date between Wilmington Trust Company as Owner Trustee,
Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated
Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the
Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and
America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor and America West
Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement
[GPA 1991 AWA-E3] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee, each as amended, supplemented or otherwise modified from time to
time.
"Other Letters of Credit" shall mean any and all letters of
credit pursuant to Section 8(l) of the Other Leases.
"Owner Participant" shall mean ___________________________,
a Delaware corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
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"Owner Trustee" shall mean Wilmington Trust Company, as Owner
Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial Assignment,
Assumption, Release and Amendment Agreement, dated as of December 30, 1988,
among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended,
supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1989 BN-12], dated as of December 19, 1989, among Original Head
Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the
"Lender" named therein, as of July 29, 1993, as the same may be amended,
supplemented or otherwise modified from time to time and as in effect
immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (excluding complete Engines or engines), including Buyer
Furnished Equipment, which may now or from time to time be incorporated or
installed in or attached to or were provided by the Manufacturer with the
Airframe or any Engine or so long as title thereto shall remain vested in Lessor
in accordance with the terms of Section 9 hereof after removal from such
Airframe or Engine. Except as otherwise set forth herein, at such time as a
replacement part shall be substituted for a Part in accordance with Section 9
hereof, the Part so replaced shall cease to be a Part hereunder.
"Payment Location" shall have the meaning set forth in Exhibit
C, as the same may be changed from time to time by Lessor as provided in Section
4(c).
"Permitted Lien" shall mean any Lien referred to in clauses
(i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
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<PAGE> 18
"Permitted Sublessee" shall mean a Certificated Air Carrier
or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United
States Government or an agency or instrumentality thereof which bears the full
faith and credit of the United States of America or (c) any other Person
approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or association of which any of the above is a member or a
participant.
"Purchase Agreement" shall mean the Amended and Restated
Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and
restated as of December 30, 1988 (insofar as the same relates to Model A320
Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the
Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices
thereto, as partially assigned to Parent pursuant to the Partial Assignment, to
which Airbus Industrie, as guarantor, has consented, and as the same may from
time to time be further amended, supplemented or otherwise modified to the
extent permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement, the
Partial Assignment and any other agreement, document or certificate delivered or
entered into pursuant to the foregoing, as amended, supplemented or otherwise
modified.
"Removable Part" shall have the meaning set forth in Section
9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section
20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
If a Renewal Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Renewal Rent Payment Date shall be made on the next
succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20
following the end of the Basic Term if Lessee
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shall have exercised its renewal option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may
be, and Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have the
meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee, any
of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer
or Controller.
"Restricted Use Period" shall have the meaning specified in
Exhibit C.
"Return Occasion" shall mean the event that occurs when
possession of the Aircraft is to be returned from Lessee to Lessor at the end of
the Term of this Lease or upon Lessor taking possession pursuant to Section 18
or for any other reason.
"Specified Investments" shall mean (i) direct obligations of
the United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an entity
referred to in clause (iii) above or another financial institution having a net
worth of at least $750,000,000 and having a rating of "B" or better from
Thompson BankWatch, Inc. is obligated to repurchase any such obligation not
later than ninety (90) days after the purchase of any such obligation; and (v)
money market funds which invest solely in obligations
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<PAGE> 20
described in clause (i); provided that if all of the above investments are
unavailable, the entire amounts to be invested may be used to purchase Federal
funds from an entity described in clause (iii) above; and provided further that
no investment shall be eligible as a "Specified Investment" unless the final
maturity or date of return of such investment is on or before the date which is
ninety (90) days from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the
applicable date during the Basic Term the amount set forth on Exhibit A hereto
and, thereafter, the amount described in Section 20 (it being understood and
agreed that the amounts set forth in Exhibit A take into account fully the
amount and application of each installment of Basic Rent or Renewal Rent on each
Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a
Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional
credit of such Basic Rent or Renewal Rent is to be made in respect thereof
except as expressly provided herein on a Basic Rent Payment Date or a Renewal
Rent Payment Date). In the event that it is necessary to determine a separate
Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value
shall be based on the ratio that the original cost to Lessor of the Airframe or
such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for
the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth, on Exhibit
A hereto.
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any
payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of
an amount equal to average daily Basic Rent or Renewal Rent in connection with
an extension of the Term of this Lease as a result of (a) an incipient Event of
Loss and the operation of Section 11 hereof or (b) the need to correct any
failure of the Aircraft to satisfy the requirements of Section 16 and Exhibit E
hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due
to the Owner Trustee in respect of fees or expenses as provided in Section 21(j)
hereof; (vi) an amount equal to any payment due to the
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Indenture Trustee in respect of fees or expenses as provided in the Indenture
and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any
Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through
Trust Agreement; (viii) the Pro Rata Share of any payment due to the
Subordination Agent in respect of fees, compensation, costs or expenses pursuant
to the Intercreditor Agreement; (ix) an amount equal to the amount specified in
clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to
the extent permitted by applicable Law, interest at the Interest Rate
calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or
average daily Basic Rent referred to in clause (iii) of this definition of
"Supplemental Rent", as the case may be, not paid on the due date thereof for
the period for which the same shall be overdue and (2) on any Supplemental Rent
not paid when due hereunder from and including the due date until the same shall
be paid. As used herein, "Pro Rata Share" means as of any date of determination
a fraction the numerator of which is the aggregate Principal Amount then
outstanding of the Equipment Notes issued under the Indenture and the
denominator of which is the aggregate principal balance then outstanding of all
"equipment notes" issued under the Indentures (as defined in the Intercreditor
Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-12], dated as of
December 19, 1989, and as amended and restated as of November 26, 1996, between
Original Head Lessee and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in
Lease Supplement No. 2 and, if Lessee extends
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<PAGE> 22
the Term in accordance with Section 20, the Renewal Term, in either case as
extended or deemed extended as a result of the occurrence of an event described
in clause (iii) to the definition of "Supplemental Rent" in this Lease, for
which the Aircraft is leased hereunder pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1989
BN-12] dated as of December 19, 1989 as amended by Trust Supplement No. 1 and as
further amended by Trust Supplement No. 2 between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust Agreement"
shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement
[GPA 1989 BN-12] No. 1 dated the Delivery Date between Lessor and Owner
Participant for the purpose of bringing the Aircraft and the Original Head Lease
into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement
[GPA 1989 BN-12] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government
of the United States of America and any board, commission, department, division,
organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees
to furnish the Aircraft or the Airframe and Engine or engines installed thereon
at that time to a third party pursuant to which such Aircraft or the Airframe
and Engine or engines (i) shall be operated solely by regular employees of
Lessee possessing all current certificates and licenses required under the
Federal Aviation Act (it is understood that cabin attendants need not be regular
employees of Lessee) and Lessee otherwise maintains
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<PAGE> 23
operational control and possession thereof, and (ii) shall be maintained by
Lessee in accordance with its normal maintenance practices and this Lease, and
otherwise the insurance required hereunder shall be maintained and the Aircraft
shall be used and operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby
agrees to lease the Aircraft to Lessee, and Lessee hereby agrees to lease the
Aircraft from Lessor, on the terms and subject to the conditions set forth in
this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Aircraft was delivered
to Lessee, and Lessee accepted delivery of the Aircraft, on
December 28, 1989.
(b) [Intentionally Left Blank]
(c) Acceptance of Aircraft. The Aircraft leased
hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND
EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a)
AND (b) HEREOF.
Lessee hereby agrees that it has accepted the
Aircraft for all purposes of this Lease and Lessee's acceptance of the Aircraft
was conclusive evidence that, as between Lessor and Lessee, the Aircraft was in
all respects satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease
shall commence on the Delivery Date and shall continue until the Expiration
Date; provided, however, that the Term of this Lease may be earlier terminated
pursuant to the provisions hereof.
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the
following as Rent hereunder:
(i) Basic Rent. The Basic Rent, as set
forth in Exhibit C throughout the Basic Term hereof, in consecutive
installments, in arrears as set forth on Schedule I attached to Exhibit C, due
and payable on each Basic Rent Payment Date to the Lessor; and
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(ii) Supplemental Rent. Any and all
Supplemental Rent, which shall be due and payable ten (10) Business Days after
demand unless otherwise specifically provided. In the event of any failure on
the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all
rights, powers and remedies provided for herein or by law or equity or otherwise
in the case of nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to
pay Supplemental Rent which is due and owing pursuant to the terms hereof shall
survive the expiration or termination of Lessee's obligation to pay Basic Rent
or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any
provision in this Lease or in any other Operative Document to the contrary,
under all circumstances and in any event, (i) the Stipulated Loss Value,
together with the payment of Supplemental Rent and all other Rent then due
hereunder, as of any time and as of the date of any payment thereof shall (both
before and after giving effect to any reductions therefrom) be in an amount at
least sufficient to pay in full as of such time or date the aggregate unpaid
principal amount of the Equipment Notes then outstanding and all accrued and
unpaid interest (assuming interest has been timely paid) thereon, and (ii) Basic
Rent payable on any Basic Rent Payment Date shall at least equal the aggregate
amount of principal and interest due and payable on the Equipment Notes on such
Basic Rent Payment Date. It is agreed, however, that no installment of Basic
Rent or Stipulated Loss Value shall be increased or adjusted by reason of (A)
any attachment or diversion of Rent on account of any Lessor's Lien or Lenders'
Lien, (B) any modification of the terms of the Equipment Notes or the other
Financing Documents made without the prior written consent of Lessee or (C) the
acceleration of any Equipment Note due to the occurrence of any "Indenture Event
of Default" (as defined in the Indenture) which does not constitute an Event of
Default hereunder. It is further agreed that nothing in this Lease or any other
Operative Document shall be deemed to constitute a guaranty of the value,
utility or useful life of the Aircraft or a guaranty in respect of interest,
principal or any other amounts payable in respect of or under the Equipment
Notes.
(c) Date, Place and Method of Payment. If any
date on which a payment of Rent becomes due and payable is not a Business Day,
the Rent otherwise due on such date shall be due and payable on the next
succeeding Business Day. All Basic Rent, Renewal Rent and Supplemental Rent
payable under this Lease shall be paid by wire transfer in
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<PAGE> 25
immediately available currency of the United States of America, no later than
12:00 p.m. (noon), New York City time, on the date payable hereunder, and, so
long as the Lien of the Indenture shall not have been discharged, to or as
directed by Indenture Trustee in accordance with the payment instructions set
forth in Exhibit C hereto or at such other address in the City of New York or
Hartford, Connecticut as Indenture Trustee may direct by thirty (30) days prior
written notice to Lessee, except for all Excepted Payments. All Excepted
Payments, and, upon discharge of the Lien of the Indenture, all payments of Rent
thereafter made hereunder, shall be paid in such immediately available funds no
later than 12:00 p.m. (noon), New York City time, on the date payable hereunder,
to Lessor or to Owner Participant, as appropriate, in accordance with the
payment instructions set forth in Exhibit C or at such other address as Lessor
may direct by thirty (30) days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim,
Etc. This Lease is a net lease. Lessee's obligations to pay all Rent and to
perform all other obligations hereunder are absolute and unconditional and shall
not be affected or reduced by any circumstances, including, without limitation,
(i) any setoff, counterclaim, recoupment, defense, or other right which Lessee
may have against Lessor, Original Head Lessee, Owner Participant, Indenture
Trustee, any Note Holder, any Manufacturer, any Person providing services with
respect to the Aircraft, or any other Person, for any reason whatsoever (whether
in connection with the transactions contemplated hereby or otherwise),
including, without limitation, any breach by Lessor of its representations,
warranties or covenants contained herein or in the other Operative Documents;
(ii) any defect in the title, airworthiness, eligibility for registration under
the Federal Aviation Act, condition, design, operation, or fitness for use of,
or any damage to or loss or destruction of, the Aircraft (subject to the
provisions of Section 11(a)(ii) hereof), any interruption or cessation in the
use of or possession thereof by or availability to Lessee for any reason
whatsoever, whether arising out of or related to an act or omission of Lessee,
Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Aircraft or any other Person; (iii) any Liens with respect to the Aircraft; (iv)
the invalidity or unenforceability or lack of due authorization or other
infirmity of this Lease or any sublease or any absence of right, power or
authority of Lessor, Original Head Lessee,
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Lessee or Indenture Trustee to enter into this Lease or the Indenture, as the
case may be; (v) any insolvency, bankruptcy, reorganization, or similar
proceedings by or against Lessor, Original Head Lessee, Lessee, any sublessee,
Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any other
circumstance or happening of any nature whatsoever, whether or not similar to
any of the foregoing; it being the expressed intention of Lessor and Lessee that
all Rent payable hereunder shall be payable in all events, unless the obligation
to pay the same shall be terminated pursuant to the express provisions of this
Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Aircraft or any obligation imposed
upon Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law, except as specifically provided herein,
Lessee waives all rights (if any) to any diminution in its Rent obligations
hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as
provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal
Rent, as the case may be, payment and any Supplemental Rent payment at the time
such payments would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part, and so long as
such payments are made and all other terms and conditions hereof are complied
with by Lessee, Lessor and Lessee will deem this Lease to remain in full force
and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor,
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Indenture Trustee or any other Person as shall be liable therefor, on account of
any failure of the Original Head Lessee, Lessor, Indenture Trustee or any other
such Person to perform its express obligations under this Lease and the other
Operative Documents, or to enforce any judgment obtained therefor.
Section 5. Representations, Warranties and
Covenants.
(a) Warranties and Disclaimer of Warranties. THE
AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND
"WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS.
LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED
THE AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR
FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND
LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE
OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR
USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER
CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR
WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY
THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE
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AIRCRAFT OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS
OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS
SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS
OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED
WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that (x)
on the Delivery Date Lessor had, and on the Restatement Date Lessor has, the
right to lease the Aircraft hereunder and (y) on the Delivery Date the Aircraft
was free of Head Lessor's Liens and on the Restatement Date the Aircraft is free
of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall
not create, incur, assume or suffer to exist any Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor.
Lessor hereby represents and warrants, as of the Restatement Date that its
representations and warranties set forth in Section 9(b) of the Refunding
Agreement were true when made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor
covenants and agrees that Lessor will not, without the prior written consent of
Lessee, amend, modify, supplement or waive any provision of any Financing
Document in such a way as to materially increase Lessee's obligations hereunder
or materially reduce Lessee's rights hereunder.
The representations, warranties and covenants of
Lessor under Sections 5(a) and 5(b) and this Section 5(c) shall survive the
execution and delivery of this Lease and the delivery of the Aircraft and the
Restatement Date.
(d) Suppliers' Warranties. So long as a Default
or an Event of Default has not occurred and is continuing and provided that the
Aircraft continues to be maintained, modified and repaired as required
hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees
otherwise to make available to Lessee the right to exercise in Lessee's name
such rights as Lessor may have or may subsequently obtain (but without
representation or warranty
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<PAGE> 29
by or recourse to Lessor) with respect to any product warranty, service life
policy, trademark, patent or copyright infringement indemnity, or airframe or
propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's
Subsidiary, IAE or any subcontractor or vendor with respect thereto under the
Purchase Agreement (except those which were given directly to Parent, the
Original Head Lessee or any of their Affiliates and are not directly related to
the operator's use of the Aircraft), to the extent that the same may be assigned
or otherwise made available to Lessee, and Lessor agrees to exert its reasonable
efforts, at Lessee's expense and upon its request, to enforce such rights as
Lessor may have with respect thereto for the benefit of Lessee; provided,
however, that upon and during the continuance of a Default or an Event of
Default, such assignment or other rights which are otherwise made available to
Lessee shall immediately and automatically without further action be deemed
cancelled and, to the extent of any remaining interest held by Lessee, deemed
reassigned to Lessor and all such rights shall revert to Lessor automatically
including all claims thereunder whether or not perfected and all amounts payable
shall be paid to and held by Lessor. In no event, however, shall Lessee have any
right to amend, supplement or otherwise modify the Purchase Agreement (by change
order or otherwise). In connection with the foregoing, Lessee agrees to be bound
by and comply with all applicable terms, conditions and limitations of the
provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE
WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST
HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR
OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE
AIRCRAFT, AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO
BE INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as
no Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as
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all necessary approvals of the FAA and any other Governmental Entity having
jurisdiction have been obtained, then Lessee, without the prior written consent
of Lessor, may, only to the extent provided below and subject to the limitations
of Sections 6(a)(ii) and 6(a)(iii) below:
(1) subject any Engine to a normal interchange,
maintenance, servicing or pooling agreement or similar arrangement
with a Permitted Sublessee, in each case customary in the airline
industry of which Lessee is a part and entered into in the
ordinary course of its business; provided that no transfer of the
registration of any Engine shall be effected in connection
therewith; and provided, further, that (A) no such agreement or
arrangement contemplates, results in or requires the transfer of
title to any Engine, and (B) if Lessor's title to any Engine shall
be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to
such Engine and not an Event of Default and Lessee shall comply
with Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or
any Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for
testing, service, storage, repair, maintenance, inspection or
overhaul work on such Aircraft, Airframe or Engine or any part
thereof or for alterations or modifications in or additions to
such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the
Airframe to the United States of America or any
instrumentality or agency thereof pursuant to a
sublease;
(4) (i) subject the Airframe to the Civil Reserve Air
Fleet Program and transfer possession of the Airframe or any
Engine to the United States Government pursuant to the Civil
Reserve Air Fleet Program, so long as Lessee shall promptly notify
Lessor upon transferring possession of the Airframe or any Engine
to the United States Government pursuant to the Civil Reserve Air
Fleet Program and provide Lessor with the name and address of the
Contracting Office Representative for the Military Airlift Command
of the
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United States Air Force to whom notices must be given; or
(ii) subject the Airframe to (a) a service contract with
the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term,
or (b) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except (A)
Permitted Liens and Liens which apply only to engines (other than
the Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an
entirety) and (B) the rights of participants under normal
interchange agreements which are customary in the airline industry
and do not contemplate, permit, result in or require the transfer
of title to the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of
all Liens except the rights of the parties to the lease or
conditional sale or other security agreement covering such
airframe and except Liens of the type permitted by clauses (A) and
(B) of Section 6(a)(i)(5) and the Lien of any mortgage which
provides that each Engine leased to Lessee hereby shall not become
subject to the Lien thereof or to any rights of any party
thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of
such Engine on any airframe subject to the Lien of such mortgage,
unless and until Lessee shall become the owner of such Engine and
Lessor shall have no further interest therein, all pursuant to the
express terms of this Lease; and (B) there shall be in effect a
written agreement of the lessor or secured party of such airframe
(which may be contained in the lease or conditional sale or other
security agreement covering such airframe) substantially similar
in effect to the agreement of Lessor in Section 6(b) below whereby
such lessor or secured party effectively and expressly agrees that
neither it nor its successors or assigns
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will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any
time while such Engine is subject to this Lease or is owned by
Lessor, and a copy of such agreement shall be provided to Lessor
upon written request;
(7) install an Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional
sale or other security agreement under circumstances where neither
Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided
that such installation shall be deemed an Event of Loss with
respect to such Engine and Lessee shall comply with Section 11(b)
hereof in respect thereof, Lessor not intending hereby to waive
any right or interest it may have to or in such Engine under
applicable Law until compliance by Lessee with such Section 11(b);
(8) enter into a Wet Lease for the Aircraft or the
Airframe and engines installed thereon in the ordinary course of
Lessee's business for a period not extending beyond the Term;
provided that if Lessee shall enter into any Wet Lease for a
period of more than six months (including renewal options) Lessee
shall provide to Lessor written notice of such Wet Lease (such
notice to be given at least ten (10) Business Days prior to
entering into such Wet Lease); or
(9) sublease the Aircraft or the Airframe to any
Permitted Sublessee on the terms and conditions set
forth in Section 6(a)(iii) below.
(ii) Certain Limitations on Transfers. With
respect to any transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession
by reason of a transfer permitted by Section 6(a) hereof (other
than the transfer of an Engine which is deemed to have been an
Event of Loss) and any Wet Lease shall be expressly subject and
subordinate to all the terms of this Lease and the Lien of the
Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and
Lessee shall remain primarily liable hereunder for the performance
of all of the terms of
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this Lease to the same extent as if such transfer had not occurred
and no provision of this Lease shall be deemed a waiver of the
Lessor's rights hereunder or under the other Operative Documents
nor discharge or diminish any of Lessee's obligations hereunder or
under the other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the
Aircraft, the Airframe or any Engine pursuant to the terms of this
Section 6(a) shall be permitted if such Wet Lease, Permitted
Sublease or other relinquishment of possession would cause the
Aircraft, the Airframe or such Engine to be "tax-exempt use
property" within the meaning of Section 168(h) of the Code or
cease to be "Section 38 property" within the meaning of Section
48(a) of the Code (as determined after the application of Section
47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend
beyond the Basic Term or the Renewal Term (if Lessee shall have
exercised its option to renew this Lease in accordance with the
terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable;
(6) The sublessee under any Permitted Sublease, in its
consent thereto, shall confirm that from and after the occurrence
and continuance of an Event of Default and, unless an Event of
Default specified in Section 17(e), (f) or (g) of this Lease has
occurred and is continuing, this Lease being deemed or declared in
default, Lessor (and, so long as the Lien of the Indenture shall
not have been discharged, Indenture Trustee) shall be entitled to
enforce directly and in its own name all representations,
warranties, indemnities, covenants and agreements under the
applicable Permitted Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I) the
Aircraft or Airframe may not be operated or used other than as
provided in this Lease and shall
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be maintained and operated as required hereunder, (II) Lessor may
avoid or terminate such sublease following an Event of Default
hereunder and (III) to the extent not accomplished by an
assignment of the Permitted Sublease, upon the occurrence of an
Event of Default hereunder, Lessee's rights under such Permitted
Sublease shall automatically be deemed assigned to Lessor; and (B)
be a "net lease" in accordance with industry practice and shall be
comparable to, or more restrictive than, this Lease and under such
Permitted Sublease (except a sublease to the United States
Government or a Foreign Air Carrier after the Restricted Use
Period), Lessee as lessor under such Permitted Sublease, must be
entitled to the same benefits under 11 U.S.C. Section 1110 as
Lessor is entitled hereunder and such Permitted Sublease shall
contain provisions regarding such Section 1110 which are
substantially the same as the related provisions of this Lease. In
addition, from and after the occurrence and continuance of an
Event of Default, all rent and other amounts payable by the
Permitted Sublessee under such Permitted Sublease shall be paid
directly to Indenture Trustee and, upon discharge of the Lien of
the Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any sublease
pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or
Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under
such sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the
date such sublease is entered into, (B) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier
(other than a Foreign Air Carrier principally based in Taiwan),
the United States maintains diplomatic relations with the country
in which such proposed Permitted Sublessee is principally based at
the time such sublease is entered into (or, in the case of a
sublease to a proposed Permitted Sublessee principally based in
Taiwan, maintains diplomatic relations at least as good as those
in effect on the Restatement Date) and (C) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier,
Lessor and the Indenture Trustee shall have received an opinion of
counsel to
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Lessee, in form and substance reasonably satisfactory to Owner
Participant and the Indenture Trustee, to the effect that (I) the
terms of the proposed sublease will be legal, valid, binding and
(subject to customary exceptions in foreign opinions generally)
enforceable against the proposed Permitted Sublessee in the
country in which the Permitted Sublessee is principally based,
(II) there exist no possessory rights in favor of the Permitted
Sublessee under such sublease under the laws of such Permitted
Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee, prevent the return or
repossession of the Aircraft in accordance with the terms of this
Lease, (III) (unless Lessee shall have agreed or is required to
provide insurance covering the risk of requisition of use of the
Aircraft by the government of the country of such Permitted
Sublessee's country of domicile) the laws of such Permitted
Sublessee's country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely
convertible into dollars for the loss of use of the Aircraft in
the event of the requisition by such government of such use, (IV)
the Permitted Sublessee is either not entitled to sovereign
immunity, or has effectively waived such sovereign immunity, with
respect to its rights and obligations under the proposed sublease;
(V) the laws of such Permitted Sublessee's country of domicile
would give recognition to Lessor's title to the Aircraft, to the
registry of the Aircraft in the name of the Lessor (or Lessee, as
"lessee", or the proposed Permitted Sublessee, as "sublessee", as
appropriate) and to the Lien of the Indenture; (VI) it is not
necessary under the laws of such Permitted Sublessee's country of
domicile, solely as a consequence of such subleasing and without
giving effect to any other activity of Owner Participant, Owner
Trustee or Indenture Trustee or any Affiliate thereof, as the case
may be, for the Owner Trustee, the Owner Participant or the
Indenture Trustee to qualify to do business in such jurisdiction
and (VII) if the Owner Participant so requests, (x) under the laws
of such Permitted Sublessee's country of domicile there is no tort
liability of the owner of an aircraft not in possession thereof
(it being agreed that in the event this opinion cannot be given in
a form reasonably satisfactory to Owner Participant, such opinion
shall be waived if insurance reasonably satisfactory to Owner
Participant is provided to cover such risk), and (y) such other
matters as the Owner Participant reasonably
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requests, provided, however, that no sublease shall extend beyond
the expiration of the Basic Term or any Renewal Term then in
effect.
Any Permitted Sublease shall expressly provide that the rights
of any Permitted Sublessee shall be expressly subject and subordinate to all the
terms of this Lease and to the Lien of the Indenture (if it has not been
discharged), including, without limitation, the covenants contained in Sections
6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to
Section 18 hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder or under the other Operative Documents, and such rights shall
continue as if such Permitted Sublease had not occurred. Any Permitted Sublease
shall expressly prohibit any further sub-sublease or assignment or any other
similar transfer of the Aircraft, Airframe or any Engine or rights thereto by
the Permitted Sublessee. Lessee shall provide to the Owner Participant and the
Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such
notice to be given not later than ten Business Days prior to entering into any
Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of
each Permitted Sublease together with an assignment, as security for Lessee's
obligations hereunder, of such Permitted Sublease, and if Lessor or the
Indenture Trustee so requests, a consent thereto from such Permitted Sublessee,
substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days
following the effective date of such Permitted Sublease.
(b) Reciprocal Recognition of Rights. In the
event the lessor or secured party of any airframe leased to Lessee (or a
Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee) is subject to
a conditional sale or other security agreement in accordance with Section
6(a)(i)(6) hereof, and the lease or conditional sale or other security agreement
covering such airframe also covers an engine or engines owned by the lessor
under such lease or subject to a security interest in favor of the secured party
under such conditional sale or other security agreement, Lessor hereby agrees
for the benefit of such lessor or secured party that Lessor will not acquire or
claim, as
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against such lessor or secured party, any right, title or interest in any such
engine as the result of such engine being installed on the Airframe at any time
while such engine is subject to such lease or conditional sale or other security
agreement and owned by such lessor or subject to a security interest in favor of
such secured party. Lessor also hereby agrees for the benefit of the mortgagee
under any mortgage complying with Section 6(a)(i)(6) hereof, relating to
installation of an Engine on an airframe leased to Lessee (or a Permitted
Sublessee), that Lessor will not acquire or claim, as against such mortgagee,
any right, title or interest in any engine subject to the lien of such mortgage
as the result of such engine being installed on the Airframe at any time while
such engine is subject to the lien of such mortgage.
(c) Lawful Insured Operations. Lessee will not
permit the Aircraft, the Airframe or any Engine to be serviced, repaired,
maintained, used or operated in violation of any Law of any Governmental Entity
having jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration issued by any such authority or any manufacturer's
specifications, service bulletins or other requirements, including, without
limitation, any manufacturer's requirements as may be applicable to keep in full
force and effect each material warranty, product or performance guaranty,
service life policy or the like, in each case, to the extent made mandatory for
Part 121 operators similarly situated to Lessee or the Permitted Sublessee if
the Aircraft is registered with the FAA, or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered in accordance with
Section 11 of the Refunding Agreement, unless the validity thereof is being
contested in good faith and by appropriate proceedings, but only so long as such
proceedings do not involve any danger of sale, forfeiture or loss of the
Aircraft or impair the interest of Lessor therein or impair the validity or
priority of the Lien of the Indenture or result in a risk of criminal liability
of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with
any insurance required to be maintained by Lessee hereunder. In the event that
such Law or other requirement requires alteration of the Aircraft during the
Basic Term or the then-current Renewal Term, Lessee shall comply therewith at
its sole expense and shall maintain the same in proper condition for operation
under such Laws and other requirements. Lessee shall not operate in any manner
or locate in any place the Aircraft, or suffer
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or permit the Aircraft to be operated by a Permitted Sublessee or otherwise in
any manner or located by a Permitted Sublessee or otherwise in any place (i)
unless the Aircraft is covered by insurance or United States Government
indemnity as required by the provisions hereof or (ii) contrary to the terms of
such insurance or United States Government indemnity. Lessee also agrees not to
operate or locate the Aircraft or suffer or permit the Aircraft to be operated
or located in any area excluded from coverage by any insurance policy issued
pursuant to the requirements of this Lease or in any war zone unless insured or
indemnified by the United States of America therefor, except in the case of
operation pursuant to a sublease or contract with, or as a result of a
requisition (not constituting an Event of Loss) by, the United States of
America, and then only if Lessee has obtained insurance or an indemnity (in lieu
of such insurance) from the United States of America covering such risks, in the
amounts and otherwise as required by this Lease.
(d) Maintenance. Lessee, at its own cost and
expense, shall: (i) perform or cause to be performed all service, repair,
maintenance, overhaul, inspections, alterations, modifications, and testing (A)
in accordance with good airline industry practice and in such manner to provide
complete data and documentation necessary to substantiate certification, (B) as
may be necessary and required under, and in compliance with, applicable Law,
including, without limitation, FAA rules, regulations and other requirements,
any other applicable rules, regulations and requirements by any other applicable
Governmental Entity, the Maintenance Program, airworthiness directives having a
compliance date during the Term, and the service bulletins and other
requirements of any manufacturer, including, without limitation, such
requirements as may be applicable to keep in full force and effect any and all
material warranties, product and performance guaranties, service life policies,
indemnities or the like, (C) except during any period that a Permitted Sublease
is in effect, in the same manner and with the same care, including regard for
the status and technical condition of the Aircraft, as shall be the case with
respect to similar aircraft and engines owned by Lessee without discrimination
and as if Lessee owned the Aircraft and was going to use the Aircraft in
continued regular customer service after the expiration of the Term, and
consistent with good industry practice, and during any period in which a
Permitted Sublease is in effect, in the same manner and with the same care,
including regard for the status and technical condition of the
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Aircraft, as shall be the case with respect to similar aircraft and engines
owned by such Permitted Sublessee without discrimination and as if the Permitted
Sublessee owned the Aircraft and was going to use the Aircraft in continued
regular customer service after the expiration of the Permitted Sublease, and
consistent with good industry practice, provided, however, that in all
circumstances the Aircraft shall be maintained by Lessee (or any Permitted
Sublessee) in accordance with maintenance standards required by, or
substantially equivalent to those required by the central civil aviation
authority of the country of registry, and, to the extent not inconsistent
therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as
when delivered to Lessee, ordinary wear and tear excepted, and in good operating
condition; (ii) keep the Aircraft or cause the Aircraft to be kept in such
condition as is necessary to enable the airworthiness certification of such
Aircraft to be maintained in good standing at all times under the Federal
Aviation Act and any other applicable law, or the applicable laws of any other
jurisdiction in which the Aircraft may be registered in accordance with Section
11 of the Refunding Agreement (provided that if any grounding is fleetwide in
nature and so long as Lessee or a Permitted Sublessee is contesting in good
faith such grounding, Lessee shall not be deemed in violation of this
maintenance covenant); and (iii) maintain in English all records, logs and other
materials required by, and in a manner acceptable to, the FAA or any other
Governmental Entity having jurisdiction and as provided under the Maintenance
Program and Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall
cause the Aircraft at all times, at its expense, to be duly registered during
the Restricted Use Period and, subject to Section 11 of the Refunding Agreement,
thereafter under the Federal Aviation Act in the name of Lessor or any successor
or assignee, so long as (i) while the Aircraft is registered under the Federal
Aviation Act, each of the Lessor or its successors or assigns is a "citizen of
the United States" as defined in Section 40102(a)(15) of the Federal Aviation
Act and (ii) the applicable parties to the Refunding Agreement cooperate with
Lessee with respect thereto as reasonably requested by Lessee. Lessee shall not
register the Aircraft or permit the Aircraft to be registered under any Laws
other than the Federal Aviation Act at any time except as provided in Section 11
of the Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this Lease
at all times. At any time after the Restricted Use Period,
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Lessor, upon compliance with all of the terms of Section 11 of the Refunding
Agreement, shall, at the request and sole expense of Lessee, cooperate with
Lessee to take all actions reasonably required to change the registration of the
Aircraft to another country.
Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") in the
cockpit of the Aircraft and on each Engine showing title thereto and the Lien of
the Indenture as designated by Lessor and as Lessor may from time to time
reasonably request. Unless otherwise requested, upon delivery of the Aircraft,
Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a
location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and on each Engine (if not prohibited by
applicable Law), a Lease Identification in the form set forth in Exhibit C
hereto or with any other appropriate information in any other form subsequently
designated by Lessor to Lessee. Except as provided herein, Lessee will not allow
the name of any Person to be placed on the Aircraft or either Engine as a
designation that would be reasonably interpreted as a claim of ownership or
Lien; provided, however, that Lessee may cause the Airframe and Engines to have
placed thereon the customary colors and insignia of Lessee or any Permitted
Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor,
Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Aircraft as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause any sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee on reasonable prior notice at reasonable times
to visit, inspect and survey the Aircraft (including, without limitation, a
visual "walk around" inspection which may include going on board the Aircraft,
and inspecting the Aircraft during maintenance checks when panels and bays are
open and subject to view), its condition, use, and operation, and the records
maintained in connection therewith, and to visit and inspect the properties and
to discuss the affairs, finances and accounts of Lessee with the principal
officers of Lessee, provided, that so long as no Default or Event of Default has
occurred hereunder
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inspections shall be endeavored to be performed during regularly scheduled
maintenance checks of the Aircraft. Each such inspection or survey shall be
conducted so as to not unreasonably interfere with the business of Lessee or the
maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or
Indenture Trustee's request, Lessee will notify such Person of the next
scheduled maintenance check for the Airframe or any Engine. Lessor, Owner
Participant and Indenture Trustee shall have no duty to make any such inspection
and shall not incur any liability or obligation by reason of not making any such
inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to
object to any condition or procedure observed or observable in the course of an
inspection hereunder shall not be deemed to waive or modify any of the terms of
this Lease with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to
furnish Lessor, until the expiration or other termination of the Term of this
Lease, the following:
(i) within sixty (60) days following the end
of each quarter of Lessee's fiscal year, except the last such quarter of such
year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report
on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee
no longer files such report, an unaudited consolidated balance sheet of Lessee
and its consolidated subsidiaries prepared by it as of the close of the period
ended, together with the related statements of income and cash flows for such
period, and in each case certified by a Responsible Officer of Lessee as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after
the close of each fiscal year of Lessee, a copy of Lessee's Annual Report on
Form 10-K as filed with the Securities and Exchange Commission or, if Lessee no
longer files such reports, an audited consolidated balance sheet, income
statement, and cash flow statement of Lessee and its
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consolidated subsidiaries, as of the close of such fiscal year, and in each case
as certified by independent public accountants, including their certificate and
accompanying comments, as having been prepared in accordance with GAAP and as
fairly presenting the financial condition and results of operations and changes
in financial position for such period then ended in accordance with such
principles and practices, without qualification as to the scope of the audit or
non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of all
reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934,
as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of insurance
required to be maintained hereunder, a certificate signed by the Approved Broker
of Lessee as to the due compliance with the insurance provisions of Section 12
hereof with respect to the Aircraft, together with certificates of insurance
evidencing such insurance and the opinion provided for in Section 12(f);
(v) together with each set of financial statements referred to
in clauses (i) and (ii), a certificate signed by a Responsible Officer of
Lessee, to the effect that such officer has reviewed the relevant terms of this
Lease and has made, or caused to be made under his or her supervision, a review
of the transactions and condition of Lessee during the accounting period covered
by such financial statements, and that such review has not disclosed the
existence during such accounting period, nor does such officer have any
knowledge of the existence, as at the date of such certificate, of any condition
or event which constitutes a Default or an Event of Default, or, if such
condition or event which constitutes a Default or an Event of Default existed or
exists, specifying the nature and period of existence thereof and what action
Lessee has taken or is taking or proposes to take with respect thereto;
(vi) as soon as practicable after becoming aware thereof,
notice of damage or destruction to the Aircraft, either Engine or any Part with
a repair or replacement cost (including labor charges) in excess of $1,000,000;
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(vii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
(viii) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in
Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so long
as it shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier, including,
without limitation, its status so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all
Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal liability
on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with or merge into or with any other
corporation or other Person, and Lessee shall not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and other assets
(in one or a series of transactions) to any corporation or other Person, unless:
(i) the Person formed by or surviving such consolidation or
merger or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
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(the "Successor Entity"): (A) shall be a corporation organized and existing
under the Laws of the United States of America or any State thereof or the
District of Columbia; (B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded to all or substantially all
of such property and other assets (including, without limitation, all or
substantially all of Lessee's property and other assets) as an entirety and,
unless the Owner Participant otherwise agrees, shall have a Net Worth of not
less than Lessee's Net Worth immediately prior to such transaction; (C) shall be
a "citizen of the United States" of America as defined in Section 40102(a)(15)
of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall
execute and deliver to Lessor and Indenture Trustee such recordations and
filings with any Governmental Entity and such other documents as Lessor
determines shall be reasonably necessary or advisable (including, without
limitation, to preserve and protect the interests of the Lessor and the priority
of the Lien of the Indenture (if it has not been discharged)) to evidence, or in
connection with, such consolidation, merger, sale, lease, transfer or other
disposition and an agreement, in form and substance reasonably satisfactory to
Lessor, which is a legal, valid, binding and enforceable assumption by such
Successor Entity of the due and punctual performance and observance of each
covenant and condition of this Lease and the other Operative Documents to which
Lessee is a party and agreement to be bound thereby, and an officer's
certificate to such effect, and to the effect that the other requirements of
this paragraph have been satisfied, and a legal opinion from counsel to such
effect and otherwise in such form and substance reasonably satisfactory to
Lessor; and
(ii) prior to and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing.
No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of
each calendar year and within 60 days of a request by Lessor or Owner
Participant, or such shorter period as may be set forth in any written request
by the Internal Revenue Service for information or documents, Lessee shall
furnish in writing to Lessor or Owner Participant such information and documents
(or copies thereof) regarding the Aircraft as may be reasonably requested by
Lessor or Owner Participant or
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the Internal Revenue Service in order to permit Lessor to file its Federal and
state income tax returns (or to permit the filing of the Federal and state
income tax returns of any affiliated group of corporations filing a consolidated
return of which Lessor is a member), or to maintain or defend any claims related
thereto and promptly, after reasonable notice, furnish to Lessor or Owner
Participant such information as may be reasonably requested by Lessor or Owner
Participant or the applicable Governmental Entity as may be required to enable
Lessor or Owner Participant to file any reports required to be filed by it with
any Governmental Entity because of its ownership or other interest in the
Aircraft, the Airframe or the Engines.
(g) Place of Business. At all times while this
Lease is in effect, Lessee will not, without thirty (30) days prior written
notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture
shall not have been discharged), change its chief executive office (as such term
is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona)
or location of its books and records, from 4000 East Sky Harbor Boulevard,
Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have
so notified Lessor and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use
the Aircraft, Airframe or Engines only in commercial passenger operations and
related cargo operations. Unless Owner Participant otherwise agrees, during the
Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or
permit the Aircraft, Airframe or Engines to be used either "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code,
or in such manner that the percentage of the income, deduction or credit
attributable to the Aircraft, Airframe or Engines for federal income tax
purposes during any taxable year of the Lessor considered to be from foreign
sources exceeds the Maximum Foreign Use Percentage. Unless the Owner Participant
otherwise agrees, prior to permitting the Aircraft to be operated in any member
state of the European Union or other European country, Lessee shall deliver to
Lessor (i) a representation and warranty to the effect that Lessee (or any
Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or other
relevant air traffic control authority over delinquent charges payable by it and
(ii) a letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol
or other relevant air traffic control authority pursuant to which Lessee (or
such Permitted Sublessee) authorizes the addressee to issue to
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Lessor, upon Lessor's request from time to time, a statement of account of all
sums due by Lessee (or such Permitted Sublessee) to the authority in respect of
all aircraft (including, without limitation,the Aircraft) operated by Lessee (or
such Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that
Lessor would not have entered into this amended and restated Lease unless it had
available to it the benefits of a lessor under Section 1110 of Title 11 of the
United States Code. Lessee covenants and agrees with Lessor that to better
ensure the availability of such benefits, Lessee shall support any motion,
petition or application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the
Aircraft under said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of said Section
1110 to be fulfilled in order to entitle Lessee to continued use and possession
of the Aircraft hereunder. The acknowledgement, covenant and agreement contained
in this Section 8(i) shall continue in full force and effect and survive the
expiration or other termination of this Lease and are expressly made for the
benefit of and shall be enforceable by the Lessor, the Owner Participant and, if
the Lien of the Indenture has not been discharged, the Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or
obtain, and maintain in full force and effect, each and every consent, license,
approval, notice, registration, filing or other action with any Governmental
Entity necessary or advisable in connection with the operation or use of the
Aircraft, the Airframe, any Engine or Part or the execution, delivery or
performance of this Lease or the enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate.
(i) During such times that the Aircraft is registered under the Federal Aviation
Act, Lessee shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period
covered by the opinion of counsel rendered on the
Restatement Date, any opinion of counsel rendered
pursuant to Section 11(C) of the Refunding
Agreement, and any opinion of counsel rendered
pursuant to this Section 8(k)(i) and (Y) upon any
change in Law that would render the opinion of
counsel rendered
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on the Restatement Date or such immediately
preceding opinion of counsel inaccurate, an
opinion of counsel with respect to Lessee and
the FAA reasonably satisfactory to each
addressee of such opinion (which counsel may
be internal legal counsel of Lessee and FAA
counsel) stating, in the opinion of such
counsel, that such action has been taken with
respect to the recording, filing, rerecording and
refiling of (i) the appropriate Operative
Documents and any supplements and amendments
thereto and (ii) such other appropriate
documents, as is necessary to maintain the
perfection of Lessor's title to and/or interest
in and Indenture Trustee's security interest in
the Aircraft and the Operative Documents for such
period of time as reflects the then-current
applicable Law, reciting the details of such
actions; or
(2) at any time that an opinion is not required
pursuant to Section 8(k)(i)(1), annually, a
certificate reasonably satisfactory to each
recipient thereof signed by a Responsible Officer
of Lessee certifying that no such action is
necessary to maintain the perfection of such
title and/or interest and security interest.
(ii) During such times that the Aircraft is
registered under any Laws other than the Federal Aviation Act, Lessee shall
furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior
to the expiration of the time period covered by any opinion of counsel rendered
pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel
rendered pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in
Law that would render such immediately preceding opinion of counsel inaccurate),
an opinion of counsel reasonably satisfactory to each addressee of such opinion
stating, in the opinion of such counsel, that such action has been taken with
respect to the recording, filing, re-recording and refiling of (i) the
appropriate Operative Documents and any supplements and amendments thereto and
(ii) such other appropriate documents, as is necessary to maintain the
perfection of Owner Trustee's title to and/or interest in and Indenture
Trustee's security interest in the Aircraft and the Operative Documents for such
period of time as reflects the
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then-current applicable Law, reciting the details of such actions.
(l) Letter of Credit. As security for the
obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary
thereof, one or more irrevocable standby letters of credit, in form and
substance acceptable to Lessor in its sole and absolute discretion (the "Letter
of Credit"), including, without limitation, as to renewal provisions, with a
face amount available for drawdown at all times equal to the amount set forth on
Exhibit C (the "Face Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof
shall be available for drawdown thereunder and payable in New York, New York, on
demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of
Default has occurred, which amount may be applied, retained or utilized as
provided in the penultimate paragraph of this Section 8(l).
(ii) be maintained in full force and effect
at all times until ninety-one (91) days after the Expiration Date with a
commercial bank acceptable to Lessor, in its sole and absolute discretion,
having a long-term unsecured debt rating of "A" or better by Standard & Poor's
Rating Group (if the issuing bank's credit rating is lower than such rating,
Lessee shall replace such Letter of Credit issuer within five Business Days of
any such reduction in rating with a commercial bank meeting such rating
requirement), provided, that a Letter of Credit set forth in Exhibit D-2 issued
by The Industrial Bank of Japan, Limited, will be acceptable to Lessor for so
long as The Industrial Bank of Japan, Limited maintains a long term unsecured
debt rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferrable
and assignable; and
(iv) permit partial drawings. If the Letter
of Credit is still in effect at the end of the Term or the Lessor is holding
proceeds of the Letter of Credit that were retained and not applied as provided
herein, then Lessor shall return the Letter of Credit to Lessee or terminate it,
and/or return any retained and unapplied proceeds, ninety-one (91) days
following the date of such expiration or other termination of this Lease so long
as no Default or Event of Default has occurred or is continuing hereunder or
under any Other Lease, upon payment in full of all amounts then due and owing to
Owner Trustee and Owner Participant under the Operative Documents.
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If an Event of Default has occurred or is continuing under
this Lease or an Event of Default has occurred or is continuing under any Other
Lease (as therein defined), in addition to any other rights and remedies Lessor
may have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform Commercial
Code as adopted in New York) or equity and upon exercising its rights under the
Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
the payment of Rent, Lessee's right to apply the same to such claim shall be
limited to amounts which would (absent such Event of Default) be distributable
under the Indenture at the time such payment is made to Lessor, Owner
Participant or any of their respective Affiliates (and shall not include any
amounts distributable to Indenture Trustee in its individual capacity or to the
Note Holders); provided further, however, that neither the amount so applied at
any one time nor the aggregate amount so applied at different times shall reduce
the amount of any installment or payment of Rent (whether upon the termination
of the Lease or otherwise) payable by Lessee to an amount insufficient to pay in
full the amounts required to be paid on account of the principal of and any
interest on the Equipment Notes or otherwise owing to a Note Holder. Lessee
shall not be entitled to any refund or credit with respect to any amounts so
applied. Any amount retained shall be considered the property of Lessor and
Lessor may commingle such amount with its general funds and Lessee, further,
hereby absolutely and irrevocably disclaims, to the maximum extent permitted by
applicable Law, any interest therein. Lessee shall not be entitled to any
interest or other earnings on such retained amount and such amount shall not be
refundable.
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On application of all or any portion of the amounts drawn
under the Letter of Credit or any Other Letters of Credit in accordance with
this Section 8(l), or the Other Leases, Lessee shall on demand reinstate the
amount of the Letter of Credit or Other Letters of Credit, as the case may be,
to its or their full Face Amount or provide to Lessor one or more additional
Letters of Credit meeting the requirements of this Section 8(l), so that the
Letter of Credit and each of the Other Letters of Credit at all times equals the
original Face Amount provided for herein. During such times as Lessor shall
elect to hold all or part of the proceeds of the Letter of Credit or Other
Letters of Credit as security for Lessee's obligations to Lessor under the Lease
and the Other Leases, Lessee shall not be obligated to reinstate the amount of
the Letter of Credit or Letters of Credit, as the case may be, in respect of the
proceeds so held.
Section 9. Replacement of Parts; Alterations, Modifications
and Additions.
(a) Replacement of Parts. Lessee, at its own
cost and expense, will promptly replace, or cause to be replaced, all Parts
which may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for any
reason whatsoever. In addition, in the ordinary course of maintenance, service,
repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) may at its own cost and expense remove any Parts, whether
or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use, provided that Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own
cost and expense such Parts as promptly as possible. All replacement Parts shall
be free and clear of all Liens (except for pooling arrangements to the extent
permitted by paragraph (c) of this Section and Permitted Liens), be in at least
the equivalent or better modification status and service bulletin accomplishment
status, be fully interchangeable as to form, fit and function and shall be in as
good operating condition as, and have a value, remaining useful life and utility
at least equal to, the Parts replaced (assuming such replaced parts were in the
condition and repair in which they were required to be maintained by the terms
hereof).
All Parts which are at any time removed from the Aircraft
shall remain the property of Lessor, subject to the
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Lien of the Indenture if it has not been discharged, and subject to this Lease
no matter where located until such time as such Parts shall be replaced by parts
which have been incorporated or installed in or attached to the Aircraft and
which meet the requirements for replacement Parts specified above. Immediately
upon any replacement Part becoming incorporated or installed in or attached to
the Aircraft as above provided, or as provided in Section 9(c), without further
act, (i) title to the removed Part shall thereupon vest in Lessee free and clear
of all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders
and shall no longer be deemed a Part hereunder, (ii) title to such replacement
Part shall thereupon vest in Lessor and become subject to the Lien of the
Indenture if it has not been discharged, and (iii) such replacement Part shall
become subject to the Lien of the Indenture (if it has not been discharged) and
this Lease and be deemed a Part for all purposes hereof to the same extent as
the Part which it has replaced.
(b) Alterations, Modifications and Additions.
Lessee, at its own cost and expense, shall make or cause to be made such
alterations and modifications in and additions to the Airframe and each Engine
to the extent made mandatory for Lessee (or a sublessee) in respect of the
Aircraft, Engines or Parts from time to time to meet the applicable standards of
the FAA or under any Law of any Governmental Entity having jurisdiction or
issued by the manufacturer of the Airframe, Engines or Parts. In addition, so
long as no Default or Event of Default has occurred and is continuing, Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own
expense, may from time to time make such alterations and modifications in and
additions to the Airframe and either Engine as Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper
conduct of its business, provided, no such alteration, modification or addition
diminishes the value, remaining useful life or utility, or impairs the condition
or airworthiness, of the Airframe, either Engine or any Part below that
immediately prior to such alteration, modification or addition assuming that the
Airframe, Engines and Parts were then of the value, utility and remaining useful
life and in the condition and airworthiness required by the terms of this Lease.
Except as otherwise provided herein, title to all Parts incorporated or
installed in or attached or added to the Aircraft as the result of such
alteration, modification or addition, shall immediately vest in Lessor and
become subject to the Lien of the Indenture (if it has not been
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discharged) and this Lease, without the necessity for any further act of
transfer, document or notice. Notwithstanding the foregoing sentence of this
Section 9(b), Lessor agrees that so long as no Default or Event of Default shall
have occurred and be continuing Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may, at such time during the Term for the
Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in
addition to, and not in replacement or substitution for, any Part originally
incorporated or installed in or attached to, or delivered with, the Aircraft on
the Delivery Date or any Part in replacement of, or substitution for, any such
originally incorporated, installed, attached or delivered Part, (ii) such Part
is not required to be incorporated or installed in or attached or added to the
Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the
insurance required by Section 12 and (iii) such Part can be removed from the
Aircraft without causing any material damage thereto and without diminishing or
impairing the value, utility, remaining useful life, condition or airworthiness
which the Aircraft would have had at such time had such alteration, modification
or addition not occurred. Upon the removal by Lessee of any such Part as
provided in the preceding sentence, title thereto shall, without further act,
vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
and such Part shall no longer be deemed part of the Aircraft (such a part is
herein called a "Removable Part"). Any Part not removed by Lessee as above
provided prior to the return of the Aircraft to Lessor hereunder, whether
pursuant to Section 16, Section 18 or otherwise, shall remain the property of
Lessor.
If any Removable Part is (i) owned by any third party and
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) subject to a conditional sale contract or other security
interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) pursuant to a lease which is subject to a security interest
in favor of any third party, then Lessor will not acquire or claim, as against
such lessor, conditional vendor or secured party, any right, title or interest
in any such Removable Part as the result of such Removable Part being installed
on the Aircraft; provided, however, that (A) Lessor's inability to so acquire or
claim is subject to the express condition that such lessor, conditional vendor,
or secured party shall have agreed in writing (which agreement may be contained
in the lease, conditional sale agreement or security agreement) not
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to acquire or claim, as against Lessor, any right, title or interest in the
Aircraft, or any Part other than its interest in such Removable Part by reason
of such Removable Part being installed thereon, and (B) any Removable Part not
removed by Lessee upon the termination or expiration of this Lease, at such
time, shall become the property of Lessor and be subject to this Lease, and
provided, further, that (1) if removal of any such Part shall affect the
operation of the Aircraft in any way whatsoever, Lessee shall replace such Part
with an owned Part of the same value, utility and remaining useful life and (2)
Lessee shall repair any unsightly area of the Aircraft as a result of such
removal and make all other repairs which are advisable and result from such
removal.
In the event Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) replaces a Part which is not required to be replaced
under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may remove the replacement Part so long as it
reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to form,
fit and function, has been overhauled, repaired and inspected by an agency
acceptable to the FAA or other Governmental Entity having jurisdiction, and is
in as good operating condition as, and has a utility, remaining useful life and
a value at least equal to that of such Part when it was removed from the
Aircraft.
Notwithstanding any other provision hereof, and without
limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect,
Permitted Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic equipment (including seats with such equipment installed therein)
(any or all of which are hereafter referred to as "Excluded Property") in the
ordinary course of business, and Lessor shall not claim or acquire title thereto
and the rights of the owners thereof therein shall not constitute a default
hereunder; provided that (i) any such Excluded Property shall be removed prior
to the date of a Return Occasion without causing any damage to the Aircraft and
without diminishing or impairing the value, utility, remaining useful life or
condition which the Aircraft would have had at such time had such Excluded
Property not been installed, (ii) any equipment or seats which such Excluded
Property replaces shall be properly stored with the interests of Lessor and, if
the Lien of the Indenture is in
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effect, the Indenture Trustee, duly noted thereon and acknowledged by any
applicable bailee or warehouse, and properly reinstalled on the Aircraft prior
to the date of a Return Occasion, and (iii) Lessee (or such Permitted Sublessee)
shall make all repairs which are required as a result of such removal and/or
reinstallation.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Airframe
or either Engine as provided in Section 9(a) may so long as no Default or Event
of Default shall have occurred and be continuing or would result therefrom be
subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) to a normal pooling arrangement customary in the airline industry of
which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
is a part entered into in the ordinary course of Lessee's or such Permitted
Sublessee's business, provided the Part replacing such removed Part shall be
incorporated or installed in or attached to the Aircraft in accordance with
Section 9(a) as promptly as possible, and in any event within sixty (60) days,
after the removal of such removed Part. In addition, any Replacement Part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 9(a) may be owned by another Person subject to such a
normal pooling agreement; provided, however, that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly
thereafter as possible, and in any event within sixty (60) days, either (i)
causes title to such replacement Part to vest with Lessor in accordance with
Section 9(a) (and to be subjected to the Lien of the Indenture if it has not
been discharged) by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) acquiring title thereto for the benefit of and transferring
title to Lessor free and clear of all Liens except Permitted Liens, whereupon
such replacement Part shall become subject to this Lease and the Lien of the
Indenture (if in effect) without the necessity for any further act, document or
notice, or (ii) replaces such replacement Part by incorporating or installing in
or attaching to the Aircraft a further replacement Part owned by Lessee (or, if
a Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all
Liens other than Permitted Liens and by causing title to such further
replacement Part to vest in Lessor as above provided and to
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be subjected to the Lien of the Indenture if it has not been discharged,
whereupon such replacement Part shall become subject to this Lease and the Lien
of the Indenture (if in effect) without the necessity for any further act,
document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment
of Basic Rent hereunder shall be free and clear of, and without deduction for,
any and all withholdings on account of Taxes of any nature whatsoever, whether
or not an exclusion pursuant to Section 10(b) applies, except as required by
law. If any such deduction or withholding of Taxes is required with respect to
such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent
such that the net amount actually received by Lessor, after such deduction or
withholding, will be equal to all such amounts that would be received by Lessor
if no such deduction or withholding had been required, but only to the extent
necessary to ensure that the holders of the outstanding Equipment Notes receive
such amount as may be required by the Indenture. If Lessee pays any amount to
Lessor (or to any taxing authority for the account of Lessor) as a result of the
application of the preceding sentence with respect to any withholding Tax which
is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor
(or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to
the extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant would be liable) shall reimburse Lessee for such withholding Tax
within 30 days of written notice accompanied by evidence of payment for such
withholding Taxes (exclusive of interest, penalties and additions to Tax) paid
by Lessee provided that in any circumstance in which the Lessor is required to
reimburse the Lessee for any such withholding Taxes and the Lessee has not
received such reimbursement from Lessor or the Owner Participant, then to the
extent of such shortfall and so long as no Lease Event of Default has occurred
and is continuing, Lessee shall be entitled to obtain reimbursement from Lessor
by reducing the succeeding payments of Rent payable to Lessor (other than any
portion of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder) until the aggregate amount
of reduction is equal to the sum of the amount of such shortfall and interest on
that amount at the Interest Rate from the date reimbursement is required to be
made until the date of such reduction in Rent. Except as provided in Section
10(b), and taking into
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account any payments received by Lessor pursuant to the second sentence of this
Section 10(a), Lessee agrees to pay, and to indemnify and hold each Indemnitee
harmless from, any and all Taxes, howsoever levied or imposed, whether levied or
imposed upon or with respect to or asserted against any Indemnitee, Lessee, the
Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or
otherwise, with respect to any period beginning, or events or circumstances
occurring, on or after the Restatement Date, by any federal, state or local
government or taxing authority in the United States of America or by any foreign
government or any taxing authority or governmental subdivision of a foreign
country or of a territory or possession of the United States (each such
governmental subdivision or taxing authority referred to as a Taxing
Authority"):
(i) upon or with respect to, based upon or
measured by (A) the Aircraft, the Airframe, any Engine or any Part
thereof, or interest therein, (B) the manufacture, purchase,
ownership, delivery, leasing, acceptance, rejection, assigning,
possession, use, operation, location, settlement of any insurance
claim, sale, mortgaging, pledging, financing, subleasing, rental,
retirement, abandonment, registration, reregistration,
deregistration, preparation, installation, modification, repair,
maintenance, replacement, transportation, storage, transfer of
title, return or other disposition of the Aircraft, the Airframe,
any Engine or any Part thereof or interest therein; or (C) the
rentals, receipts, income or earnings arising therefrom (including
without limitation the Rent), or
(ii) upon or with respect to the Operative
Documents (including the Equipment Notes), any interest in any
thereof, or any future amendment, supplement, waiver or consent
thereto requested by Lessee with respect to any thereof, or the
execution, delivery, or performance of any thereof, or the
acquisition or subsequent transfer thereof or the issuance of the
Equipment Notes or any other document executed and delivered in
connection with the consummation or confirmation of the
transactions contemplated by the Operative Documents or any
Indemnitee's interest in any of the foregoing, or the execution,
amendment, supplement, issuance, reissuance, refinancing or
delivery of any of the foregoing, or
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(iii) the Trust Indenture Estate or the property,
or the income or other proceeds received with respect to the
property, held by the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest
or premium on, or other amounts payable with respect to the
Equipment Notes, whether as originally issued or pursuant to any
modification or reissuance, or
(v) otherwise with respect to or in
connection with the transactions contemplated by the
Operative Documents.
(b) Exclusions. The following Taxes shall not be
subject to indemnification under subsection (a) of this
Section 10:
(i) In the case of any Indemnitee, Taxes imposed
on, based on, or measured by, the gross or net income of such
Indemnitee or Taxes in lieu thereof (including minimum taxes,
withholding taxes and taxes on or measured by any item of tax
preference) imposed by the federal government of the United States
of America (other than taxes in the nature of sales or use taxes,
license taxes, or property taxes),
(ii) In the case of any Indemnitee, Taxes imposed
on, based on, or measured by the gross or net income, receipts,
capital, or net worth, franchises, excess profits or conduct of
business of such Indemnitee (including minimum taxes, withholding
taxes and taxes on or measured by any items of tax preference),
imposed by any state, local or foreign government or taxing
authority (other than Taxes in the nature of sales Taxes, use
Taxes, license Taxes or property Taxes, and Covered Income Taxes
described in subsection (c) of this Section 10),
(iii) In the case of any Indemnitee, Taxes which
arise out of or are caused by any gross negligence or willful
misconduct of such Indemnitee,
(iv) In the case of any Indemnitee, any Taxes
imposed as a result of a voluntary or involuntary bankruptcy of
such Indemnitee or any sale, transfer of title, transfer or other
disposition by such Indemnitee or a related Indemnitee (for such
purpose, Owner
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Trustee and Owner Participant are related Indemnitees with respect
to each other) of the Aircraft, the Airframe, any Engine or any
Part thereof or interest therein, or any interest in the Rent or
part thereof or any interest in the Operative Documents or part
thereof, unless such sale, transfer or disposition occurs in
connection with (A) an Event of Default and the exercise by any
Indemnitee of its remedies under this Lease or the Indenture, as
the case may be or (B) the substitution, pooling or interchange of
the Aircraft, the Airframe, any Engine or any Part pursuant to the
terms hereof; provided, however, that in all cases Owner
Participant and Owner Trustee shall consider in good faith such
request as Lessee shall make concerning the appropriate
jurisdiction in which such sale, transfer or disposition shall be
made,
(v) In the case of any Indemnitee, Taxes imposed
on a transferee of such Indemnitee of any interest in the
Aircraft, the Airframe, any Engine or any Part or any interest in
the Operative Documents to the extent the amount of any such Taxes
exceeds the amount of such Taxes that would have been imposed had
there not been any such transfer, unless such transfer results
from action by or on behalf of such Indemnitee taken in connection
with any Event of Default that has occurred and is continuing or
upon the request of the Lessee,
(vi) Any interest, penalties, fines and additions
to tax imposed on an Indemnitee (other than Taxes that are due and
payable with a return when properly filed) resulting from such
Indemnitee's failure to file returns that are timely and proper,
provided such failure was not attributable to such Indemnitee
contesting any claim in accordance with this Section 10(b) or to a
failure by Lessee to satisfy its obligations related to such
return,
(vii) With respect to an Indemnitee other than
the Indenture Trustee or the Trust Indenture Estate, Taxes which
arise out of or are caused by (i) any act or omission or material
misrepresentation of any Indemnitee where such act or omission is
not permitted by the Financing Documents or the Operative
Documents, or (ii) a failure by an Indemnitee to fulfill its
contest obligations, and, in the case of the Indenture Trustee and
the Trust Indenture Estate, Taxes imposed as a result of a breach
of such
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Indemnitee's representations, warranties, or covenants contained
in Sections 9(a), 12 or 16 of the Refunding Agreement in any
material respect, or from a failure by such Indemnitee to fulfill
its contest obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft
related to acts or events occurring after the later of the
termination of the Lease and the redelivery of the Aircraft,
(ix) In the case of each Pass-Through Trust, each
Pass-Through Trustee (in its individual capacity and as trustee
under the Pass-Through Trusts), the Subordination Agent and each
Liquidity Provider, United States withholding taxes imposed as a
result of the place of organization or other status of a holder of
an interest in a Pass-Through Trust, or
(x) In the case of the Indenture Trustee, each
Pass-Through Trust, each Pass-Through Trustee (in its individual
capacity), the Subordination Agent and each Liquidity Provider,
Taxes imposed with respect to the Equipment Notes as a result of
activities of such Indemnitee unrelated to the transactions
contemplated by the Operative Documents.
(c) Covered Income Tax. For purposes of clause
(ii) of subsection (b) of this Section 10, a Covered Income
Tax includes:
(i) in the case of an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, any Tax imposed
on, based on or measured by gross or net income, receipts, capital
or net worth, franchises, excess profits or conduct of business
(other than taxes which are in the nature of sales or use taxes,
license taxes or property taxes) imposed on an Indemnitee (A) by
any state or local Taxing Authority other than Taxes imposed by
any such state or local jurisdiction in which the Indemnitee has
its principal place of business or is subject to such Tax as a
result of business transactions or other presence unrelated to the
transactions contemplated by the Financing Documents or the
Operative Documents, unless such Taxes are imposed by such
jurisdiction solely as a result of (x) the operation of the
Aircraft in such jurisdiction or (y) the transactions contemplated
by the Operative Documents, to the extent such taxes are directly
attributable to such operation of the Aircraft or to such
transactions, and (B) by any foreign jurisdiction which are
imposed as a result of Lessee's or
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sublessee's activities in such foreign jurisdiction in connection
with the transactions contemplated by the Financing Documents or
the Operative Documents, provided, however, a Covered Income Tax
also includes the incremental amount of franchise taxes, taxes on
doing business, capital stock taxes or taxes on, based on or
measured by gross or net income of the original Owner Participant
attributable to the Lease (excluding, however, any taxes that
would be excluded under any provision other than clauses (i) and
(ii) of subsection (b) of this Section 10) which are imposed by
the "Home State" of a sublessee (the Home State of a sublessee
being the jurisdiction in which such sublessee maintains its
principal operations and maintenance center), or in the absence of
a Permitted Sublessee, the jurisdiction where the Aircraft is
stored, but only to the extent such incremental taxes result from
activities of Lessee or Permitted Sublessee under the Lease in or
with respect to the Home State or the jurisdiction where the
Aircraft is stored, and taking into account in calculating such
incremental taxes all state tax benefits and savings in the Home
State resulting from activities of Lessee or Permitted Sublessee
under the Lease, disregarding for such purpose any actual or
constructive changes in ownership of the original Owner
Participant, provided, however, that Owner Participant and Lessee
agree to negotiate, in good faith, a cap to Lessee's liability for
indemnity payments attributable to taxes incurred in sublessee's
Home State with respect to each Permitted Sublessee;
(ii) in the case of the Indenture Trustee or the
Trust Indenture Estate, any Tax based on or measured by gross or
net income, receipts, capital or net worth, franchises, excess
profits or conduct of business (including minimum taxes,
withholding taxes, and taxes on or measured by any item of tax
preference) imposed on such Indemnitee by a Taxing Authority in or
of any foreign jurisdiction or a territory or possession of the
United States, other than any such Tax which would not have been
imposed in the absence of such Indemnitee's (including for
purposes of this definition, all entities with which such
Indemnitee is combined, integrated, or consolidated in such Taxing
Authority's jurisdiction) engaging in business, maintaining an
office or other place of business or otherwise being located in
such jurisdiction other than merely by reason of such Indemnitee's
participation in
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the transactions contemplated by the Operative Documents; and
(iii) in the case of the Indenture Trustee, or
the Trust Indenture Estate, a tax imposed by any Taxing Authority
other than the Federal government of the United States of America
based on, or measured by gross income or receipts (including
minimum taxes, withholding taxes, and taxes on or measured by any
item of tax preference), to the extent such Tax is attributable to
the operation of registration of the Aircraft in such jurisdiction
or to the transactions contemplated by the Operative Documents or
is the result of the activities of Lessee, sublessee, or any
Affiliate of either thereof in such jurisdiction, including
residence.
(d) Reports and Returns. In case any report or
return is required to be made by Lessee with respect to any Taxes which are
subject to indemnification by Lessee under this Section 10, Lessee will either
make such report or return in such manner as will show the ownership of the
Aircraft in Owner Trustee or the interest of Owner Participant or its permitted
assigns and send a copy of such report or return to the Owner Participant or
Owner Trustee or will notify the Owner Participant or Owner Trustee of such
requirement and make such report or return in such manner as shall be reasonably
satisfactory to Owner Participant or Owner Trustee. If actual notice is given by
any taxing authority to an Indemnitee that a report or return is required to be
filed with respect to any such Taxes, the Indemnitee shall promptly notify
Lessee of such required report or return and Lessee shall either file such
report or return in the manner prescribed in the preceding sentence, or shall
use its best efforts to cause such report or return to be filed by the
appropriate entity. Each Indemnitee agrees to respond to any reasonable request
of Lessee for information not within Lessee's control and within the control of
and reasonably available to such Indemnitee with respect to the filing of any
such report or return, but Lessee agrees to pay any reasonable costs, fees,
disbursements or other charges of independent counsel or independent accountants
incurred in connection with such request.
(e) After-Tax Basis. Lessee further agrees that,
with respect to any payment or indemnity under this Section 10 and under Section
13 hereof, such payment or indemnity shall include the net amount necessary to
hold the recipient
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of the payment or indemnity harmless on an after-tax basis from all Taxes
required to be paid or credited by such recipient with respect to such payment
or indemnity under the laws of any Taxing Authority; provided, however, that in
the case of Taxes imposed on the Owner Participant, such Taxes shall be
calculated on the basis of the assumption that Owner Participant shall be
subject to the highest federal corporate income tax rate applicable to Owner
Participant in the year of payment and the highest corporate income tax rate in
the jurisdiction in which Owner Participant files a consolidated state income
tax return (currently Virginia).
(f) Tax Benefit. If, by reason of any payment
made to or for the account of an Indemnitee by Lessee pursuant to this Section
10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax
deduction or credit (including foreign tax credit and any reduction in Taxes)
not previously taken into account in computing the amount of such payment, such
Indemnitee shall promptly pay to Lessee, but only if there shall then be no
Lease Event of Default and if Lessee shall have made all payments then due and
owing to such Indemnitee under the Operative Documents, an amount equal to the
sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee
which is attributable to such deduction or credit and (ii) the reduction
calculated on the same basis as the gross up in Section 10(e) hereof in Taxes
realized by such Indemnitee as a result of any payment made by such Indemnitee
pursuant to this sentence; provided, however, that such Indemnitee shall not be
obligated to make any payment pursuant to this Section 10 or Section 13 hereof
to the extent that the amount calculated pursuant to (i) above would exceed (A)
the amount of all prior payments by Lessee to such Indemnitee, pursuant to this
Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes
required to be paid by such Indemnitee in respect of the receipt or accrual of
such amounts received by such Indemnitee from Lessee, less (B) the portion of
all prior payments computed pursuant to (i) above by such Indemnitee to Lessee
hereunder.
(g) Payment. If a claim is made against any
Indemnitee for any Taxes which may be subject to indemnification by Lessee
hereunder and if such Indemnitee has notice thereof, such Indemnitee shall
promptly notify Lessee; provided that the failure to provide such notice shall
not release Lessee from any of its obligations hereunder except to the extent
Lessee's right to contest such claim is precluded thereby. Any amount payable as
an
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indemnity to any Indemnitee or any amount payable to Lessee pursuant to this
Section 10 is to be paid to such party directly, in immediately available funds,
within thirty (30) days after receipt of a written demand therefor from such
Indemnitee or Lessee, as the case may be, except in the case of a payment to an
Indemnitee to the extent that such Taxes are being contested in good faith
pursuant to this Section 10, in which event the payment of such indemnity shall
be made by the due date for the payment of any Taxes that are the subject of
such contest taking into account all extensions of the due date that are
available as a result of the contest. In the event an Indemnitee makes a tax
payment with respect to any such Taxes (other than with funds advanced to such
Indemnitee on an interest-free basis by Lessee pursuant to this Section 10),
Lessee shall reimburse the amount of such payment and also shall pay to the
Indemnitee interest on the amount of such payment by such Indemnitee at the
Interest Rate from the date of any such payment by such Indemnitee to the date
of such reimbursement by Lessee to the Indemnitee hereunder. In the event an
amount is payable to Lessee under this Section 10, the Indemnitee owing such
amount shall pay interest on such amount at the Interest Rate from the date of
receipt by such Indemnitee of any amount giving rise to such obligation to pay
Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee
receives a written notice of a claim which, if sustained, would require the
payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee
shall promptly notify Lessee of such claim and, if requested by Lessee in
writing, shall, at Lessee's sole expense, in good faith contest or shall permit
Lessee, if desired by Lessee and such contest may be conducted in whole or in
part separately in the name of Lessee without involving Taxes of such Indemnitee
not indemnified hereunder, to contest in the name of Lessee and/or the
Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting
payment thereof if practicable, (y) not paying the same except under protest, if
protest is necessary and proper, and (z) if payments be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings; provided, however, the Lessee shall not be permitted to contest in
the name of such Indemnitee if such contest involves Taxes imposed against such
Indemnitee that are unrelated to the transactions contemplated by the Financing
Documents or the Operative Documents or Taxes based on or measured by the gross
or net income of the Indemnitee, and provided, that if the Indemnitee determines
in good faith
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that there is a material possibility of a material adverse impact upon the
Indemnitee with respect to such contest, such Indemnitee may retain or reassert
control of any contest that Lessee would otherwise be permitted to contest;
provided, further, that the Indemnitee shall not be required to undertake or
allow in its name or on its behalf any contest unless the following conditions
are satisfied:
(i) Lessee shall have (a) furnished
Indemnitee with a written opinion of tax counsel selected by
Indemnitee and reasonably acceptable to Lessee to the effect that
a reasonable basis (as defined in ABA Opinion 85-352) exists to
contest such claim (which opinion shall be obtained at Lessee's
sole cost and expense), provided however, that in the event the
subject matter of the contest is of a continuing nature and has
previously been decided adversely pursuant to the contest
provisions of this Section 10, there has been a change in the law
(including, without limitation, amendments to statutes or
regulations, administrative rulings and court decisions) after
such claim shall have been so previously decided and such
Indemnitee shall have received an opinion of tax counsel, to the
effect that, as a result of such change other than a change in
statutory law, it is more likely than not that the position which
the Indemnitee or the Lessee, as the case may be, had asserted in
such previous contest would prevail and, in the case of statutory
changes-in-law, it is as likely as not that the position will
prevail, and (b) agreed to pay Indemnitee for all reasonable costs
and expenses which Indemnitee may incur in contesting such claim
(including without limitation, payment on demand of all
out-of-pocket costs, expenses, additions to tax because of
underpayment of estimated taxes, losses, legal and accounting and
investigatory fees and disbursements, penalties, and interests),
(ii) a threshold amount of $50,000 for any
individual claim is at issue,
(iii) there is no substantial risk or danger
of the sale, loss or forfeiture of the Aircraft,
(iv) Lessee shall have admitted its liability
to indemnify Owner Participant for such claim or set
forth in writing why it is not so liable,
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(v) if such contest is to be initiated by the
payment of, and the claiming of a refund for, such Taxes, the
Lessee shall have advanced to such Indemnitee sufficient funds (on
an interest free basis) to make such payments,
(vi) no claim shall be appealed to the U.S.
Supreme Court,
(vii) no appeal of a trial court decision shall
be undertaken unless Lessee at its sole cost and expense shall
have furnished Indemnitee with a written opinion of tax counsel
selected by Indemnitee and reasonably acceptable to Lessee to the
effect that Indemnitee is more likely than not to prevail in such
appeal, and
(viii) no Event of Default has occurred and is
continuing.
(i) Refund. If any Indemnitee shall obtain a
refund of all or any part of any Taxes paid by Lessee or from an advance by
Lessee, such Indemnitee shall pay Lessee the amount of such refund together with
any interest paid thereon attributable to the Taxes paid or advanced by Lessee
less the amount of any Taxes payable by such Indemnitee in respect of the
receipt of such refund and interest after giving credit to Lessee for any
savings by such Indemnitee in respect to any such Taxes by reason of deductions,
credits, allocations or allowances in respect of the payment of any such Taxes;
provided that such amount shall not be payable before such time as Lessee shall
have made all payments or indemnities then due to the Lessor and the Indemnitee
under the Lease and all other Operative Documents, and provided further that no
amount shall be payable during any period in which an Event of Default under the
Lease has occurred and is continuing unremedied unless this Lease has terminated
and Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be
in default under any of the above indemnification provisions of this Section 10
so long as Lessee or the Indemnitee shall diligently prosecute such contest in
accordance with the provisions of this Section 10. Notwithstanding the
foregoing, if a claim is made against any Indemnitee for any Taxes which, if
successful, would result in the imposition of Taxes under circumstances which
would require Lessee to indemnify such Indemnitee, the Indemnitee shall be
released
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from its responsibility to contest such claim or part thereof, if it agrees in
writing not to seek indemnification from Lessee in respect of the claim, or such
part thereof to be contested. In the event an Indemnitee fails to contest, or
refuses to permit Lessee to contest, a claim or part thereof which the
Indemnitee has the obligation to contest or to permit Lessee to contest under
this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee
for such claim or such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a
member of an affiliated group (within the meaning of Section 1504(a) of the
Code) which files a consolidated Federal income tax return, the term
"Indemnitee" shall mean and include any member of such affiliated group.
(l) Verification. At Lessee's request, the amount of any
indemnity payment by Lessee pursuant to this Section 10 or any payment by an
Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified
by an independent public accounting firm selected by such Indemnitee and
reasonably satisfactory to Lessee. In order to enable such accountants to verify
the indemnity amount, such Indemnitee shall provide to the accountants (for
their own confidential use) information reasonably necessary for such
verification to which Lessor has access; provided, however, such information
shall not be disclosed to Lessee or any person other than such accountants. The
fee of such firm shall be payable by Lessee unless such verification shall
result in an adjustment in Lessee's favor exceeding 10% of the amount of the
indemnity payment.
(m) Survival. All of the obligations and rights of Lessee and
Lessor under this Section 10 with respect to the Aircraft, the Airframe, the
Engines or any Part thereof shall survive the assignment, or expiration or other
termination, of the Lease with respect to the Aircraft for a period of six (6)
years from the occurrence of such assignment, or expiration or termination,
except that such obligations shall survive the expiration of such six (6) year
period with respect to any claim asserted prior to the expiration of such six
(6) year period but in either case only to the extent such obligation or claim
relates to events which occurred or conditions which existed during the Term.
Such obligations are expressly undertaken by Lessee for the benefit of, and
shall be enforceable by, Lessor. The provisions of this Section 10(m) are
subject to the exclusions of Section 10(b)(viii).
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Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe.
Subject to the other provisions of this Section 11, upon an Event of Loss with
respect to the Airframe or the Airframe and any Engines then installed thereon,
Lessee shall forthwith (and, in any event, within five (5) Business Days after
such occurrence) give Lessor written notice of such occurrence and within thirty
(30) days after such occurrence give Lessor written notice of its election,
subject to the terms hereof and of the Indenture, to perform one of the
following two options (it being agreed that if Lessee shall not have given
Lessor notice of such election within thirty (30) days after such occurrence,
Lessee shall be deemed to have elected to perform the option set forth in the
following clause (ii)), provided, that Lessee shall not have the right to select
the option set forth in clause (i) if a Default or an Event of Default shall
have occurred and be continuing at the time of such election or at the time of
replacement:
(i) within one hundred twenty (120) days
(the "Replacement Period") after the date of the Event of Loss (but in no event
later than the last day of the Term) Lessee shall convey, or cause to be
conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the
Lien of the Indenture if it has not been discharged, and to be leased by Lessee
hereunder in replacement of the Airframe and such Engines then installed
thereon, title to a replacement Airframe (together with the same number of
replacement Engines as the Engines), such replacement Airframe and Engines (A)
to be free and clear of all Liens (it being understood that, upon such
conveyance, such replacement Airframe and replacement Engines may be subject to
Permitted Liens), (B) to have a value, utility and remaining useful life,
determined in accordance with the Appraisal Procedure as provided in Section
11(c) hereof, at least equal to, and to be in at least as good operating
condition as, the Airframe and the Engines, if any, so replaced (assuming the
Airframe and the Engines were maintained in accordance with the requirements of
this Agreement, whether or not they are in fact so maintained), and (C) to be a
like Airbus A320-231 model aircraft with equivalent or better modification
status delivered by the Manufacturer not earlier than June 30, 1988 and, in the
case of Engines, in compliance with Section 11(b); provided that if Lessee shall
not perform its obligation to effect such replacement under this clause by the
end of the Replacement Period, Lessee shall then be deemed to have elected to
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comply, and shall comply, with the provisions of clause (ii) of this Section
11(a); provided, further, that the payment specified therein shall be deemed to
have become due and payable on the Stipulated Loss Value Date occurring on or
immediately preceding the last day of the Replacement Period. Upon compliance
with the foregoing, Lessor will, subject to the rights of any insurers, transfer
to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty
(except a warranty that such Airframe and Engines are free and clear of Lessor's
Liens), all of Lessor's right, title and interest, if any, in and to the
Airframe and the Engines suffering the Event of Loss as well as all of Lessor's
right, title and interest in and to any Engine constituting part of the Aircraft
and replaced as provided above but not installed thereon at the time of the
Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed
part of the property leased hereunder and shall be deemed the "Airframe" as
defined herein. No Event of Loss resulting in replacement of the Airframe or
Engines under this Section 11(a)(i) shall result in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or
before one hundred twenty (120) days after the date of the Event of Loss (or, if
earlier, with respect to insurance proceeds, on the date on which insurance
proceeds with respect to the Event of Loss are received by the loss payee)
Lessee shall pay to Lessor in immediately available funds the sum of (A) the
Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated
Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be,
payable on each Basic Rent Payment Date or Renewal Rent Payment Date,
respectively, prior to the date of payment of such Stipulated Loss Value which
has not been paid when due, plus, if such Stipulated Loss Value Date is also a
Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent
or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss
Value Date, or, if such Stipulated Loss Value Date occurs after the last day of
the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent,
as the case may be, in effect on the last day of the Term, for each day from and
including the last day of the Term to and excluding such Stipulated Loss Value
Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of
Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with
respect to the Aircraft for any period commencing after the date on which such
Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain
liable for, and shall pay on or before the date the Stipulated Loss Value and
Supplemental Rent are
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paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the
Aircraft due on or before the date of such payment of Stipulated Loss Value and
Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft,
and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee,
"AS IS, WHERE IS," without recourse, representation or warranty (except a
warranty that such Airframe and Engines are free and clear of Lessor's Liens),
all of Lessor's right, title and interest, if any, in and to the Airframe and
Engines suffering the Event of Loss, as well as all of Lessor's right, title and
interest, if any, in and to any Engine constituting part of the Aircraft but not
installed thereon at the time of the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon an Event of
Loss with respect to an Engine only, Lessee shall give Lessor prompt written
notice thereof and shall, at its own cost and expense, within sixty (60) days
after such occurrence convey or cause to be conveyed to Lessor as replacement
for the Engine suffering an Event of Loss, title to another IAE Model V2500
engine of like model and equivalent or better modification status or, at
Lessee's option, an IAE engine of an improved model, in each such case which has
a value, remaining useful life and utility determined in accordance with the
Appraisal Procedure at least equal to such Engine and is suitable for
installation and use on the Airframe without diminishing the value, remaining
useful life or utility of such Airframe, free of all Liens (it being understood
that, upon such conveyance, such replacement Engine may be subject to Permitted
Liens) and being in as good operating condition as (including no greater number
of cycles or hours than) the Engine being replaced assuming the Engine being
replaced was serviceable and otherwise in the condition and repair required by
the terms hereof immediately prior to the Event of Loss. Prior to or at the time
of any such conveyance, Lessee, at its own cost and expense, will (i) furnish
Lessor with a full warranty bill of sale, in form and substance reasonably
satisfactory to Owner Participant and Indenture Trustee, as applicable, with
respect to such replacement Engine; (ii) cause supplements, in form and
substance reasonably satisfactory to Owner Participant and Indenture Trustee (if
the Lien of the Indenture has not been discharged), subjecting such replacement
Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if
in effect), to be duly executed by Lessee, if applicable, and duly filed for
recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and
Indenture Trustee (if the Lien of the Indenture has not been discharged) with
such evidence
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of title to such Replacement Engine and of compliance with the insurance
provisions of Section 12 hereof with respect to such Replacement Engine as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request; (iv) furnish Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged) with an opinion
of Lessee's counsel addressed to such parties and to Lessor to the effect that
title to such Replacement Engine has been duly conveyed to Lessor free and clear
of all Liens (except Permitted Liens), and is duly leased hereunder and subject
to the Lien of the Indenture (if it has not been discharged), the instruments
subjecting such Replacement Engine to the Lien of the Indenture and the Lease,
and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the
case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Engine and the Lien of the
Indenture on such Replacement Engine; (v) furnish a certificate signed by a
Responsible Officer of Lessee certifying that, upon consummation of such
replacement, no Default or Event of Default will exist hereunder; (vi) furnish
such documents and evidence with respect to Lessee, Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged), as
such parties or their respective counsel may reasonably request in order to
establish the consummation of the transactions contemplated by this Section
11(b), the taking of all corporate proceedings in connection therewith and
compliance with the conditions set forth in this Section 11(b), in each case in
form and substance satisfactory to such party; (vii) furnish such Uniform
Commercial Code financing statements covering the Replacement Engine as may be
requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not
been discharged); (viii) furnish Owner Participant with an opinion of tax
counsel mutually satisfactory to Owner Participant and Lessee and which opinion
is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner
Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in
Section 5.06(a) (5) (i) of the Indenture. Upon full compliance by Lessee with
the terms of this Section 11(b),
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Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS,
WHERE IS" without recourse, representation or warranty (except a warranty that
such Engine is free and clear of Lessor's Liens), all of Lessor's right, title
and interest, if any, in the Engine which suffered the Event of Loss. For all
purposes hereof, each such Replacement Engine shall be deemed an "Engine" as
defined herein and shall be deemed part of the same Aircraft as was the Engine
replaced thereof. No Event of Loss covered by this Section 11(b) shall result in
any reduction in Rent.
(c) Conveyance of Replacement Airframe. Prior to
or at the time of any conveyance of a replacement Airframe pursuant to Section
11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the
following documents which shall have been duly authorized, executed and
delivered by the respective parties thereto and shall be in full force and
effect on said date: (i) a full warranty bill of sale, in form and substance
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such
other form of bill of sale as may be approved by the FAA on said date), executed
by the owner thereof, in favor of Lessor and, cause supplements, reasonably
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), to this Lease, the Indenture (if then in
effect) and the Trust Agreement (if then in effect), with respect to such
replacement Airframe and to be duly filed for recordation pursuant to the
Federal Aviation Act or other applicable Governmental Entity; (ii) the
certificate specified in Section 12(f) hereof demonstrating compliance with the
insurance requirements of Section 12 with respect to the replacement Airframe
and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner
Participant) of Lessee's counsel (and such other evidence of title as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request) to the effect that, upon such conveyance,
Lessor will acquire good title to such replacement Airframe free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe may be subject to Permitted Liens), that such replacement Airframe will
be leased hereunder to the same extent as the Airframe replaced thereby and will
be subject to the Lien of the Indenture (if it has not been discharged), the
instruments subjecting such Replacement Airframe and Replacement Engine to the
Lien of the Indenture and the Lease, and subjecting to any relevant
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Assigned Sublease and Sublease Assignment, as the case may be, have been duly
filed for recordation pursuant to the Federal Aviation Act or any other law then
applicable to the registration of the Aircraft, and no further action, filing or
recording of any document is necessary in order to establish and perfect, in the
United States and, if the Aircraft is registered outside the United States, in
the jurisdiction of registration, the legal title to such Replacement Airframe
and Replacement Engine and the Lien of the Indenture on such Replacement
Airframe and Replacement Engine; and that Lessor, and Indenture Trustee as
assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of
the United States Code with respect to such replacement airframe and engines to
the same extent as with respect to the Airframe and Engines then installed
thereon prior to such replacement; (iv) a certificate signed by a Responsible
Officer of Lessee certifying that, upon consummation of such replacement, no
Default or Event of Default will exist hereunder; (v) such documents and
evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the
Lien of the Indenture has not been discharged), as such parties or their
respective counsel may reasonably request in order to establish the consummation
of the transactions contemplated by this Section 11(c), the taking of all
corporate proceedings in connection therewith and compliance with the conditions
set forth in this Section 11(c), in each case in form and substance satisfactory
to each such party, including evidence that the Aircraft of which the
replacement Airframe is a part has been duly certificated by the FAA as to type
and airworthiness in accordance with the terms of this Lease and application for
registration of such replacement Airframe in the name of Lessor has been duly
made with the FAA or other applicable Governmental Entity and Lessee has
temporary or permanent authority to operate the replacement Airframe; (vi)
furnish such Uniform Commercial Code financing statements covering the
replacement Airframe as may be reasonably requested by Lessor or Indenture
Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually
satisfactory to Owner Participant and Lessee and which opinion is reasonably
satisfactory to Owner Participant to the effect that such replacement will have
no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal
prepared in accordance with the Appraisal Procedure which confirms that the
replacement Airframe and any replacement Engine has a value, utility and
remaining useful life at least equal to that of the Airframe and Engines which
suffered the Event of Loss assuming that the same were maintained in accordance
with the requirements of this Lease whether or not they are
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in fact so maintained; and (ix) furnish Owner Trustee and Indenture Trustee with
the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the
Indenture. Upon full compliance by Lessee with the terms of this Section 11(c),
Lessor will, subject to the rights of any insurers, transfer to Lessee "AS IS,
WHERE IS," without recourse, representation or warranty (except a warranty that
such Airframe is free and clear of Lessor's Liens), all of Lessor's right, title
and interest in and to the Aircraft which suffered the Event of Loss. No Event
of Loss with respect to the Aircraft under the circumstances contemplated by the
terms of this Section 11(c) shall result in any reduction in Rent.
For all purposes of this Lease, each such replacement Aircraft
(together with any Engines constituting part of the Aircraft being replaced as
to which an Event of Loss has not occurred) shall be deemed part of the property
leased hereunder and shall be deemed the "Aircraft" as defined herein.
(d) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer (including a
Governmental Entity providing an indemnity in lieu thereof) with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(f) below, any payments (other than insurance or
such indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and other
payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this
Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such
Stipulated Loss Value and other payments, if not already paid by Lessee, or, if
already paid by Lessee, shall (unless a Default or an Event of Default shall
have occurred and be continuing) be applied by Lessor to reimburse Lessee for
its payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a
result of an Event of Loss with respect to the Airframe or
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an Engine which is being replaced pursuant to Section 11(a)(i) or Section 11(b)
hereof, all such payments shall be paid over to, or retained by, Lessee if
Lessee shall have fully performed or, concurrently therewith fully performs, the
terms of Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be,
and of Section 15 hereof with respect to the Event of Loss for which such
payments are made and if no Default or Event of Default shall have occurred and
be continuing.
(e) Requisition for Use by Government with Respect to the
Aircraft. Subject to Section 11(f) below, in the event of the requisition for
use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other
than a requisition constituting an Event of Loss), Lessee shall promptly notify
Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as if such
requisition had not occurred. All payments received by Lessor or Lessee from the
Governmental Entity for the use of such Airframe or Engine during the Term shall
be paid over to, or retained by, Lessee if no Default or Event of Default shall
have occurred and be continuing; and all other payments received by Lessor or
Lessee from the Governmental Entity shall be paid over to, or retained by,
Lessor. If the Airframe and such Engines or engines are not returned by the end
of the Term, an Event of Loss shall be deemed to have occurred on the last day
of the Term and, on the last day of the Term, Lessee shall either pay to Lessor
the amount provided herein for an Event of Loss to the Airframe and such Engines
or engines on such date or provide a replacement Aircraft and Engine on such
date in the condition provided for in Section 16 and Exhibit E. In the event of
the requisition for use by the Governmental Entity of any Engine without the
requisition for use of the Airframe, Lessee will replace such Engine hereunder
by complying with the terms of Section 11(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine, and thereafter any payments
received by Lessor or Lessee from the Governmental Entity with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application in Default. Any amount referred to in clause
(i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to
Lessee shall not be paid to Lessee, or, if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such
payment or retention a Default or an Event of Default
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shall have occurred and be continuing. In such case, all such amounts shall be
paid to and held by Indenture Trustee so long as the Lien of the Indenture shall
not have been discharged and thereafter by Lessor as security for the
obligations of Lessee, or, at the option of Lessor or the Indenture Trustee, as
the case may be, applied by Lessor or the Indenture Trustee, as the case may be,
toward payment of any of Lessee's obligations at the time due hereunder, as
Lessor or the Indenture Trustee, as the case may be, may elect, including,
without limitation, by reason of this Lease being declared or deemed in default.
At such time as there shall not be continuing any such Event of Default or
Default, all such amounts at the time held by Lessor or Indenture Trustee in
excess of the amount, if any, which Lessor or Indenture Trustee has elected for
application as provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability
products, completed operation liability covering maintenance of aircraft, but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Aircraft, in an amount not less than three hundred
fifty million dollars ($350,000,000), combined single limit, per occurrence or
such higher amount, and of such type and terms, as are customarily carried by
prudent Certificated Air Carriers, similarly situated to Lessee, operating
aircraft of similar size and engines and as hereinafter provided. Each and any
policy of insurance carried in accordance with this Section 12(a), and each and
any policy obtained in substitution or replacement for any of such policies, (i)
shall designate Lessor (in both its individual and trustee capacity), Owner
Participant, Indenture Trustee (in both its individual and trustee capacity) and
the other Indemnitees and their respective permitted assigns, as additional
insureds as their interests may appear (but without imposing upon any such
Person any obligation imposed upon the insured, including, without limitation,
the liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, in such policies, the
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insurance shall not be invalidated as to an insured or additional insured by any
act or omission of Lessee or any other insured or additional insured and shall
insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees
and their respective permitted assigns, regardless as to any insured or
additional insured of any breach or violation by Lessee or any other insured or
additional insured of any warranty, declaration or condition contained in such
policies, (iii) shall provide that if such insurance is cancelled for any reason
whatsoever, or is changed in any adverse way with respect to the interests of
Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if
such insurance is allowed to lapse for non-payment of premium, such
cancellation, change or lapse shall not be effective as to Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees, and their respective
permitted assigns, until thirty (30) days, in each instance (seven (7) days or
such lesser period of time as is the insurance industry standard for war/allied
perils coverage), after notice to Lessor, Owner Participant and Indenture
Trustee from such insurer or insurers, of such prospective cancellation, change
or lapse, (iv) shall include coverage for any country in or over which the
Aircraft is located or operated, and (v) shall provide that, as against Lessor,
Owner Participant, Indenture Trustee and the other Indemnitees, and their
respective permitted assigns, each insurer shall waive any rights of set-off,
counterclaim or any other deduction, whether by attachment or otherwise, and
waives any rights it may have to be subrogated to any right of any insured
against Lessor, Owner Participant, Indenture Trustee, or the other Indemnitees,
or their respective permitted assigns, with respect to the Aircraft. Each
liability policy shall be primary without right of contribution from any other
insurance which may be carried by Lessor, Owner Participant, Indenture Trustee
or the other Indemnitees, or their respective permitted assigns, and shall
expressly provide that all of the provisions thereof shall operate in the same
manner as if there were a separate policy covering each insured, provided, that
such policies shall not operate to increase the insurer's limit of liability.
Lessee shall cause its insurers to agree that the indemnity and hold harmless
provisions of Section 13 are insured as a contractual assumption of liability by
Lessee's insurers, subject to the terms, coverage, conditions, limitations and
exclusions of the policy of insurance. Without limiting the foregoing, the type
and amount of the insurance carried by Lessee hereunder shall be no less in
amount and no less comprehensive or favorable to Lessor, Owner Participant,
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Indenture Trustee and the other Indemnitees then that carried by Lessee with
respect to other A320-231 aircraft or similar-size aircraft owned or leased by
Lessee.
(b) Insurance Against Loss or Damage. Lessee, at
its own expense, will maintain in effect, or cause to be carried and maintained
in effect, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the consent of Lessee) covering the Aircraft,
and "all-risk" coverage including transit insurance with respect to Engines and
Parts while not installed on such Aircraft or an aircraft, which in each case
considering all policy terms, limitations and exclusions is of the type, terms
and amount customarily maintained by prudent Certificated Air Carriers similarly
situated to Lessee and operating similar size aircraft and engines and as
hereinafter provided. Lessee shall also maintain, or cause to be maintained, war
risk and allied perils hull insurance reasonably acceptable to Lessor with
Approved Insurers. In addition, at least ten (10) Business Days (or, in the case
of an emergency, at least two (2) Business Days) prior to permitting the
Aircraft, Airframe or Engines to be operated or located outside of the United
States of America, other than in Canada or Mexico, Lessee shall notify Lessor
thereof. If Owner Participant or Indenture Trustee reasonably requests at any
time and if such insurance is then customarily being obtained by or for Persons
leasing or financing similarly-sized aircraft operating on similar routes to
operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is
in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay
or reimburse Lessor for political risk, repossession, expropriation,
confiscation and similar insurance as Lessor may arrange or cause to be
arranged; provided that Indenture Trustee shall not be obligated to request such
insurance and shall not be liable for any failure to request such insurance.
Anything herein to the contrary notwithstanding, at all times while the Aircraft
is subject to this Lease, the insurance required by this Section 12(b) shall be
for an amount on an "agreed value" basis not less than the Stipulated Loss Value
from time to time determined for the Aircraft. Without limiting the foregoing,
the type and amount of insurance carried by Lessee hereunder shall be no less
comprehensive or favorable
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to Lessor, Owner Participant, Indenture Trustee and the other Indemnitees than
that carried by Lessee with respect to similar-size aircraft owned or leased by
Lessee.
Each and any policy of insurance obtained and
maintained pursuant to this Section 12(b), and each and any policy obtained in
substitution or replacement for any such policies, (i) shall designate Lessor as
owner of the Aircraft, shall designate, so long as the Lien of the Indenture has
not been discharged, Indenture Trustee and, thereafter, Lessor, as sole loss
payee, as provided below and shall designate Lessor, Owner Participant,
Indenture Trustee (in both its individual capacity and its trustee capacity) and
the other Indemnitees and their respective permitted assigns as additional
insureds, as their respective interests may appear (but without imposing upon
Lessor, Owner Participant, Indenture Trustee and their respective permitted
assigns, any obligation imposed upon the insured, including, without limitation,
the liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of such an additional insured and its
permitted assigns, in such policies, the insurance shall not be invalidated as
to an insured by any act or omission of Lessee or any other additional insured,
and shall insure each such additional insured and its permitted assigns,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their respective
permitted assigns, or if such insurance is allowed to lapse, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee, the other Indemnitees or their respective permitted assigns,
until thirty (30) days (seven (7) days or such lesser period of time as is the
insurance industry standard for war/allied perils coverage) after written notice
to Lessor, Owner Participant and Indenture Trustee from such insurer or
insurers, as the case may be, of such prospective cancellation, change or lapse,
(iv) shall include coverage for any country in or over which the Aircraft may at
any time be located or operated, (v) shall provide that, as against Lessor,
Owner Participant, Indenture Trustee the other Indemnitees and their respective
permitted assigns, each insurer shall waive any rights of set-off, counterclaim
or any other deduction, whether by attachment or otherwise, and waives any
rights it
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may have to be subrogated to any right of any insured against Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees and their respective
permitted assigns, with respect to the Aircraft, (vi) shall provide that in the
event of any damage or loss which is an Event of Loss hereunder and which
results in a payment, such payment shall be payable directly to Indenture
Trustee as sole loss payee, so long as the Lien of the Indenture shall not have
been discharged and thereafter to Lessor, as sole loss payee, and (vii) shall
provide that in the event of any damage or loss which is not an Event of Loss
hereunder and which results in a payment, such payment shall be payable directly
to Indenture Trustee, as sole loss payee for the account of all interests, so
long as the Lien of the Indenture shall not have been discharged and thereafter
to Lessor, as sole loss payee for the account of all interests. The insurance
required under this Section 12(b) may incorporate deductible amounts which shall
not exceed one million dollars ($1,000,000).
Each of Lessor and Owner Participant shall have the right to
carry additional and separate excess or contingent insurance for its own benefit
at its own expense, without, however, thereby limiting Lessee's obligations
under this Section 12, and Lessee shall not carry any such insurance if it would
conflict with or adversely affect other insurance carried by Lessor or Owner
Participant. Lessee shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to Lessee, provided, however, that such insurance does not conflict with
or adversely affect the insurance required hereunder or any excess or contingent
insurance carried by Lessor or Owner Participant. Lessee shall give Lessor
reasonable prior written notice of any insurance to be carried by Lessee in
addition to that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained to cover
"all-risk" ground and flight aircraft, hull and war risks and allied perils
insurance, Lessee shall include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by Lessee with respect to all
other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
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(c) Application of Insurance Proceeds for an
Event of Loss. It is agreed that insurance payments which arise from insurance
required to be carried by Lessee pursuant to this Section 12 and received as the
result of the occurrence of an Event of Loss shall be applied as follows (after
reimbursement of Lessor, Owner Participant and Indenture Trustee for their
reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and other
payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this
Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture
has not been discharged and thereafter to Lessor in reduction of Lessee's
obligation to pay such Stipulated Loss Value and any other payments if not
already paid by Lessee, or, if already paid by Lessee, shall (unless a Default
or an Event of Default shall have occurred and be continuing) be applied by
Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its
payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a
result of an Event of Loss with respect to the Airframe or an Engine which is
being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such
payments shall be paid over by the Indenture Trustee or Lessor, as the case may
be, to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or
Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect
to the Event of Loss for which such payments are made and if no Default or Event
of Default shall have occurred and be continuing.
(d) Application of Insurance Proceeds for Other
than an Event of Loss. The insurance payments of any property damage loss to the
Airframe or any Engine not constituting an Event of Loss with respect thereto
will be applied in payment for the actual costs of repairs or for replacement
property which Lessee has incurred in accordance with the terms of Section 9, 11
or 12(c) of this Lease against such documentation evidencing payment by Lessee
as Lessor may reasonably request to reimburse Lessee for such repairs or
replacements already paid for by Lessee, and any balance remaining after
compliance with such Sections with
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respect to such loss shall be paid to Lessor. Lessee shall be entitled to
receive from the insurer any insurance proceeds not in excess of five hundred
thousand dollars ($500,000) as soon as such funds are paid and shall promptly
receive such additional insurance proceeds from the loss payee upon invoices for
repair work in progress, replacement parts which are ordered or for work
completed as provided above in this Section 12(d). Any amount referred to in
this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at
the time of such payment any Default or Event of Default shall have occurred and
be continuing, but shall be held by Lessor as security for the obligations of
Lessee under this Lease or applied as provided in Section 12(e).
(e) Application in Default. Any amount referred
to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable
to Lessee shall not be paid to Lessee, or if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the
Lien of the Indenture shall not have been discharged, and thereafter to Lessor,
if at the time of such payment or retention a Default or an Event of Default
shall have occurred and be continuing. In such case, all such amounts shall be
paid to and held by Indenture Trustee, so long as the Lien of the Indenture
shall not have been discharged, and thereafter held by Lessor as security for
the obligations of Lessee, or, at the option of Indenture Trustee or Lessor,
applied by Indenture Trustee or Lessor toward payment of any of Lessee's
obligations at the time due hereunder, including, without limitation, by reason
of this Lease being declared or deemed declared in default, as Indenture Trustee
or Lessor may elect. At such time as there shall not be continuing any such
Event of Default or Default, all such amounts at the time held by Indenture
Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or
Lessor has elected for application as provided above, shall be paid to Lessee.
(f) Certificates. On or before the Delivery
Date, and thereafter on any renewal by the Lessee of the insurance required
hereby (but in no event less than once in every twelve (12) month period),
Lessee will furnish to Lessor and Indenture Trustee a certificate executed and
delivered by an Approved Insurer or the Approved Broker, describing in
reasonable detail, and in accordance with customary practice, insurance carried
on the Aircraft and Lessee shall also furnish an opinion or report by the
Approved Insurer or the Approved Broker certifying that the
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insurance then maintained on the Aircraft complies with the terms of this Lease.
Lessee will cause the Approved Broker to agree to advise Lessor, Owner
Participant and Indenture Trustee in writing at least thirty (30) days (seven
(7) days or such lesser period of time as is the insurance industry standard for
war/allied perils coverage) prior to the expiration, non-renewal, termination or
cancellation for any reason (including, without limitation, failure to pay
premium therefor) or material modification of any such insurance.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in
effect, the Permitted Sublessee) may carry primary insurance outside of the
aviation insurance markets in New York, London or Paris if the relevant primary
insurer shall have obtained reinsurance and such reinsurance (i) is on the same
terms as the original insurance and includes the provisions required by this
Agreement; (ii) provides in case of any bankruptcy, insolvency, liquidation,
dissolution or similar proceedings of or affecting the original insurer that the
reinsurers' liability will be to make such payment as would have fallen due
under the relevant policy of reinsurance if the original insurer had
(immediately before such bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full under the original
insurance policies in respect of which the then relevant policy of reinsurance
has been effected; and (iii) contains a "cut-through" clause in the following
form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the
Reinsured hereby mutually agree that in the event of any claim arising under the
reinsurances in respect of a total loss or other claim where as provided by the
Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-12] dated as of
November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee,
and America West Airlines, Inc. such claim is to be paid to the person named as
sole loss payee under the primary insurances, the Reinsurers will in lieu of
payment to the original insured, its successors in interest and assigns pay to
the person named as sole loss payee under the primary insurances effected by the
original insured that portion of any loss
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due for which the Reinsurers would otherwise be liable to pay the original
insurer (subject to proof of loss), it being understood and agreed that any such
payment by the Reinsurers will (to the extent of such payment) fully discharge
and release the Reinsurers from any and all further liability in connection
therewith."
(h) Storage. During any period that the Aircraft
is in storage or otherwise grounded, Lessee may carry or cause to be carried, in
lieu of the insurance required by Sections 12(a) and (b) above, insurance
otherwise conforming with the provisions of said Sections 12(a) and (b) except
that the scope of the risk and the type of insurance, and the amount of the
insurance in the case of the insurance described in Section 12(a) above (but not
the amount of insurance to be carried under Section 12(b) above), shall be the
same as from time to time applicable to similar size passenger aircraft that
comprise Lessee's fleet in similar storage or grounding, and in any event
(including, without limitation, at any time when there shall be in existence a
Permitted Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event
of Default has occurred and is continuing, any amount held by Lessor or
Indenture Trustee, as the case may be, until application by Lessor or Indenture
Trustee, as the case may be, pursuant to this Section 12 shall be invested as
provided in Section 21(h) hereof.
(j) After the Term. Lessee shall continue to
maintain at its expense the insurance described in Section 12(a) for three years
after the expiration or termination of the Basic Term or Renewal Term, if Lessee
has elected to renew the Lease in accordance with Section 20, covering each
Indemnitee as its interest may appear and specifically insuring the indemnity
contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain
of the insurance described in Section 12 above, Lessee may provide a United
States governmental indemnity, to the extent and subject to the terms and
conditions specified in Section 6(c).
Section 13. General Indemnity.
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Lessee hereby agrees to indemnify, reimburse, defend and hold
harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e),
within fifteen (15) days after demand from and against any and all claims
(whether or not based on strict liability), damages (whether direct, indirect,
incidental, special or consequential), losses, charges, fees, liabilities,
obligations, demands, suits, judgments, actions and other legal proceedings
(whether civil or criminal), penalties, fines, other sanctions, and any
reasonable costs and expenses, in connection herewith, including, without
limitation, costs and expenses set forth in Section 21(j) hereof and reasonable
attorney's fees and expenses of whatever kind or nature (any and all of which
are hereafter referred to as "Claims") imposed on, or asserted by or against, or
suffered or incurred by, any Indemnitee, from (and including) the Restatement
Date, including, without limitation, injury, death or property damage of
passengers, shippers and others, environmental control, noise and pollution
regulations, which in any way may result from, pertain to, or arise in any
manner out of, or are in any manner related to (1) the Operative Documents, the
Purchase Documents or the Financing Documents, or any of the transactions
contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine
used in connection with the Airframe or any Part thereof, including, but not
limited to, (A) the importation, exportation, condition, manufacture, design,
purchase, ownership, registration, reregistration, deregistration (other than
any deregistration caused by the failure of the registered owner of the Aircraft
to be a "citizen of the United States" as defined under the Federal Aviation Act
and the regulations thereunder or to file the documentation necessary to
continue FAA registration of the Aircraft), delivery, nondelivery, assignment,
leasing, subleasing, sub-subleasing, acceptance, rejection, possession,
repossession, control, return, financing, Liens (excluding Lessor's Liens, Head
Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture),
use, performance, modification, maintenance, overhaul, operation, pooling,
interchange, repair, testing, sale, return or other disposition or application
of the Aircraft, the Airframe, any Engine, any engine used in connection with
the Airframe or any Part (including, but not limited to, latent and other
defects whether or not discoverable by Lessee or Lessor, Claims related to any
actual or alleged violation of Law, loss or damage to any property of
passengers, shippers or otherwise or any Claim related to patent, copyright,
trademark or other infringement) either in the air or on the ground, and,
including, without limitation, any interest
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therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's
Liens, Head Lessor's Liens and Lenders' Liens but including the Lien of the
Indenture), or the rentals, receipts or earnings therefrom (including, without
limitation, the Rent and any other amounts paid or payable with respect
thereto); or (B) any defect in the Aircraft, the Airframe, any Engine, any
engine used in connection with the Airframe or any Part thereof arising from the
material or any article used therein, whether from the design, testing or use
thereof from any maintenance, service, repair, overhaul or testing of such
Aircraft, Airframe, Engine, engine or Part, or otherwise regardless of when such
defect shall be discovered, whether or not such Aircraft, Airframe, Engine,
engine or Part is at the time in the possession of Lessee, and regardless of
where such Aircraft, Airframe, Engine, engine or Part may then be located; or
(3) the breach of any representation, warranty or covenant made by Lessee
hereunder or under any of the other Operative Documents or any Default or Event
of Default; provided, however, that the indemnity provided for in this Section
13 shall not apply to any portion of a Claim of an Indemnitee to the extent it
results from: (i) the gross negligence or willful misconduct of such Indemnitee
or any of its directors, officers, employees, servants or agents (except any
such gross negligence or willful misconduct as may be attributed to an
Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any
Operative Document, any Purchase Document or any Financing Document), (ii) the
material breach of any express representation, warranty or covenant made by such
Indemnitee herein or in any other Operative Document, or the Financing Documents
(not resulting from a breach by Lessee of any of its representations, warranties
or covenants in the Operative Documents or in the Financing Documents), (iii)
any Taxes, whether or not Lessee is required to indemnify such Taxes under
Section 10 hereof or the Tax Indemnification Agreement (it being understood that
Section 10 hereof and the Tax Indemnification Agreement exclusively provide for
Lessee's liability with respect to Taxes), (iv) any Claim which relates solely
to events which occurred prior to (but excluding) the Restatement Date (other
than Claims related to the condition, manufacture or design of the Aircraft) and
any Claim concerning payment for or the ownership of Buyer Furnished Equipment,
(v) an underlying act which occurs after the Aircraft has been returned to
Lessor in accordance with the terms hereof and the Term of this Lease has been
terminated or has expired and the return is not related to an Event of Default,
(vi) as to such Indemnitee, an underlying act which occurs after a disposition
or other transfer (voluntary or involuntary) by such Indemnitee of all or any
part of its interest in the
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Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents,
the Purchase Documents or the Operative Documents, except as contemplated under
or pursuant to the Operative Documents, the Financing Documents or the Purchase
Documents and except as resulting from the exercise of its remedies during the
period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
or thereunder and except any Claim which is alleged or does relate to the period
prior to such disposition or (vii) the authorization or giving or withholding of
any future amendments, supplements, waivers or consents with respect to any of
the Financing Documents, the Purchase Documents or the Operative Documents,
which amendments, supplements, waivers or consents were not requested by Lessee
or are not required to give effect to the provisions of the Operative Documents,
the Financing Documents or the Purchase Documents (provided, however, in no
event will Lessee be liable for any Claims resulting from, pertaining to or
arising from or related to Lessor's granting or creating a Lessor's Lien or the
granting or creation of a Head Lessor's Lien). Upon full payment of the
indemnities herein, Lessee shall be subrogated to all rights and remedies which
such Indemnitee may have against any third party against whom such Indemnitee
has the right to assert a Claim which arises under any action described in this
Section 13 (except Claims under such Indemnitee's own insurance policies or
under the indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may result
from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as and to the extent such Indemnitee
is responsible under the Refunding Agreement for Claims related to such
deregistration), delivery, non-delivery, assignment, leasing, subleasing,
manufacture, acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Aircraft, the
Airframe, any Engine or any engine used in connection with the Airframe or any
Part
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thereof, either in the air or on the ground, or which may be caused by any
defect in such Aircraft, Airframe, Engine, engine or Part from the material or
any article used therein or from the design or testing thereof, or use thereof
or from any maintenance, service, repair, overhaul, or testing of such Aircraft,
Airframe, Engine, engine or Part, claims for infringement, loss of or injury to
any person, loss of or damage to any property or environmental damage,
regardless of when such defect may be discovered, whether or not such Aircraft,
Airframe, Engine, engine or Part is at the time in the possession of Lessee, and
regardless of the location of such Aircraft at any such time except to the
extent that such Claim results from (i) the gross negligence or willful
misconduct of such Indemnitee (except any such gross negligence or willful
misconduct as may be attributed to an Indemnitee due to its interest in the
Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document
or any Financing Document), (ii) the material breach of any of its express
representations, warranties or covenants hereunder, under any other Operative
Document or Financing Document (not resulting from a breach by Lessee of any of
its representations, warranties or covenants in the Operative Documents or in
the Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to but excluding the Restatement Date (other than Claims related to the
condition, manufacture or design of the Aircraft) and any Claim concerning
payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act
which occurs after the Aircraft has been returned to Lessor in accordance with
the terms hereof and the Term of this Lease has been terminated or has expired
and the return is not related to an Event of Default, (vi) an underlying act
which occurs after a disposition or other transfer (voluntary or involuntary) by
such Indemnitee of all or any part of its interest in the Aircraft, the
Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents (except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder and
except any Claim which is alleged or does relate to the
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period prior to such disposition), (vii) the authorization or giving or
withholding of any future amendments, supplements, waivers or consents with
respect to any of the Financing Documents, the Purchase Documents or the
Operative Documents, which amendments, supplements, waivers or consents were not
requested by Lessee or are not required to give effect to the provisions of the
Operative Documents, the Financing Documents or the Purchase Documents or (viii)
a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such
Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense and
with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter
into a settlement or other compromise with respect to any Claim which Lessee or
such Indemnitee is defending hereunder in excess of $100,000 without the prior
written consent of the other, which consent shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense thereof
where Lessee has the right to control the defense thereof is materially
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prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section.
Nothing in this Section shall be construed as a guaranty by
Lessee of payments due pursuant to any indebtedness incurred with respect to the
purchase of the Aircraft or of the residual value of the Aircraft.
Notwithstanding anything herein or in any other Operative
Document to the contrary, with respect to any Claim for which any Indemnitee is
entitled to indemnification under more than one provision of this Lease or any
other Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue in
full force and effect notwithstanding the expiration or other termination of
this Lease or any of the other Operative Documents and are expressly made for
the benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume,
or suffer to exist any Lien on or with respect to the Aircraft, the Airframe,
any Engine or any Part thereof, title thereto, or any interest of Lessor therein
or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner
Participant, Indenture Trustee and any other Indemnitee as herein provided or
provided under the other Operative Documents or the Financing Documents; (ii)
Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes
either not yet due or being diligently contested in good faith by appropriate
proceedings in accordance with Section 10 and so long as adequate reserves are
maintained with respect to such Liens and only so long as neither such
proceedings nor such Liens involve any material danger of the sale, forfeiture
or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any
interest of Lessor or Indenture Trustee therein or any risk of criminal
liability of Lessor or Indenture Trustee; (iv)
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inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other
like inchoate Liens arising in the ordinary course of business for sums not
overdue by more than 45 days or being diligently contested in good faith and
only so long as neither such proceedings nor any such Liens involve any material
danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or
any Engine or any Part, or any interest of Lessor or Indenture Trustee therein;
(v) the rights of other Persons to the extent expressly permitted by the
provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment
or award against Lessee (or any Permitted Sublessee) unless the judgment or
award shall not, within thirty (30) days after the entry thereof, have been
discharged, vacated, reversed, or execution thereof stayed pending appeal or
shall not have been discharged, vacated or reversed within thirty (30) days
after the expiration of such stay and only so long as such Liens shall not
involve any material danger of the sale, forfeiture or loss of any of the
Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or
Indenture Trustee therein and provided that the execution of such judgment or
award or an attachment relating thereto shall not have occurred within such
thirty (30) day period; and, (vii) any other Lien with respect to which Lessee
(or a Permitted Sublessee) shall have provided a bond adequate in the reasonable
opinion of Indenture Trustee (if the Lien of the Indenture has not been
discharged) and Owner Participant. Lessee shall promptly, at its own expense,
take or cause to be taken such action as may be necessary to duly discharge any
Lien (except for the Liens referred to in clauses (i) through (vii) of this
Section 14) directly or indirectly created, incurred, assumed, or suffered to
exist by Lessee if the same shall arise at any time.
Section 15. Protection of Title and Further
Assurances.
Forthwith upon the execution and delivery of this
Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture
Supplement and Trust Supplement, and any other supplement from time to time
required by the terms hereof, Lessee will cause this Lease, the Indenture, the
Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and
such other supplements to be duly filed and recorded, and maintained of record,
in accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and
expense (except
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it shall be at Lessor's expense if in connection with a change in ownership of
the Aircraft or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default) and upon request by Lessor, cause any financing statements and
any and all additional instruments and other documents, so far as permitted by
applicable Law, to be kept, filed, and recorded and to be re-executed, refiled
and re-recorded at all times in the appropriate office pursuant or in relation
to any applicable Laws of any Governmental Entity, to protect and preserve the
rights and interests of Lessor or Indenture Trustee hereunder, under the
Indenture and in the Aircraft, and Lessee shall furnish to Lessor and Indenture
Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of
each such filing or refiling and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or
cause to be done, at Lessee's cost and expense (except it shall be at Lessor's
expense if in connection with a change in ownership of the Aircraft or any other
transfer or assignment by Lessor other than as contemplated hereunder or under
the Financing Documents or in connection with an Event of Default), any and all
acts and things within its control which may be required under the terms of the
Mortgage Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease, and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Aircraft, as Lessor may
reasonably request. Lessee shall also do or cause to be done, at its own expense
(except it shall be at Lessor's expense if in connection with a change in the
ownership of the Aircraft or any other transfer or assignment by Lessor other
than as contemplated hereunder or under the Financing Documents or in connection
with an Event of Default), any and all acts and things which may be required
under the terms of any other Law involving any jurisdiction in which Lessee, any
Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may
reasonably request, to protect and preserve the title of the Lessor, this Lease,
the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and
under any of the Operative Documents or Financing Documents within any such
jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and
duly execute and deliver to Lessor or Indenture
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Trustee, as applicable, such further documents and assurances and take such
further actions as Owner Participant or Indenture Trustee may from time to time
reasonably request in order to more effectively carry out the intent and purpose
of this Lease and the other Operative Documents and the Financing Documents and
to protect the rights and remedies created or intended to be created in favor of
Lessor or Indenture Trustee hereunder and the other Operative Documents and the
Financing Documents including, without limitation, if reasonably requested by
Owner Participant or Indenture Trustee, at the expense of Lessee (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee
other than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default), the execution and delivery of supplements
or amendments hereto in recordable form, subjecting to this Lease, the Indenture
and the other Financing Documents, any replacement Aircraft or Engine and the
recording or filing of counterparts thereof in accordance with the laws of any
appropriate jurisdiction.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at
its own expense and risk, shall return the Aircraft to Lessor (or any Person
designated by Lessor) in at least the condition specified in this Section and
Exhibit E hereto at any Lessee system location in the continental United States
selected by Lessor, as Lessor may elect, or such other location as Lessor and
Lessee may agree, fully equipped with all required Engines, or other engines
owned by Lessee (which shall thereupon become Engines as hereinafter provided)
meeting the conditions specified in this Section and Exhibit E, duly installed
thereon by delivering the same to the Lessor at such location. Lessee shall
comply with Section 11(b) and this Section 16 with respect to any engines
installed on the Aircraft returned to Lessor hereunder and meeting the
conditions described herein which were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion
hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for
the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders'
Liens, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of
the regulations promulgated under the Federal Aviation Act and with a current
and valid Airworthiness Certificate
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installed on the Aircraft, unless such certificate shall have been suspended or
revoked as a result of the suspension or revocation of the registration of the
Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft
to be registered in the name of Lessor under the Federal Aviation Act (whether
by means of a voting trust agreement or otherwise) in which case the Aircraft
shall nevertheless meet all conditions for such certification and for the
issuance of such certificate; (iii) in full airworthy condition for over water
and EROPS operation according to the FAA standards required to allow the
Aircraft to be operated under, and in full compliance with, such Airworthiness
Certificate and Part 121 of the regulations promulgated under the Federal
Aviation Act for such operation, such compliance to be by means of such
mechanical repairs or modifications or such inspections as may be required
thereby, but not by operational restrictions, by logbook entries or other method
of acceptance of such restrictions; (iv) in full compliance with Lessee's
Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen
of the United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act and reasonably cooperative with Lessee at Lessee's expense with
respect to effecting such registration, duly registered in the name of the
Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi)
in full compliance with the maintenance and operation provisions of this Lease
and all FAA airworthiness directives, mandatory service bulletins and equivalent
requirements which by their terms require compliance on or before the last day
of the Term (without regard to any deferral, waiver, deviation or exemption
granted by the FAA specifically to Lessee delaying such compliance); (vii) in
good and airworthy operating condition, and in the same condition (including,
without limitation, in a passenger configuration suitable for passenger revenue
service) as when delivered to Lessee hereunder, ordinary wear and tear excepted,
with no open or outstanding deferred maintenance items, scheduled or
unscheduled, with all systems and components fully serviceable and operational
and with no placards restricting operation or use, and (viii) with all remaining
warranties, indemnities, policies and guarantees referred to in Section 5(d)
made available to Lessor in a manner and by documents in form and substance
reasonably satisfactory to Lessor.
(c) Engines. In the event any engine not owned by Lessor shall
be installed on the Aircraft on any Return Occasion, without limiting Lessee's
obligations under the
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Tax Indemnification Agreement, such engine shall be of the same model and
equivalent modification status as the Engines or, at Lessee's option, an IAE
engine of an improved model suitable for installation and use on the Airframe
without diminishing the value, remaining useful life or utility of such
Airframe, in each such case having a value, remaining useful life and utility at
least equal to (as determined in accordance with the Appraisal Procedure), and
be in an operating condition as good as the Engines, assuming the Engines were
in the condition and repair as required by the terms hereof immediately prior to
such termination and shall conform to the return condition requirements set
forth in this Section 16 and Exhibit E, and Lessee, at its own expense and
concurrently with such delivery, shall cause such engine to become an Engine by
complying with Section 11(b) hereof. Lessee's obligation to comply with the
terms of this Section 16(c) shall be conditioned on Lessor's transferring to
Lessee all of Lessor's right, title and interest in and to any Engine not
installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any
representation, warranty or recourse of any kind whatsoever, express or implied,
except a warranty that such Engine is free and clear of Lessor's Liens.
(d) Records and Documents. Upon the return of
the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and
inspection, modification, overhaul and other records, related to the Aircraft,
including, without limitation, those required to be maintained with respect
thereto under applicable rules and regulations of the FAA, together with a
detailed description of the Maintenance Program then applied to the Aircraft and
shall provide Lessor and its designees access to the Maintenance Program which
is sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft under
the Maintenance Program, in each case as Lessor may reasonably request, and all
documentation with respect to the Aircraft set forth on Exhibit B or otherwise
delivered to Lessee at delivery thereof, and (ii) all records necessary or
required by the FAA to certify and place the Aircraft on an FAA or other
country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of
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Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be
updated to the latest revision status as of the last day of the Term within such
software base and all data therein or pertaining thereto shall be deemed
property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the maintenance records by part numbers and serial
numbers other than the manufacturer's shall be provided with interchange or
cross reference listing necessary to establish complete traceability. All
documentation, flight, and maintenance records as specified by United States
Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation
121.380 which normally accompany the transfer of an aircraft which has been
operating in regulated commercial air service, shall be delivered to Lessor with
the Aircraft. Any documents or records required to be delivered hereunder shall
be in English.
(e) Condition of Aircraft. Upon any Return
Occasion, Lessee shall return such Aircraft to Lessor in such condition that the
Aircraft shall also comply with each and every condition and requirement set
forth elsewhere in this Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion,
Lessee shall make the Aircraft available to Lessor at the location where the
"block 'C' Check" (or equivalent level designated check or checks) required
hereunder to be performed immediately prior to redelivery is to be performed for
detailed inspection of the documents referred to in paragraph (d) above and the
Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding
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compensation to representatives of Lessor), in order to verify that the
condition of such Aircraft complies with the requirements set forth above (such
inspection being hereinafter referred to as the "Final Inspection"). The Final
Inspection shall be combined with such "block 'C' Check" (or equivalent level
check or checks) and may include such other items as reasonably requested by
Lessor. Lessee shall give Lessor not less than thirty (30) days prior written
notice of the commencement date of such Final Inspection. The period allowed for
the Final Inspection shall be the same period during which such "block 'C'
Check" is being performed and shall have such duration as to permit the opening
of any areas of the Aircraft which are necessary or advisable to satisfy Lessor
as to compliance with the requirements of this Section 16 and Exhibit E. The
Final Inspection shall commence on the date so noticed which shall be on or
before the expiration of the Term with respect to the Aircraft and shall
continue on consecutive days until all activity required above to be conducted
has been concluded. To the extent that any portion of the Final Inspection
extends beyond the expiration of the Term, unless Lessor has terminated the
Lease pursuant to Section 18(g) hereof, the Term with respect to the Aircraft
undergoing the Final Inspection shall be deemed to have been automatically
extended, and all obligations hereunder continued, on a daily basis until the
Final Inspection shall have been concluded and Lessee shall pay Rent during any
such extension in an amount equal to the average daily Basic Rent or Renewal
Rent, as the case may be, paid in respect of the last year of the Basic Term or
Renewal Term, as the case may be (and Stipulated Loss Value during such
extension shall equal the Stipulated Loss Value on the last day of the Basic
Term or Renewal Term, as the case may be); provided, however, that Lessee shall
not be required to pay Rent with respect to the Aircraft during the period of
extension to the extent that Lessor is responsible for the delay in completion
of the Final Inspection. All storage expenses attributable to any Term extension
pursuant to the preceding sentence shall be payable by Lessee, except that
Lessee shall not be liable for any storage expenses which are incurred after the
sixtieth (60th) day after the Term to the extent that storage continues
thereafter due to Lessor's delay in completion of the Final Inspection.
(g) Aircraft Records and Documents. In order to
enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to
Subsection 16(f) above, Lessee agrees to make available to Lessor at a
maintenance base of Lessee with adequate facilities for short-term maintenance,
where
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the Final Inspection is to occur, not later than ten (10) days prior to the
commencement of such Final Inspection, the Aircraft Records and Documents listed
in Exhibit B hereto, together with such other documentation (including, without
limitation, original airworthiness directive compliance documents and other work
documents) regarding the condition, use, maintenance, or operation as Lessor may
reasonably request or require to substantiate the status of the Aircraft.
(h) Corrections and Subsequent Corrections. To
the extent that the Aircraft or any Engine fails upon a Return Occasion to
conform to any requirement imposed by this Lease Lessor may, at its option, (i)
continue the Lease in effect in the manner provided for in Section 16(f) above
with regard to automatic extension until such time as such Aircraft is brought
up to the condition required by this Section 16, including Exhibit E, or (ii)
accept the return of such Aircraft and thereafter have any such nonconformance
corrected, at such time as Lessor may deem appropriate but not to commence later
than ninety (90) days following the return of such Aircraft, at commercial rates
then charged by the Person selected by Lessor to perform such correction.
Lessee's obligations to pay such Supplemental Rent shall survive the Expiration
Date or other termination of this Lease. Nothing set forth in this paragraph
shall constitute a limitation on Lessor's or Owner Participant's ability to
recover from Lessee any damages, expenses or losses pursuant to Sections 13 or
18 hereof suffered as a result of Lessee's failure to effect the return of the
Aircraft at the time, in the place and in the condition as specified in this
Section 16 and Exhibit E hereto.
(i) Functional Flight Check. Immediately prior
to the expiration of the Term, Lessor will be permitted to conduct a
non-commercial functional flight check flight of no more than two (2) hours
duration in accordance with the Manufacturer's functional flight check
procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft
and proper functioning of all systems and components. A qualified pilot and up
to five (5) other representatives selected by Lessor may take part in such
flight to verify compliance of the Aircraft with the requirements of this Lease,
provided, that Lessor shall be responsible for the charges of such qualified
pilot and representatives. Lessee may combine the functional flight check
provided in this Section 16(i) with the delivery flight specified in Section
16(a) and such functional flight check shall include the landing. Any
discrepancy or
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malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any actions
to correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee
shall, at Lessee's expense, take such action as Lessor may reasonably request to
assist Lessor in obtaining any required documents in relation to the export of
the Aircraft from the United States (including, without limitation, a valid and
subsisting export certificate of airworthiness with respect to the Aircraft and
export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits.
Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits
furnished without charge by the manufacturer for installation on the Aircraft
which have not been so installed together with appropriate instructions for
installation. In the event such uninstalled kits were purchased or manufactured
by Lessee, then Lessor shall be advised of such kits by Lessee and have a right
of first refusal to purchase such kits at Lessee's cost for a period of ninety
(90) days after return.
(l) Storage Upon Return. Upon any Return Occasion,
Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition
to other storage referred to above, arrange for the parking, storage and
insurance of the Aircraft for a period not exceeding sixty (60) days at such
reasonable location as Lessor requests where Lessee has or can arrange for
storage. Lessee shall pay or cause to be paid all costs and expenses for such
parking, storage and insurance.
(m) Resale/Release Cooperation. During the last
twelve (12) months of the Term, with reasonable notice and at reasonable times,
Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all
reasonable respects, with the efforts of Lessor to sell or lease the Aircraft
after the end of the Term, by permitting prospective purchasers or lessees,
except to the extent prohibited by applicable Law, to inspect the Aircraft and
the records relating thereto to the extent it does not
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unreasonably interfere with the operation or maintenance of the Aircraft or the
conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic Rent,
Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days
after the date on which such payment is due, or (ii) any other payment of
Supplemental Rent due hereunder within ten Business Days after the date on which
such payment is due and Lessee has received written demand therefor by the party
entitled thereto; provided that any failure of Lessee to pay to Lessor or the
Owner Participant when due any Excepted Payments (as defined in the Indenture)
shall not constitute an Event of Default unless Lessor or Owner Participant
delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force and
effect any insurance required under the provisions of Section 12 hereof or shall
operate the Aircraft outside of the scope or in violation of the terms of the
insurance or United States Government indemnity coverage required to be
maintained with respect to such Aircraft; or
(c) Any representation or warranty made by Lessee herein or in
the Refunding Agreement or in any certificate furnished by Lessee in connection
herewith or therewith is or was incorrect at the time made in any material
respect and such incorrectness shall not have been cured within thirty (30) days
after the receipt by Lessee of a written notice from Lessor or the Indenture
Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant,
condition, or agreement to be performed or observed by it pursuant to this Lease
or the Refunding Agreement, and such failure shall continue uncured for thirty
(30) days after written notice thereof is given by Lessor or Indenture Trustee
to Lessee; provided, however,
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that if Lessee shall have undertaken to cure any such failure which arises under
the first or second sentence of Section 6(c) or Section 6(d), as such provisions
of Section 6 relate to maintenance, service, repair or overhaul, or Section 9,
and notwithstanding the diligence of Lessee in attempting to cure such failure,
such failure is not cured within said thirty (30) day period but is curable with
future due diligence, there shall exist no Event of Default under this Section
17 so long as Lessee is proceeding with due diligence to cure such failure and
such failure is remedied not later than one hundred eighty (180) days after
receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a
custodian, receiver, trustee or liquidator of itself or all or any material part
of Lessee's property or Lessee's consolidated property, or Lessee admits in
writing its inability to, or is unable to, or does not, pay its debts generally
as they come due, or makes a general assignment for the benefit of creditors, or
Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking
reorganization in a proceeding under any bankruptcy or insolvency Laws (as now
or hereafter in effect), or an answer admitting the material allegations of a
petition filed against Lessee in any such proceeding, or Lessee by voluntary
petition, answer or consent seeks relief under the provisions of any other
bankruptcy, insolvency or other similar Law providing for the reorganization or
winding-up of corporations, or provides for an agreement, composition, extension
or adjustment with its creditors, or any corporate action (including, without
limitation, any board of directors or shareholder action) is taken by Lessee in
furtherance of any of the foregoing, whether or not the same is fully effected
or accomplished; or
(f) An order, judgment or decree is entered by
any court appointing, without the consent of Lessee, a custodian, receiver,
trustee or liquidator of Lessee, or of all or any material part of Lessee's
property, or Lessee's consolidated property, or all or any material part of
Lessee's property or Lessee's consolidated property is sequestered, and any such
order, judgment or decree of appointment or sequestration remains in effect,
undismissed, unstayed or unvacated for a period of ninety (90) days after the
date of entry thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a
proceeding under the Federal bankruptcy laws or other
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insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or
dismissed within ninety (90) days thereafter or at any time an order for relief
is granted in such proceeding, or if, under the provisions of any Law providing
for reorganization or winding-up of corporations which may apply to Lessee, any
court of competent jurisdiction assumes jurisdiction over, or custody or control
of, Lessee or of all or any material part of Lessee's property, or Lessee's
consolidated property and such jurisdiction, custody or control remains in
effect, unrelinquished, unstayed or unterminated for a period of ninety (90)
days or at any time an order for relief is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial passenger
Certificated Air Carrier or, except in either case in connection with a labor
dispute, announcement thereof or Lessee's suspension of its business as a
commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States air
carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at
any time thereafter so long as the same shall be continuing, Lessor may, at its
option, declare by written notice to Lessee this Lease to be in default,
provided, however, that this Lease shall be deemed to be declared in default
automatically without the necessity of such written declaration upon the
occurrence of any Event of Default described in paragraph (e), (f) or (g) of
Section 17 hereof; and at any time thereafter, so long as any outstanding Event
of Default shall not have been remedied, Lessor may do one or more of the
following with respect to all or any part of the Airframe and any or all of the
Engines as Lessor in its sole discretion shall elect, to the extent permitted
by, and subject to compliance with any mandatory requirements of, applicable Law
then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's cost and expense, immediately return, and the
Lessee hereby agrees that it
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shall return promptly all or such part of, the Aircraft to Lessor in the manner
specified in such notice, in which event such return shall not be delayed for
the purposes of complying with the return conditions specified in Section 16 and
Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's
possession of the Aircraft) or delayed for any other reason; provided, however,
that Lessee shall remain and be liable to Lessor for amounts provided for herein
or other damages resulting from the Aircraft or any Engine not being in the
condition required by Section 16 and Exhibit E. Notwithstanding the foregoing,
at Lessor's option, Lessee shall be required thereafter to take such actions as
would be required by the provisions of this Lease if such Aircraft were being
returned at the end of the Term hereof with respect to such Aircraft. In
addition, Lessor or Lessor's agent, at its option and to the extent permitted by
applicable Law, may but shall not be obligated to enter upon the premises where
all or any part of the Aircraft, Airframe and/or Engines are located to take
immediate possession of and, at Lessor's option, remove the same (and/or any
engine which is not an Engine but which is installed on the Airframe, subject to
the rights of the owner, lessor or secured party thereof) by summary proceedings
or otherwise, all without liability accruing to Lessor or Lessor's agent for or
by reason of such entry or taking of possession or removal whether for the
restoration of damage to property, or otherwise, caused by such entry or taking,
except direct damages to the extent caused by Lessor's gross negligence or
willful misconduct.
(b) With or without taking possession thereof,
sell or cause to be sold, the Aircraft, Airframe or Engine or any part thereof,
or Lessor's interest therein, at private or public sale, as Lessor in its sole
discretion may determine, or otherwise dispose of, hold, use, operate, or lease
to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole
discretion may determine, all free and clear of any rights of Lessee or any
Permitted Sublessee and except as hereinafter set forth in this Section 18.
Lessor may be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised,
or shall thereafter at any time exercise, any of its rights under paragraph (a)
or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty
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(in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the
period commencing after the Stipulated Loss Value Date specified for payment in
such notice), any unpaid Rent for the Aircraft to and including the Stipulated
Loss Value Date specified in such notice, plus whichever of the following
amounts as Lessor may specify, in its sole and absolute discretion, in such
notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated
Loss Value for the Aircraft, Airframe or Engine computed as of the date
specified in such notice plus, if such date is a Basic Rent Payment Date or a
Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as
the case may be, due on such date, over the fair market sale value of the
Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an
amount equal to the excess, if any, of the sum of the Stipulated Loss Value for
the Aircraft, Airframe or Engine computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment
Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due
on such date, over the fair market rental value of the Aircraft for the
remainder of the Term as of the date specified in such notice.
(d) In the event Lessor, pursuant to paragraph
(b) above, shall have sold the Aircraft, Airframe or Engine or its interest
therein, Lessor, in lieu of exercising its rights under paragraph (c) above,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
to Lessor on such demand, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date immediately prior to
the date such sale occurs), any unpaid Rent due to and including the date of
sale, plus the amount by which the Stipulated Loss Value of such Aircraft,
Airframe or Engine, computed as of such Stipulated Loss Value Date, exceeds the
net proceeds of such sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under
paragraph (b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee
to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby
agrees that it will so pay to Lessor, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the
case may be, payable in advance for the period on and after the Stipulated Loss
Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such
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Aircraft due and unpaid for any period prior to and including, and any Basic
Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount
equal to the Stipulated Loss Value for the Aircraft computed as of such
Stipulated Loss Value Date; and upon such payment of liquidated damages and the
payment of all other Rent then due hereunder and the discharge of the Lien of
the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's
expense, transfer, without recourse or warranty (except as to the absence of
Lessor's Liens and the Lien of the Indenture), all right, title and interest of
Lessor in and to the Aircraft to Lessee or as it may direct and Lessor shall, at
Lessee's expense, execute and deliver such documents evidencing such transfer
and take such further action as Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to
paragraph (b) above, shall have relet the Aircraft, Airframe or Engine under a
long term lease, Lessor, in lieu of exercising its rights under paragraph (c)
above with respect to such Aircraft, Airframe or Engine, may, if it shall so
elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such
demand, as liquidated damages for loss of bargain and not as a penalty (in lieu
of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due
after the time of reletting) any unpaid Rent for such Aircraft due up to the
date of reletting, plus the amount, if any, by which the aggregate Basic Rent or
Renewal Rent, as the case may be, for such Aircraft which would otherwise have
become due over the Basic Term or Renewal Term, as the case may be, discounted
periodically (equal to installment frequency) to present worth as of the date of
reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental
payments to become due under the reletting from the date of such reletting to
the date upon which the Term for such Aircraft, Airframe or Engine would have
expired but for Lessee's default, discounted periodically (equal to installment
frequency) to present worth as of the date of the reletting at the rate of 8.50%
per annum.
(g) Cancel, rescind and/or terminate this Lease
by written notice to Lessee which cancellation, rescission and/or termination
shall be effective upon dispatch, whereupon Lessee's right to possess and use
the Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall
be and remain liable for damages and losses suffered by Lessor and all other
amounts payable by Lessee hereunder.
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(h) Lessor may exercise any other right or remedy
which may be available to it under applicable laws, or may proceed by
appropriate court action or actions, either at law or in equity, to enforce any
other remedy or right Lessor may have hereunder, under the other Operative
Documents, at law or in equity, including, without limitation, proceed by court
order to enforce performance by Lessee of the applicable covenants of this Lease
or to recover damages for the breach thereof.
In addition to the foregoing, Lessee shall be
liable (without duplication of the remedies above and of Lessee's obligations
under Section 10 and Section 13 hereof and subject to the exclusions set forth
therein) for any and all unpaid Rent before, during or after the exercise of any
of the above mentioned remedies (including without limitation interest on unpaid
amounts with respect to all amounts not paid when due, including, without
limitation, any amounts payable pursuant to the foregoing provisions of this
Section 18), and, except as specified above, until satisfaction of all of
Lessee's obligations to Lessor hereunder and for all legal fees and other costs
and expenses incurred by any Indemnitee by reason of the occurrence of any Event
of Default or the exercise of an Indemnitee's remedies with respect thereto,
including all costs and expenses incurred in connection with the return of the
Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in
placing the Aircraft, Airframe or Engine in the condition and with airworthiness
certification as required by such Section and such Exhibit and costs and
expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass
Through Trust Agreements, the Intercreditor Agreement or each Liquidity
Facility. All liquidated damages payable pursuant to the foregoing shall bear
interest, which shall be payable on the date the payment of such liquidated
damages is due at a rate equal to the Interest Rate from and including the date
due to and excluding the date actually paid.
In effecting any repossession, Lessor, its
representatives and agents, to the extent permitted by applicable Law, (i) shall
have the right to enter upon any premises where it reasonably believes the
Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be
liable, in conversion or otherwise, for the taking of any personal property of
Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part
which is repossessed, (iii) shall not be liable or responsible, in any manner,
for any damage or injury to any of Lessee's
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property in repossessing and holding the Aircraft, the Airframe, an Engine or
Part except for direct damages caused by Lessor's gross negligence or willful
misconduct and (iv) shall have the right to maintain possession of and dispose
of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee
or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole
expense, assemble and make the Aircraft, the Airframe, an Engine or Part
available at a place designated by Lessor in accordance with Section 16 and
Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or
repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or
otherwise upon the occurrence of an Event of Default, any rights in any warranty
(express or implied), service life policy, infringement indemnity, performance
guaranty or the like heretofore made available to Lessee or otherwise held by
Lessee shall without further act, notice or writing be deemed automatically
cancelled and shall be enforceable solely by and for the benefit of, and
assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for
all expenses, disbursements, costs and fees incurred in (i) repossessing,
storing, preserving, shipping, maintaining, repairing and refurbishing the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine
or Part for sale or lease, advertising the sale or lease of the Aircraft, the
Airframe, an Engine or Part and selling or releasing the Aircraft, the Airframe,
an Engine or Part. Lessor is hereby authorized and instructed, at its option, to
make expenditures which Lessor considers advisable to repair and restore the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof, all at Lessee's sole expense.
For the purpose of this Section 18, the "fair
market rental value" or the "fair market sales value" of the Aircraft, Airframe,
an Engine or Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an
Engine or Part pursuant to this Section , Owner Participant may bid for and
purchase such property and Lessee agrees that the amounts paid therefor shall be
used in the computations contemplated herein and Lessee shall remain liable for
any deficiency.
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No remedy referred to in this Section is intended
to be exclusive, but, to the extent permitted by Law, each shall be cumulative
and in addition to any other remedy referred to above or otherwise available to
Lessor at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d), (e) or (f)
above.
Lessee hereby irrevocably appoints Lessor as
Lessee's attorney-in-fact (which appointment is coupled with an interest) to
execute all documents deemed necessary to release, terminate and void Lessee's
interest in the Aircraft leased hereunder or otherwise to more effectively carry
out Lessor's rights and remedies and to file said documents for recordation with
the FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
The provisions of this Section 18 shall continue
in full force and effect and survive the expiration or other termination of this
Lease and are expressly made for the benefit of and shall be enforceable by
Lessor, Owner Participant and, if the Lien of the Indenture has not been
discharged, Indenture Trustee.
Section 19. Security for Obligations. In order
to secure the Equipment Notes, Lessor has created, by the Indenture, a security
interest in the Trust Indenture Estate, including, without limitation, this
Lease and all Rent and other sums payable hereunder, except as provided in the
Indenture and subject in each case to Liens permitted hereunder. The Indenture
provides, among other things for the assignment by Lessor to Indenture Trustee
of its right, title and interest in, to and under this Lease, to the extent set
forth in the Indenture, for the creation of a first-mortgage lien on and
perfected security interest in all of Lessor's right, title and interest in and
to the Aircraft in favor of Indenture Trustee. Lessee hereby
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consents to such assignment and to the creation of such mortgage and security
interest and acknowledges receipt of copies of the Trust Agreement and the
Indenture, it being understood that such consent shall not affect any
requirement or the absence of any requirement for any consent under any other
circumstances. Until the Lien of the Indenture has been discharged, Lessee will
furnish to Indenture Trustee counterparts of all notices and other writings of
any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien
of the Indenture has been discharged, (a) Lessee shall make all payments of
Rent, Stipulated Loss Value and all other amounts payable hereunder (other than
Excepted Payments) to or as directed by Indenture Trustee as provided in
Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise
the rights of Lessor (but not Owner Participant) (other than Expected Rights)
herein as and to the extent provided herein or in the Indenture and any express
reference to Indenture Trustee in any Section of this Lease shall not give rise
to any implication that Indenture Trustee may not exercise the rights of Lessor
in any other Section of this Lease as and to the extent provided in the
Indenture.
The provisions of this Lease and the Refunding Agreement which
require or permit action by, the payment of monies to, the consent or approval
of, the furnishing of any instrument or information to, or the performance of
any other obligation to, Indenture Trustee, shall not be effective, and the
Sections hereof containing such provisions shall be read as though there were no
such requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received from
Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee under
this Lease by a Permitted Sublessee shall constitute payment or performance of
such obligation by Lessee.
Section 20. Renewal Option. Lessee may renew this Lease as
provided in the following clause (i) and subject to the following clause (ii):
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(i) Exercise of Renewal Option. Provided that
this Lease has not been previously terminated and that no Default
or Event of Default shall have occurred and be continuing at the
time of the giving of irrevocable notice hereinafter referred to
in this clause (i) or at the time of the commencement of the
Renewal Term, Lessee, at its option, may renew this Lease for one
Renewal Term consisting of a period equal to five years. The right
to renew this Lease for such Renewal Term pursuant to this clause
(i) shall be exercised upon irrevocable notice from Lessee
received by Lessor of Lessee's election to so renew this Lease not
less than twelve (12) months and not more than twenty-four (24)
months prior to the last day of the Basic Term. The Renewal Rent
for the Renewal Term shall be the "fair market rental value" of
the Aircraft for such Renewal Term (the "renewal fair market
rental value") as determined in accordance with the Appraisal
Procedure. For purposes of this paragraph (i), the Appraisal
Procedure shall be initiated by Lessee no earlier than nine (9)
months prior to the end of the Basic Term. If Lessee shall fail to
exercise its option to extend the term of this Lease for the
Renewal Term in accordance with the provisions of this paragraph,
all of Lessee's rights to extend the Term for such Renewal Term
shall expire. Lessee shall pay all reasonable costs and expenses,
including, without limitation, reasonable legal fees and expenses,
incurred by Lessor, Owner Participant and the Indenture Trustee in
connection with the exercise of such option.
(ii) Provisions Applicable During Renewal Term.
All provisions of this Lease, including, without limitation, as to
Rent and Stipulated Loss Value (which shall be, with appropriate
adjustments, in no event less than the greater of 120% of the
"fair market sales value" of the Aircraft as of the first day of
the Renewal Term as determined pursuant to the Appraisal Procedure
or the amount set forth on Exhibit A as of the end of the Basic
Term), shall remain in effect and be applicable during such
Renewal Term, except that Lessee shall pay to the Lessor,
semi-annually in arrears as Renewal Rent on each Renewal Rent
Payment Date, the amount for such Renewal Term as determined in
accordance with clause (i) of this Section 20.
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Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision
of this Lease 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. To the extent
permitted by Law, each of Lessor and Lessee hereby waives any provision of Law
which renders any provision hereof prohibited or unenforceable in any respect.
No term or provision of this Lease may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing expressed to be a
supplement or amendment to, or waiver or termination of this Lease signed by an
officer of the party against which the enforcement of the change, waiver,
discharge, or termination is sought. This Lease shall constitute an agreement of
lease, and nothing herein shall be construed as conveying to Lessee any right,
title, or interest in the Aircraft or any Engine or Part except as a lessee
only. Without limiting the foregoing, the parties hereto agree to treat this
Agreement as a lease for United States federal income tax purposes and Lessee
will not file a tax return which is inconsistent with the foregoing and nothing
contained herein shall be construed as an election by Lessor to treat Lessee as
having acquired the Aircraft for the purpose of the investment credit allowed by
Section 38 of the 1954 Code or any similar or successor statute. The headings in
this Lease are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED
IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor and
Lessee required or permitted under the terms and provisions hereof shall be in
writing and shall be sent to Lessor or Lessee at their respective addresses set
forth in Exhibit C hereto (or such other addresses as the parties may designate
from time to time in writing). All
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notices, reports or other documents provided to Lessor or Lessee shall be
provided concurrently to Indenture Trustee (until such time as the Lien of the
Indenture is discharged) and to Owner Participant, at such address as Owner
Participant and Indenture Trustee, respectively, may designate from time to
time. All notices and instructions hereunder shall become effective when
received.
(d) Lessor's Right to Perform for Lessee. If
Lessee fails to make any payment of Rent required to be made by it hereunder or
fails to perform or comply with any covenant, agreement, or obligation contained
herein, Lessor shall have the right but not the obligation to make such payment
or conform or comply with such agreement, covenant, or obligation, and the
amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance thereof or
compliance therewith, together with interest thereon at the Interest Rate, shall
be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of
any such action by Lessor pursuant to this Section 21(d) shall not constitute a
waiver or release of any obligation of Lessee under this Lease, nor a waiver of
any Event of Default which may arise out of Lessee's nonperformance of such
obligation, nor an election or waiver by Lessor or any remedy or right available
to Lessor under or in relation to this Lease.
(e) Counterparts. To the extent, if any, that
this Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of any
counterpart other than the original counterpart, which shall be identified as
the counterpart containing the receipt therefor executed by or on behalf of
Indenture Trustee on the signature page thereof. Subject to the preceding
sentence, this Lease may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so
long as no Event of Default shall have occurred and be continuing and this Lease
has not been declared or deemed to be in default, Lessor shall not take or cause
to be taken any action to interfere with the right of Lessee to the possession,
use, operation and quiet enjoyment of and other rights with respect to the
Aircraft hereunder, and all rents, revenues, profits and income therefrom, in
accordance
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with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
Trustee, Note Holder or any other Person lawfully claiming by or through them,
and provided further, that the foregoing shall not be deemed to have modified
the obligations of Lessee pursuant to Section 4(d) hereof, which obligations
remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that,
except as provided in the Refunding Agreement, there has been no third party as
agent involved in this Lease and each indemnifies the other from liability for
fees, commissions, or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are
held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a
Default or an Event of Default shall have occurred and be continuing, be
invested as provided below until paid to Lessee or applied by Lessor or
Indenture Trustee to the extent provided herein. Until paid to Lessee or applied
as provided herein or in the Indenture such monies shall be invested by Lessor
or Indenture Trustee from time to time at the expense of Lessee in Specified
Investments, as directed by Lessee in accordance with the provisions of Section
3.07 of the Indenture if the Lien of the Indenture shall not have been
discharged and thereafter as provided below. There shall be promptly (but not
more frequently than monthly) remitted to Lessee any gain (including interest
received) realized as the result of any such investment (net of any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment) unless a Default or an Event of Default shall have occurred and
be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the
case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the
amount of any loss realized as the result of any such investment (together with
any Taxes, fees, commission and other reasonable expenses, if any, incurred in
connection with such investment).
(i) Entire Agreement; Amendment. This Lease
(including the Exhibits hereto), any related letter agreements and the other
Operative Documents, the Financing Documents and the Purchase Documents
(including the Exhibits thereto) and all closing documents delivered in
connection with any of the foregoing embody the entire agreement and
understanding among the parties hereto with respect to the
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subject matter hereof. This Lease may be changed, waived, discharged, amended,
revised or terminated only by an instrument in writing signed by the party
against which enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18, Lessee agrees
within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications hereof or thereof, or waivers or consents hereunder or thereunder,
and (iii) any Default or Event of Default or the enforcement of any of Lessor's
rights, remedies or privileges hereunder or at law or in equity, but not
Lessor's legal fees and expenses in connection with the negotiation and
execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
and take such other action not inconsistent with this Lease as Lessor reasonably
deems necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor
shall use its best efforts to have the Aircraft registered under the United
States Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process; Waiver of
Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submits for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United
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States District Court for the Southern District of New York. Each of Lessee and
Lessor represents and warrants that it is not currently entitled to, and agrees
that to the extent that Lessee or Lessor hereinafter may acquire, any immunity
(including, without limitation, sovereign immunity) from jurisdiction of any
court or from any legal process, it hereby, to the extent permitted by Law,
waives such immunity, and agrees not to assert, by way of motion, as a defense,
or otherwise, in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of the above-named courts that it is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Lease or any of the other Operative
Documents or the subject matter hereof or thereof or any of the transactions
contemplated hereby and thereby may not be enforced in or by such courts. Each
of Lessee and Lessor hereby generally consents to service of process by
registered mail, return receipt requested, addressed to it at its address set
forth in Exhibit C, or at such other office of Lessee or Lessor as from time to
time may be designated by Lessee or Lessor (as applicable) in writing to Lessee
or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of
Lessee and Lessor hereby agrees that its submission to jurisdiction and its
designation of service of process by mail set forth above is made for the
express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each
Note Holder and their successors and assigns (as applicable). Final (after all
appeals) judgment (the enforcement of which has not been stayed) against either
Lessee or Lessor obtained in any suit originally brought in the court of the
State of New York in New York County or in the United States District of New
York shall be conclusive, and, to the extent permitted by applicable Law, may be
enforced in other jurisdictions by suit on the judgment, a certified or true
copy of which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Lessee therein described; provided that the
plaintiff at its option may bring suit, or institute other judicial proceedings,
against Lessee or Lessor, as the case may be, or any of their assets in the
courts of any country or place where such Person or such assets may be found.
EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS
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BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without
limitation, contract claims, tort claims, breach of duty claims and other common
law and statutory claims. Lessor and Lessee represent and warrant that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE
DOCUMENTS. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto
agree that all statements, representations, covenants and agreements made by
Lessor (when made in its capacity as such and not in its individual capacity)
contained in this Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies that can be exercised and enforced against the
Trust Estate. Therefore, no recourse shall be had with respect to anything
contained in this Agreement (except for any express provisions that Lessor is
responsible for in its individual capacity), against Lessor in its individual
capacity or against any institution or person that becomes a successor trustee
or co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling Person or Persons of any of them; provided that (i) this
Section 21(n) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable and (ii) nothing contained in
this Section 21(n) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Agreement or such other agreements of rights
and remedies against the Trust Estate. The foregoing provisions of this Section
21(n) shall survive the termination of this Agreement and the other Operative
Documents.
(o) Successor Trustee. Lessee agrees that in the
case of the appointment of any successor Owner Trustee pursuant to the terms of
the Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the
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necessity of any consent or approval by Lessee (subject to Section 14(d) of the
Refunding Agreement) and without in any way altering the terms of this Lease or
Lessee's obligations hereunder. One such appointment and designation of a
successor Owner Trustee shall not exhaust the right to appoint and designate
further successor Owner Trustees pursuant to the Trust Agreement, but such right
may be exercised repeatedly as long as this Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto
agree that the Original Head Lease, as amended and restated by this Amended and
Restated Aircraft Lease Agreement [GPA 1989 BN-12] (and as otherwise extended,
amended, modified, renewed or supplemented), shall be governed by Article 2-A of
the Uniform Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each
pursuant to due authority, have each caused this Lease to be executed by its
duly authorized officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
otherwise expressly provided herein,
but solely as Owner Trustee
By:__________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:___________________________
Title:
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TABLE OF CONTENTS
<TABLE>
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Section 1. Definitions..................................................... 1
Section 2. Agreement to Lease.............................................. 21
Section 3. Delivery and Acceptance; Term................................... 22
(a) Time of Delivery................................................ 22
(b) ................................................................ 22
[Intentionally Left Blank]
(c) Acceptance of Aircraft.......................................... 22
(d) Term of Lease................................................... 22
Section 4. Rent............................................................ 22
(a) Rent............................................................ 22
(b) Minimum Payments................................................ 23
(c) Date, Place and Method of Payment............................... 23
(d) Prohibition Against Setoff,
Counterclaim, Etc............................................... 24
Section 5. Representations, Warranties and Covenants....................... 26
(a) Warranties and Disclaimer of Warranties......................... 26
(b) Representations and Warranties of
Lessor.......................................................... 27
(c) No Amendments to Financing Documents............................ 27
(d) Suppliers' Warranties........................................... 27
Section 6. Possession and Use.............................................. 28
(a) Possession...................................................... 28
(b) Reciprocal Recognition of Rights................................ 35
(c) Lawful Insured Operations....................................... 36
(d) Maintenance..................................................... 37
(e) Registration and Insignia....................................... 38
Section 7. Inspection...................................................... 39
Section 8. Additional Covenants of Lessee.................................. 40
(a) Financial Information........................................... 40
(b) Maintenance of Corporate Existence.............................. 42
(c) Maintenance of Status........................................... 42
(d) Payment of Taxes................................................ 42
(e) Consolidation, Merger, Etc...................................... 42
(f) Information..................................................... 43
(g) Place of Business............................................... 44
(h) Certain Limitations on Use...................................... 44
(i) Section 1110.................................................... 45
(j) Permits and Licenses............................................ 45
</TABLE>
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<TABLE>
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(k) Security Opinion; Annual Certificate........................... 45
(l) Letter of Credit............................................... 46
Section 9. Replacement of Parts; Alterations, Modifications and
Additions...................................................... 49
(a) Replacement of Parts........................................... 49
(b) Alterations, Modifications and Additions....................... 50
(c) Pooling........................................................ 52
Section 10. General Tax Indemnity.......................................... 53
(a) Indemnity...................................................... 53
(b) Exclusions..................................................... 55
(c) Covered Income Tax............................................. 57
(d) Reports and Returns............................................ 59
(e) After-Tax Basis................................................ 59
(f) Tax Benefit.................................................... 60
(g) Payment........................................................ 60
(h) Contest........................................................ 61
(i) Refund......................................................... 63
(j) Diligence...................................................... 63
(k) Affiliated Group............................................... 63
(l) Verification................................................... 64
(m) Survival....................................................... 64
Section 11. Loss, Damage and Requisition................................... 64
(a) Event of Loss with Respect to the Airframe..................... 64
(b) Event of Loss with Respect to an Engine........................ 67
(c) Conveyance of Replacement Airframe............................. 68
(d) Application of Proceeds and Payments........................... 70
(e) Requisition for Use by Government with Respect to the
Aircraft....................................................... 71
(f) Application in Default......................................... 72
Section 12. Insurance...................................................... 72
(a) Public Liability and Property Damage Insurance................. 72
(b) Insurance Against Loss or Damage............................... 74
(c) Application of Insurance Proceeds for an Event of Loss......... 77
(d) Application of Insurance Proceeds for Other than an Event of
Loss........................................................... 77
(e) Application in Default......................................... 78
(f) Certificates................................................... 78
(g) Reinsurance.................................................... 79
(h) Storage........................................................ 80
(i) Amounts Held................................................... 80
</TABLE>
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<TABLE>
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(j) After the Term................................................. 80
(k) Governmental Indemnity......................................... 80
Section 13. General Indemnity.............................................. 81
Section 14. Liens.......................................................... 86
Section 15. Protection of Title and Further Assurances..................... 87
Section 16. Return of Aircraft and Records................................. 89
(a) Return......................................................... 89
(b) Status Upon Return............................................. 90
(c) Engines........................................................ 91
(d) Records and Documents.......................................... 91
(e) Condition of Aircraft.......................................... 92
(f) Final Inspection............................................... 93
(g) Aircraft Records and Documents................................. 94
(h) Corrections and Subsequent Corrections......................... 94
(i) Functional Flight Check........................................ 94
(j) Export Certificate of Airworthiness............................ 95
(k) Service Bulletin and Modification Kits......................... 95
(l) Storage Upon Return............................................ 95
(m) Resale/Release Cooperation..................................... 96
Section 17. Events of Default.............................................. 96
Section 18. Remedies....................................................... 98
Section 19. Security for Obligations....................................... 104
Section 20. Renewal Option................................................. 106
Section 21. Miscellaneous........ ......................................... 107
(a) Severability, Amendment, and Construction...................... 107
(b) GOVERNING LAW.................................................. 107
(c) Notices........................................................ 108
(d) Lessor's Right to Perform for Lessee........................... 108
(e) Counterparts................................................... 108
(f) Quiet Enjoyment................................................ 108
(g) Brokers........................................................ 109
(h) Investment of Funds............................................ 109
(i) Entire Agreement; Amendment.................................... 110
(j) Expenses....................................................... 110
(k) Federal Bankruptcy Code........................................ 110
(l) U.S. Registration Number....................................... 110
</TABLE>
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<TABLE>
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(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non
Conveniens; Waiver of Jury Trial......................110
(n) Limitation on Recourse................................112
(o) Successor Trustee.....................................113
(p) Article 2-A of the UCC................................113
</TABLE>
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ANNEXES
Annex I - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Assignment of Permitted Sublessee
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<PAGE> 1
EXHIBIT 4.26
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1990 AWA-13] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN
ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
FLEET NATIONAL BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-13] DATED AS OF NOVEMBER 26,
1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART
OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY FLEET NATIONAL BANK, AS
INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
- --------------------------------------------------------------------------------
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1990 AWA-13]
Dated as of September 21, 1990
Amended and Restated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1990 AWA-13] dated
as of September 21, 1990, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 091
U.S. Registration No. N634AW
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<PAGE> 2
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of September 21,
1990 and amended and restated as of November 26, 1996 is entered into between
WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise
expressly provided herein, but solely as Owner Trustee under a Trust Agreement
[GPA 1990 AWA-13] dated as of September 21, 1990, as amended, and with its
principal place of business at Rodney Square North, Wilmington, Delaware 19890
(together with its successors and permitted assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors
and permitted assigns, "Lessee").
W I T N E S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective meanings for
all purposes of this Lease (including the Recitals) and shall be equally
applicable to both the singular and the plural forms of the terms defined
herein:
As used herein, the terms "Assigned Sublease", "Equipment Notes",
"Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through
Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate",
"Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as defined in the Pass Through Trust Agreement); and the term
<PAGE> 3
"Lease Amendment No. 1" shall have the meaning specified in the Refunding
Agreement.
"Affiliate" shall mean, with respect to any specified Person, any
other Person which, directly or indirectly, owns or controls, is controlled by
or is under common control with such specified Person. Control will be deemed to
exist based on (i) ownership of 25% or more of the voting securities of a Person
or (ii) the power to direct or elect or cause the direction or election of the
management and policies of a Person whether by contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a groupement
d'interet economique formed under the laws of the French Republic, and its
successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and described in
Lease Supplement No. 1 (or any airframe from time to time substituted for such
Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE
Model V2500 Engines described in Lease Supplement No. 1 (or any Engine
substituted therefor hereunder) with respect to such Airframe, whether or not
any such initial or substituted Engines may from time to time no longer be
installed on the Airframe or may be installed on any other airframe, (ii) Parts
or components thereof, (iii) spare parts or ancillary equipment or devices
furnished therewith under this Lease (including any separate equipment described
on one or more Lease Supplements hereto), (iv) the Aircraft Records and
Documents and all other logs, manuals and records with respect to such Aircraft,
and (v) all substitutions, replacements and renewals of any and all thereof.
"Aircraft Records and Documents" shall mean the items identified in
Exhibit B hereto, all of which shall be maintained in the English language.
"Airframe" shall mean (a) the Airbus Industrie model A320-231
aircraft (except Engines or engines from time to time installed thereon)
described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder,
and any such model aircraft (except Engines or engines from time to time
installed thereon) which may from time to time be substituted for such aircraft
(except Engines or engines from time to time installed thereon) pursuant to
Section 11(a)(i); and (b) any and all Parts so long as the same shall be
incorporated or installed on or attached to the Airframe, or so long as title
thereto shall remain vested in Lessor in
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<PAGE> 4
accordance with the terms of Section 9 hereof after removal from the Airframe;
provided, however, that at such time as an aircraft (except Engines or engines
from time to time installed thereon) shall be deemed part of the property leased
hereunder in substitution for the Airframe pursuant to the applicable provisions
hereof and the replacement Airframe shall have been subjected to the Lien of the
Indenture (if the Lien of the Indenture has not been discharged), the replaced
Airframe shall cease to be the Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair
market sales value" or "fair market rental value" shall mean the value that
would be obtained in an arm's-length transaction between an informed and willing
seller or lessor, as the case may be, and an informed and willing buyer or
lessee, as the case may be, both under no compulsion to sell and purchase or to
lease (and other than a lessee in possession or a used equipment scrap dealer),
as the case may be, as such value is determined by an appraisal which assumes:
(i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered
by this Lease (or any sublease) or any of the other Operative Documents or any
of the Financing Documents and the terms thereof; (ii) that such Aircraft,
Airframe, Engine or Part has been maintained in all respects in accordance with
the terms of this Lease (whether or not in fact in such condition), (iii) that
such Aircraft, Airframe, Engine or Part meets the return conditions specified in
Section 16 and Exhibit E (whether or not in fact meeting such conditions) and
(iv) that Lessee has removed the Removable Parts entitled to be removed under
Section 9(b) (it being agreed that no such removal is permitted in connection
with an appraisal pursuant to Section 18) and replaced any part which was
removed from the Aircraft as a result of such Removable Part being installed;
provided, however, that costs of removal from the location of current use and
costs of sale shall not be a consideration in determining such value except in
connection with any determination of "fair market sales value" or "fair market
rental value" pursuant to Section 18; and provided, further, that any
determination of "fair market sales value" or "fair market rental value"
pursuant to Section 18 shall be on an "as is, where is" basis in its actual
condition and location subject to this Lease and any sublease and any and all
Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee
shall, except for any appraisal
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<PAGE> 5
pursuant to Section 18 in which case only Lessor shall select such appraiser
(which appraiser does not have to be acceptable to Lessee), select an
independent nationally-recognized aircraft appraiser, mutually acceptable to
each of them, who shall make the determination as to the "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part
for which such appraisal is to be conducted. If Lessor and Lessee fail to agree
upon a mutually acceptable appraiser within ten (10) days, then each of Lessor
and Lessee shall select an appraiser and such determination shall be made by
such appraisers (if either party shall fail to appoint an appraiser within ten
(10) days after notice from the other party of the selection of its appraiser,
then the appraisal made by the other party's appraiser shall be determinative).
If the two appraisers chosen pursuant to the preceding sentence fail to agree
upon a determination of the "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after
their appointment, then such appraisers shall mutually choose a third appraiser
within ten (10) days thereafter, provided that if such appraisers fail to
mutually choose a third appraiser within said 10-day period, such appointment
shall be made by the American Arbitration Association (or any successor) in New
York, New York, and the three appraisers so chosen shall each make such
determination. The appraisal determined by each of the three appraisers chosen
pursuant to the preceding sentence shall be averaged and the appraisal furthest
from the average of the three appraisals shall be disregarded. The appraisal
determined by each of the two remaining appraisers shall be averaged and such
average shall be the appraised "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the
fees and expenses of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent specified in
Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to
Section 4(a)(i).
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<PAGE> 6
"Basic Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If
a Basic Rent Payment Date shall fall on a day which is not a Business Day, any
payment due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease Supplement No.
3.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banking institutions in New York, New York or Hartford,
Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which was to be
furnished by Braniff, Inc. or, if applicable, Original Head Lessee and installed
on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and any similar
equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation (except the
United States Government) domiciled in the United States of America and holding
a Certificate of Convenience and Necessity issued under Section 41102(a) of the
Federal Aviation Act by the Department of Transportation or any predecessor or
successor agency thereto, or, in the event such Certificates shall no longer be
issued, any corporation (except the United States Government) domiciled in the
United States of America and legally engaged in the business of transporting for
hire passengers or cargo by air predominantly to, from or between points within
the United States of America, and, in either event, operating commercial jet
aircraft, which also is a citizen of the United States (as defined in Section
40102 of the Federal Aviation Act) holding an air carrier operating certificate
issued by the Secretary of Transportation pursuant to chapter 447 of the Federal
Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air
Fleet Program administered by the United States Government and authorized under
10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or
substitute program of the United States Government.
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<PAGE> 7
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as amended and
the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether or not
incorporated, which is under common control with Lessee within the meaning of
Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated Consent
and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and
restated as of December 30, 1988, in the form attached to the Purchase
Agreement.
"Default" shall mean an event or condition which would constitute an
Event of Default with the lapse of time or the giving of notice or both.
"Delivery Date" shall mean September 28, 1990, being the date the
Aircraft was delivered to and accepted by the Original Head Lessee as Lessee
hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United
States of America.
"Engine" shall mean (i) each of the two IAE Model V2500 engines
listed by manufacturer's serial number in Lease Supplement No. 1 and initially
installed on the Airframe covered by such Lease Supplement, whether or not from
time to time thereafter no longer installed on the Airframe or installed on any
other aircraft or airframe, and (ii) any replacement engine which may from time
to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for any
Engine leased hereunder; together in each case with any and all Parts
incorporated or installed in or attached thereto or any and all Parts removed
therefrom so long as title thereto after removal from such Engine shall remain
vested in Lessor in accordance with the terms of Section 9 hereof. Except as
otherwise set forth herein, at such time as a replacement engine shall be so
substituted and leased hereunder and the replacement Engine shall have been
subjected to the Lien of the Indenture (if the Lien of the Indenture has not
been discharged), such replaced Engine shall cease to be an Engine hereunder.
The term "Engines"
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<PAGE> 8
means, as of any date of determination, both Engines then leased hereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one or
more clauses in Section 17.
"Event of Loss" shall mean any of the following events with respect
to the Aircraft, Airframe or either Engine: (a) loss of such property or the use
thereof due to theft or disappearance for a period in excess of sixty (60)
consecutive days, but in no event later than the last day of the Term; (b)
destruction or damage of such property that renders repair uneconomic or such
property permanently unfit for normal use by Lessee (or, if a Permitted Sublease
is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss
or disappearance of or damage to or destruction of such property which results
in an insurance settlement with respect to such property on the basis of an
actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any law, rule, regulation,
order or other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or
Engine in the normal course of Lessee's (or, if a Permitted Sublease is in
effect, the Permitted
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<PAGE> 9
Sublessee's) business of air transportation of passengers shall have been
prohibited for a period of six (6) consecutive months, unless Lessee (or the
Permitted Sublessee), prior to the expiration of such six-month period, shall
have undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit such normal use of such item of equipment by
Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall
have been so prohibited by any such Governmental Entity for a period of twelve
(12) consecutive months or is continuing on the last day of the Term; or (h) as
otherwise provided herein. An Event of Loss with respect to the Aircraft shall
be deemed to have occurred if an Event of Loss occurs with respect to the
Airframe which is a part of such Aircraft. An Event of Loss with respect to an
Engine shall not, absent an Event of Loss with respect to the Airframe, be
deemed an Event of Loss with respect to the Airframe.
"Excluded Property" shall have the meaning set forth in Section 9(b)
hereto.
"Expiration Date" shall mean the date specified in Lease Supplement
No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale
for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's
Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the
Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head
Lessee to Lessor.
"Federal Aviation Act" shall mean the sections of Title 49 of the
United States Code relating to aviation, as amended and in effect from time to
time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal year-end audited
consolidated balance sheet and statements of income and cash flow for the period
then ending, copies of which for the fiscal year ending December 31, 1995, have
been provided to Lessor prior to the date hereof.
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<PAGE> 10
"Financing Documents" shall mean the Lease Agreement, each Lease
Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement,
the Equipment Notes issued under the Indenture, the Intercreditor Agreement,
each Liquidity Facility, each Pass Through Trust Agreement and each supplement
thereto and any certificate delivered or entered into in accordance with the
foregoing, as amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in Exhibit
F-1, as amended, supplemented or otherwise modified from time to time, whose
principal place of business and legal domicile at the time of entering into the
applicable sublease is located in a country listed on Exhibit F-2, as amended,
supplemented or otherwise modified from time to time, and not prohibited by the
terms of the insurance then in effect, with which the United States has
diplomatic or, such as in the case of Taiwan, similar relations, in each case
which is obligated under the applicable sublease to perform all maintenance
required by applicable foreign governmental standards made mandatory to the
Aircraft by such jurisdiction and, to the extent not inconsistent therewith, all
FAA-airworthiness directives and other requirements made mandatory to the
Aircraft by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its
operations.
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<PAGE> 11
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and as
trustee under the Trust Agreement), the Trust Estate, Owner Participant, the
Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee
(in its individual capacity and as trustee under the Pass Through Trusts), the
Subordination Agent and each Liquidity Provider, and their respective successors
and permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership), and any
combination thereof and their respective officers, directors, agents, servants,
employees, subsidiaries, Affiliates and shareholders.
"Indenture" shall mean the Amended and Restated Trust Indenture and
Security Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, and amended
and restated as of November 26, 1996, as the same may be further amended,
supplemented or modified from time to time, between Indenture Trustee and
Lessor. The term "Indenture" shall also include the Indenture Supplements
entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company serving as
Indenture Trustee under the Indenture, and its successors and assigns.
"Interest Rate" shall mean (i) with respect to the portion of any
payment of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder, a per annum rate of
interest equal to the Past Due Rate applicable thereto under and as defined in
the Indenture computed on the basis of a 360-day year and twelve 30-day months
and (ii) with respect to any other amount, a per annum rate of interest equal to
the sum of the rate of interest publicly announced by Citibank, N.A., at its
principal office in New York City, as its prime or similar base rate from time
to time in effect from the date the amount becomes due to the date it is paid in
full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case
may be, and actual number of days elapsed.
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"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any Governmental
Entity; (ii) any treaty, pact, compact or other agreement to which any
Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as originally executed and as amended, supplemented or otherwise
modified from time to time, including, without limitation, by one or more Lease
Supplements, as a whole and not to any particular Section or other subdivision,
and any reference to a "Section " or an "Exhibit" shall refer to a Section or
Exhibit of this Lease, as so amended, supplemented or modified, unless expressly
provided to the contrary.
"Lease Identification" shall have the meaning set forth in Section
6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1, Lease
Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement
entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1990
AWA-13] No. 1 dated the Delivery Date between Lessor and Original Head Lessee,
as Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1990
AWA-13] No. 2 dated December 31, 1991 between Lessor and Original Head Lessee,
as Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA 1990
AWA-13] No. 3, substantially in the form of Exhibit D-1 hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its
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<PAGE> 13
individual capacity (and not as Indenture Trustee) not related to its interest
in the Aircraft or the administration of the Trust Estate or the Trust Indenture
Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the
Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture
Trustee in its individual capacity (and not as Indenture Trustee) not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of Indenture Trustee in its individual capacity (and not as Indenture
Trustee) which are in violation of any of the Operative Documents, or (iii)
Taxes imposed on or Claims against Indenture Trustee in its individual capacity
(and not as Indenture Trustee) which are excluded from indemnification by
Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) arising out of the voluntary or involuntary transfer
by Indenture Trustee in its individual capacity (and not as Indenture Trustee)
of all or any portion of its interest in the Aircraft, the Airframe, any Engine,
the Trust Estate, the Trust Indenture Estate or the Operative Documents (except
a Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals hereto.
"Lessor" shall have the meaning set forth in the Recitals hereto.
"Lessor's Lien" shall mean any Lien or disposition of title
affecting the Aircraft, the Airframe, any Engine or any Part arising as a result
of (i) any claim against Lessor, Owner Participant, Trust Company or any of
their Affiliates not related to the transactions contemplated by this Lease or
the other Operative Documents, the Financing Documents or the Purchase
Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company
or any of their Affiliates not expressly contemplated by this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents or not
permitted without consent (which consent has not been granted) by any party
hereto or thereto or that is in violation of any term of this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents; (iii)
Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner
Participant or any of their Affiliates or the consolidated group of taxpayers of
which any of them is a member which are not to be indemnified against by Lessee
under the Operative
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<PAGE> 14
Documents, the Purchase Documents or the Financing Documents or by Original Head
Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims
against the Trust Estate, Trust Company, Owner Participant or Lessor or any of
their Affiliates arising out of the transfer of all or any part of their
respective interest in the Aircraft, the Airframe, either Engine, the Trust
Estate, the Operative Documents or the Financing Documents other than any
transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or 20
(except Liens resulting from a transfer not permitted by such Section ) of this
Lease or pursuant to Section 10 of the Refunding Agreement; provided, however,
that there shall be excluded from this definition and Lessor shall not be
required to remove any Lien which would otherwise constitute a Lessor's Lien, if
it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Aircraft or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest, lease in the
nature of a security interest, statutory right in rem, or claim of any kind,
including any thereof arising under any conditional sale agreement, equipment
trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the Indenture
on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West Maintenance
Program approved by the FAA for America West Airbus model A320-231 aircraft in
effect on the date hereof or as modified with the approval of the FAA without
affecting, or any other FAA approved maintenance program which does not affect,
the return condition standards set forth in Section 16 and Exhibit E or (ii) if
the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any
other maintenance program for the Aircraft which is approved by the aviation
authority of the country of registry and complies with the requirements
applicable to maintenance of the Aircraft contained in the definition of Foreign
Air Carrier. The Maintenance Program shall encompass scheduled maintenance,
condition monitored maintenance, and on-condition maintenance of the Airframe,
Engines, and components of the Aircraft, including, but not
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<PAGE> 15
limited to, servicing, testing, preventive maintenance, repairs, structural
inspections, structure life improvements, system checks, overhauls, approved
modifications, service bulletins, engineering orders, airworthiness directives,
and corrosion control inspections and treatments. All modifications and
supplements to the Maintenance Program shall be provided to Lessor upon its
reasonable request and Lessor shall be given reasonable access to the
Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's Subsidiary,
IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be
applicable in any given circumstance, together in each case with any
subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French
societe a responsabilite limitee, which as of the date hereof is owned by Airbus
Industrie.
"Maximum Foreign Use Percentage" shall have the meaning specified in
Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such Person's
stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease Supplement,
any sublease, the Tax Indemnification Agreement, the Financing Documents, and
any certificate delivered or entered into pursuant to the foregoing, as amended,
supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease Agreement [GPA
1990 AWA-13], with respect to the Aircraft, dated as of September 21, 1990,
between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect
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<PAGE> 16
immediately prior to the Restatement Date, as more particularly described in
Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall mean the
Head Lease Tax Indemnification Agreement [GPA 1990 AWA-13], dated as of
September 21, 1990, and amended and restated as of the Restatement Date, between
the Original Head Lessee and Owner Participant, as amended, supplemented or
otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a
Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as defined in
the Original Head Lease) as in effect immediately prior to the Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft Lease
Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA
1990 AWA-14] amended and restated as of the Restatement Date between Wilmington
Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as
Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15]
amended and restated as of the Restatement Date between Wilmington Trust Company
as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended
and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as
of the Restatement Date between Wilmington Trust Company as Owner Trustee,
Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated
Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the
Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and
America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor and America West
Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement
[GPA 1991 AWA-E3] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee, each as amended, supplemented or otherwise modified from time to
time.
"Other Letters of Credit" shall mean any and all letters of credit
pursuant to Section 8(l) of the Other Leases.
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<PAGE> 17
"Owner Participant" shall mean _________________________________, a
Delaware corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as Owner
Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial Assignment,
Assumption, Release and Amendment Agreement, dated as of December 30, 1988,
among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended,
supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation Agreement
[GPA 1990 AWA-13], dated as of September 21, 1990, among Original Head Lessee,
Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender"
named therein, as amended by the Letter Agreement dated as of July 29, 1993, as
the same may be further amended, supplemented or otherwise modified from time to
time and as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(excluding complete Engines or engines), including Buyer Furnished Equipment,
which may now or from time to time be incorporated or installed in or attached
to or were provided by the Manufacturer with the Airframe or any Engine or so
long as title thereto shall remain vested in Lessor in accordance with the terms
of Section 9 hereof after removal from such Airframe or Engine. Except as
otherwise set forth herein, at such time as a replacement part shall be
substituted for a Part in accordance with Section 9 hereof, the Part so replaced
shall cease to be a Part hereunder.
"Payment Location" shall have the meaning set forth in Exhibit C, as
the same may be changed from time to time by Lessor as provided in Section 4(c).
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<PAGE> 18
"Permitted Lien" shall mean any Lien referred to in clauses (i)
through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in Section
6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier or,
after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United
States Government or an agency or instrumentality thereof which bears the full
faith and credit of the United States of America or (c) any other Person
approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person, corporation,
partnership, firm, joint stock company, joint venture, trust, estate,
unincorporated organization, association, Governmental Entity, or organization
or association of which any of the above is a member or a participant.
"Purchase Agreement" shall mean the Amended and Restated Airbus
A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated
as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft),
between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and
Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as
partially assigned to Parent pursuant to the Partial Assignment, to which Airbus
Industrie, as guarantor, has consented, and as the same may from time to time be
further amended, supplemented or otherwise modified to the extent permitted by
the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement, the Partial
Assignment and any other agreement, document or certificate delivered or entered
into pursuant to the foregoing, as amended, supplemented or otherwise modified.
"Removable Part" shall have the meaning set forth in Section 9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section 20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment
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<PAGE> 19
of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a
day which is not a Business Day, any payment due on such Renewal Rent Payment
Date shall be made on the next succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20
following the end of the Basic Term if Lessee shall have exercised its renewal
option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may be,
and Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have the
meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in Section 11.
"Responsible Officer" shall mean, with respect to Lessee, any of the
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or
Controller.
"Restricted Use Period" shall have the meaning specified in Exhibit
C.
"Return Occasion" shall mean the event that occurs when possession
of the Aircraft is to be returned from Lessee to Lessor at the end of the Term
of this Lease or upon Lessor taking possession pursuant to Section 18 or for any
other reason.
"Specified Investments" shall mean (i) direct obligations of the
United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral
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<PAGE> 20
pursuant to which an entity referred to in clause (iii) above or another
financial institution having a net worth of at least $750,000,000 and having a
rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase
any such obligation not later than ninety (90) days after the purchase of any
such obligation; and (v) money market funds which invest solely in obligations
described in clause (i); provided that if all of the above investments are
unavailable, the entire amounts to be invested may be used to purchase Federal
funds from an entity described in clause (iii) above; and provided further that
no investment shall be eligible as a "Specified Investment" unless the final
maturity or date of return of such investment is on or before the date which is
ninety (90) days from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date during
the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the
amount described in Section 20 (it being understood and agreed that the amounts
set forth in Exhibit A take into account fully the amount and application of
each installment of Basic Rent or Renewal Rent on each Stipulated Loss Value
Date (other than a Stipulated Loss Value Date that is a Basic Rent Payment Date
or Renewal Rent Payment Date) so that no additional credit of such Basic Rent or
Renewal Rent is to be made in respect thereof except as expressly provided
herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In the
event that it is necessary to determine a separate Stipulated Loss Value for the
Airframe or an Engine, such Stipulated Loss Value shall be based on the ratio
that the original cost to Lessor of the Airframe or such Engine bears to
Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date listed, or
with respect to any Renewal Term determined as set forth, on Exhibit A hereto.
"Supplemental Rent" shall mean any and all amounts, liabilities and
obligations other than Basic Rent and Renewal Rent which Lessee assumes or
agrees to pay to Lessor or any other Indemnitee hereunder or under any other
Operative Document, including, without limitation, (i) any payment of Stipulated
Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of
indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount
equal to average daily Basic Rent or Renewal Rent in connection with an
extension of the Term of this Lease as a result of (a) an
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<PAGE> 21
incipient Event of Loss and the operation of Section 11 hereof or (b) the need
to correct any failure of the Aircraft to satisfy the requirements of Section 16
and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to
any payment due to the Owner Trustee in respect of fees or expenses as provided
in Section 21(j) hereof; (vi) an amount equal to any payment due to the
Indenture Trustee in respect of fees or expenses as provided in the Indenture
and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any
Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through
Trust Agreement; (viii) the Pro Rata Share of any payment due to the
Subordination Agent in respect of fees, compensation, costs or expenses pursuant
to the Intercreditor Agreement; (ix) an amount equal to the amount specified in
clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to
the extent permitted by applicable Law, interest at the Interest Rate
calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or
average daily Basic Rent referred to in clause (iii) of this definition of
"Supplemental Rent", as the case may be, not paid on the due date thereof for
the period for which the same shall be overdue and (2) on any Supplemental Rent
not paid when due hereunder from and including the due date until the same shall
be paid. As used herein, "Pro Rata Share" means as of any date of determination
a fraction the numerator of which is the aggregate Principal Amount then
outstanding of the Equipment Notes issued under the Indenture and the
denominator of which is the aggregate principal balance then outstanding of all
"equipment notes" issued under the Indentures (as defined in the Intercreditor
Agreement).
"Tax Indemnification Agreement" shall mean the Amended and Restated
Sublease Tax Indemnification Agreement [GPA 1990 AWA-13], dated as of September
21, 1990, and as amended and restated as of November 26, 1996, between Original
Head Lessee and Lessee, as the same may be amended, supplemented or otherwise
modified from time to time.
"Taxes" shall mean any and all fees (including, without limitation,
license and registration fees), taxes (including, without limitation, sales,
personal property (tangible and intangible), transfer, fuel, leasing, use,
occupational, value added, excess profits, excise, gross receipts, franchise,
stamp, and income taxes), levies, imposts, withholdings, assessments, or other
taxes, duties or charges of any nature whatsoever, together with any
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<PAGE> 22
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in Lease
Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20,
the Renewal Term, in either case as extended or deemed extended as a result of
the occurrence of an event described in clause (iii) to the definition of
"Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1990 AWA-13]
dated as of September 21, 1990 as amended by Trust Supplement No. 1 and as
further amended by Trust Supplement No. 2 between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust Agreement"
shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA
1990 AWA-13] No. 1 dated the Delivery Date between Lessor and Owner Participant
for the purpose of bringing the Aircraft and the Original Head Lease into the
Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA
1990 AWA-13] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government of the
United States of America and any board, commission, department, division, organ,
instrumentality, court or agency thereof.
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<PAGE> 23
"Wet Lease" shall mean any arrangement whereby Lessee agrees to
furnish the Aircraft or the Airframe and Engine or engines installed thereon at
that time to a third party pursuant to which such Aircraft or the Airframe and
Engine or engines (i) shall be operated solely by regular employees of Lessee
possessing all current certificates and licenses required under the Federal
Aviation Act (it is understood that cabin attendants need not be regular
employees of Lessee) and Lessee otherwise maintains operational control and
possession thereof, and (ii) shall be maintained by Lessee in accordance with
its normal maintenance practices and this Lease, and otherwise the insurance
required hereunder shall be maintained and the Aircraft shall be used and
operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease the
Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor,
on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Aircraft was delivered to Lessee, and
Lessee accepted delivery of the Aircraft, on September 28, 1990.
(b) [Intentionally Left Blank]
(c) Acceptance of Aircraft. The Aircraft leased hereunder was
delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER
OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for all
purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive
evidence that, as between Lessor and Lessee, the Aircraft was in all respects
satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall commence on
the Delivery Date and shall continue until the Expiration Date; provided,
however, that the Term of this Lease may be earlier terminated pursuant to the
provisions hereof.
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<PAGE> 24
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the following as Rent
hereunder:
(i) Basic Rent. The Basic Rent, as set forth in Exhibit C
throughout the Basic Term hereof, in consecutive installments, in arrears as set
forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent
Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all Supplemental Rent, which
shall be due and payable ten (10) Business Days after demand unless otherwise
specifically provided. In the event of any failure on the part of Lessee to pay
any Supplemental Rent when due, Lessor shall have all rights, powers and
remedies provided for herein or by law or equity or otherwise in the case of
nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to pay
Supplemental Rent which is due and owing pursuant to the terms hereof shall
survive the expiration or termination of Lessee's obligation to pay Basic Rent
or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any provision in this Lease or
in any other Operative Document to the contrary, under all circumstances and in
any event, (i) the Stipulated Loss Value, together with the payment of
Supplemental Rent and all other Rent then due hereunder, as of any time and as
of the date of any payment thereof shall (both before and after giving effect to
any reductions therefrom) be in an amount at least sufficient to pay in full as
of such time or date the aggregate unpaid principal amount of the Equipment
Notes then outstanding and all accrued and unpaid interest (assuming interest
has been timely paid) thereon, and (ii) Basic Rent payable on any Basic Rent
Payment Date shall at least equal the aggregate amount of principal and interest
due and payable on the Equipment Notes on such Basic Rent Payment Date. It is
agreed, however, that no installment of Basic Rent or Stipulated Loss Value
shall be increased or adjusted by reason of (A) any attachment or diversion of
Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of
the terms of the Equipment Notes or the other Financing Documents made without
the prior written consent of Lessee or (C) the acceleration of any Equipment
Note due to the occurrence of any "Indenture Event of Default" (as defined in
the Indenture) which does not constitute an Event of Default hereunder. It is
further agreed that nothing in this Lease or any other Operative Document shall
be deemed
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<PAGE> 25
to constitute a guaranty of the value, utility or useful life of the Aircraft or
a guaranty in respect of interest, principal or any other amounts payable in
respect of or under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on which a
payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in the City of New York or Hartford, Connecticut as Indenture
Trustee may direct by thirty (30) days prior written notice to Lessee, except
for all Excepted Payments. All Excepted Payments, and, upon discharge of the
Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be
paid in such immediately available funds no later than 12:00 p.m. (noon), New
York City time, on the date payable hereunder, to Lessor or to Owner
Participant, as appropriate, in accordance with the payment instructions set
forth in Exhibit C or at such other address as Lessor may direct by thirty (30)
days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a
net lease. Lessee's obligations to pay all Rent and to perform all other
obligations hereunder are absolute and unconditional and shall not be affected
or reduced by any circumstances, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense, or other right which Lessee may have against
Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Aircraft, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
limitation, any breach by Lessor of its representations, warranties or covenants
contained herein or in the other Operative Documents; (ii) any defect in the
title, airworthiness, eligibility for registration under the Federal Aviation
Act, condition, design, operation, or fitness for use of, or any damage to or
loss or destruction of, the Aircraft (subject to the provisions of Section
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11(a)(ii) hereof), any interruption or cessation in the use of or possession
thereof by or availability to Lessee for any reason whatsoever, whether arising
out of or related to an act or omission of Lessee, Lessor, Original Head Lessee,
Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any
Person providing services with respect to the Aircraft or any other Person;
(iii) any Liens with respect to the Aircraft; (iv) the invalidity or
unenforceability or lack of due authorization or other infirmity of this Lease
or any sublease or any absence of right, power or authority of Lessor, Original
Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the
Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization,
or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any
sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any
other circumstance or happening of any nature whatsoever, whether or not similar
to any of the foregoing; it being the expressed intention of Lessor and Lessee
that all Rent payable hereunder shall be payable in all events, unless the
obligation to pay the same shall be terminated pursuant to the express
provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement, Lessee
hereby waives, to the extent permitted by applicable Law, any and all rights
which it may now have or which at any time hereafter may be conferred upon it,
by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer,
suspend or surrender this Lease or the Aircraft or any obligation imposed upon
Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee will not
seek to recover all or any part of any payment of Rent for any reason whatsoever
except manifest error.
If for any reason whatsoever this Lease shall be terminated in whole
or in part by operation of Law, except as specifically provided herein, Lessee
waives all rights (if any) to any diminution in its Rent obligations hereunder
and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in
Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the
case may be, payment and any Supplemental Rent payment at the time such payments
would have become due and payable in accordance with the terms hereof had this
Lease not been terminated in whole or
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in part, and so long as such payments are made and all other terms and
conditions hereof are complied with by Lessee, Lessor and Lessee will deem this
Lease to remain in full force and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall
be liable therefor, on account of any failure of the Original Head Lessee,
Lessor, Indenture Trustee or any other such Person to perform its express
obligations under this Lease and the other Operative Documents, or to enforce
any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS
DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE
EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND
SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER
THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR
ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND
NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER
PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED),
AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS
FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR
OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION
OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT,
INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY
ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM
COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF
USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY
WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY
SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR
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NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR
ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN
THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES,
RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i)
ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR
INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT
THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE,
OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii)
ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING,
MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES
AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF
ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT,
EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER
IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and
warrants that (x) on the Delivery Date Lessor had, and on the Restatement Date
Lessor has, the right to lease the Aircraft hereunder and (y) on the Delivery
Date the Aircraft was free of Head Lessor's Liens and on the Restatement Date
the Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor
covenants that it shall not create, incur, assume or suffer to exist any
Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor. Lessor hereby
represents and warrants, as of the Restatement Date that its representations and
warranties set forth in Section 9(b) of the Refunding Agreement were true when
made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor covenants and
agrees that Lessor will not, without the prior written consent of Lessee, amend,
modify, supplement or waive any provision of any Financing Document in such a
way as to materially increase Lessee's obligations hereunder or materially
reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor under
Sections 5(a) and 5(b) and this Section 5(c)
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shall survive the execution and delivery of this Lease and the delivery of the
Aircraft and the Restatement Date.
(d) Suppliers' Warranties. So long as a Default or an Event of
Default has not occurred and is continuing and provided that the Aircraft
continues to be maintained, modified and repaired as required hereunder, Lessor
hereby assigns or, if by their terms not assignable, agrees otherwise to make
available to Lessee the right to exercise in Lessee's name such rights as Lessor
may have or may subsequently obtain (but without representation or warranty by
or recourse to Lessor) with respect to any product warranty, service life
policy, trademark, patent or copyright infringement indemnity, or airframe or
propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's
Subsidiary, IAE or any subcontractor or vendor with respect thereto under the
Purchase Agreement (except those which were given directly to Parent, the
Original Head Lessee or any of their Affiliates and are not directly related to
the operator's use of the Aircraft), to the extent that the same may be assigned
or otherwise made available to Lessee, and Lessor agrees to exert its reasonable
efforts, at Lessee's expense and upon its request, to enforce such rights as
Lessor may have with respect thereto for the benefit of Lessee; provided,
however, that upon and during the continuance of a Default or an Event of
Default, such assignment or other rights which are otherwise made available to
Lessee shall immediately and automatically without further action be deemed
cancelled and, to the extent of any remaining interest held by Lessee, deemed
reassigned to Lessor and all such rights shall revert to Lessor automatically
including all claims thereunder whether or not perfected and all amounts payable
shall be paid to and held by Lessor. In no event, however, shall Lessee have any
right to amend, supplement or otherwise modify the Purchase Agreement (by change
order or otherwise). In connection with the foregoing, Lessee agrees to be bound
by and comply with all applicable terms, conditions and limitations of the
provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN
THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS
PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY
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MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT,
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE
INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no
Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as all necessary approvals of the FAA
and any other Governmental Entity having jurisdiction have been obtained, then
Lessee, without the prior written consent of Lessor, may, only to the extent
provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii)
below:
(1) subject any Engine to a normal interchange, maintenance,
servicing or pooling agreement or similar arrangement with a
Permitted Sublessee, in each case customary in the airline industry
of which Lessee is a part and entered into in the ordinary course of
its business; provided that no transfer of the registration of any
Engine shall be effected in connection therewith; and provided,
further, that (A) no such agreement or arrangement contemplates,
results in or requires the transfer of title to any Engine, and (B)
if Lessor's title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an
Event of Loss with respect to such Engine and not an Event of
Default and Lessee shall comply with Section 11(b) hereof in respect
thereof;
(2) deliver possession of the Aircraft, the Airframe or any
Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for testing,
service, storage, repair, maintenance, inspection or overhaul work
on such Aircraft, Airframe or Engine or any part thereof or for
alterations or modifications in or additions to such Aircraft,
Airframe or Engine to the extent required or permitted by the terms
of Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe to the
United States of America or any instrumentality or agency thereof
pursuant to a sublease;
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(4) (i) subject the Airframe to the Civil Reserve Air Fleet
Program and transfer possession of the Airframe or any Engine to the
United States Government pursuant to the Civil Reserve Air Fleet
Program, so long as Lessee shall promptly notify Lessor upon
transferring possession of the Airframe or any Engine to the United
States Government pursuant to the Civil Reserve Air Fleet Program
and provide Lessor with the name and address of the Contracting
Office Representative for the Military Airlift Command of the United
States Air Force to whom notices must be given; or
(ii) subject the Airframe to (a) a service contract with the
United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term, or
(b) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the Airframe)
owned by Lessee free and clear of all Liens except (A) Permitted
Liens and Liens which apply only to engines (other than the
Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an entirety)
and (B) the rights of participants under normal interchange
agreements which are customary in the airline industry and do not
contemplate, permit, result in or require the transfer of title to
the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or owned
by Lessee subject to a conditional sale or other security agreement;
provided that: (A) such airframe is free and clear of all Liens
except the rights of the parties to the lease or conditional sale or
other security agreement covering such airframe and except Liens of
the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and
the Lien of any mortgage which provides that each Engine leased to
Lessee hereby shall not become subject to the Lien thereof or to any
rights of any party thereunder other than Lessee (with respect to
Lessee's rights expressly granted hereunder), notwithstanding the
installation of such Engine on any airframe subject to the Lien of
such mortgage, unless and until Lessee shall become the
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owner of such Engine and Lessor shall have no further interest
therein, all pursuant to the express terms of this Lease; and (B)
there shall be in effect a written agreement of the lessor or
secured party of such airframe (which may be contained in the lease
or conditional sale or other security agreement covering such
airframe) substantially similar in effect to the agreement of Lessor
in Section 6(b) below whereby such lessor or secured party
effectively and expressly agrees that neither it nor its successors
or assigns will acquire or claim any right, title or interest in any
Engine by reason of such Engine being installed on such airframe at
any time while such Engine is subject to this Lease or is owned by
Lessor, and a copy of such agreement shall be provided to Lessor
upon written request;
(7) install an Engine on an airframe owned by Lessee, leased
to Lessee or purchased by Lessee subject to a conditional sale or
other security agreement under circumstances where neither Section
6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such
installation shall be deemed an Event of Loss with respect to such
Engine and Lessee shall comply with Section 11(b) hereof in respect
thereof, Lessor not intending hereby to waive any right or interest
it may have to or in such Engine under applicable Law until
compliance by Lessee with such Section 11(b);
(8) enter into a Wet Lease for the Aircraft or the Airframe
and engines installed thereon in the ordinary course of Lessee's
business for a period not extending beyond the Term; provided that
if Lessee shall enter into any Wet Lease for a period of more than
six months (including renewal options) Lessee shall provide to
Lessor written notice of such Wet Lease (such notice to be given at
least ten (10) Business Days prior to entering into such Wet Lease);
or
(9) sublease the Aircraft or the Airframe to any Permitted
Sublessee on the terms and conditions set forth in Section 6(a)(iii)
below.
(ii) Certain Limitations on Transfers. With respect to any
transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession by
reason of a transfer permitted by Section
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6(a) hereof (other than the transfer of an Engine which is deemed to
have been an Event of Loss) and any Wet Lease shall be expressly
subject and subordinate to all the terms of this Lease and the Lien
of the Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and
Lessee shall remain primarily liable hereunder for the performance
of all of the terms of this Lease to the same extent as if such
transfer had not occurred and no provision of this Lease shall be
deemed a waiver of the Lessor's rights hereunder or under the other
Operative Documents nor discharge or diminish any of Lessee's
obligations hereunder or under the other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease, Permitted
Sublease or other relinquishment of possession of the Aircraft, the
Airframe or any Engine pursuant to the terms of this Section 6(a)
shall be permitted if such Wet Lease, Permitted Sublease or other
relinquishment of possession would cause the Aircraft, the Airframe
or such Engine to be "tax-exempt use property" within the meaning of
Section 168(h) of the Code or cease to be "Section 38 property"
within the meaning of Section 48(a) of the Code (as determined after
the application of Section 47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted Sublease or
other relinquishment of possession shall not extend beyond the Basic
Term or the Renewal Term (if Lessee shall have exercised its option
to renew this Lease in accordance with the terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable;
(6) The sublessee under any Permitted Sublease, in its consent
thereto, shall confirm that from and after the occurrence and
continuance of an Event of Default and, unless an Event of Default
specified in Section 17(e), (f) or (g) of this Lease has occurred
and is continuing, this Lease being deemed or declared
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in default, Lessor (and, so long as the Lien of the Indenture shall
not have been discharged, Indenture Trustee) shall be entitled to
enforce directly and in its own name all representations,
warranties, indemnities, covenants and agreements under the
applicable Permitted Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I) the
Aircraft or Airframe may not be operated or used other than as
provided in this Lease and shall be maintained and operated as
required hereunder, (II) Lessor may avoid or terminate such sublease
following an Event of Default hereunder and (III) to the extent not
accomplished by an assignment of the Permitted Sublease, upon the
occurrence of an Event of Default hereunder, Lessee's rights under
such Permitted Sublease shall automatically be deemed assigned to
Lessor; and (B) be a "net lease" in accordance with industry
practice and shall be comparable to, or more restrictive than, this
Lease and under such Permitted Sublease (except a sublease to the
United States Government or a Foreign Air Carrier after the
Restricted Use Period), Lessee as lessor under such Permitted
Sublease, must be entitled to the same benefits under 11 U.S.C.
Section 1110 as Lessor is entitled hereunder and such Permitted
Sublease shall contain provisions regarding such Section 1110 which
are substantially the same as the related provisions of this Lease.
In addition, from and after the occurrence and continuance of an
Event of Default, all rent and other amounts payable by the
Permitted Sublessee under such Permitted Sublease shall be paid
directly to Indenture Trustee and, upon discharge of the Lien of the
Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any sublease
pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or
Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under
such sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the date
such sublease is entered into, (B) in the event that the Permitted
Sublessee under such sublease is a Foreign Air Carrier (other than a
Foreign Air Carrier principally based in Taiwan), the United
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<PAGE> 35
States maintains diplomatic relations with the country in which such
proposed Permitted Sublessee is principally based at the time such
sublease is entered into (or, in the case of a sublease to a
proposed Permitted Sublessee principally based in Taiwan, maintains
diplomatic relations at least as good as those in effect on the
Restatement Date) and (C) in the event that the Permitted Sublessee
under such sublease is a Foreign Air Carrier, Lessor and the
Indenture Trustee shall have received an opinion of counsel to
Lessee, in form and substance reasonably satisfactory to Owner
Participant and the Indenture Trustee, to the effect that (I) the
terms of the proposed sublease will be legal, valid, binding and
(subject to customary exceptions in foreign opinions generally)
enforceable against the proposed Permitted Sublessee in the country
in which the Permitted Sublessee is principally based, (II) there
exist no possessory rights in favor of the Permitted Sublessee under
such sublease under the laws of such Permitted Sublessee's country
of domicile that would, upon bankruptcy or insolvency of or other
default by Lessee, prevent the return or repossession of the
Aircraft in accordance with the terms of this Lease, (III) (unless
Lessee shall have agreed or is required to provide insurance
covering the risk of requisition of use of the Aircraft by the
government of the country of such Permitted Sublessee's country of
domicile) the laws of such Permitted Sublessee's country of domicile
require fair compensation by the government of such jurisdiction
payable in currency freely convertible into dollars for the loss of
use of the Aircraft in the event of the requisition by such
government of such use, (IV) the Permitted Sublessee is either not
entitled to sovereign immunity, or has effectively waived such
sovereign immunity, with respect to its rights and obligations under
the proposed sublease; (V) the laws of such Permitted Sublessee's
country of domicile would give recognition to Lessor's title to the
Aircraft, to the registry of the Aircraft in the name of the Lessor
(or Lessee, as "lessee", or the proposed Permitted Sublessee, as
"sublessee", as appropriate) and to the Lien of the Indenture; (VI)
it is not necessary under the laws of such Permitted Sublessee's
country of domicile, solely as a consequence of such subleasing and
without giving effect to any other activity of Owner Participant,
Owner Trustee or Indenture Trustee or any Affiliate thereof, as the
case may be, for the Owner Trustee, the Owner Participant or the
Indenture Trustee to qualify
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to do business in such jurisdiction and (VII) if the Owner
Participant so requests, (x) under the laws of such Permitted
Sublessee's country of domicile there is no tort liability of the
owner of an aircraft not in possession thereof (it being agreed that
in the event this opinion cannot be given in a form reasonably
satisfactory to Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to Owner Participant is provided
to cover such risk), and (y) such other matters as the Owner
Participant reasonably requests, provided, however, that no sublease
shall extend beyond the expiration of the Basic Term or any Renewal
Term then in effect.
Any Permitted Sublease shall expressly provide that the rights
of any Permitted Sublessee shall be expressly subject and subordinate to all the
terms of this Lease and to the Lien of the Indenture (if it has not been
discharged), including, without limitation, the covenants contained in Sections
6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to
Section 18 hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder or under the other Operative Documents, and such rights shall
continue as if such Permitted Sublease had not occurred. Any Permitted Sublease
shall expressly prohibit any further sub-sublease or assignment or any other
similar transfer of the Aircraft, Airframe or any Engine or rights thereto by
the Permitted Sublessee. Lessee shall provide to the Owner Participant and the
Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such
notice to be given not later than ten Business Days prior to entering into any
Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of
each Permitted Sublease together with an assignment, as security for Lessee's
obligations hereunder, of such Permitted Sublease, and if Lessor or the
Indenture Trustee so requests, a consent thereto from such Permitted Sublessee,
substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days
following the effective date of such Permitted Sublease.
(b) Reciprocal Recognition of Rights. In the event the lessor
or secured party of any airframe leased to
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Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee)
is subject to a conditional sale or other security agreement in accordance with
Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security
agreement covering such airframe also covers an engine or engines owned by the
lessor under such lease or subject to a security interest in favor of the
secured party under such conditional sale or other security agreement, Lessor
hereby agrees for the benefit of such lessor or secured party that Lessor will
not acquire or claim, as against such lessor or secured party, any right, title
or interest in any such engine as the result of such engine being installed on
the Airframe at any time while such engine is subject to such lease or
conditional sale or other security agreement and owned by such lessor or subject
to a security interest in favor of such secured party. Lessor also hereby agrees
for the benefit of the mortgagee under any mortgage complying with Section
6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased
to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as
against such mortgagee, any right, title or interest in any engine subject to
the lien of such mortgage as the result of such engine being installed on the
Airframe at any time while such engine is subject to the lien of such mortgage.
(c) Lawful Insured Operations. Lessee will not permit the
Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used
or operated in violation of any Law of any Governmental Entity having
jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration issued by any such authority or any manufacturer's
specifications, service bulletins or other requirements, including, without
limitation, any manufacturer's requirements as may be applicable to keep in full
force and effect each material warranty, product or performance guaranty,
service life policy or the like, in each case, to the extent made mandatory for
Part 121 operators similarly situated to Lessee or the Permitted Sublessee if
the Aircraft is registered with the FAA, or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered in accordance with
Section 11 of the Refunding Agreement, unless the validity thereof is being
contested in good faith and by appropriate proceedings, but only so long as such
proceedings do not involve any danger of sale, forfeiture or loss of the
Aircraft or impair the interest of Lessor therein or impair the validity or
priority of the
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Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner
Participant or Indenture Trustee and are not inconsistent with any insurance
required to be maintained by Lessee hereunder. In the event that such Law or
other requirement requires alteration of the Aircraft during the Basic Term or
the then-current Renewal Term, Lessee shall comply therewith at its sole expense
and shall maintain the same in proper condition for operation under such Laws
and other requirements. Lessee shall not operate in any manner or locate in any
place the Aircraft, or suffer or permit the Aircraft to be operated by a
Permitted Sublessee or otherwise in any manner or located by a Permitted
Sublessee or otherwise in any place (i) unless the Aircraft is covered by
insurance or United States Government indemnity as required by the provisions
hereof or (ii) contrary to the terms of such insurance or United States
Government indemnity. Lessee also agrees not to operate or locate the Aircraft
or suffer or permit the Aircraft to be operated or located in any area excluded
from coverage by any insurance policy issued pursuant to the requirements of
this Lease or in any war zone unless insured or indemnified by the United States
of America therefor, except in the case of operation pursuant to a sublease or
contract with, or as a result of a requisition (not constituting an Event of
Loss) by, the United States of America, and then only if Lessee has obtained
insurance or an indemnity (in lieu of such insurance) from the United States of
America covering such risks, in the amounts and otherwise as required by this
Lease.
(d) Maintenance. Lessee, at its own cost and expense, shall:
(i) perform or cause to be performed all service, repair, maintenance, overhaul,
inspections, alterations, modifications, and testing (A) in accordance with good
airline industry practice and in such manner to provide complete data and
documentation necessary to substantiate certification, (B) as may be necessary
and required under, and in compliance with, applicable Law, including, without
limitation, FAA rules, regulations and other requirements, any other applicable
rules, regulations and requirements by any other applicable Governmental Entity,
the Maintenance Program, airworthiness directives having a compliance date
during the Term, and the service bulletins and other requirements of any
manufacturer, including, without limitation, such requirements as may be
applicable to keep in full force and effect any and all material warranties,
product and performance guaranties, service life policies, indemnities or the
like, (C) except during any period that a Permitted Sublease is in effect, in
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the same manner and with the same care, including regard for the status and
technical condition of the Aircraft, as shall be the case with respect to
similar aircraft and engines owned by Lessee without discrimination and as if
Lessee owned the Aircraft and was going to use the Aircraft in continued regular
customer service after the expiration of the Term, and consistent with good
industry practice, and during any period in which a Permitted Sublease is in
effect, in the same manner and with the same care, including regard for the
status and technical condition of the Aircraft, as shall be the case with
respect to similar aircraft and engines owned by such Permitted Sublessee
without discrimination and as if the Permitted Sublessee owned the Aircraft and
was going to use the Aircraft in continued regular customer service after the
expiration of the Permitted Sublease, and consistent with good industry
practice, provided, however, that in all circumstances the Aircraft shall be
maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance
standards required by, or substantially equivalent to those required by the
central civil aviation authority of the country of registry, and, to the extent
not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as
good a condition as when delivered to Lessee, ordinary wear and tear excepted,
and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to
be kept in such condition as is necessary to enable the airworthiness
certification of such Aircraft to be maintained in good standing at all times
under the Federal Aviation Act and any other applicable law, or the applicable
laws of any other jurisdiction in which the Aircraft may be registered in
accordance with Section 11 of the Refunding Agreement (provided that if any
grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee
is contesting in good faith such grounding, Lessee shall not be deemed in
violation of this maintenance covenant); and (iii) maintain in English all
records, logs and other materials required by, and in a manner acceptable to,
the FAA or any other Governmental Entity having jurisdiction and as provided
under the Maintenance Program and Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the Aircraft at
all times, at its expense, to be duly registered during the Restricted Use
Period and, subject to Section 11 of the Refunding Agreement, thereafter under
the Federal Aviation Act in the name of Lessor or any successor or assignee, so
long as (i) while the Aircraft is registered under the Federal Aviation Act,
each of the Lessor or its successors or assigns is a "citizen of the United
States" as
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defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the
applicable parties to the Refunding Agreement cooperate with Lessee with respect
thereto as reasonably requested by Lessee. Lessee shall not register the
Aircraft or permit the Aircraft to be registered under any Laws other than the
Federal Aviation Act at any time except as provided in Section 11 of the
Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this Lease
at all times. At any time after the Restricted Use Period, Lessor, upon
compliance with all of the terms of Section 11 of the Refunding Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions reasonably required to change the registration of the Aircraft to
another country.
Lessee agrees at its expense to place such appropriate insignia,
plates and other identification ("Lease Identification") in the cockpit of the
Aircraft and on each Engine showing title thereto and the Lien of the Indenture
as designated by Lessor and as Lessor may from time to time reasonably request.
Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten
or cause to be fastened in the cockpit of the Airframe in a location reasonably
adjacent to and not less prominent than the airworthiness certificate for the
Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease
Identification in the form set forth in Exhibit C hereto or with any other
appropriate information in any other form subsequently designated by Lessor to
Lessee. Except as provided herein, Lessee will not allow the name of any Person
to be placed on the Aircraft or either Engine as a designation that would be
reasonably interpreted as a claim of ownership or Lien; provided, however, that
Lessee may cause the Airframe and Engines to have placed thereon the customary
colors and insignia of Lessee or any Permitted Sublessee under a Permitted
Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor, Owner
Participant and Indenture Trustee such information concerning the location,
condition, use and operation of the Aircraft as Lessor, Owner Participant or
Indenture Trustee may reasonably request. Lessee shall permit, or cause any
sublessee to permit, any person designated by Lessor, Owner Participant or
Indenture Trustee on reasonable prior notice at reasonable times to visit,
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inspect and survey the Aircraft (including, without limitation, a visual "walk
around" inspection which may include going on board the Aircraft, and inspecting
the Aircraft during maintenance checks when panels and bays are open and subject
to view), its condition, use, and operation, and the records maintained in
connection therewith, and to visit and inspect the properties and to discuss the
affairs, finances and accounts of Lessee with the principal officers of Lessee,
provided, that so long as no Default or Event of Default has occurred hereunder
inspections shall be endeavored to be performed during regularly scheduled
maintenance checks of the Aircraft. Each such inspection or survey shall be
conducted so as to not unreasonably interfere with the business of Lessee or the
maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or
Indenture Trustee's request, Lessee will notify such Person of the next
scheduled maintenance check for the Airframe or any Engine. Lessor, Owner
Participant and Indenture Trustee shall have no duty to make any such inspection
and shall not incur any liability or obligation by reason of not making any such
inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to
object to any condition or procedure observed or observable in the course of an
inspection hereunder shall not be deemed to waive or modify any of the terms of
this Lease with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish Lessor, until
the expiration or other termination of the Term of this Lease, the following:
(i) within sixty (60) days following the end of each quarter
of Lessee's fiscal year, except the last such quarter of such year, commencing
after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such report, an unaudited consolidated balance sheet of Lessee and its
consolidated subsidiaries prepared by it as of the close of the period ended,
together with the related statements of income and cash flows for such period,
and in each case certified by a Responsible Officer of Lessee as having been
prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial
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position for such period then ended in accordance with such principles and
practices (subject to normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close of
each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such reports, an audited consolidated balance sheet, income statement, and cash
flow statement of Lessee and its consolidated subsidiaries, as of the close of
such fiscal year, and in each case as certified by independent public
accountants, including their certificate and accompanying comments, as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices, without
qualification as to the scope of the audit or non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of all
reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934,
as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of insurance
required to be maintained hereunder, a certificate signed by the Approved Broker
of Lessee as to the due compliance with the insurance provisions of Section 12
hereof with respect to the Aircraft, together with certificates of insurance
evidencing such insurance and the opinion provided for in Section 12(f);
(v) together with each set of financial statements referred to
in clauses (i) and (ii), a certificate signed by a Responsible Officer of
Lessee, to the effect that such officer has reviewed the relevant terms of this
Lease and has made, or caused to be made under his or her supervision, a review
of the transactions and condition of Lessee during the accounting period covered
by such financial statements, and that such review has not disclosed the
existence during such accounting period, nor does such officer have any
knowledge of the existence, as at the date of such certificate, of any condition
or event which constitutes a Default or an Event of Default, or, if such
condition or event which constitutes a Default or an
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Event of Default existed or exists, specifying the nature and period of
existence thereof and what action Lessee has taken or is taking or proposes to
take with respect thereto;
(vi) as soon as practicable after becoming aware thereof,
notice of damage or destruction to the Aircraft, either Engine or any Part with
a repair or replacement cost (including labor charges) in excess of $1,000,000;
(vii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
(viii) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in
Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so long as it
shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier, including,
without limitation, its status so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes
imposed upon it, or upon its income or profits, or upon any property belonging
to it, on or prior to the due date thereof, including any extensions which have
been duly obtained or granted; provided, however, that Lessee shall not be
required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal liability
on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with
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or merge into or with any other corporation or other Person, and Lessee shall
not convey, transfer, lease or otherwise dispose of all or substantially all of
its property and other assets (in one or a series of transactions) to any
corporation or other Person, unless:
(i) the Person formed by or surviving such consolidation or
merger or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
(the "Successor Entity"): (A) shall be a corporation organized and existing
under the Laws of the United States of America or any State thereof or the
District of Columbia; (B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded to all or substantially all
of such property and other assets (including, without limitation, all or
substantially all of Lessee's property and other assets) as an entirety and,
unless the Owner Participant otherwise agrees, shall have a Net Worth of not
less than Lessee's Net Worth immediately prior to such transaction; (C) shall be
a "citizen of the United States" of America as defined in Section 40102(a)(15)
of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall
execute and deliver to Lessor and Indenture Trustee such recordations and
filings with any Governmental Entity and such other documents as Lessor
determines shall be reasonably necessary or advisable (including, without
limitation, to preserve and protect the interests of the Lessor and the priority
of the Lien of the Indenture (if it has not been discharged)) to evidence, or in
connection with, such consolidation, merger, sale, lease, transfer or other
disposition and an agreement, in form and substance reasonably satisfactory to
Lessor, which is a legal, valid, binding and enforceable assumption by such
Successor Entity of the due and punctual performance and observance of each
covenant and condition of this Lease and the other Operative Documents to which
Lessee is a party and agreement to be bound thereby, and an officer's
certificate to such effect, and to the effect that the other requirements of
this paragraph have been satisfied, and a legal opinion from counsel to such
effect and otherwise in such form and substance reasonably satisfactory to
Lessor; and
(ii) prior to and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing.
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No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each calendar year
and within 60 days of a request by Lessor or Owner Participant, or such shorter
period as may be set forth in any written request by the Internal Revenue
Service for information or documents, Lessee shall furnish in writing to Lessor
or Owner Participant such information and documents (or copies thereof)
regarding the Aircraft as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its Federal and state income tax returns (or to permit the filing of the Federal
and state income tax returns of any affiliated group of corporations filing a
consolidated return of which Lessor is a member), or to maintain or defend any
claims related thereto and promptly, after reasonable notice, furnish to Lessor
or Owner Participant such information as may be reasonably requested by Lessor
or Owner Participant or the applicable Governmental Entity as may be required to
enable Lessor or Owner Participant to file any reports required to be filed by
it with any Governmental Entity because of its ownership or other interest in
the Aircraft, the Airframe or the Engines.
(g) Place of Business. At all times while this Lease is in effect,
Lessee will not, without thirty (30) days prior written notice to Lessor and
Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the Aircraft,
Airframe or Engines only in commercial passenger operations and related cargo
operations. Unless Owner Participant otherwise agrees, during the Restricted Use
Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the
Aircraft, Airframe or Engines to be used either "predominantly outside the
United States" within the meaning of Section 48(a)(2) of the Code, or in such
manner that the percentage of the income, deduction or credit attributable to
the Aircraft, Airframe or Engines for federal income tax purposes during any
taxable year of the Lessor considered to be from foreign sources exceeds the
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Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees,
prior to permitting the Aircraft to be operated in any member state of the
European Union or other European country, Lessee shall deliver to Lessor (i) a
representation and warranty to the effect that Lessee (or any Permitted
Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant
air traffic control authority over delinquent charges payable by it and (ii) a
letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or
other relevant air traffic control authority pursuant to which Lessee (or such
Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's
request from time to time, a statement of account of all sums due by Lessee (or
such Permitted Sublessee) to the authority in respect of all aircraft
(including, without limitation,the Aircraft) operated by Lessee (or such
Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would not have
entered into this amended and restated Lease unless it had available to it the
benefits of a lessor under Section 1110 of Title 11 of the United States Code.
Lessee covenants and agrees with Lessor that to better ensure the availability
of such benefits, Lessee shall support any motion, petition or application filed
by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby
Lessor seeks recovery of possession of the Aircraft under said Section 1110 and
shall not in any way oppose such action by Lessor unless Lessee shall have
complied with the requirements of said Section 1110 to be fulfilled in order to
entitle Lessee to continued use and possession of the Aircraft hereunder. The
acknowledgement, covenant and agreement contained in this Section 8(i) shall
continue in full force and effect and survive the expiration or other
termination of this Lease and are expressly made for the benefit of and shall be
enforceable by the Lessor, the Owner Participant and, if the Lien of the
Indenture has not been discharged, the Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or obtain, and maintain
in full force and effect, each and every consent, license, approval, notice,
registration, filing or other action with any Governmental Entity necessary or
advisable in connection with the operation or use of the Aircraft, the Airframe,
any Engine or Part or the execution, delivery or performance of this Lease or
the enforcement thereof against Lessee.
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(k) Security Opinion; Annual Certificate. (i) During such times that
the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish
to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period covered by the
opinion of counsel rendered on the Restatement Date, any
opinion of counsel rendered pursuant to Section 11(C) of the
Refunding Agreement, and any opinion of counsel rendered
pursuant to this Section 8(k)(i) and (Y) upon any change in
Law that would render the opinion of counsel rendered on the
Restatement Date or such immediately preceding opinion of
counsel inaccurate, an opinion of counsel with respect to
Lessee and the FAA reasonably satisfactory to each addressee
of such opinion (which counsel may be internal legal counsel
of Lessee and FAA counsel) stating, in the opinion of such
counsel, that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i) the
appropriate Operative Documents and any supplements and
amendments thereto and (ii) such other appropriate documents,
as is necessary to maintain the perfection of Lessor's title
to and/or interest in and Indenture Trustee's security
interest in the Aircraft and the Operative Documents for such
period of time as reflects the then-current applicable Law,
reciting the details of such actions; or
(2) at any time that an opinion is not required pursuant to
Section 8(k)(i)(1), annually, a certificate reasonably
satisfactory to each recipient thereof signed by a Responsible
Officer of Lessee certifying that no such action is necessary
to maintain the perfection of such title and/or interest and
security interest.
(ii) During such times that the Aircraft is registered under any
Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to
Indenture Trustee annually (but in any case, (X) prior to the expiration of the
time period covered by any opinion of counsel rendered pursuant to Section 11(C)
of the Refunding Agreement, and any opinion of counsel rendered pursuant to this
Section
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8(k)(ii) and (Y) promptly upon any change in Law that would render such
immediately preceding opinion of counsel inaccurate), an opinion of counsel
reasonably satisfactory to each addressee of such opinion stating, in the
opinion of such counsel, that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i) the appropriate Operative
Documents and any supplements and amendments thereto and (ii) such other
appropriate documents, as is necessary to maintain the perfection of Owner
Trustee's title to and/or interest in and Indenture Trustee's security interest
in the Aircraft and the Operative Documents for such period of time as reflects
the then-current applicable Law, reciting the details of such actions.
(l) Letter of Credit. As security for the obligations to Lessor,
Lessee shall provide to Lessor, as named beneficiary thereof, one or more
irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof shall be available
for drawdown thereunder and payable in New York, New York, on demand at any
time, if a Default under Section 17(e), (f) or (g) or an Event of Default has
occurred, which amount may be applied, retained or utilized as provided in the
penultimate paragraph of this Section 8(l).
(ii) be maintained in full force and effect at all times until
ninety-one (91) days after the Expiration Date with a commercial bank acceptable
to Lessor, in its sole and absolute discretion, having a long-term unsecured
debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing
bank's credit rating is lower than such rating, Lessee shall replace such Letter
of Credit issuer within five Business Days of any such reduction in rating with
a commercial bank meeting such rating requirement), provided, that a Letter of
Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited,
will be acceptable to Lessor for so long as The Industrial Bank of Japan,
Limited maintains a long term unsecured debt rating at least equal to its rating
on the date hereof;
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(iii) be expressly designated as transferrable and assignable;
and
(iv) permit partial drawings. If the Letter of Credit is still
in effect at the end of the Term, or the Lessor is holding proceeds of the
Letter of Credit that were retained and not applied as provided herein then
Lessor shall return the Letter of Credit to Lessee or terminate it and/or return
any retained and unapplied proceeds, ninety-one (91) days following the date of
such expiration or other termination of this Lease so long as no Default or
Event of Default has occurred or is continuing hereunder or under any Other
Lease, upon payment in full of all amounts then due and owing to Owner Trustee
and Owner Participant under the Operative Documents.
If an Event of Default has occurred or is continuing under this
Lease or an Event of Default has occurred or is continuing under any Other Lease
(as therein defined), in addition to any other rights and remedies Lessor may
have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform Commercial
Code as adopted in New York) or equity and upon exercising its rights under the
Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
the payment of Rent, Lessee's right to apply the same to such claim shall be
limited to amounts which would (absent such Event of Default) be distributable
under the Indenture at the time such payment is made to Lessor, Owner
Participant or any of their respective Affiliates (and shall not include any
amounts distributable to Indenture Trustee in its individual capacity or to the
Note Holders); provided further, however, that neither the amount so applied at
any one time nor the aggregate amount so applied at different times shall reduce
the amount of any installment or payment of Rent (whether
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upon the termination of the Lease or otherwise) payable by Lessee to an amount
insufficient to pay in full the amounts required to be paid on account of the
principal of and any interest on the Equipment Notes or otherwise owing to a
Note Holder. Lessee shall not be entitled to any refund or credit with respect
to any amounts so applied. Any amount retained shall be considered the property
of Lessor and Lessor may commingle such amount with its general funds and
Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum
extent permitted by applicable Law, any interest therein. Lessee shall not be
entitled to any interest or other earnings on such retained amount and such
amount shall not be refundable.
On application of all or any portion of the amounts drawn under the
Letter of Credit or any Other Letters of Credit in accordance with this Section
8(l), or the Other Leases, Lessee shall on demand reinstate the amount of the
Letter of Credit or Other Letters of Credit, as the case may be, to its or their
full Face Amount or provide to Lessor one or more additional Letters of Credit
meeting the requirements of this Section 8(l), so that the Letter of Credit and
each of the Other Letters of Credit at all times equals the original Face Amount
provided for herein. During such times as Lessor shall elect to hold all or part
of the proceeds of the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee
shall not be obligated to reinstate the amount of the Letter of Credit or
Letters of Credit, as the case may be, in respect of the proceeds so held.
Section 9. Replacement of Parts; Alterations, Modifications and
Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense, will
promptly replace, or cause to be replaced, all Parts which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever. In
addition, in the ordinary course of maintenance, service, repair, overhaul or
testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may at its own cost and expense remove any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and
expense such Parts as promptly as
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possible. All replacement Parts shall be free and clear of all Liens (except for
pooling arrangements to the extent permitted by paragraph (c) of this Section
and Permitted Liens), be in at least the equivalent or better modification
status and service bulletin accomplishment status, be fully interchangeable as
to form, fit and function and shall be in as good operating condition as, and
have a value, remaining useful life and utility at least equal to, the Parts
replaced (assuming such replaced parts were in the condition and repair in which
they were required to be maintained by the terms hereof).
All Parts which are at any time removed from the Aircraft shall
remain the property of Lessor, subject to the Lien of the Indenture if it has
not been discharged, and subject to this Lease no matter where located until
such time as such Parts shall be replaced by parts which have been incorporated
or installed in or attached to the Aircraft and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Aircraft as above
provided, or as provided in Section 9(c), without further act, (i) title to the
removed Part shall thereupon vest in Lessee free and clear of all rights of
Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no
longer be deemed a Part hereunder, (ii) title to such replacement Part shall
thereupon vest in Lessor and become subject to the Lien of the Indenture if it
has not been discharged, and (iii) such replacement Part shall become subject to
the Lien of the Indenture (if it has not been discharged) and this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(b) Alterations, Modifications and Additions. Lessee, at its own
cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine to the extent
made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines
or Parts from time to time to meet the applicable standards of the FAA or under
any Law of any Governmental Entity having jurisdiction or issued by the
manufacturer of the Airframe, Engines or Parts. In addition, so long as no
Default or Event of Default has occurred and is continuing, Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may
from time to time make such alterations and modifications in and additions to
the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee)
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may deem desirable in the proper conduct of its business, provided, no such
alteration, modification or addition diminishes the value, remaining useful life
or utility, or impairs the condition or airworthiness, of the Airframe, either
Engine or any Part below that immediately prior to such alteration, modification
or addition assuming that the Airframe, Engines and Parts were then of the
value, utility and remaining useful life and in the condition and airworthiness
required by the terms of this Lease. Except as otherwise provided herein, title
to all Parts incorporated or installed in or attached or added to the Aircraft
as the result of such alteration, modification or addition, shall immediately
vest in Lessor and become subject to the Lien of the Indenture (if it has not
been discharged) and this Lease, without the necessity for any further act of
transfer, document or notice. Notwithstanding the foregoing sentence of this
Section 9(b), Lessor agrees that so long as no Default or Event of Default shall
have occurred and be continuing Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may, at such time during the Term for the
Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in
addition to, and not in replacement or substitution for, any Part originally
incorporated or installed in or attached to, or delivered with, the Aircraft on
the Delivery Date or any Part in replacement of, or substitution for, any such
originally incorporated, installed, attached or delivered Part, (ii) such Part
is not required to be incorporated or installed in or attached or added to the
Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the
insurance required by Section 12 and (iii) such Part can be removed from the
Aircraft without causing any material damage thereto and without diminishing or
impairing the value, utility, remaining useful life, condition or airworthiness
which the Aircraft would have had at such time had such alteration, modification
or addition not occurred. Upon the removal by Lessee of any such Part as
provided in the preceding sentence, title thereto shall, without further act,
vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
and such Part shall no longer be deemed part of the Aircraft (such a part is
herein called a "Removable Part"). Any Part not removed by Lessee as above
provided prior to the return of the Aircraft to Lessor hereunder, whether
pursuant to Section 16, Section 18 or otherwise, shall remain the property of
Lessor.
If any Removable Part is (i) owned by any third party and leased to
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii)
sold to Lessee (or,
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if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a
conditional sale contract or other security interest or (iii) leased to Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a
lease which is subject to a security interest in favor of any third party, then
Lessor will not acquire or claim, as against such lessor, conditional vendor or
secured party, any right, title or interest in any such Removable Part as the
result of such Removable Part being installed on the Aircraft; provided,
however, that (A) Lessor's inability to so acquire or claim is subject to the
express condition that such lessor, conditional vendor, or secured party shall
have agreed in writing (which agreement may be contained in the lease,
conditional sale agreement or security agreement) not to acquire or claim, as
against Lessor, any right, title or interest in the Aircraft, or any Part other
than its interest in such Removable Part by reason of such Removable Part being
installed thereon, and (B) any Removable Part not removed by Lessee upon the
termination or expiration of this Lease, at such time, shall become the property
of Lessor and be subject to this Lease, and provided, further, that (1) if
removal of any such Part shall affect the operation of the Aircraft in any way
whatsoever, Lessee shall replace such Part with an owned Part of the same value,
utility and remaining useful life and (2) Lessee shall repair any unsightly area
of the Aircraft as a result of such removal and make all other repairs which are
advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) replaces a Part which is not required to be replaced under
Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) may remove the replacement Part so long as it reinstalls
the original Part and such original Part is free and clear of all Liens, other
than Permitted Liens, is in at least the same modification status and service
bulletin accomplishment status, is fully interchangeable as to form, fit and
function, has been overhauled, repaired and inspected by an agency acceptable to
the FAA or other Governmental Entity having jurisdiction, and is in as good
operating condition as, and has a utility, remaining useful life and a value at
least equal to that of such Part when it was removed from the Aircraft.
Notwithstanding any other provision hereof, and without limiting the
foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted
Sublessee) may install in the Aircraft audio visual, entertainment or telephonic
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equipment (including seats with such equipment installed therein) (any or all of
which are hereafter referred to as "Excluded Property") in the ordinary course
of business, and Lessor shall not claim or acquire title thereto and the rights
of the owners thereof therein shall not constitute a default hereunder; provided
that (i) any such Excluded Property shall be removed prior to the date of a
Return Occasion without causing any damage to the Aircraft and without
diminishing or impairing the value, utility, remaining useful life or condition
which the Aircraft would have had at such time had such Excluded Property not
been installed, (ii) any equipment or seats which such Excluded Property
replaces shall be properly stored with the interests of Lessor and, if the Lien
of the Indenture is in effect, the Indenture Trustee, duly noted thereon and
acknowledged by any applicable bailee or warehouse, and properly reinstalled on
the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such
Permitted Sublessee) shall make all repairs which are required as a result of
such removal and/or reinstallation.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Airframe or either Engine as
provided in Section 9(a) may so long as no Default or Event of Default shall
have occurred and be continuing or would result therefrom be subjected by Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal
pooling arrangement customary in the airline industry of which Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into
in the ordinary course of Lessee's or such Permitted Sublessee's business,
provided the Part replacing such removed Part shall be incorporated or installed
in or attached to the Aircraft in accordance with Section 9(a) as promptly as
possible, and in any event within sixty (60) days, after the removal of such
removed Part. In addition, any Replacement Part when incorporated or installed
in or attached to the Airframe or any Engine in accordance with Section 9(a) may
be owned by another Person subject to such a normal pooling agreement; provided,
however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), at its own expense, as promptly thereafter as possible, and in any
event within sixty (60) days, either (i) causes title to such replacement Part
to vest with Lessor in accordance with Section 9(a) (and to be subjected
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to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto
for the benefit of and transferring title to Lessor free and clear of all Liens
except Permitted Liens, whereupon such replacement Part shall become subject to
this Lease and the Lien of the Indenture (if in effect) without the necessity
for any further act, document or notice, or (ii) replaces such replacement Part
by incorporating or installing in or attaching to the Aircraft a further
replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) free and clear of all Liens other than Permitted Liens and
by causing title to such further replacement Part to vest in Lessor as above
provided and to be subjected to the Lien of the Indenture if it has not been
discharged, whereupon such replacement Part shall become subject to this Lease
and the Lien of the Indenture (if in effect) without the necessity for any
further act, document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment of Basic Rent
hereunder shall be free and clear of, and without deduction for, any and all
withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such payments
of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the
net amount actually received by Lessor, after such deduction or withholding,
will be equal to all such amounts that would be received by Lessor if no such
deduction or withholding had been required, but only to the extent necessary to
ensure that the holders of the outstanding Equipment Notes receive such amount
as may be required by the Indenture. If Lessee pays any amount to Lessor (or to
any taxing authority for the account of Lessor) as a result of the application
of the preceding sentence with respect to any withholding Tax which is an
excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in
the case of Taxes imposed on the Owner Trustee, the Owner Participant to the
extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant would be liable) shall reimburse Lessee for such withholding Tax
within 30 days of written notice accompanied by evidence of payment for such
withholding Taxes (exclusive of interest, penalties and additions to Tax) paid
by Lessee provided that in any circumstance in which the Lessor is
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required to reimburse the Lessee for any such withholding Taxes and the Lessee
has not received such reimbursement from Lessor or the Owner Participant, then
to the extent of such shortfall and so long as no Lease Event of Default has
occurred and is continuing, Lessee shall be entitled to obtain reimbursement
from Lessor by reducing the succeeding payments of Rent payable to Lessor (other
than any portion of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder) until the
aggregate amount of reduction is equal to the sum of the amount of such
shortfall and interest on that amount at the Interest Rate from the date
reimbursement is required to be made until the date of such reduction in Rent.
Except as provided in Section 10(b), and taking into account any payments
received by Lessor pursuant to the second sentence of this Section 10(a), Lessee
agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and
all Taxes, howsoever levied or imposed, whether levied or imposed upon or with
respect to or asserted against any Indemnitee, Lessee, the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or otherwise, with
respect to any period beginning, or events or circumstances occurring, on or
after the Restatement Date, by any federal, state or local government or taxing
authority in the United States of America or by any foreign government or any
taxing authority or governmental subdivision of a foreign country or of a
territory or possession of the United States (each such governmental subdivision
or taxing authority referred to as a Taxing Authority"):
(i) upon or with respect to, based upon or measured by (A) the
Aircraft, the Airframe, any Engine or any Part thereof, or interest
therein, (B) the manufacture, purchase, ownership, delivery, leasing,
acceptance, rejection, assigning, possession, use, operation, location,
settlement of any insurance claim, sale, mortgaging, pledging,
financing, subleasing, rental, retirement, abandonment, registration,
re-registration, deregistration, preparation, installation,
modification, repair, maintenance, replacement, transportation,
storage, transfer of title, return or other disposition of the
Aircraft, the Airframe, any Engine or any Part thereof or interest
therein; or (C) the rentals, receipts, income or earnings arising
therefrom (including without limitation the Rent), or
(ii) upon or with respect to the Operative Documents
(including the Equipment Notes), any interest
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in any thereof, or any future amendment, supplement, waiver or consent
thereto requested by Lessee with respect to any thereof, or the
execution, delivery, or performance of any thereof, or the acquisition
or subsequent transfer thereof or the issuance of the Equipment Notes
or any other document executed and delivered in connection with the
consummation or confirmation of the transactions contemplated by the
Operative Documents or any Indemnitee's interest in any of the
foregoing, or the execution, amendment, supplement, issuance,
reissuance, refinancing or delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property, or the
income or other proceeds received with respect to the property, held by
the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or premium
on, or other amounts payable with respect to the Equipment Notes,
whether as originally issued or pursuant to any modification or
reissuance, or
(v) otherwise with respect to or in connection with the
transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be subject to
indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, Taxes imposed on, based on,
or measured by, the gross or net income of such Indemnitee or Taxes in
lieu thereof (including minimum taxes, withholding taxes and taxes on
or measured by any item of tax preference) imposed by the federal
government of the United States of America (other than taxes in the
nature of sales or use taxes, license taxes, or property taxes),
(ii) In the case of any Indemnitee, Taxes imposed on, based
on, or measured by the gross or net income, receipts, capital, or net
worth, franchises, excess profits or conduct of business of such
Indemnitee (including minimum taxes, withholding taxes and taxes on or
measured by any items of tax preference), imposed by any state, local
or foreign government or taxing authority (other than Taxes in the
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nature of sales Taxes, use Taxes, license Taxes or property Taxes, and
Covered Income Taxes described in subsection (c) of this Section 10),
(iii) In the case of any Indemnitee, Taxes which arise out of
or are caused by any gross negligence or willful misconduct of such
Indemnitee,
(iv) In the case of any Indemnitee, any Taxes imposed as a
result of a voluntary or involuntary bankruptcy of such Indemnitee or
any sale, transfer of title, transfer or other disposition by such
Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and
Owner Participant are related Indemnitees with respect to each other)
of the Aircraft, the Airframe, any Engine or any Part thereof or
interest therein, or any interest in the Rent or part thereof or any
interest in the Operative Documents or part thereof, unless such sale,
transfer or disposition occurs in connection with (A) an Event of
Default and the exercise by any Indemnitee of its remedies under this
Lease or the Indenture, as the case may be or (B) the substitution,
pooling or interchange of the Aircraft, the Airframe, any Engine or any
Part pursuant to the terms hereof; provided, however, that in all cases
Owner Participant and Owner Trustee shall consider in good faith such
request as Lessee shall make concerning the appropriate jurisdiction in
which such sale, transfer or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed on a
transferee of such Indemnitee of any interest in the Aircraft, the
Airframe, any Engine or any Part or any interest in the Operative
Documents to the extent the amount of any such Taxes exceeds the amount
of such Taxes that would have been imposed had there not been any such
transfer, unless such transfer results from action by or on behalf of
such Indemnitee taken in connection with any Event of Default that has
occurred and is continuing or upon the request of the Lessee,
(vi) Any interest, penalties, fines and additions to tax
imposed on an Indemnitee (other than Taxes that are due and payable
with a return when properly filed) resulting from such Indemnitee's
failure to file returns that are timely and proper, provided such
failure was not attributable to such Indemnitee contesting any claim in
accordance with this
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Section 10(b) or to a failure by Lessee to satisfy its obligations
related to such return,
(vii) With respect to an Indemnitee other than the Indenture
Trustee or the Trust Indenture Estate, Taxes which arise out of or are
caused by (i) any act or omission or material misrepresentation of any
Indemnitee where such act or omission is not permitted by the Financing
Documents or the Operative Documents, or (ii) a failure by an
Indemnitee to fulfill its contest obligations, and, in the case of the
Indenture Trustee and the Trust Indenture Estate, Taxes imposed as a
result of a breach of such Indemnitee's representations, warranties, or
covenants contained in Sections 9(a), 12 or 16 of the Refunding
Agreement in any material respect, or from a failure by such Indemnitee
to fulfill its contest obligations,
(viii) So long as no Event of Default shall have occurred and
be continuing, Taxes attributable to the Aircraft related to acts or
events occurring after the later of the termination of the Lease and
the redelivery of the Aircraft,
(ix) In the case of each Pass-Through Trust, each Pass-Through
Trustee (in its individual capacity and as trustee under the Pass-Through
Trusts), the Subordination Agent and each Liquidity Provider, United States
withholding taxes imposed as a result of the place of organization or other
status of a holder of an interest in a Pass-Through Trust, or
(x) In the case of the Indenture Trustee, each Pass-Through
Trust, each Pass-Through Trustee (in its individual capacity), the Subordination
Agent and each Liquidity Provider, Taxes imposed with respect to the Equipment
Notes as a result of activities of such Indemnitee unrelated to the transactions
contemplated by the Operative Documents.
(c) Covered Income Tax. For purposes of clause (ii) of subsection
(b) of this Section 10, a Covered Income Tax includes:
(i) in the case of an Indemnitee other than the Indenture
Trustee or the Trust Indenture Estate, any Tax imposed on, based on or
measured by gross or net income, receipts, capital or net worth,
franchises, excess profits or conduct of business (other than taxes
which are in the nature of sales or use taxes, license taxes or
property taxes) imposed on an Indemnitee (A)
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by any state or local Taxing Authority other than Taxes imposed by any such
state or local jurisdiction in which the Indemnitee has its principal place of
business or is subject to such Tax as a result of business transactions or other
presence unrelated to the transactions contemplated by the Financing Documents
or the Operative Documents, unless such Taxes are imposed by such jurisdiction
solely as a result of (x) the operation of the Aircraft in such jurisdiction or
(y) the transactions contemplated by the Operative Documents, to the extent such
taxes are directly attributable to such operation of the Aircraft or to such
transactions, and (B) by any foreign jurisdiction which are imposed as a result
of Lessee's or sublessee's activities in such foreign jurisdiction in connection
with the transactions contemplated by the Financing Documents or the Operative
Documents, provided, however, a Covered Income Tax also includes the incremental
amount of franchise taxes, taxes on doing business, capital stock taxes or taxes
on, based on or measured by gross or net income of the original Owner
Participant attributable to the Lease (excluding, however, any taxes that would
be excluded under any provision other than clauses (i) and (ii) of subsection
(b) of this Section 10) which are imposed by the "Home State" of a sublessee
(the Home State of a sublessee being the jurisdiction in which such sublessee
maintains its principal operations and maintenance center), or in the absence of
a Permitted Sublessee, the jurisdiction where the Aircraft is stored, but only
to the extent such incremental taxes result from activities of Lessee or
Permitted Sublessee under the Lease in or with respect to the Home State or the
jurisdiction where the Aircraft is stored, and taking into account in
calculating such incremental taxes all state tax benefits and savings in the
Home State resulting from activities of Lessee or Permitted Sublessee under the
Lease, disregarding for such purpose any actual or constructive changes in
ownership of the original Owner Participant, provided, however, that Owner
Participant and Lessee agree to negotiate, in good faith, a cap to Lessee's
liability for indemnity payments attributable to taxes incurred in sublessee's
Home State with respect to each Permitted Sublessee; and
(ii) in the case of the Indenture Trustee or the Trust
Indenture Estate, any Tax based on or measured by gross or net income,
receipts, capital or
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net worth, franchises, excess profits or conduct of business (including
minimum taxes, withholding taxes, and taxes on or measured by any item
of tax preference) imposed on such Indemnitee by a Taxing Authority in
or of any foreign jurisdiction or a territory or possession of the
United States, other than any such Tax which would not have been
imposed in the absence of such Indemnitee's (including for purposes of
this definition, all entities with which such Indemnitee is combined,
integrated, or consolidated in such Taxing Authority's jurisdiction)
engaging in business, maintaining an office or other place of business
or otherwise being located in such jurisdiction other than merely by
reason of such Indemnitee's participation in the transactions
contemplated by the Operative Documents.
(d) Reports and Returns. In case any report or return is required to
be made by Lessee with respect to any Taxes which are subject to indemnification
by Lessee under this Section 10, Lessee will either make such report or return
in such manner as will show the ownership of the Aircraft in Owner Trustee or
the interest of Owner Participant or its permitted assigns and send a copy of
such report or return to the Owner Participant or Owner Trustee or will notify
the Owner Participant or Owner Trustee of such requirement and make such report
or return in such manner as shall be reasonably satisfactory to Owner
Participant or Owner Trustee. If actual notice is given by any taxing authority
to an Indemnitee that a report or return is required to be filed with respect to
any such Taxes, the Indemnitee shall promptly notify Lessee of such required
report or return and Lessee shall either file such report or return in the
manner prescribed in the preceding sentence, or shall use its best efforts to
cause such report or return to be filed by the appropriate entity. Each
Indemnitee agrees to respond to any reasonable request of Lessee for information
not within Lessee's control and within the control of and reasonably available
to such Indemnitee with respect to the filing of any such report or return, but
Lessee agrees to pay any reasonable costs, fees, disbursements or other charges
of independent counsel or independent accountants incurred in connection with
such request.
(e) After-Tax Basis. Lessee further agrees that, with respect to any
payment or indemnity under this Section 10 and under Section 13 hereof, such
payment or indemnity shall include the net amount necessary to hold the
recipient
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of the payment or indemnity harmless on an after-tax basis from all Taxes
required to be paid or credited by such recipient with respect to such payment
or indemnity under the laws of any Taxing Authority; provided, however, that in
the case of Taxes imposed on the Owner Participant, such Taxes shall be
calculated on the basis of the assumption that Owner Participant shall be
subject to the highest federal corporate income tax rate applicable to Owner
Participant in the year of payment and the highest corporate income tax rate in
the jurisdiction in which Owner Participant files a consolidated state income
tax return (currently Virginia).
(f) Tax Benefit. If, by reason of any payment made to or for the
account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13
hereof, such Indemnitee subsequently actually realizes a tax deduction or credit
(including foreign tax credit and any reduction in Taxes) not previously taken
into account in computing the amount of such payment, such Indemnitee shall
promptly pay to Lessee, but only if there shall then be no Lease Event of
Default and if Lessee shall have made all payments then due and owing to such
Indemnitee under the Operative Documents, an amount equal to the sum of (i) the
actual reduction in Taxes, if any, realized by such Indemnitee which is
attributable to such deduction or credit and (ii) the reduction calculated on
the same basis as the gross up in Section 10(e) hereof in Taxes realized by such
Indemnitee as a result of any payment made by such Indemnitee pursuant to this
sentence; provided, however, that such Indemnitee shall not be obligated to make
any payment pursuant to this Section 10 or Section 13 hereof to the extent that
the amount calculated pursuant to (i) above would exceed (A) the amount of all
prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or
Section 13 hereof, net of any amount paid in respect of Taxes required to be
paid by such Indemnitee in respect of the receipt or accrual of such amounts
received by such Indemnitee from Lessee, less (B) the portion of all prior
payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee for any Taxes
which may be subject to indemnification by Lessee hereunder and if such
Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee;
provided that the failure to provide such notice shall not release Lessee from
any of its obligations hereunder except to the extent Lessee's right to contest
such claim is precluded thereby. Any amount payable as an
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indemnity to any Indemnitee or any amount payable to Lessee pursuant to this
Section 10 is to be paid to such party directly, in immediately available funds,
within thirty (30) days after receipt of a written demand therefor from such
Indemnitee or Lessee, as the case may be, except in the case of a payment to an
Indemnitee to the extent that such Taxes are being contested in good faith
pursuant to this Section 10, in which event the payment of such indemnity shall
be made by the due date for the payment of any Taxes that are the subject of
such contest taking into account all extensions of the due date that are
available as a result of the contest. In the event an Indemnitee makes a tax
payment with respect to any such Taxes (other than with funds advanced to such
Indemnitee on an interest-free basis by Lessee pursuant to this Section 10),
Lessee shall reimburse the amount of such payment and also shall pay to the
Indemnitee interest on the amount of such payment by such Indemnitee at the
Interest Rate from the date of any such payment by such Indemnitee to the date
of such reimbursement by Lessee to the Indemnitee hereunder. In the event an
amount is payable to Lessee under this Section 10, the Indemnitee owing such
amount shall pay interest on such amount at the Interest Rate from the date of
receipt by such Indemnitee of any amount giving rise to such obligation to pay
Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee receives a written
notice of a claim which, if sustained, would require the payment of an indemnity
by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify
Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's
sole expense, in good faith contest or shall permit Lessee, if desired by Lessee
and such contest may be conducted in whole or in part separately in the name of
Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to
contest in the name of Lessee and/or the Indemnitee, the validity, applicability
or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not
paying the same except under protest, if protest is necessary and proper, and
(z) if payments be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings; provided, however, the
Lessee shall not be permitted to contest in the name of such Indemnitee if such
contest involves Taxes imposed against such Indemnitee that are unrelated to the
transactions contemplated by the Financing Documents or the Operative Documents
or Taxes based on or measured by the gross or net income of the Indemnitee, and
provided, that if the Indemnitee determines in good faith
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that there is a material possibility of a material adverse impact upon the
Indemnitee with respect to such contest, such Indemnitee may retain or reassert
control of any contest that Lessee would otherwise be permitted to contest;
provided, further, that the Indemnitee shall not be required to undertake or
allow in its name or on its behalf any contest unless the following conditions
are satisfied:
(i) Lessee shall have (a) furnished Indemnitee with a written
opinion of tax counsel selected by Indemnitee and reasonably acceptable
to Lessee to the effect that a reasonable basis (as defined in ABA
Opinion 85-352) exists to contest such claim (which opinion shall be
obtained at Lessee's sole cost and expense), provided however, that in
the event the subject matter of the contest is of a continuing nature
and has previously been decided adversely pursuant to the contest
provisions of this Section 10, there has been a change in the law
(including, without limitation, amendments to statutes or regulations,
administrative rulings and court decisions) after such claim shall have
been so previously decided and such Indemnitee shall have received an
opinion of tax counsel, to the effect that, as a result of such change
other than a change in statutory law, it is more likely than not that
the position which the Indemnitee or the Lessee, as the case may be,
had asserted in such previous contest would prevail and, in the case of
statutory changes-in-law, it is as likely as not that the position will
prevail, and (b) agreed to pay Indemnitee for all reasonable costs and
expenses which Indemnitee may incur in contesting such claim (including
without limitation, payment on demand of all out-of-pocket costs,
expenses, additions to tax because of underpayment of estimated taxes,
losses, legal and accounting and investigatory fees and disbursements,
penalties, and interests),
(ii) a threshold amount of $50,000 for any individual claim is
at issue,
(iii) there is no substantial risk or danger of the sale, loss
or forfeiture of the Aircraft,
(iv) Lessee shall have admitted its liability to indemnify
Owner Participant for such claim or set forth in writing why it is not
so liable,
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(v) if such contest is to be initiated by the payment of, and
the claiming of a refund for, such Taxes, the Lessee shall have
advanced to such Indemnitee sufficient funds (on an interest free
basis) to make such payments,
(vi) no claim shall be appealed to the U.S. Supreme Court,
(vii) no appeal of a trial court decision shall be undertaken
unless Lessee at its sole cost and expense shall have furnished
Indemnitee with a written opinion of tax counsel selected by Indemnitee
and reasonably acceptable to Lessee to the effect that Indemnitee is
more likely than not to prevail in such appeal, and
(viii) no Event of Default has occurred and is continuing.
(i) Refund. If any Indemnitee shall obtain a refund of all or any
part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee
shall pay Lessee the amount of such refund together with any interest paid
thereon attributable to the Taxes paid or advanced by Lessee less the amount of
any Taxes payable by such Indemnitee in respect of the receipt of such refund
and interest after giving credit to Lessee for any savings by such Indemnitee in
respect to any such Taxes by reason of deductions, credits, allocations or
allowances in respect of the payment of any such Taxes; provided that such
amount shall not be payable before such time as Lessee shall have made all
payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default under any
of the above indemnification provisions of this Section 10 so long as Lessee or
the Indemnitee shall diligently prosecute such contest in accordance with the
provisions of this Section 10. Notwithstanding the foregoing, if a claim is made
against any Indemnitee for any Taxes which, if successful, would result in the
imposition of Taxes under circumstances which would require Lessee to indemnify
such Indemnitee, the Indemnitee shall be released
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from its responsibility to contest such claim or part thereof, if it agrees in
writing not to seek indemnification from Lessee in respect of the claim, or such
part thereof to be contested. In the event an Indemnitee fails to contest, or
refuses to permit Lessee to contest, a claim or part thereof which the
Indemnitee has the obligation to contest or to permit Lessee to contest under
this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee
for such claim or such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a member
of an affiliated group (within the meaning of Section 1504(a) of the Code) which
files a consolidated Federal income tax return, the term "Indemnitee" shall mean
and include any member of such affiliated group.
(l) Verification. At Lessee's request, the amount of any indemnity
payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to
Lessee pursuant to this Section 10 shall be verified and certified by an
independent public accounting firm selected by such Indemnitee and reasonably
satisfactory to Lessee. In order to enable such accountants to verify the
indemnity amount, such Indemnitee shall provide to the accountants (for their
own confidential use) information reasonably necessary for such verification to
which Lessor has access; provided, however, such information shall not be
disclosed to Lessee or any person other than such accountants. The fee of such
firm shall be payable by Lessee unless such verification shall result in an
adjustment in Lessee's favor exceeding 10% of the amount of the indemnity
payment.
(m) Survival. All of the obligations and rights of Lessee and Lessor
under this Section 10 with respect to the Aircraft, the Airframe, the Engines or
any Part thereof shall survive the assignment, or expiration or other
termination, of the Lease with respect to the Aircraft for a period of six (6)
years from the occurrence of such assignment, or expiration or termination,
except that such obligations shall survive the expiration of such six (6) year
period with respect to any claim asserted prior to the expiration of such six
(6) year period but in either case only to the extent such obligation or claim
relates to events which occurred or conditions which existed during the Term.
Such obligations are expressly undertaken by Lessee for the benefit of, and
shall be enforceable by, Lessor. The provisions of this Section 10(m) are
subject to the exclusions of Section 10(b)(viii).
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Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe. Subject to the other
provisions of this Section 11, upon an Event of Loss with respect to the
Airframe or the Airframe and any Engines then installed thereon, Lessee shall
forthwith (and, in any event, within five (5) Business Days after such
occurrence) give Lessor written notice of such occurrence and within thirty (30)
days after such occurrence give Lessor written notice of its election, subject
to the terms hereof and of the Indenture, to perform one of the following two
options (it being agreed that if Lessee shall not have given Lessor notice of
such election within thirty (30) days after such occurrence, Lessee shall be
deemed to have elected to perform the option set forth in the following clause
(ii)), provided, that Lessee shall not have the right to select the option set
forth in clause (i) if a Default or an Event of Default shall have occurred and
be continuing at the time of such election or at the time of replacement:
(i) within one hundred twenty (120) days (the "Replacement
Period") after the date of the Event of Loss (but in no event later than the
last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as
provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture
if it has not been discharged, and to be leased by Lessee hereunder in
replacement of the Airframe and such Engines then installed thereon, title to a
replacement Airframe (together with the same number of replacement Engines as
the Engines), such replacement Airframe and Engines (A) to be free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe and replacement Engines may be subject to Permitted Liens), (B) to have
a value, utility and remaining useful life, determined in accordance with the
Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and
to be in at least as good operating condition as, the Airframe and the Engines,
if any, so replaced (assuming the Airframe and the Engines were maintained in
accordance with the requirements of this Agreement, whether or not they are in
fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with
equivalent or better modification status delivered by the Manufacturer not
earlier than June 30, 1988 and, in the case of Engines, in compliance with
Section 11(b); provided that if Lessee shall not perform its obligation to
effect such replacement under this clause by the end of the Replacement Period,
Lessee shall then be deemed to have elected to
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comply, and shall comply, with the provisions of clause (ii) of this Section
11(a); provided, further, that the payment specified therein shall be deemed to
have become due and payable on the Stipulated Loss Value Date occurring on or
immediately preceding the last day of the Replacement Period. Upon compliance
with the foregoing, Lessor will, subject to the rights of any insurers, transfer
to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty
(except a warranty that such Airframe and Engines are free and clear of Lessor's
Liens), all of Lessor's right, title and interest, if any, in and to the
Airframe and the Engines suffering the Event of Loss as well as all of Lessor's
right, title and interest in and to any Engine constituting part of the Aircraft
and replaced as provided above but not installed thereon at the time of the
Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed
part of the property leased hereunder and shall be deemed the "Airframe" as
defined herein. No Event of Loss resulting in replacement of the Airframe or
Engines under this Section 11(a)(i) shall result in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or before one hundred
twenty (120) days after the date of the Event of Loss (or, if earlier, with
respect to insurance proceeds, on the date on which insurance proceeds with
respect to the Event of Loss are received by the loss payee) Lessee shall pay to
Lessor in immediately available funds the sum of (A) the Stipulated Loss Value
of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus
all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent
Payment Date or Renewal Rent Payment Date, respectively, prior to the date of
payment of such Stipulated Loss Value which has not been paid when due, plus, if
such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal
Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be,
payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated
Loss Value Date occurs after the last day of the Term, plus an amount equal to
the average daily Basic Rent or Renewal Rent, as the case may be, in effect on
the last day of the Term, for each day from and including the last day of the
Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental
Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or
Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any
period commencing after the date on which such Stipulated Loss Value is paid
shall terminate; provided that Lessee shall remain liable for, and shall pay on
or before the date the Stipulated Loss Value and Supplemental Rent are
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paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the
Aircraft due on or before the date of such payment of Stipulated Loss Value and
Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft,
and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee,
"AS IS, WHERE IS," without recourse, representation or warranty (except a
warranty that such Airframe and Engines are free and clear of Lessor's Liens),
all of Lessor's right, title and interest, if any, in and to the Airframe and
Engines suffering the Event of Loss, as well as all of Lessor's right, title and
interest, if any, in and to any Engine constituting part of the Aircraft but not
installed thereon at the time of the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon an Event of Loss
with respect to an Engine only, Lessee shall give Lessor prompt written notice
thereof and shall, at its own cost and expense, within sixty (60) days after
such occurrence convey or cause to be conveyed to Lessor as replacement for the
Engine suffering an Event of Loss, title to another IAE Model V2500 engine of
like model and equivalent or better modification status or, at Lessee's option,
an IAE engine of an improved model, in each such case which has a value,
remaining useful life and utility determined in accordance with the Appraisal
Procedure at least equal to such Engine and is suitable for installation and use
on the Airframe without diminishing the value, remaining useful life or utility
of such Airframe, free of all Liens (it being understood that, upon such
conveyance, such replacement Engine may be subject to Permitted Liens) and being
in as good operating condition as (including no greater number of cycles or
hours than) the Engine being replaced assuming the Engine being replaced was
serviceable and otherwise in the condition and repair required by the terms
hereof immediately prior to the Event of Loss. Prior to or at the time of any
such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor
with a full warranty bill of sale, in form and substance reasonably satisfactory
to Owner Participant and Indenture Trustee, as applicable, with respect to such
replacement Engine; (ii) cause supplements, in form and substance reasonably
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), subjecting such replacement Engine to this
Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to
be duly executed by Lessee, if applicable, and duly filed for recordation
pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee
(if the Lien of the Indenture has not been discharged) with such evidence
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of title to such Replacement Engine and of compliance with the insurance
provisions of Section 12 hereof with respect to such Replacement Engine as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request; (iv) furnish Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged) with an opinion
of Lessee's counsel addressed to such parties and to Lessor to the effect that
title to such Replacement Engine has been duly conveyed to Lessor free and clear
of all Liens (except Permitted Liens), and is duly leased hereunder and subject
to the Lien of the Indenture (if it has not been discharged), the instruments
subjecting such Replacement Engine to the Lien of the Indenture and the Lease,
and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the
case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Engine and the Lien of the
Indenture on such Replacement Engine; (v) furnish a certificate signed by a
Responsible Officer of Lessee certifying that, upon consummation of such
replacement, no Default or Event of Default will exist hereunder; (vi) furnish
such documents and evidence with respect to Lessee, Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged), as
such parties or their respective counsel may reasonably request in order to
establish the consummation of the transactions contemplated by this Section
11(b), the taking of all corporate proceedings in connection therewith and
compliance with the conditions set forth in this Section 11(b), in each case in
form and substance satisfactory to such party; (vii) furnish such Uniform
Commercial Code financing statements covering the Replacement Engine as may be
requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not
been discharged); (viii) furnish Owner Participant with an opinion of tax
counsel mutually satisfactory to Owner Participant and Lessee and which opinion
is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner
Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in
Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the
terms of this Section 11(b),
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Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS,
WHERE IS" without recourse, representation or warranty (except a warranty that
such Engine is free and clear of Lessor's Liens), all of Lessor's right, title
and interest, if any, in the Engine which suffered the Event of Loss. For all
purposes hereof, each such Replacement Engine shall be deemed an "Engine" as
defined herein and shall be deemed part of the same Aircraft as was the Engine
replaced thereof. No Event of Loss covered by this Section 11(b) shall result in
any reduction in Rent.
(c) Conveyance of Replacement Airframe. Prior to or at the time of
any conveyance of a replacement Airframe pursuant to Section 11(a) above,
Lessee, at its own cost and expense, will furnish Lessor with the following
documents which shall have been duly authorized, executed and delivered by the
respective parties thereto and shall be in full force and effect on said date:
(i) a full warranty bill of sale, in form and substance satisfactory to Owner
Participant and Indenture Trustee (if the Lien of the Indenture has not been
discharged), and an AC Form 8050-2 Bill of Sale (or such other form of bill of
sale as may be approved by the FAA on said date), executed by the owner thereof,
in favor of Lessor and, cause supplements, reasonably satisfactory to Owner
Participant and Indenture Trustee (if the Lien of the Indenture has not been
discharged), to this Lease, the Indenture (if then in effect) and the Trust
Agreement (if then in effect), with respect to such replacement Airframe and to
be duly filed for recordation pursuant to the Federal Aviation Act or other
applicable Governmental Entity; (ii) the certificate specified in Section 12(f)
hereof demonstrating compliance with the insurance requirements of Section 12
with respect to the replacement Airframe and Engines; (iii) an opinion
(addressed to Indenture Trustee, Lessor, and Owner Participant) of Lessee's
counsel (and such other evidence of title as Owner Participant or Indenture
Trustee (if the Lien of the Indenture has not been discharged) may reasonably
request) to the effect that, upon such conveyance, Lessor will acquire good
title to such replacement Airframe free and clear of all Liens (it being
understood that, upon such conveyance, such replacement Airframe may be subject
to Permitted Liens), that such replacement Airframe will be leased hereunder to
the same extent as the Airframe replaced thereby and will be subject to the Lien
of the Indenture (if it has not been discharged), the instruments subjecting
such Replacement Airframe and Replacement Engine to the Lien of the Indenture
and the Lease, and subjecting to any relevant
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Assigned Sublease and Sublease Assignment, as the case may be, have been duly
filed for recordation pursuant to the Federal Aviation Act or any other law then
applicable to the registration of the Aircraft, and no further action, filing or
recording of any document is necessary in order to establish and perfect, in the
United States and, if the Aircraft is registered outside the United States, in
the jurisdiction of registration, the legal title to such Replacement Airframe
and Replacement Engine and the Lien of the Indenture on such Replacement
Airframe and Replacement Engine; and that Lessor, and Indenture Trustee as
assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of
the United States Code with respect to such replacement airframe and engines to
the same extent as with respect to the Airframe and Engines then installed
thereon prior to such replacement; (iv) a certificate signed by a Responsible
Officer of Lessee certifying that, upon consummation of such replacement, no
Default or Event of Default will exist hereunder; (v) such documents and
evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the
Lien of the Indenture has not been discharged), as such parties or their
respective counsel may reasonably request in order to establish the consummation
of the transactions contemplated by this Section 11(c), the taking of all
corporate proceedings in connection therewith and compliance with the conditions
set forth in this Section 11(c), in each case in form and substance satisfactory
to each such party, including evidence that the Aircraft of which the
replacement Airframe is a part has been duly certificated by the FAA as to type
and airworthiness in accordance with the terms of this Lease and application for
registration of such replacement Airframe in the name of Lessor has been duly
made with the FAA or other applicable Governmental Entity and Lessee has
temporary or permanent authority to operate the replacement Airframe; (vi)
furnish such Uniform Commercial Code financing statements covering the
replacement Airframe as may be reasonably requested by Lessor or Indenture
Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually
satisfactory to Owner Participant and Lessee and which opinion is reasonably
satisfactory to Owner Participant to the effect that such replacement will have
no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal
prepared in accordance with the Appraisal Procedure which confirms that the
replacement Airframe and any replacement Engine has a value, utility and
remaining useful life at least equal to that of the Airframe and Engines which
suffered the Event of Loss assuming that the same were maintained in accordance
with the requirements of this Lease whether or not they are in fact so
maintained; and (ix) furnish Owner Trustee and
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Indenture Trustee with the opinion of counsel to Lessee specified in Section
5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of
this Section 11(c), Lessor will, subject to the rights of any insurers, transfer
to Lessee "AS IS, WHERE IS," without recourse, representation or warranty
(except a warranty that such Airframe is free and clear of Lessor's Liens), all
of Lessor's right, title and interest in and to the Aircraft which suffered the
Event of Loss. No Event of Loss with respect to the Aircraft under the
circumstances contemplated by the terms of this Section 11(c) shall result in
any reduction in Rent.
For all purposes of this Lease, each such replacement Aircraft
(together with any Engines constituting part of the Aircraft being replaced as
to which an Event of Loss has not occurred) shall be deemed part of the property
leased hereunder and shall be deemed the "Aircraft" as defined herein.
(d) Application of Proceeds and Payments. Any payments received at
any time by Lessor or by Lessee from any insurer (including a Governmental
Entity providing an indemnity in lieu thereof) with respect to an Event of Loss
shall be applied in the manner specified in Sections 12(c) and (e) hereof.
Subject to Section 11(f) below, any payments (other than insurance or such
indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value and other payments, if not already paid by Lessee, or, if already
paid by Lessee, shall (unless a Default or an Event of Default shall have
occurred and be continuing) be applied by Lessor to reimburse Lessee for its
payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a result of an Event of
Loss with respect to the Airframe or an Engine which is being replaced pursuant
to Section
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11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section
11(b) hereof, as the case may be, and of Section 15 hereof with respect to the
Event of Loss for which such payments are made and if no Default or Event of
Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect to the Aircraft.
Subject to Section 11(f) below, in the event of the requisition for use by a
Governmental Entity of the Aircraft, the Airframe or an Engine (other than a
requisition constituting an Event of Loss), Lessee shall promptly notify Lessor
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
thereof and all of Lessee's obligations under this Lease with respect to such
Airframe or Engine shall continue to the same extent as if such requisition had
not occurred. All payments received by Lessor or Lessee from the Governmental
Entity for the use of such Airframe or Engine during the Term shall be paid over
to, or retained by, Lessee if no Default or Event of Default shall have occurred
and be continuing; and all other payments received by Lessor or Lessee from the
Governmental Entity shall be paid over to, or retained by, Lessor. If the
Airframe and such Engines or engines are not returned by the end of the Term, an
Event of Loss shall be deemed to have occurred on the last day of the Term and,
on the last day of the Term, Lessee shall either pay to Lessor the amount
provided herein for an Event of Loss to the Airframe and such Engines or engines
on such date or provide a replacement Aircraft and Engine on such date in the
condition provided for in Section 16 and Exhibit E. In the event of the
requisition for use by the Governmental Entity of any Engine without the
requisition for use of the Airframe, Lessee will replace such Engine hereunder
by complying with the terms of Section 11(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine, and thereafter any payments
received by Lessor or Lessee from the Governmental Entity with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application in Default. Any amount referred to in clause (i) or
(ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee
shall not be paid to Lessee, or, if it has been previously paid to or retained
by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or
retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all
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such amounts shall be paid to and held by Indenture Trustee so long as the Lien
of the Indenture shall not have been discharged and thereafter by Lessor as
security for the obligations of Lessee, or, at the option of Lessor or the
Indenture Trustee, as the case may be, applied by Lessor or the Indenture
Trustee, as the case may be, toward payment of any of Lessee's obligations at
the time due hereunder, as Lessor or the Indenture Trustee, as the case may be,
may elect, including, without limitation, by reason of this Lease being declared
or deemed in default. At such time as there shall not be continuing any such
Event of Default or Default, all such amounts at the time held by Lessor or
Indenture Trustee in excess of the amount, if any, which Lessor or Indenture
Trustee has elected for application as provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee will
carry and maintain in effect, or cause to be carried and maintained in effect,
at its own cost and expense, with Approved Insurers, comprehensive aircraft and
general public liability insurance (including, without limitation, contractual
liability, liability war risk and passenger legal liability products, completed
operation liability covering maintenance of aircraft, but excluding
manufacturer's product liability insurance), and property damage insurance with
respect to the Aircraft, in an amount not less than three hundred fifty million
dollars ($350,000,000), combined single limit, per occurrence or such higher
amount, and of such type and terms, as are customarily carried by prudent
Certificated Air Carriers, similarly situated to Lessee, operating aircraft of
similar size and engines and as hereinafter provided. Each and any policy of
insurance carried in accordance with this Section 12(a), and each and any policy
obtained in substitution or replacement for any of such policies, (i) shall
designate Lessor (in both its individual and trustee capacity), Owner
Participant, Indenture Trustee (in both its individual and trustee capacity) and
the other Indemnitees and their respective permitted assigns, as additional
insureds as their interests may appear (but without imposing upon any such
Person any obligation imposed upon the insured, including, without limitation,
the liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, in such policies, the insurance shall not be invalidated as to an
insured or
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additional insured by any act or omission of Lessee or any other insured or
additional insured and shall insure Lessor, Owner Participant, Indenture Trustee
and the other Indemnitees and their respective permitted assigns, regardless as
to any insured or additional insured of any breach or violation by Lessee or any
other insured or additional insured of any warranty, declaration or condition
contained in such policies, (iii) shall provide that if such insurance is
cancelled for any reason whatsoever, or is changed in any adverse way with
respect to the interests of Lessor, Owner Participant, Indenture Trustee and the
other Indemnitees or if such insurance is allowed to lapse for non-payment of
premium, such cancellation, change or lapse shall not be effective as to Lessor,
Owner Participant, Indenture Trustee and the other Indemnitees, and their
respective permitted assigns, until thirty (30) days, in each instance (seven
(7) days or such lesser period of time as is the insurance industry standard for
war/allied perils coverage), after notice to Lessor, Owner Participant and
Indenture Trustee from such insurer or insurers, of such prospective
cancellation, change or lapse, (iv) shall include coverage for any country in or
over which the Aircraft is located or operated, and (v) shall provide that, as
against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees,
and their respective permitted assigns, each insurer shall waive any rights of
set-off, counterclaim or any other deduction, whether by attachment or
otherwise, and waives any rights it may have to be subrogated to any right of
any insured against Lessor, Owner Participant, Indenture Trustee, or the other
Indemnitees, or their respective permitted assigns, with respect to the
Aircraft. Each liability policy shall be primary without right of contribution
from any other insurance which may be carried by Lessor, Owner Participant,
Indenture Trustee or the other Indemnitees, or their respective permitted
assigns, and shall expressly provide that all of the provisions thereof shall
operate in the same manner as if there were a separate policy covering each
insured, provided, that such policies shall not operate to increase the
insurer's limit of liability. Lessee shall cause its insurers to agree that the
indemnity and hold harmless provisions of Section 13 are insured as a
contractual assumption of liability by Lessee's insurers, subject to the terms,
coverage, conditions, limitations and exclusions of the policy of insurance.
Without limiting the foregoing, the type and amount of the insurance carried by
Lessee hereunder shall be no less in amount and no less comprehensive or
favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees then that
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carried by Lessee with respect to other A320-231 aircraft or similar-size
aircraft owned or leased by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own expense,
will maintain in effect, or cause to be carried and maintained in effect, with
Approved Insurers "all-risk" ground and flight aircraft hull insurance (which
shall include, but not be limited to, hijacking, a disappearance clause and
coverage against strikes, riots, commotions or labor disturbances, air piracy,
malicious acts or acts of sabotage and unlawful seizure or wrongful exercise of
control of the Aircraft in flight by a person on board such Aircraft acting
without the consent of Lessee) covering the Aircraft, and "all-risk" coverage
including transit insurance with respect to Engines and Parts while not
installed on such Aircraft or an aircraft, which in each case considering all
policy terms, limitations and exclusions is of the type, terms and amount
customarily maintained by prudent Certificated Air Carriers similarly situated
to Lessee and operating similar size aircraft and engines and as hereinafter
provided. Lessee shall also maintain, or cause to be maintained, war risk and
allied perils hull insurance reasonably acceptable to Lessor with Approved
Insurers. In addition, at least ten (10) Business Days (or, in the case of an
emergency, at least two (2) Business Days) prior to permitting the Aircraft,
Airframe or Engines to be operated or located outside of the United States of
America, other than in Canada or Mexico, Lessee shall notify Lessor thereof. If
Owner Participant or Indenture Trustee reasonably requests at any time and if
such insurance is then customarily being obtained by or for Persons leasing or
financing similarly-sized aircraft operating on similar routes to operators
located in the jurisdiction of Lessee's or, if a Permitted Sublease is in
effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or
reimburse Lessor for political risk, repossession, expropriation, confiscation
and similar insurance as Lessor may arrange or cause to be arranged; provided
that Indenture Trustee shall not be obligated to request such insurance and
shall not be liable for any failure to request such insurance. Anything herein
to the contrary notwithstanding, at all times while the Aircraft is subject to
this Lease, the insurance required by this Section 12(b) shall be for an amount
on an "agreed value" basis not less than the Stipulated Loss Value from time to
time determined for the Aircraft. Without limiting the foregoing, the type and
amount of insurance carried by Lessee hereunder shall be no less comprehensive
or favorable to Lessor, Owner Participant, Indenture Trustee and the
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other Indemnitees than that carried by Lessee with respect to similar-size
aircraft owned or leased by Lessee.
Each and any policy of insurance obtained and maintained pursuant to
this Section 12(b), and each and any policy obtained in substitution or
replacement for any such policies, (i) shall designate Lessor as owner of the
Aircraft, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns as additional insureds, as
their respective interests may appear (but without imposing upon Lessor, Owner
Participant, Indenture Trustee and their respective permitted assigns, any
obligation imposed upon the insured, including, without limitation, the
liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of such an additional insured and its
permitted assigns, in such policies, the insurance shall not be invalidated as
to an insured by any act or omission of Lessee or any other additional insured,
and shall insure each such additional insured and its permitted assigns,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their respective
permitted assigns, or if such insurance is allowed to lapse, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee, the other Indemnitees or their respective permitted assigns,
until thirty (30) days (seven (7) days or such lesser period of time as is the
insurance industry standard for war/allied perils coverage) after written notice
to Lessor, Owner Participant and Indenture Trustee from such insurer or
insurers, as the case may be, of such prospective cancellation, change or lapse,
(iv) shall include coverage for any country in or over which the Aircraft may at
any time be located or operated, (v) shall provide that, as against Lessor,
Owner Participant, Indenture Trustee the other Indemnitees and their respective
permitted assigns, each insurer shall waive any rights of set-off, counterclaim
or any other deduction, whether by attachment or otherwise, and waives any
rights it may have to be subrogated to any right of any insured
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against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees
and their respective permitted assigns, with respect to the Aircraft, (vi) shall
provide that in the event of any damage or loss which is an Event of Loss
hereunder and which results in a payment, such payment shall be payable directly
to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture
shall not have been discharged and thereafter to Lessor, as sole loss payee, and
(vii) shall provide that in the event of any damage or loss which is not an
Event of Loss hereunder and which results in a payment, such payment shall be
payable directly to Indenture Trustee, as sole loss payee for the account of all
interests, so long as the Lien of the Indenture shall not have been discharged
and thereafter to Lessor, as sole loss payee for the account of all interests.
The insurance required under this Section 12(b) may incorporate deductible
amounts which shall not exceed one million dollars ($1,000,000).
Each of Lessor and Owner Participant shall have the right to carry
additional and separate excess or contingent insurance for its own benefit at
its own expense, without, however, thereby limiting Lessee's obligations under
this Section 12, and Lessee shall not carry any such insurance if it would
conflict with or adversely affect other insurance carried by Lessor or Owner
Participant. Lessee shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to Lessee, provided, however, that such insurance does not conflict with
or adversely affect the insurance required hereunder or any excess or contingent
insurance carried by Lessor or Owner Participant. Lessee shall give Lessor
reasonable prior written notice of any insurance to be carried by Lessee in
addition to that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained to cover
"all-risk" ground and flight aircraft, hull and war risks and allied perils
insurance, Lessee shall include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by Lessee with respect to all
other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of Loss. It is
agreed that insurance payments which
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arise from insurance required to be carried by Lessee pursuant to this Section
12 and received as the result of the occurrence of an Event of Loss shall be
applied as follows (after reimbursement of Lessor, Owner Participant and
Indenture Trustee for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Indenture Trustee so long as the Lien of the Indenture has not been
discharged and thereafter to Lessor in reduction of Lessee's obligation to pay
such Stipulated Loss Value and any other payments if not already paid by Lessee,
or, if already paid by Lessee, shall (unless a Default or an Event of Default
shall have occurred and be continuing) be applied by Indenture Trustee or
Lessor, as the case may be, to reimburse Lessee for its payment of such
Stipulated Loss Value and other payments and the balance, if any, of such
payment remaining thereafter shall be paid over to, or retained by, Lessor; or
(ii) if such payments are received as a result of an Event of
Loss with respect to the Airframe or an Engine which is being replaced pursuant
to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid
over by the Indenture Trustee or Lessor, as the case may be, to, or retained by,
Lessee if Lessee shall have fully performed or, concurrently therewith fully
performs, the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the
case may be, and of Section 15 hereof with respect to the Event of Loss for
which such payments are made and if no Default or Event of Default shall have
occurred and be continuing.
(d) Application of Insurance Proceeds for Other than an Event of
Loss. The insurance payments of any property damage loss to the Airframe or any
Engine not constituting an Event of Loss with respect thereto will be applied in
payment for the actual costs of repairs or for replacement property which Lessee
has incurred in accordance with the terms of Section 9, 11 or 12(c) of this
Lease against such documentation evidencing payment by Lessee as Lessor may
reasonably request to reimburse Lessee for such repairs or replacements already
paid for by Lessee, and any balance remaining after compliance with such
Sections with respect to such loss shall be paid to Lessor. Lessee shall be
entitled to receive from the insurer any insurance
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proceeds not in excess of five hundred thousand dollars ($500,000) as soon as
such funds are paid and shall promptly receive such additional insurance
proceeds from the loss payee upon invoices for repair work in progress,
replacement parts which are ordered or for work completed as provided above in
this Section 12(d). Any amount referred to in this Section 12(d) which is
payable to Lessee shall not be paid to Lessee if at the time of such payment any
Default or Event of Default shall have occurred and be continuing, but shall be
held by Lessor as security for the obligations of Lessee under this Lease or
applied as provided in Section 12(e).
(e) Application in Default. Any amount referred to in clause (ii) of
Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be
paid to Lessee, or if it has been previously paid to or retained by Lessee,
shall be paid by Lessee to Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter to Lessor, if at the
time of such payment or retention a Default or an Event of Default shall have
occurred and be continuing. In such case, all such amounts shall be paid to and
held by Indenture Trustee, so long as the Lien of the Indenture shall not have
been discharged, and thereafter held by Lessor as security for the obligations
of Lessee, or, at the option of Indenture Trustee or Lessor, applied by
Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the
time due hereunder, including, without limitation, by reason of this Lease being
declared or deemed declared in default, as Indenture Trustee or Lessor may
elect. At such time as there shall not be continuing any such Event of Default
or Default, all such amounts at the time held by Indenture Trustee or Lessor in
excess of the amount, if any, which Indenture Trustee or Lessor has elected for
application as provided above, shall be paid to Lessee.
(f) Certificates. On or before the Delivery Date, and thereafter on
any renewal by the Lessee of the insurance required hereby (but in no event less
than once in every twelve (12) month period), Lessee will furnish to Lessor and
Indenture Trustee a certificate executed and delivered by an Approved Insurer or
the Approved Broker, describing in reasonable detail, and in accordance with
customary practice, insurance carried on the Aircraft and Lessee shall also
furnish an opinion or report by the Approved Insurer or the Approved Broker
certifying that the insurance then maintained on the Aircraft complies with the
terms of this Lease. Lessee will cause the Approved Broker
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to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at
least thirty (30) days (seven (7) days or such lesser period of time as is the
insurance industry standard for war/allied perils coverage) prior to the
expiration, non-renewal, termination or cancellation for any reason (including,
without limitation, failure to pay premium therefor) or material modification of
any such insurance.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in effect,
the Permitted Sublessee) may carry primary insurance outside of the aviation
insurance markets in New York, London or Paris if the relevant primary insurer
shall have obtained reinsurance and such reinsurance (i) is on the same terms as
the original insurance and includes the provisions required by this Agreement;
(ii) provides in case of any bankruptcy, insolvency, liquidation, dissolution or
similar proceedings of or affecting the original insurer that the reinsurers'
liability will be to make such payment as would have fallen due under the
relevant policy of reinsurance if the original insurer had (immediately before
such bankruptcy, insolvency, liquidation, dissolution or similar proceedings)
discharged its obligations in full under the original insurance policies in
respect of which the then relevant policy of reinsurance has been effected; and
(iii) contains a "cut-through" clause in the following form (or otherwise,
satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby
mutually agree that in the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided by the Amended and
Restated Aircraft Lease Agreement [GPA 1990 AWA-13] dated as of November 26,
1996 and made between Wilmington Trust Company, as Owner Trustee, and America
West Airlines, Inc. such claim is to be paid to the person named as sole loss
payee under the primary insurances, the Reinsurers will in lieu of payment to
the original insured, its successors in interest and assigns pay to the person
named as sole loss payee under the primary insurances effected by the original
insured that portion of any loss due for which the Reinsurers would otherwise be
liable to pay the original insurer (subject to proof of loss), it
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being understood and agreed that any such payment by the Reinsurers will (to the
extent of such payment) fully discharge and release the Reinsurers from any and
all further liability in connection therewith."
(h) Storage. During any period that the Aircraft is in storage or
otherwise grounded, Lessee may carry or cause to be carried, in lieu of the
insurance required by Sections 12(a) and (b) above, insurance otherwise
conforming with the provisions of said Sections 12(a) and (b) except that the
scope of the risk and the type of insurance, and the amount of the insurance in
the case of the insurance described in Section 12(a) above (but not the amount
of insurance to be carried under Section 12(b) above), shall be the same as from
time to time applicable to similar size passenger aircraft that comprise
Lessee's fleet in similar storage or grounding, and in any event (including,
without limitation, at any time when there shall be in existence a Permitted
Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of Default has
occurred and is continuing, any amount held by Lessor or Indenture Trustee, as
the case may be, until application by Lessor or Indenture Trustee, as the case
may be, pursuant to this Section 12 shall be invested as provided in Section
21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at its expense
the insurance described in Section 12(a) for three years after the expiration or
termination of the Basic Term or Renewal Term, if Lessee has elected to renew
the Lease in accordance with Section 20, covering each Indemnitee as its
interest may appear and specifically insuring the indemnity contained in Section
13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of the insurance
described in Section 12 above, Lessee may provide a United States governmental
indemnity, to the extent and subject to the terms and conditions specified in
Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and hold
harmless each Indemnitee on a net after-tax
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basis, as provided in Section 10(e), within fifteen (15) days after demand from
and against any and all claims (whether or not based on strict liability),
damages (whether direct, indirect, incidental, special or consequential),
losses, charges, fees, liabilities, obligations, demands, suits, judgments,
actions and other legal proceedings (whether civil or criminal), penalties,
fines, other sanctions, and any reasonable costs and expenses, in connection
herewith, including, without limitation, costs and expenses set forth in Section
21(j) hereof and reasonable attorney's fees and expenses of whatever kind or
nature (any and all of which are hereafter referred to as "Claims") imposed on,
or asserted by or against, or suffered or incurred by, any Indemnitee, from (and
including) the Restatement Date, including, without limitation, injury, death or
property damage of passengers, shippers and others, environmental control, noise
and pollution regulations, which in any way may result from, pertain to, or
arise in any manner out of, or are in any manner related to (1) the Operative
Documents, the Purchase Documents or the Financing Documents, or any of the
transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or
any engine used in connection with the Airframe or any Part thereof, including,
but not limited to, (A) the importation, exportation, condition, manufacture,
design, purchase, ownership, registration, reregistration, deregistration (other
than any deregistration caused by the failure of the registered owner of the
Aircraft to be a "citizen of the United States" as defined under the Federal
Aviation Act and the regulations thereunder or to file the documentation
necessary to continue FAA registration of the Aircraft), delivery, nondelivery,
assignment, leasing, subleasing, sub-subleasing, acceptance, rejection,
possession, repossession, control, return, financing, Liens (excluding Lessor's
Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the
Indenture), use, performance, modification, maintenance, overhaul, operation,
pooling, interchange, repair, testing, sale, return or other disposition or
application of the Aircraft, the Airframe, any Engine, any engine used in
connection with the Airframe or any Part (including, but not limited to, latent
and other defects whether or not discoverable by Lessee or Lessor, Claims
related to any actual or alleged violation of Law, loss or damage to any
property of passengers, shippers or otherwise or any Claim related to patent,
copyright, trademark or other infringement) either in the air or on the ground,
and, including, without limitation, any interest therein of an Indemnitee or
imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and
Lenders'
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Liens but including the Lien of the Indenture), or the rentals, receipts or
earnings therefrom (including, without limitation, the Rent and any other
amounts paid or payable with respect thereto); or (B) any defect in the
Aircraft, the Airframe, any Engine, any engine used in connection with the
Airframe or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine
or Part, or otherwise regardless of when such defect shall be discovered,
whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in
the possession of Lessee, and regardless of where such Aircraft, Airframe,
Engine, engine or Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Aircraft, the Airframe, an Engine, any Operative Document,
any Purchase Document or any Financing Document), (ii) the material breach of
any express representation, warranty or covenant made by such Indemnitee herein
or in any other Operative Document, or the Financing Documents (not resulting
from a breach by Lessee of any of its representations, warranties or covenants
in the Operative Documents or in the Financing Documents), (iii) any Taxes,
whether or not Lessee is required to indemnify such Taxes under Section 10
hereof or the Tax Indemnification Agreement (it being understood that Section 10
hereof and the Tax Indemnification Agreement exclusively provide for Lessee's
liability with respect to Taxes), (iv) any Claim which relates solely to events
which occurred prior to but excluding the Restatement Date (other than Claims
related to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to Lessor in
accordance with the terms hereof and the Term of this Lease has been terminated
or has expired and the return is not related to an Event of Default, (vi) as to
such Indemnitee, an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the
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Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents,
the Purchase Documents or the Operative Documents, except as contemplated under
or pursuant to the Operative Documents, the Financing Documents or the Purchase
Documents and except as resulting from the exercise of its remedies during the
period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
or thereunder and except any Claim which is alleged or does relate to the period
prior to such disposition or (vii) the authorization or giving or withholding of
any future amendments, supplements, waivers or consents with respect to any of
the Financing Documents, the Purchase Documents or the Operative Documents,
which amendments, supplements, waivers or consents were not requested by Lessee
or are not required to give effect to the provisions of the Operative Documents,
the Financing Documents or the Purchase Documents (provided, however, in no
event will Lessee be liable for any Claims resulting from, pertaining to or
arising from or related to Lessor's granting or creating a Lessor's Lien or the
granting or creation of a Head Lessor's Lien). Upon full payment of the
indemnities herein, Lessee shall be subrogated to all rights and remedies which
such Indemnitee may have against any third party against whom such Indemnitee
has the right to assert a Claim which arises under any action described in this
Section 13 (except Claims under such Indemnitee's own insurance policies or
under the indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13, Lessee
hereby waives and releases any Claim now or hereafter existing against any
Indemnitee, on account of any Claims for or on account of or arising or in any
way connected with injury to or death of personnel of Lessee or loss or damage
to property of Lessee or the loss of use of any property which may result from
or arise in any manner out of or in relation to the importation, exportation,
ownership, purchase, registration, reregistration, deregistration (except as to
Owner Participant or Lessor as and to the extent such Indemnitee is responsible
under the Refunding Agreement for Claims related to such deregistration),
delivery, non-delivery, assignment, leasing, subleasing, manufacture,
acceptance, rejection, possession, return, financing, performance, modification,
maintenance, condition, use, operation, pooling, interchange, repair, testing,
sale, return or other disposition of the Aircraft, the Airframe, any Engine or
any engine used in connection with the Airframe or any Part
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thereof, either in the air or on the ground, or which may be caused by any
defect in such Aircraft, Airframe, Engine, engine or Part from the material or
any article used therein or from the design or testing thereof, or use thereof
or from any maintenance, service, repair, overhaul, or testing of such Aircraft,
Airframe, Engine, engine or Part, claims for infringement, loss of or injury to
any person, loss of or damage to any property or environmental damage,
regardless of when such defect may be discovered, whether or not such Aircraft,
Airframe, Engine, engine or Part is at the time in the possession of Lessee, and
regardless of the location of such Aircraft at any such time except to the
extent that such Claim results from (i) the gross negligence or willful
misconduct of such Indemnitee (except any such gross negligence or willful
misconduct as may be attributed to an Indemnitee due to its interest in the
Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document
or any Financing Document), (ii) the material breach of any of its express
representations, warranties or covenants hereunder, under any other Operative
Document or Financing Document (not resulting from a breach by Lessee of any of
its representations, warranties or covenants in the Operative Documents or in
the Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to but excluding the Restatement Date (other than Claims related to the
condition, manufacture or design of the Aircraft) and any Claim concerning
payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act
which occurs after the Aircraft has been returned to Lessor in accordance with
the terms hereof and the Term of this Lease has been terminated or has expired
and the return is not related to an Event of Default, (vi) an underlying act
which occurs after a disposition or other transfer (voluntary or involuntary) by
such Indemnitee of all or any part of its interest in the Aircraft, the
Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents (except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder and
except any Claim which is alleged or does relate to the
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period prior to such disposition), (vii) the authorization or giving or
withholding of any future amendments, supplements, waivers or consents with
respect to any of the Financing Documents, the Purchase Documents or the
Operative Documents, which amendments, supplements, waivers or consents were not
requested by Lessee or are not required to give effect to the provisions of the
Operative Documents, the Financing Documents or the Purchase Documents or (viii)
a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such
Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense and with
Lessee's cooperation, be entitled to conduct the defense of any Claim against
it; provided, however, that Lessee shall, at the request of any Indemnitee and
so long as no Event of Default has occurred and is continuing, assume and
conduct promptly and diligently, at its sole cost and expense, the defense of
such Indemnitee against any Claim of a third party with counsel reasonably
acceptable to such Indemnitee; and provided, further, however, that Lessee shall
have the right as well as the obligation to assume such defense to the extent
required under the terms of the applicable insurance policies so long as no
Default or Event of Default has occurred and is continuing. In the event Lessee
shall so assume the defense of any Claim, such Indemnitee shall cooperate with
Lessee in defending such Claim, but any expenses incurred by such Indemnitee in
connection therewith shall either be paid by Lessee to such Indemnitee in
advance, or reasonable security shall be provided by Lessee to such Indemnitee
for such payments. Neither Lessee nor an Indemnitee shall enter into a
settlement or other compromise with respect to any Claim which Lessee or such
Indemnitee is defending hereunder in excess of $100,000 without the prior
written consent of the other, which consent shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any Claims by
a third party hereunder following such Indemnitee's actual knowledge of such
Claims by third parties, but the failure of such Indemnitee to give the notice
required by this Section 13 shall not constitute a release by Lessor or such
Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to
such Indemnitee in respect of any such Claim or otherwise affect the obligations
or liabilities of Lessee to any Indemnitee in respect of any such Claim, except
to the extent that Lessee's ability to control the defense thereof where Lessee
has the right to control the defense thereof is materially
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prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such information
requested by the other as is reasonably necessary or advisable for the other to
control the defense of a Claim to the extent permitted by this Section .
Nothing in this Section shall be construed as a guaranty by Lessee
of payments due pursuant to any indebtedness incurred with respect to the
purchase of the Aircraft or of the residual value of the Aircraft.
Notwithstanding anything herein or in any other Operative Document
to the contrary, with respect to any Claim for which any Indemnitee is entitled
to indemnification under more than one provision of this Lease or any other
Operative Document, such Indemnitee shall be entitled to recovery for such Claim
only pursuant to one such provision as it may select in its sole discretion
(and, for the avoidance of doubt, such Indemnitee shall not be entitled to any
double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue in full
force and effect notwithstanding the expiration or other termination of this
Lease or any of the other Operative Documents and are expressly made for the
benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume, or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine or any Part thereof, title thereto, or any interest of Lessor therein or
in this Lease, except (i) the respective rights of Lessor, Lessee, Owner
Participant, Indenture Trustee and any other Indemnitee as herein provided or
provided under the other Operative Documents or the Financing Documents; (ii)
Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes
either not yet due or being diligently contested in good faith by appropriate
proceedings in accordance with Section 10 and so long as adequate reserves are
maintained with respect to such Liens and only so long as neither such
proceedings nor such Liens involve any material danger of the sale, forfeiture
or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any
interest of Lessor or Indenture Trustee therein or any risk of criminal
liability of Lessor or Indenture Trustee; (iv)
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inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other
like inchoate Liens arising in the ordinary course of business for sums not
overdue by more than 45 days or being diligently contested in good faith and
only so long as neither such proceedings nor any such Liens involve any material
danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or
any Engine or any Part, or any interest of Lessor or Indenture Trustee therein;
(v) the rights of other Persons to the extent expressly permitted by the
provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment
or award against Lessee (or any Permitted Sublessee) unless the judgment or
award shall not, within thirty (30) days after the entry thereof, have been
discharged, vacated, reversed, or execution thereof stayed pending appeal or
shall not have been discharged, vacated or reversed within thirty (30) days
after the expiration of such stay and only so long as such Liens shall not
involve any material danger of the sale, forfeiture or loss of any of the
Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or
Indenture Trustee therein and provided that the execution of such judgment or
award or an attachment relating thereto shall not have occurred within such
thirty (30) day period; and, (vii) any other Lien with respect to which Lessee
(or a Permitted Sublessee) shall have provided a bond adequate in the reasonable
opinion of Indenture Trustee (if the Lien of the Indenture has not been
discharged) and Owner Participant. Lessee shall promptly, at its own expense,
take or cause to be taken such action as may be necessary to duly discharge any
Lien (except for the Liens referred to in clauses (i) through (vii) of this
Section 14) directly or indirectly created, incurred, assumed, or suffered to
exist by Lessee if the same shall arise at any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease, the
Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust
Supplement, and any other supplement from time to time required by the terms
hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease
Supplement, Indenture Supplement, Trust Supplement and such other supplements to
be duly filed and recorded, and maintained of record, in accordance with the
applicable laws of the government of registry of the Aircraft. If any filing or
recording is reasonably necessary to protect the interests of Lessor or
Indenture Trustee, Lessee shall, at its own cost and expense (except
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it shall be at Lessor's expense if in connection with a change in ownership of
the Aircraft or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default) and upon request by Lessor, cause any financing statements and
any and all additional instruments and other documents, so far as permitted by
applicable Law, to be kept, filed, and recorded and to be re-executed, refiled
and re-recorded at all times in the appropriate office pursuant or in relation
to any applicable Laws of any Governmental Entity, to protect and preserve the
rights and interests of Lessor or Indenture Trustee hereunder, under the
Indenture and in the Aircraft, and Lessee shall furnish to Lessor and Indenture
Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of
each such filing or refiling and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or cause to be done,
at Lessee's cost and expense (except it shall be at Lessor's expense if in
connection with a change in ownership of the Aircraft or any other transfer or
assignment by Lessor other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), any and all acts and
things within its control which may be required under the terms of the Mortgage
Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease, and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Aircraft, as Lessor may
reasonably request. Lessee shall also do or cause to be done, at its own expense
(except it shall be at Lessor's expense if in connection with a change in the
ownership of the Aircraft or any other transfer or assignment by Lessor other
than as contemplated hereunder or under the Financing Documents or in connection
with an Event of Default), any and all acts and things which may be required
under the terms of any other Law involving any jurisdiction in which Lessee, any
Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may
reasonably request, to protect and preserve the title of the Lessor, this Lease,
the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and
under any of the Operative Documents or Financing Documents within any such
jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and duly
execute and deliver to Lessor or Indenture
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Trustee, as applicable, such further documents and assurances and take such
further actions as Owner Participant or Indenture Trustee may from time to time
reasonably request in order to more effectively carry out the intent and purpose
of this Lease and the other Operative Documents and the Financing Documents and
to protect the rights and remedies created or intended to be created in favor of
Lessor or Indenture Trustee hereunder and the other Operative Documents and the
Financing Documents including, without limitation, if reasonably requested by
Owner Participant or Indenture Trustee, at the expense of Lessee (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee
other than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default), the execution and delivery of supplements
or amendments hereto in recordable form, subjecting to this Lease, the Indenture
and the other Financing Documents, any replacement Aircraft or Engine and the
recording or filing of counterparts thereof in accordance with the laws of any
appropriate jurisdiction.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at its own expense and
risk, shall return the Aircraft to Lessor (or any Person designated by Lessor)
in at least the condition specified in this Section and Exhibit E hereto at any
Lessee system location in the continental United States selected by Lessor, as
Lessor may elect, or such other location as Lessor and Lessee may agree, fully
equipped with all required Engines, or other engines owned by Lessee (which
shall thereupon become Engines as hereinafter provided) meeting the conditions
specified in this Section and Exhibit E, duly installed thereon by delivering
the same to the Lessor at such location. Lessee shall comply with Section 11(b)
and this Section 16 with respect to any engines installed on the Aircraft
returned to Lessor hereunder and meeting the conditions described herein which
were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion hereunder, the
Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the
Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly
certified as an airworthy aircraft by the FAA under Part 121 of the regulations
promulgated under the Federal Aviation Act and with a current and valid
Airworthiness Certificate
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installed on the Aircraft, unless such certificate shall have been suspended or
revoked as a result of the suspension or revocation of the registration of the
Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft
to be registered in the name of Lessor under the Federal Aviation Act (whether
by means of a voting trust agreement or otherwise) in which case the Aircraft
shall nevertheless meet all conditions for such certification and for the
issuance of such certificate; (iii) in full airworthy condition for over water
and EROPS operation according to the FAA standards required to allow the
Aircraft to be operated under, and in full compliance with, such Airworthiness
Certificate and Part 121 of the regulations promulgated under the Federal
Aviation Act for such operation, such compliance to be by means of such
mechanical repairs or modifications or such inspections as may be required
thereby, but not by operational restrictions, by logbook entries or other method
of acceptance of such restrictions; (iv) in full compliance with Lessee's
Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen
of the United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act and reasonably cooperative with Lessee at Lessee's expense with
respect to effecting such registration, duly registered in the name of the
Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi)
in full compliance with the maintenance and operation provisions of this Lease
and all FAA airworthiness directives, mandatory service bulletins and equivalent
requirements which by their terms require compliance on or before the last day
of the Term (without regard to any deferral, waiver, deviation or exemption
granted by the FAA specifically to Lessee delaying such compliance); (vii) in
good and airworthy operating condition, and in the same condition (including,
without limitation, in a passenger configuration suitable for passenger revenue
service) as when delivered to Lessee hereunder, ordinary wear and tear excepted,
with no open or outstanding deferred maintenance items, scheduled or
unscheduled, with all systems and components fully serviceable and operational
and with no placards restricting operation or use, and (viii) with all remaining
warranties, indemnities, policies and guarantees referred to in Section 5(d)
made available to Lessor in a manner and by documents in form and substance
reasonably satisfactory to Lessor.
(c) Engines. In the event any engine not owned by Lessor shall be
installed on the Aircraft on any Return Occasion, without limiting Lessee's
obligations under the
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Tax Indemnification Agreement, such engine shall be of the same model and
equivalent modification status as the Engines or, at Lessee's option, an IAE
engine of an improved model suitable for installation and use on the Airframe
without diminishing the value, remaining useful life or utility of such
Airframe, in each such case having a value, remaining useful life and utility at
least equal to (as determined in accordance with the Appraisal Procedure), and
be in an operating condition as good as the Engines, assuming the Engines were
in the condition and repair as required by the terms hereof immediately prior to
such termination and shall conform to the return condition requirements set
forth in this Section 16 and Exhibit E, and Lessee, at its own expense and
concurrently with such delivery, shall cause such engine to become an Engine by
complying with Section 11(b) hereof. Lessee's obligation to comply with the
terms of this Section 16(c) shall be conditioned on Lessor's transferring to
Lessee all of Lessor's right, title and interest in and to any Engine not
installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any
representation, warranty or recourse of any kind whatsoever, express or implied,
except a warranty that such Engine is free and clear of Lessor's Liens.
(d) Records and Documents. Upon the return of the Aircraft, Lessee
shall deliver to Lessor (i) all logs, manuals and data, and inspection,
modification, overhaul and other records, related to the Aircraft, including,
without limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Aircraft and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft under
the Maintenance Program, in each case as Lessor may reasonably request, and all
documentation with respect to the Aircraft set forth on Exhibit B or otherwise
delivered to Lessee at delivery thereof, and (ii) all records necessary or
required by the FAA to certify and place the Aircraft on an FAA or other
country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of
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Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be
updated to the latest revision status as of the last day of the Term within such
software base and all data therein or pertaining thereto shall be deemed
property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the maintenance records by part numbers and serial
numbers other than the manufacturer's shall be provided with interchange or
cross reference listing necessary to establish complete traceability. All
documentation, flight, and maintenance records as specified by United States
Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation
121.380 which normally accompany the transfer of an aircraft which has been
operating in regulated commercial air service, shall be delivered to Lessor with
the Aircraft. Any documents or records required to be delivered hereunder shall
be in English.
(e) Condition of Aircraft. Upon any Return Occasion, Lessee shall
return such Aircraft to Lessor in such condition that the Aircraft shall also
comply with each and every condition and requirement set forth elsewhere in this
Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion, Lessee shall make
the Aircraft available to Lessor at the location where the "block 'C' Check" (or
equivalent level designated check or checks) required hereunder to be performed
immediately prior to redelivery is to be performed for detailed inspection of
the documents referred to in paragraph (d) above and the Airframe, Engines and
Parts structure and parts, at Lessee's expense (excluding
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compensation to representatives of Lessor), in order to verify that the
condition of such Aircraft complies with the requirements set forth above (such
inspection being hereinafter referred to as the "Final Inspection"). The Final
Inspection shall be combined with such "block 'C' Check" (or equivalent level
check or checks) and may include such other items as reasonably requested by
Lessor. Lessee shall give Lessor not less than thirty (30) days prior written
notice of the commencement date of such Final Inspection. The period allowed for
the Final Inspection shall be the same period during which such "block 'C'
Check" is being performed and shall have such duration as to permit the opening
of any areas of the Aircraft which are necessary or advisable to satisfy Lessor
as to compliance with the requirements of this Section 16 and Exhibit E. The
Final Inspection shall commence on the date so noticed which shall be on or
before the expiration of the Term with respect to the Aircraft and shall
continue on consecutive days until all activity required above to be conducted
has been concluded. To the extent that any portion of the Final Inspection
extends beyond the expiration of the Term, unless Lessor has terminated the
Lease pursuant to Section 18(g) hereof, the Term with respect to the Aircraft
undergoing the Final Inspection shall be deemed to have been automatically
extended, and all obligations hereunder continued, on a daily basis until the
Final Inspection shall have been concluded and Lessee shall pay Rent during any
such extension in an amount equal to the average daily Basic Rent or Renewal
Rent, as the case may be, paid in respect of the last year of the Basic Term or
Renewal Term, as the case may be (and Stipulated Loss Value during such
extension shall equal the Stipulated Loss Value on the last day of the Basic
Term or Renewal Term, as the case may be); provided, however, that Lessee shall
not be required to pay Rent with respect to the Aircraft during the period of
extension to the extent that Lessor is responsible for the delay in completion
of the Final Inspection. All storage expenses attributable to any Term extension
pursuant to the preceding sentence shall be payable by Lessee, except that
Lessee shall not be liable for any storage expenses which are incurred after the
sixtieth (60th) day after the Term to the extent that storage continues
thereafter due to Lessor's delay in completion of the Final Inspection.
(g) Aircraft Records and Documents. In order to enable Lessor to
prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f)
above, Lessee agrees to make available to Lessor at a maintenance base of Lessee
with adequate facilities for short-term maintenance, where
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the Final Inspection is to occur, not later than ten (10) days prior to the
commencement of such Final Inspection, the Aircraft Records and Documents listed
in Exhibit B hereto, together with such other documentation (including, without
limitation, original airworthiness directive compliance documents and other work
documents) regarding the condition, use, maintenance, or operation as Lessor may
reasonably request or require to substantiate the status of the Aircraft.
(h) Corrections and Subsequent Corrections. To the extent that the
Aircraft or any Engine fails upon a Return Occasion to conform to any
requirement imposed by this Lease Lessor may, at its option, (i) continue the
Lease in effect in the manner provided for in Section 16(f) above with regard to
automatic extension until such time as such Aircraft is brought up to the
condition required by this Section 16, including Exhibit E, or (ii) accept the
return of such Aircraft and thereafter have any such nonconformance corrected,
at such time as Lessor may deem appropriate but not to commence later than
ninety (90) days following the return of such Aircraft, at commercial rates then
charged by the Person selected by Lessor to perform such correction. Lessee's
obligations to pay such Supplemental Rent shall survive the Expiration Date or
other termination of this Lease. Nothing set forth in this paragraph shall
constitute a limitation on Lessor's or Owner Participant's ability to recover
from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof
suffered as a result of Lessee's failure to effect the return of the Aircraft at
the time, in the place and in the condition as specified in this Section 16 and
Exhibit E hereto.
(i) Functional Flight Check. Immediately prior to the expiration of
the Term, Lessor will be permitted to conduct a non-commercial functional flight
check flight of no more than two (2) hours duration in accordance with the
Manufacturer's functional flight check procedures at Lessee's expense to
demonstrate the airworthiness of the Aircraft and proper functioning of all
systems and components. A qualified pilot and up to five (5) other
representatives selected by Lessor may take part in such flight to verify
compliance of the Aircraft with the requirements of this Lease, provided, that
Lessor shall be responsible for the charges of such qualified pilot and
representatives. Lessee may combine the functional flight check provided in this
Section 16(i) with the delivery flight specified in Section 16(a) and such
functional flight check shall include the landing. Any discrepancy or
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malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any actions
to correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee shall, at Lessee's
expense, take such action as Lessor may reasonably request to assist Lessor in
obtaining any required documents in relation to the export of the Aircraft from
the United States (including, without limitation, a valid and subsisting export
certificate of airworthiness with respect to the Aircraft and export license)
and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee shall deliver to
Lessor, at no cost to Lessor, all service bulletin kits furnished without charge
by the manufacturer for installation on the Aircraft which have not been so
installed together with appropriate instructions for installation. In the event
such uninstalled kits were purchased or manufactured by Lessee, then Lessor
shall be advised of such kits by Lessee and have a right of first refusal to
purchase such kits at Lessee's cost for a period of ninety (90) days after
return.
(l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at
Lessor's request and at Lessee's risk and expense, in addition to other storage
referred to above, arrange for the parking, storage and insurance of the
Aircraft for a period not exceeding sixty (60) days at such reasonable location
as Lessor requests where Lessee has or can arrange for storage. Lessee shall pay
or cause to be paid all costs and expenses for such parking, storage and
insurance.
(m) Resale/Release Cooperation. During the last twelve (12) months
of the Term, with reasonable notice and at reasonable times, Lessee will
cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable
respects, with the efforts of Lessor to sell or lease the Aircraft after the end
of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Aircraft and the records
relating thereto to the extent it does not
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unreasonably interfere with the operation or maintenance of the Aircraft or the
conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal
Rent or Stipulated Loss Value to Lessor within three (3) Business Days after the
date on which such payment is due, or (ii) any other payment of Supplemental
Rent due hereunder within ten Business Days after the date on which such payment
is due and Lessee has received written demand therefor by the party entitled
thereto; provided that any failure of Lessee to pay to Lessor or the Owner
Participant when due any Excepted Payments (as defined in the Indenture) shall
not constitute an Event of Default unless Lessor or Owner Participant delivers
notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force and
effect any insurance required under the provisions of Section 12 hereof or shall
operate the Aircraft outside of the scope or in violation of the terms of the
insurance or United States Government indemnity coverage required to be
maintained with respect to such Aircraft; or
(c) Any representation or warranty made by Lessee herein or in the
Refunding Agreement or in any certificate furnished by Lessee in connection
herewith or therewith is or was incorrect at the time made in any material
respect and such incorrectness shall not have been cured within thirty (30) days
after the receipt by Lessee of a written notice from Lessor or the Indenture
Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant, condition,
or agreement to be performed or observed by it pursuant to this Lease or the
Refunding Agreement, and such failure shall continue uncured for thirty (30)
days after written notice thereof is given by Lessor or Indenture Trustee to
Lessee; provided, however,
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that if Lessee shall have undertaken to cure any such failure which arises under
the first or second sentence of Section 6(c) or Section 6(d), as such provisions
of Section 6 relate to maintenance, service, repair or overhaul, or Section 9,
and notwithstanding the diligence of Lessee in attempting to cure such failure,
such failure is not cured within said thirty (30) day period but is curable with
future due diligence, there shall exist no Event of Default under this Section
17 so long as Lessee is proceeding with due diligence to cure such failure and
such failure is remedied not later than one hundred eighty (180) days after
receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a custodian, receiver,
trustee or liquidator of itself or all or any material part of Lessee's property
or Lessee's consolidated property, or Lessee admits in writing its inability to,
or is unable to, or does not, pay its debts generally as they come due, or makes
a general assignment for the benefit of creditors, or Lessee files a voluntary
petition in bankruptcy or a voluntary petition seeking reorganization in a
proceeding under any bankruptcy or insolvency Laws (as now or hereafter in
effect), or an answer admitting the material allegations of a petition filed
against Lessee in any such proceeding, or Lessee by voluntary petition, answer
or consent seeks relief under the provisions of any other bankruptcy, insolvency
or other similar Law providing for the reorganization or winding-up of
corporations, or provides for an agreement, composition, extension or adjustment
with its creditors, or any corporate action (including, without limitation, any
board of directors or shareholder action) is taken by Lessee in furtherance of
any of the foregoing, whether or not the same is fully effected or accomplished;
or
(f) An order, judgment or decree is entered by any court appointing,
without the consent of Lessee, a custodian, receiver, trustee or liquidator of
Lessee, or of all or any material part of Lessee's property, or Lessee's
consolidated property, or all or any material part of Lessee's property or
Lessee's consolidated property is sequestered, and any such order, judgment or
decree of appointment or sequestration remains in effect, undismissed, unstayed
or unvacated for a period of ninety (90) days after the date of entry thereof or
at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding under the
Federal bankruptcy laws or other
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insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or
dismissed within ninety (90) days thereafter or at any time an order for relief
is granted in such proceeding, or if, under the provisions of any Law providing
for reorganization or winding-up of corporations which may apply to Lessee, any
court of competent jurisdiction assumes jurisdiction over, or custody or control
of, Lessee or of all or any material part of Lessee's property, or Lessee's
consolidated property and such jurisdiction, custody or control remains in
effect, unrelinquished, unstayed or unterminated for a period of ninety (90)
days or at any time an order for relief is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial passenger
Certificated Air Carrier or, except in either case in connection with a labor
dispute, announcement thereof or Lessee's suspension of its business as a
commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States air carrier
license or certificate under Part 121 of the Federal Aviation Regulations or
certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor may, at its option,
declare by written notice to Lessee this Lease to be in default, provided,
however, that this Lease shall be deemed to be declared in default automatically
without the necessity of such written declaration upon the occurrence of any
Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof;
and at any time thereafter, so long as any outstanding Event of Default shall
not have been remedied, Lessor may do one or more of the following with respect
to all or any part of the Airframe and any or all of the Engines as Lessor in
its sole discretion shall elect, to the extent permitted by, and subject to
compliance with any mandatory requirements of, applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written demand of
Lessor and at Lessee's cost and expense, immediately return, and the Lessee
hereby agrees that it
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shall return promptly all or such part of, the Aircraft to Lessor in the manner
specified in such notice, in which event such return shall not be delayed for
the purposes of complying with the return conditions specified in Section 16 and
Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's
possession of the Aircraft) or delayed for any other reason; provided, however,
that Lessee shall remain and be liable to Lessor for amounts provided for herein
or other damages resulting from the Aircraft or any Engine not being in the
condition required by Section 16 and Exhibit E. Notwithstanding the foregoing,
at Lessor's option, Lessee shall be required thereafter to take such actions as
would be required by the provisions of this Lease if such Aircraft were being
returned at the end of the Term hereof with respect to such Aircraft. In
addition, Lessor or Lessor's agent, at its option and to the extent permitted by
applicable Law, may but shall not be obligated to enter upon the premises where
all or any part of the Aircraft, Airframe and/or Engines are located to take
immediate possession of and, at Lessor's option, remove the same (and/or any
engine which is not an Engine but which is installed on the Airframe, subject to
the rights of the owner, lessor or secured party thereof) by summary proceedings
or otherwise, all without liability accruing to Lessor or Lessor's agent for or
by reason of such entry or taking of possession or removal whether for the
restoration of damage to property, or otherwise, caused by such entry or taking,
except direct damages to the extent caused by Lessor's gross negligence or
willful misconduct.
(b) With or without taking possession thereof, sell or cause to be
sold, the Aircraft, Airframe or Engine or any part thereof, or Lessor's interest
therein, at private or public sale, as Lessor in its sole discretion may
determine, or otherwise dispose of, hold, use, operate, or lease to others, or
keep idle the Aircraft, Airframe or Engine, as Lessor in its sole discretion may
determine, all free and clear of any rights of Lessee or any Permitted Sublessee
and except as hereinafter set forth in this Section 18. Lessor may be the
purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall thereafter
at any time exercise, any of its rights under paragraph (a) or paragraph (b)
above, Lessor, by written notice to Lessee specifying a payment date which shall
be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee
shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice,
as liquidated damages for loss of bargain and not as a penalty
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(in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the
period commencing after the Stipulated Loss Value Date specified for payment in
such notice), any unpaid Rent for the Aircraft to and including the Stipulated
Loss Value Date specified in such notice, plus whichever of the following
amounts as Lessor may specify, in its sole and absolute discretion, in such
notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated
Loss Value for the Aircraft, Airframe or Engine computed as of the date
specified in such notice plus, if such date is a Basic Rent Payment Date or a
Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as
the case may be, due on such date, over the fair market sale value of the
Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an
amount equal to the excess, if any, of the sum of the Stipulated Loss Value for
the Aircraft, Airframe or Engine computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment
Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due
on such date, over the fair market rental value of the Aircraft for the
remainder of the Term as of the date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above, shall have
sold the Aircraft, Airframe or Engine or its interest therein, Lessor, in lieu
of exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date immediately prior to the date such sale
occurs), any unpaid Rent due to and including the date of sale, plus the amount
by which the Stipulated Loss Value of such Aircraft, Airframe or Engine,
computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such
sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph (b), (c) or (d)
above, by notice to Lessee, Lessor may require Lessee to pay, on the next
Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so
pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in
advance for the period on and after the Stipulated Loss Value Date), any unpaid
Basic Rent or Renewal Rent, as the case may be, for such
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Aircraft due and unpaid for any period prior to and including, and any Basic
Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount
equal to the Stipulated Loss Value for the Aircraft computed as of such
Stipulated Loss Value Date; and upon such payment of liquidated damages and the
payment of all other Rent then due hereunder and the discharge of the Lien of
the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's
expense, transfer, without recourse or warranty (except as to the absence of
Lessor's Liens and the Lien of the Indenture), all right, title and interest of
Lessor in and to the Aircraft to Lessee or as it may direct and Lessor shall, at
Lessee's expense, execute and deliver such documents evidencing such transfer
and take such further action as Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to paragraph (b) above, shall
have relet the Aircraft, Airframe or Engine under a long term lease, Lessor, in
lieu of exercising its rights under paragraph (c) above with respect to such
Aircraft, Airframe or Engine, may, if it shall so elect, demand that Lessee pay
Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for
loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent,
as the case may be, for such Aircraft due after the time of reletting) any
unpaid Rent for such Aircraft due up to the date of reletting, plus the amount,
if any, by which the aggregate Basic Rent or Renewal Rent, as the case may be,
for such Aircraft which would otherwise have become due over the Basic Term or
Renewal Term, as the case may be, discounted periodically (equal to installment
frequency) to present worth as of the date of reletting at the rate of 8.50% per
annum, exceeds the aggregate basic rental payments to become due under the
reletting from the date of such reletting to the date upon which the Term for
such Aircraft, Airframe or Engine would have expired but for Lessee's default,
discounted periodically (equal to installment frequency) to present worth as of
the date of the reletting at the rate of 8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by written notice to
Lessee which cancellation, rescission and/or termination shall be effective upon
dispatch, whereupon Lessee's right to possess and use the Aircraft, Airframe or
Engine shall immediately cease, however, Lessee shall be and remain liable for
damages and losses suffered by Lessor and all other amounts payable by Lessee
hereunder.
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(h) Lessor may exercise any other right or remedy which may be
available to it under applicable laws, or may proceed by appropriate court
action or actions, either at law or in equity, to enforce any other remedy or
right Lessor may have hereunder, under the other Operative Documents, at law or
in equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable (without
duplication of the remedies above and of Lessee's obligations under Section 10
and Section 13 hereof and subject to the exclusions set forth therein) for any
and all unpaid Rent before, during or after the exercise of any of the above
mentioned remedies (including without limitation interest on unpaid amounts with
respect to all amounts not paid when due, including, without limitation, any
amounts payable pursuant to the foregoing provisions of this Section 18), and,
except as specified above, until satisfaction of all of Lessee's obligations to
Lessor hereunder and for all legal fees and other costs and expenses incurred by
any Indemnitee by reason of the occurrence of any Event of Default or the
exercise of an Indemnitee's remedies with respect thereto, including all costs
and expenses incurred in connection with the return of the Aircraft in
accordance with the terms of Section 16 and Exhibit E hereof or in placing the
Aircraft, Airframe or Engine in the condition and with airworthiness
certification as required by such Section and such Exhibit and costs and
expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass
Through Trust Agreements, the Intercreditor Agreement or each Liquidity
Facility. All liquidated damages payable pursuant to the foregoing shall bear
interest, which shall be payable on the date the payment of such liquidated
damages is due at a rate equal to the Interest Rate from and including the date
due to and excluding the date actually paid.
In effecting any repossession, Lessor, its representatives and
agents, to the extent permitted by applicable Law, (i) shall have the right to
enter upon any premises where it reasonably believes the Aircraft, the Airframe,
an Engine or Part to be located, (ii) shall not be liable, in conversion or
otherwise, for the taking of any personal property of Lessee which is in or
attached to the Aircraft, the Airframe, an Engine or Part which is repossessed,
(iii) shall not be liable or responsible, in any manner, for any damage or
injury to any of Lessee's
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property in repossessing and holding the Aircraft, the Airframe, an Engine or
Part except for direct damages caused by Lessor's gross negligence or willful
misconduct and (iv) shall have the right to maintain possession of and dispose
of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee
or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole expense, assemble
and make the Aircraft, the Airframe, an Engine or Part available at a place
designated by Lessor in accordance with Section 16 and Exhibit E hereof. Lessee
hereby agrees that, in the event of the return to or repossession by Lessor of
the Aircraft, the Airframe, an Engine or Part, or otherwise upon the occurrence
of an Event of Default, any rights in any warranty (express or implied), service
life policy, infringement indemnity, performance guaranty or the like heretofore
made available to Lessee or otherwise held by Lessee shall without further act,
notice or writing be deemed automatically cancelled and shall be enforceable
solely by and for the benefit of, and assigned to, Lessor. Lessee shall be
liable to Lessor (without duplication) for all expenses, disbursements, costs
and fees incurred in (i) repossessing, storing, preserving, shipping,
maintaining, repairing and refurbishing the Aircraft, the Airframe, an Engine or
Part to the condition required by Section 16 and Exhibit E hereof and (ii)
preparing the Aircraft, the Airframe, an Engine or Part for sale or lease,
advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part
and selling or releasing the Aircraft, the Airframe, an Engine or Part. Lessor
is hereby authorized and instructed, at its option, to make expenditures which
Lessor considers advisable to repair and restore the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 16 and Exhibit E hereof, all
at Lessee's sole expense.
For the purpose of this Section 18, the "fair market rental value"
or the "fair market sales value" of the Aircraft, Airframe, an Engine or Part
shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or Part
pursuant to this Section , Owner Participant may bid for and purchase such
property and Lessee agrees that the amounts paid therefor shall be used in the
computations contemplated herein and Lessee shall remain liable for any
deficiency.
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No remedy referred to in this Section is intended to be exclusive,
but, to the extent permitted by Law, each shall be cumulative and in addition to
any other remedy referred to above or otherwise available to Lessor at law or in
equity; and, to the extent permitted by Law, the exercise or beginning of
exercise by Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all of such other remedies.
No waiver by Lessor of any Event of Default shall in any way be, or be construed
to be, a waiver of the same Event of Default in the future or any other prior or
future Event of Default. To the extent permitted by Law, Lessee hereby waives
any right it may have to require Lessor to mitigate damages in connection with
the remedies described in Sections 18(c), (d), (e) or (f) above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Aircraft leased hereunder or otherwise to more effectively carry out
Lessor's rights and remedies and to file said documents for recordation with the
FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full force and
effect and survive the expiration or other termination of this Lease and are
expressly made for the benefit of and shall be enforceable by Lessor, Owner
Participant and, if the Lien of the Indenture has not been discharged, Indenture
Trustee.
Section 19. Security for Obligations. In order to secure the
Equipment Notes, Lessor has created, by the Indenture, a security interest in
the Trust Indenture Estate, including, without limitation, this Lease and all
Rent and other sums payable hereunder, except as provided in the Indenture and
subject in each case to Liens permitted hereunder. The Indenture provides, among
other things for the assignment by Lessor to Indenture Trustee of its right,
title and interest in, to and under this Lease, to the extent set forth in the
Indenture, for the creation of a first-mortgage lien on and perfected security
interest in all of Lessor's right, title and interest in and to the Aircraft in
favor of Indenture Trustee. Lessee hereby
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consents to such assignment and to the creation of such mortgage and security
interest and acknowledges receipt of copies of the Trust Agreement and the
Indenture, it being understood that such consent shall not affect any
requirement or the absence of any requirement for any consent under any other
circumstances. Until the Lien of the Indenture has been discharged, Lessee will
furnish to Indenture Trustee counterparts of all notices and other writings of
any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien
of the Indenture has been discharged, (a) Lessee shall make all payments of
Rent, Stipulated Loss Value and all other amounts payable hereunder (other than
Excepted Payments) to or as directed by Indenture Trustee as provided in
Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise
the rights of Lessor (but not Owner Participant) (other than Expected Rights)
herein as and to the extent provided herein or in the Indenture and any express
reference to Indenture Trustee in any Section of this Lease shall not give rise
to any implication that Indenture Trustee may not exercise the rights of Lessor
in any other Section of this Lease as and to the extent provided in the
Indenture.
The provisions of this Lease and the Refunding Agreement which
require or permit action by, the payment of monies to, the consent or approval
of, the furnishing of any instrument or information to, or the performance of
any other obligation to, Indenture Trustee, shall not be effective, and the
Sections hereof containing such provisions shall be read as though there were no
such requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received from
Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to or as directed by Indenture
Trustee shall constitute payment or performance of such obligation to Lessor by
Lessee under this Lease.
Any payment or performance of an obligation of Lessee under this
Lease by a Permitted Sublessee shall constitute payment or performance of such
obligation by Lessee.
Section 20. Renewal Option. Lessee may renew this Lease as provided
in the following clause (i) and subject to the following clause (ii):
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(i) Exercise of Renewal Option. Provided that this Lease has
not been previously terminated and that no Default or Event of Default
shall have occurred and be continuing at the time of the giving of
irrevocable notice hereinafter referred to in this clause (i) or at the
time of the commencement of the Renewal Term, Lessee, at its option,
may renew this Lease for one Renewal Term consisting of a period equal
to five years. The right to renew this Lease for such Renewal Term
pursuant to this clause (i) shall be exercised upon irrevocable notice
from Lessee received by Lessor of Lessee's election to so renew this
Lease not less than twelve (12) months and not more than twenty-four
(24) months prior to the last day of the Basic Term. The Renewal Rent
for the Renewal Term shall be the "fair market rental value" of the
Aircraft for such Renewal Term (the "renewal fair market rental value")
as determined in accordance with the Appraisal Procedure. For purposes
of this paragraph (i), the Appraisal Procedure shall be initiated by
Lessee no earlier than nine (9) months prior to the end of the Basic
Term. If Lessee shall fail to exercise its option to extend the term of
this Lease for the Renewal Term in accordance with the provisions of
this paragraph, all of Lessee's rights to extend the Term for such
Renewal Term shall expire. Lessee shall pay all reasonable costs and
expenses, including, without limitation, reasonable legal fees and
expenses, incurred by Lessor, Owner Participant and the Indenture
Trustee in connection with the exercise of such option.
(ii) Provisions Applicable During Renewal Term. All provisions
of this Lease, including, without limitation, as to Rent and Stipulated
Loss Value (which shall be, with appropriate adjustments, in no event
less than the greater of 120% of the "fair market sales value" of the
Aircraft as of the first day of the Renewal Term as determined pursuant
to the Appraisal Procedure or the amount set forth on Exhibit A as of
the end of the Basic Term), shall remain in effect and be applicable
during such Renewal Term, except that Lessee shall pay to the Lessor,
semi-annually in arrears as Renewal Rent on each Renewal Rent Payment
Date, the amount for such Renewal Term as determined in accordance with
clause (i) of this Section 20.
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Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision of this
Lease 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. To the extent
permitted by Law, each of Lessor and Lessee hereby waives any provision of Law
which renders any provision hereof prohibited or unenforceable in any respect.
No term or provision of this Lease may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing expressed to be a
supplement or amendment to, or waiver or termination of this Lease signed by an
officer of the party against which the enforcement of the change, waiver,
discharge, or termination is sought. This Lease shall constitute an agreement of
lease, and nothing herein shall be construed as conveying to Lessee any right,
title, or interest in the Aircraft or any Engine or Part except as a lessee
only. Without limiting the foregoing, the parties hereto agree to treat this
Agreement as a lease for United States federal income tax purposes and Lessee
will not file a tax return which is inconsistent with the foregoing and nothing
contained herein shall be construed as an election by Lessor to treat Lessee as
having acquired the Aircraft for the purpose of the investment credit allowed by
Section 38 of the 1954 Code or any similar or successor statute. The headings in
this Lease are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE
STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor and Lessee
required or permitted under the terms and provisions hereof shall be in writing
and shall be sent to Lessor or Lessee at their respective addresses set forth in
Exhibit C hereto (or such other addresses as the parties may designate from time
to time in writing). All
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notices, reports or other documents provided to Lessor or Lessee shall be
provided concurrently to Indenture Trustee (until such time as the Lien of the
Indenture is discharged) and to Owner Participant, at such address as Owner
Participant and Indenture Trustee, respectively, may designate from time to
time. All notices and instructions hereunder shall become effective when
received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails to make
any payment of Rent required to be made by it hereunder or fails to perform or
comply with any covenant, agreement, or obligation contained herein, Lessor
shall have the right but not the obligation to make such payment or conform or
comply with such agreement, covenant, or obligation, and the amount of such
payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by or on behalf of Indenture Trustee on the
signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no Event of
Default shall have occurred and be continuing and this Lease has not been
declared or deemed to be in default, Lessor shall not take or cause to be taken
any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Aircraft
hereunder, and all rents, revenues, profits and income therefrom, in accordance
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with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
Trustee, Note Holder or any other Person lawfully claiming by or through them,
and provided further, that the foregoing shall not be deemed to have modified
the obligations of Lessee pursuant to Section 4(d) hereof, which obligations
remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as provided in the
Refunding Agreement, there has been no third party as agent involved in this
Lease and each indemnifies the other from liability for fees, commissions, or
other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by Lessor or
Indenture Trustee and are payable to Lessee shall, unless a Default or an Event
of Default shall have occurred and be continuing, be invested as provided below
until paid to Lessee or applied by Lessor or Indenture Trustee to the extent
provided herein. Until paid to Lessee or applied as provided herein or in the
Indenture such monies shall be invested by Lessor or Indenture Trustee from time
to time at the expense of Lessee in Specified Investments, as directed by Lessee
in accordance with the provisions of Section 3.07 of the Indenture if the Lien
of the Indenture shall not have been discharged and thereafter as provided
below. There shall be promptly (but not more frequently than monthly) remitted
to Lessee any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions and other reasonable expenses, if
any, incurred in connection with such investment) unless a Default or an Event
of Default shall have occurred and be continuing. Lessee will promptly pay to
Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture
Trustee harmless from, on demand, the amount of any loss realized as the result
of any such investment (together with any Taxes, fees, commission and other
reasonable expenses, if any, incurred in connection with such investment).
(i) Entire Agreement; Amendment. This Lease (including the Exhibits
hereto), any related letter agreements and the other Operative Documents, the
Financing Documents and the Purchase Documents (including the Exhibits thereto)
and all closing documents delivered in connection with any of the foregoing
embody the entire agreement and understanding among the parties hereto with
respect to the
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subject matter hereof. This Lease may be changed, waived, discharged, amended,
revised or terminated only by an instrument in writing signed by the party
against which enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18, Lessee agrees
within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications hereof or thereof, or waivers or consents hereunder or thereunder,
and (iii) any Default or Event of Default or the enforcement of any of Lessor's
rights, remedies or privileges hereunder or at law or in equity, but not
Lessor's legal fees and expenses in connection with the negotiation and
execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of Title 11
of the United States Code is amended, or if it is repealed and another statute
is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take
such other action not inconsistent with this Lease as Lessor reasonably deems
necessary so as to afford to Lessor the rights and benefits as such amended or
substituted statute confers upon owners and lessors of aircraft similarly
situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor shall use
its best efforts to have the Aircraft registered under the United States
Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process; Waiver of Forum
Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submits for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United
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States District Court for the Southern District of New York. Each of Lessee and
Lessor represents and warrants that it is not currently entitled to, and agrees
that to the extent that Lessee or Lessor hereinafter may acquire, any immunity
(including, without limitation, sovereign immunity) from jurisdiction of any
court or from any legal process, it hereby, to the extent permitted by Law,
waives such immunity, and agrees not to assert, by way of motion, as a defense,
or otherwise, in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of the above-named courts that it is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Lease or any of the other Operative
Documents or the subject matter hereof or thereof or any of the transactions
contemplated hereby and thereby may not be enforced in or by such courts. Each
of Lessee and Lessor hereby generally consents to service of process by
registered mail, return receipt requested, addressed to it at its address set
forth in Exhibit C, or at such other office of Lessee or Lessor as from time to
time may be designated by Lessee or Lessor (as applicable) in writing to Lessee
or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of
Lessee and Lessor hereby agrees that its submission to jurisdiction and its
designation of service of process by mail set forth above is made for the
express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each
Note Holder and their successors and assigns (as applicable). Final (after all
appeals) judgment (the enforcement of which has not been stayed) against either
Lessee or Lessor obtained in any suit originally brought in the court of the
State of New York in New York County or in the United States District of New
York shall be conclusive, and, to the extent permitted by applicable Law, may be
enforced in other jurisdictions by suit on the judgment, a certified or true
copy of which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Lessee therein described; provided that the
plaintiff at its option may bring suit, or institute other judicial proceedings,
against Lessee or Lessor, as the case may be, or any of their assets in the
courts of any country or place where such Person or such assets may be found.
EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS
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BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without
limitation, contract claims, tort claims, breach of duty claims and other common
law and statutory claims. Lessor and Lessee represent and warrant that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE
DOCUMENTS. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto agree that all
statements, representations, covenants and agreements made by Lessor (when made
in its capacity as such and not in its individual capacity) contained in this
Agreement, unless expressly otherwise stated, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies that can be exercised and enforced against the Trust Estate. Therefore,
no recourse shall be had with respect to anything contained in this Agreement
(except for any express provisions that Lessor is responsible for in its
individual capacity), against Lessor in its individual capacity or against any
institution or person that becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them; provided that (i) this Section 21(n) shall not
be construed to prohibit any action or proceeding against any party hereto for
its own willful misconduct or grossly negligent conduct for which it would
otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the
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necessity of any consent or approval by Lessee (subject to Section 14(d) of the
Refunding Agreement) and without in any way altering the terms of this Lease or
Lessee's obligations hereunder. One such appointment and designation of a
successor Owner Trustee shall not exhaust the right to appoint and designate
further successor Owner Trustees pursuant to the Trust Agreement, but such right
may be exercised repeatedly as long as this Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree that the
Original Head Lease, as amended and restated by this Amended and Restated
Aircraft Lease Agreement [GPA 1990 AWA-13] (and as otherwise extended, amended,
modified, renewed or supplemented), shall be governed by Article 2-A of the
Uniform Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Lease to be executed by its duly authorized
officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in
its individual capacity, except as
otherwise expressly provided
herein, but solely as Owner Trustee
By:________________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:________________________________
Title:
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TABLE OF CONTENTS
Page
Section 1. Definitions.................................................. 1
Section 2. Agreement to Lease........................................... 21
Section 3. Delivery and Acceptance; Term................................ 22
(a) Time of Delivery................................... 22
(b) ................................................... 22
[Intentionally Left Blank]
(c) Acceptance of Aircraft............................. 22
(d) Term of Lease...................................... 22
Section 4. Rent......................................................... 22
(a) Rent............................................... 22
(b) Minimum Payments................................... 23
(c) Date, Place and Method of Payment.................. 23
(d) Prohibition Against Setoff,
Counterclaim, Etc.................................. 24
Section 5. Representations, Warranties and Covenants.................... 26
(a) Warranties and Disclaimer of Warranties............ 26
(b) Representations and Warranties of
Lessor............................................. 27
(c) No Amendments to Financing Documents............... 27
(d) Suppliers' Warranties.............................. 27
Section 6. Possession and Use........................................... 28
(a) Possession......................................... 28
(b) Reciprocal Recognition of Rights................... 35
(c) Lawful Insured Operations.......................... 36
(d) Maintenance........................................ 37
(e) Registration and Insignia.......................... 38
Section 7. Inspection................................................... 39
Section 8. Additional Covenants of Lessee............................... 40
(a) Financial Information.............................. 40
(b) Maintenance of Corporate Existence................. 42
(c) Maintenance of Status.............................. 42
(d) Payment of Taxes................................... 42
(e) Consolidation, Merger, Etc......................... 42
(f) Information........................................ 43
(g) Place of Business.................................. 44
(h) Certain Limitations on Use......................... 44
(i) Section 1110....................................... 45
(j) Permits and Licenses............................... 45
i
<PAGE> 119
Page
(k) Security Opinion; Annual Certificate............. 45
(l) Letter of Credit................................. 46
Section 9. Replacement of Parts; Alterations,
Modifications and Additions...................... 49
(a) Replacement of Parts............................. 49
(b) Alterations, Modifications and
Additions........................................ 50
(c) Pooling.......................................... 52
Section 10. General Tax Indemnity..................................... 53
(a) Indemnity........................................ 53
(b) Exclusions....................................... 55
(c) Covered Income Tax............................... 57
(d) Reports and Returns.............................. 59
(e) After-Tax Basis.................................. 59
(f) Tax Benefit...................................... 60
(g) Payment.......................................... 60
(h) Contest.......................................... 61
(i) Refund........................................... 63
(j) Diligence........................................ 63
(k) Affiliated Group................................. 63
(l) Verification..................................... 64
(m) Survival......................................... 64
Section 11. Loss, Damage and Requisition.............................. 64
(a) Event of Loss with Respect to the
Airframe......................................... 64
(b) Event of Loss with Respect to an Engine.......... 67
(c) Conveyance of Replacement Airframe............... 68
(d) Application of Proceeds and Payments............. 70
(e) Requisition for Use by Government with
Respect to the Aircraft.......................... 71
(f) Application in Default........................... 72
Section 12. Insurance................................................. 72
(a) Public Liability and Property Damage
Insurance. ...................................... 72
(b) Insurance Against Loss or Damage................. 74
(c) Application of Insurance Proceeds for
an Event of Loss................................. 77
(d) Application of Insurance Proceeds for
Other than an Event of Loss...................... 77
(e) Application in Default........................... 78
(f) Certificates..................................... 78
(g) Reinsurance...................................... 79
(h) Storage.......................................... 80
(i) Amounts Held..................................... 80
ii
<PAGE> 120
Page
(j) After the Term................................... 80
(k) Governmental Indemnity........................... 80
Section 13. General Indemnity......................................... 81
Section 14. Liens..................................................... 86
Section 15. Protection of Title and Further Assurances................ 87
Section 16. Return of Aircraft and Records............................ 89
(a) Return........................................... 89
(b) Status Upon Return............................... 90
(c) Engines.......................................... 91
(d) Records and Documents............................ 91
(e) Condition of Aircraft............................ 92
(f) Final Inspection................................. 93
(g) Aircraft Records and Documents................... 94
(h) Corrections and Subsequent Corrections........... 94
(i) Functional Flight Check.......................... 94
(j) Export Certificate of Airworthiness.............. 95
(k) Service Bulletin and Modification Kits........... 95
(l) Storage Upon Return.............................. 95
(m) Resale/Release Cooperation....................... 96
Section 17. Events of Default......................................... 96
Section 18. Remedies.................................................. 98
Section 19. Security for Obligations.................................. 104
Section 20. Renewal Option............................................ 106
Section 21. Miscellaneous............................................. 107
(a) Severability, Amendment, and
Construction..................................... 107
(b) GOVERNING LAW.................................... 107
(c) Notices.......................................... 108
(d) Lessor's Right to Perform for Lessee............. 108
(e) Counterparts..................................... 108
(f) Quiet Enjoyment.................................. 108
(g) Brokers.......................................... 109
(h) Investment of Funds.............................. 109
(i) Entire Agreement; Amendment...................... 110
(j) Expenses......................................... 110
(k) Federal Bankruptcy Code.......................... 110
(l) U.S. Registration Number......................... 110
iii
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Page
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non
Conveniens; Waiver of Jury Trial.................. 110
(n) Limitation on Recourse............................ 112
(o) Successor Trustee................................. 113
(p) Article 2-A of the UCC............................ 113
iv
<PAGE> 122
ANNEXES
Annex I - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Assignment of Permitted Sublessee
v
<PAGE> 1
EXHIBIT 4.27
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1990 AWA-14] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN
ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
FLEET NATIONAL BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-14] DATED AS OF NOVEMBER 26,
1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART
OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY FLEET NATIONAL BANK, AS
INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1990 AWA-14]
Dated as of September 21, 1990
Amended and Restated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1990 AWA-14] dated
as of September 21, 1990, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 092
U.S. Registration No. N635AW
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AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of
September 21, 1990 and amended and restated as of November 26, 1996 is entered
into between WILMINGTON TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as Owner Trustee under a Trust
Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as amended, and with
its principal place of business at Rodney Square North, Wilmington, Delaware
19890 (together with its successors and permitted assigns, "Lessor"), and
AMERICA WEST AIRLINES, INC., a Delaware corporation, with its chief executive
office at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with
its successors and permitted assigns, "Lessee").
WITNESSETH:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective meanings
for all purposes of this Lease (including the Recitals) and shall be equally
applicable to both the singular and the plural forms of the terms defined
herein:
As used herein, the terms "Assigned Sublease", "Equipment Notes",
"Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through
Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate",
"Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as defined in the Pass Through Trust Agreement); and the term
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"Lease Amendment No. 1" shall have the meaning specified in the Refunding
Agreement.
"Affiliate" shall mean, with respect to any specified Person, any
other Person which, directly or indirectly, owns or controls, is controlled by
or is under common control with such specified Person. Control will be deemed to
exist based on (i) ownership of 25% or more of the voting securities of a Person
or (ii) the power to direct or elect or cause the direction or election of the
management and policies of a Person whether by contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and described
in Lease Supplement No. 1 (or any airframe from time to time substituted for
such Airframe pursuant to Section 11(a)(i) hereof) together with the (i) two IAE
Model V2500 Engines described in Lease Supplement No. 1 (or any Engine
substituted therefor hereunder) with respect to such Airframe, whether or not
any such initial or substituted Engines may from time to time no longer be
installed on the Airframe or may be installed on any other airframe, (ii) Parts
or components thereof, (iii) spare parts or ancillary equipment or devices
furnished therewith under this Lease (including any separate equipment described
on one or more Lease Supplements hereto), (iv) the Aircraft Records and
Documents and all other logs, manuals and records with respect to such Aircraft,
and (v) all substitutions, replacements and renewals of any and all thereof.
"Aircraft Records and Documents" shall mean the items identified
in Exhibit B hereto, all of which shall be maintained in the English language.
"Airframe" shall mean (a) the Airbus Industrie model A320-231
aircraft (except Engines or engines from time to time installed thereon)
described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder,
and any such model aircraft (except Engines or engines from time to time
installed thereon) which may from time to time be substituted for such aircraft
(except Engines or engines from time to time installed thereon) pursuant to
Section 11(a)(i); and (b) any and all Parts so long as the same shall be
incorporated or installed on or attached to the Airframe, or so long as title
thereto shall remain vested in Lessor in accordance with the terms of Section 9
hereof after removal
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from the Airframe; provided, however, that at such time as an aircraft (except
Engines or engines from time to time installed thereon) shall be deemed part of
the property leased hereunder in substitution for the Airframe pursuant to the
applicable provisions hereof and the replacement Airframe shall have been
subjected to the Lien of the Indenture (if the Lien of the Indenture has not
been discharged), the replaced Airframe shall cease to be the Airframe
hereunder.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair
market sales value" or "fair market rental value" shall mean the value that
would be obtained in an arm's-length transaction between an informed and willing
seller or lessor, as the case may be, and an informed and willing buyer or
lessee, as the case may be, both under no compulsion to sell and purchase or to
lease (and other than a lessee in possession or a used equipment scrap dealer),
as the case may be, as such value is determined by an appraisal which assumes:
(i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered
by this Lease (or any sublease) or any of the other Operative Documents or any
of the Financing Documents and the terms thereof; (ii) that such Aircraft,
Airframe, Engine or Part has been maintained in all respects in accordance with
the terms of this Lease (whether or not in fact in such condition), (iii) that
such Aircraft, Airframe, Engine or Part meets the return conditions specified in
Section 16 and Exhibit E (whether or not in fact meeting such conditions) and
(iv) that Lessee has removed the Removable Parts entitled to be removed under
Section 9(b) (it being agreed that no such removal is permitted in connection
with an appraisal pursuant to Section 18) and replaced any part which was
removed from the Aircraft as a result of such Removable Part being installed;
provided, however, that costs of removal from the location of current use and
costs of sale shall not be a consideration in determining such value except in
connection with any determination of "fair market sales value" or "fair market
rental value" pursuant to Section 18; and provided, further, that any
determination of "fair market sales value" or "fair market rental value"
pursuant to Section 18 shall be on an "as is, where is" basis in its actual
condition and location subject to this Lease and any sublease and any and all
Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee
shall, except for any appraisal pursuant to Section 18 in which case only Lessor
shall select such appraiser (which appraiser does not have to be
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acceptable to Lessee), select an independent nationally-recognized aircraft
appraiser, mutually acceptable to each of them, who shall make the determination
as to the "fair market sales value" or "fair market rental value" of such
Aircraft, Airframe, Engine or Part for which such appraisal is to be conducted.
If Lessor and Lessee fail to agree upon a mutually acceptable appraiser within
ten (10) days, then each of Lessor and Lessee shall select an appraiser and such
determination shall be made by such appraisers (if either party shall fail to
appoint an appraiser within ten (10) days after notice from the other party of
the selection of its appraiser, then the appraisal made by the other party's
appraiser shall be determinative). If the two appraisers chosen pursuant to the
preceding sentence fail to agree upon a determination of the "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part
within twenty (20) days after their appointment, then such appraisers shall
mutually choose a third appraiser within ten (10) days thereafter, provided that
if such appraisers fail to mutually choose a third appraiser within said 10-day
period, such appointment shall be made by the American Arbitration Association
(or any successor) in New York, New York, and the three appraisers so chosen
shall each make such determination. The appraisal determined by each of the
three appraisers chosen pursuant to the preceding sentence shall be averaged and
the appraisal furthest from the average of the three appraisals shall be
disregarded. The appraisal determined by each of the two remaining appraisers
shall be averaged and such average shall be the appraised "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part.
Lessee shall bear all the fees and expenses of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent specified
in Exhibit C and payable throughout the Basic Term for the Aircraft pursuant to
Section 4(a)(i).
"Basic Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If
a Basic Rent Payment Date shall fall on a day which is not a Business Day, any
payment
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due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease Supplement
No. 3.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banking institutions in New York, New York or Hartford,
Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which was to
be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation (except the
United States Government) domiciled in the United States of America and holding
a Certificate of Convenience and Necessity issued under Section 41102(a) of the
Federal Aviation Act by the Department of Transportation or any predecessor or
successor agency thereto, or, in the event such Certificates shall no longer be
issued, any corporation (except the United States Government) domiciled in the
United States of America and legally engaged in the business of transporting for
hire passengers or cargo by air predominantly to, from or between points within
the United States of America, and, in either event, operating commercial jet
aircraft, which also is a citizen of the United States (as defined in Section
40102 of the Federal Aviation Act) holding an air carrier operating certificate
issued by the Secretary of Transportation pursuant to chapter 447 of the Federal
Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air
Fleet Program administered by the United States Government and authorized under
10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or
substitute program of the United States Government.
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as amended
and the rules and regulations promulgated thereunder.
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"Commonly Controlled Person" shall mean an entity, whether or not
incorporated, which is under common control with Lessee within the meaning of
Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated Consent
and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and
restated as of December 30, 1988, in the form attached to the Purchase
Agreement.
"Default" shall mean an event or condition which would constitute
an Event of Default with the lapse of time or the giving of notice or both.
"Delivery Date" shall mean September 28, 1990, being the date the
Aircraft was delivered to and accepted by the Original Head Lessee as Lessee
hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United
States of America.
"Engine" shall mean (i) each of the two IAE Model V2500 engines
listed by manufacturer's serial number in Lease Supplement No. 1 and initially
installed on the Airframe covered by such Lease Supplement, whether or not from
time to time thereafter no longer installed on the Airframe or installed on any
other aircraft or airframe, and (ii) any replacement engine which may from time
to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for any
Engine leased hereunder; together in each case with any and all Parts
incorporated or installed in or attached thereto or any and all Parts removed
therefrom so long as title thereto after removal from such Engine shall remain
vested in Lessor in accordance with the terms of Section 9 hereof. Except as
otherwise set forth herein, at such time as a replacement engine shall be so
substituted and leased hereunder and the replacement Engine shall have been
subjected to the Lien of the Indenture (if the Lien of the Indenture has not
been discharged), such replaced Engine shall cease to be an Engine hereunder.
The term "Engines" means, as of any date of determination, both Engines then
leased hereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one or
more clauses in Section 17.
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"Event of Loss" shall mean any of the following events with
respect to the Aircraft, Airframe or either Engine: (a) loss of such property or
the use thereof due to theft or disappearance for a period in excess of sixty
(60) consecutive days, but in no event later than the last day of the Term; (b)
destruction or damage of such property that renders repair uneconomic or such
property permanently unfit for normal use by Lessee (or, if a Permitted Sublease
is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss
or disappearance of or damage to or destruction of such property which results
in an insurance settlement with respect to such property on the basis of an
actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any law, rule, regulation,
order or other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or
Engine in the normal course of Lessee's (or, if a Permitted Sublease is in
effect, the Permitted Sublessee's) business of air transportation of passengers
shall have been prohibited for a period of six (6) consecutive months, unless
Lessee (or the Permitted Sublessee), prior to the expiration of such six-month
period, shall have undertaken and shall be diligently carrying forward all steps
which are necessary or desirable to permit such normal use of such item of
equipment by Lessee (or the Permitted Sublessee), or, in any event, if such
normal use shall have been so prohibited by any such Governmental Entity for a
period of twelve (12) consecutive months or is continuing on the last day of the
Term; or (h) as otherwise provided
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herein. An Event of Loss with respect to the Aircraft shall be deemed to have
occurred if an Event of Loss occurs with respect to the Airframe which is a part
of such Aircraft. An Event of Loss with respect to an Engine shall not, absent
an Event of Loss with respect to the Airframe, be deemed an Event of Loss with
respect to the Airframe.
"Excluded Property" shall have the meaning set forth in Section
9(b) hereto.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administration of the
United States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Bill of Sale
for the Aircraft on AC Form 8050-2, dated the Delivery Date, from Manufacturer's
Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale for the
Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original Head
Lessee to Lessor.
"Federal Aviation Act" shall mean the sections of Title 49 of the
United States Code relating to aviation, as amended and in effect from time to
time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal year-end
audited consolidated balance sheet and statements of income and cash flow for
the period then ending, copies of which for the fiscal year ending December 31,
1995, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each Lease
Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement,
the Equipment Notes issued under the Indenture, the Intercreditor Agreement,
each Liquidity Facility, each Pass Through Trust Agreement and each supplement
thereto and any certificate delivered or entered into in accordance with the
foregoing, as amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in Exhibit
F-1, as amended, supplemented or otherwise
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modified from time to time, whose principal place of business and legal domicile
at the time of entering into the applicable sublease is located in a country
listed on Exhibit F-2, as amended, supplemented or otherwise modified from time
to time, and not prohibited by the terms of the insurance then in effect, with
which the United States has diplomatic or, such as in the case of Taiwan,
similar relations, in each case which is obligated under the applicable sublease
to perform all maintenance required by applicable foreign governmental standards
made mandatory to the Aircraft by such jurisdiction and, to the extent not
inconsistent therewith, all FAA-airworthiness directives and other requirements
made mandatory to the Aircraft by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its
operations.
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and as
trustee under the Trust Agreement), the Trust Estate, Owner Participant, the
Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee
(in its individual capacity and as trustee
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under the Pass Through Trusts), the Subordination Agent and each Liquidity
Provider, and their respective successors and permitted assigns (and, in the
case of a permitted assign of the Owner Participant that is a partnership, the
partners of such partnership), and any combination thereof and their respective
officers, directors, agents, servants, employees, subsidiaries, Affiliates and
shareholders.
"Indenture" shall mean the Amended and Restated Trust Indenture
and Security Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, and
amended and restated as of November 26, 1996, as the same may be further
amended, supplemented or modified from time to time, between Indenture Trustee
and Lessor. The term "Indenture" shall also include the Indenture Supplements
entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company serving
as Indenture Trustee under the Indenture, and its successors and assigns.
"Interest Rate" shall mean (i) with respect to the portion of any
payment of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder, a per annum rate of
interest equal to the Past Due Rate applicable thereto under and as defined in
the Indenture computed on the basis of a 360-day year and twelve 30-day months
and (ii) with respect to any other amount, a per annum rate of interest equal to
the sum of the rate of interest publicly announced by Citibank, N.A., at its
principal office in New York City, as its prime or similar base rate from time
to time in effect from the date the amount becomes due to the date it is paid in
full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case
may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any Governmental
Entity; (ii) any treaty, pact, compact or other agreement to which any
Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as
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originally executed and as amended, supplemented or otherwise modified from time
to time, including, without limitation, by one or more Lease Supplements, as a
whole and not to any particular Section or other subdivision, and any reference
to a "Section " or an "Exhibit" shall refer to a Section or Exhibit of this
Lease, as so amended, supplemented or modified, unless expressly provided to the
contrary.
"Lease Identification" shall have the meaning set forth in Section
6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1, Lease
Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement
entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1990
AWA-14] No. 1 dated the Delivery Date between Lessor and Original Head Lessee,
as Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1990
AWA-14] No. 2 dated December 31, 1991 between Lessor and Original Head Lessee,
as Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA 1990
AWA-14] No. 3, substantially in the form of Exhibit D-1 hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Aircraft or the
administration of the Trust Estate or the Trust Indenture Estate pursuant to the
Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or
otherwise, (ii) acts or omissions of Indenture Trustee in its individual
capacity (and not as Indenture Trustee) not contemplated hereunder or under the
other Operative Documents, or acts or omissions of Indenture Trustee in its
individual capacity (and not as Indenture Trustee) which are in violation of any
of the Operative Documents, or (iii) Taxes imposed on or Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
which are excluded from indemnification by Lessee, or (iv) Claims against
Indenture
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Trustee in its individual capacity (and not as Indenture Trustee) arising out of
the voluntary or involuntary transfer by Indenture Trustee in its individual
capacity (and not as Indenture Trustee) of all or any portion of its interest in
the Aircraft, the Airframe, any Engine, the Trust Estate, the Trust Indenture
Estate or the Operative Documents (except a Claim resulting from the exercise of
remedies under and in accordance with the Indenture or for a transfer provided
for in the Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals hereto.
"Lessor" shall have the meaning set forth in the Recitals hereto.
"Lessor's Lien" shall mean any Lien or disposition of title
affecting the Aircraft, the Airframe, any Engine or any Part arising as a result
of (i) any claim against Lessor, Owner Participant, Trust Company or any of
their Affiliates not related to the transactions contemplated by this Lease or
the other Operative Documents, the Financing Documents or the Purchase
Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company
or any of their Affiliates not expressly contemplated by this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents or not
permitted without consent (which consent has not been granted) by any party
hereto or thereto or that is in violation of any term of this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents; (iii)
Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner
Participant or any of their Affiliates or the consolidated group of taxpayers of
which any of them is a member which are not to be indemnified against by Lessee
under the Operative Documents, the Purchase Documents or the Financing Documents
or by Original Head Lessee under the Original Head Lease Tax Indemnification
Agreement; (iv) claims against the Trust Estate, Trust Company, Owner
Participant or Lessor or any of their Affiliates arising out of the transfer of
all or any part of their respective interest in the Aircraft, the Airframe,
either Engine, the Trust Estate, the Operative Documents or the Financing
Documents other than any transfers or dispositions pursuant to Sections 2, 6, 9,
11, 16, 18, 19 or 20 (except Liens resulting from a transfer not permitted by
such Section ) of this Lease or pursuant to Section 10 of the Refunding
Agreement; provided, however, that there shall be excluded from this definition
and Lessor shall not be required to remove any Lien which would otherwise
constitute a Lessor's Lien, if it is being
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diligently contested in good faith so long as neither such proceedings nor Lien
involves a material danger of the sale, forfeiture or loss of the Aircraft or
adversely affects Lessee's rights under Section 21(f); and provided, further,
that Lessor's Liens shall not include the Lien of the Indenture or Lenders'
Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest, lease in the
nature of a security interest, statutory right in rem, or claim of any kind,
including any thereof arising under any conditional sale agreement, equipment
trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West Maintenance
Program approved by the FAA for America West Airbus model A320-231 aircraft in
effect on the date hereof or as modified with the approval of the FAA without
affecting, or any other FAA approved maintenance program which does not affect,
the return condition standards set forth in Section 16 and Exhibit E or (ii) if
the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any
other maintenance program for the Aircraft which is approved by the aviation
authority of the country of registry and complies with the requirements
applicable to maintenance of the Aircraft contained in the definition of Foreign
Air Carrier. The Maintenance Program shall encompass scheduled maintenance,
condition monitored maintenance, and on-condition maintenance of the Airframe,
Engines, and components of the Aircraft, including, but not limited to,
servicing, testing, preventive maintenance, repairs, structural inspections,
structure life improvements, system checks, overhauls, approved modifications,
service bulletins, engineering orders, airworthiness directives, and corrosion
control inspections and treatments. All modifications and supplements to the
Maintenance Program shall be provided to Lessor upon its reasonable request and
Lessor shall be given reasonable access to the Maintenance Program upon its
request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
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"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French
societe a responsabilite limitee, which as of the date hereof is owned by Airbus
Industrie.
"Maximum Foreign Use Percentage" shall have the meaning specified
in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such Person's
stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, any sublease, the Tax Indemnification Agreement, the Financing
Documents, and any certificate delivered or entered into pursuant to the
foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease Agreement
[GPA 1990 AWA-14], with respect to the Aircraft, dated as of September 21, 1990,
between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect immediately prior to the
Restatement Date, as more particularly described in Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall mean the
Head Lease Tax Indemnification Agreement [GPA 1990 AWA-14], dated as of
September 21, 1990, and amended and restated as of the Restatement Date, between
the Original Head Lessee and Owner Participant, as amended, supplemented or
otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a
Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as defined in
the Original Head Lease) as in effect immediately prior to the Restatement Date.
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<PAGE> 16
"Other Leases" shall mean the Amended and Restated Aircraft Lease
Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA
1990 AWA-13] amended and restated as of the Restatement Date between Wilmington
Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as
Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15]
amended and restated as of the Restatement Date between Wilmington Trust Company
as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended
and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as
of the Restatement Date between Wilmington Trust Company as Owner Trustee,
Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated
Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the
Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and
America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor and America West
Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement
[GPA 1991 AWA-E3] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee, each as amended, supplemented or otherwise modified from time to
time.
"Other Letters of Credit" shall mean any and all letters of credit
pursuant to Section 8(l) of the Other Leases.
"Owner Participant" shall mean _____________ __________________, a
Delaware corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as Owner
Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial Assignment,
Assumption, Release and Amendment Agreement, dated as of December 30, 1988,
among Parent, Braniff, Inc.,
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<PAGE> 17
and Manufacturer's Subsidiary, as amended, supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation Agreement
[GPA 1990 AWA-14], dated as of September 21, 1990, among Original Head Lessee,
Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender"
named therein, as amended by the Letter Agreement dated as of July 29, 1993, as
the same may be further amended, supplemented or otherwise modified from time to
time and as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(excluding complete Engines or engines), including Buyer Furnished Equipment,
which may now or from time to time be incorporated or installed in or attached
to or were provided by the Manufacturer with the Airframe or any Engine or so
long as title thereto shall remain vested in Lessor in accordance with the terms
of Section 9 hereof after removal from such Airframe or Engine. Except as
otherwise set forth herein, at such time as a replacement part shall be
substituted for a Part in accordance with Section 9 hereof, the Part so replaced
shall cease to be a Part hereunder.
"Payment Location" shall have the meaning set forth in Exhibit C,
as the same may be changed from time to time by Lessor as provided in Section
4(c).
"Permitted Lien" shall mean any Lien referred to in clauses (i)
through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in Section
6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier or,
after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United
States Government or an agency or instrumentality thereof which bears the full
faith and credit of the United States of America or (c) any other Person
approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or
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<PAGE> 18
association of which any of the above is a member or a participant.
"Purchase Agreement" shall mean the Amended and Restated Airbus
A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated
as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft),
between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and
Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as
partially assigned to Parent pursuant to the Partial Assignment, to which Airbus
Industrie, as guarantor, has consented, and as the same may from time to time be
further amended, supplemented or otherwise modified to the extent permitted by
the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement, the
Partial Assignment and any other agreement, document or certificate delivered or
entered into pursuant to the foregoing, as amended, supplemented or otherwise
modified.
"Removable Part" shall have the meaning set forth in Section 9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section 20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
If a Renewal Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Renewal Rent Payment Date shall be made on the next
succeeding Business Day.
"Renewal Term" shall mean the period described in
Section 20 following the end of the Basic Term if Lessee shall have exercised
its renewal option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may be,
and Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have the
meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in Section
11.
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<PAGE> 19
"Responsible Officer" shall mean, with respect to Lessee, any of
the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or
Controller.
"Restricted Use Period" shall have the meaning specified in
Exhibit C.
"Return Occasion" shall mean the event that occurs when possession
of the Aircraft is to be returned from Lessee to Lessor at the end of the Term
of this Lease or upon Lessor taking possession pursuant to Section 18 or for any
other reason.
"Specified Investments" shall mean (i) direct obligations of the
United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an entity
referred to in clause (iii) above or another financial institution having a net
worth of at least $750,000,000 and having a rating of "B" or better from
Thompson BankWatch, Inc. is obligated to repurchase any such obligation not
later than ninety (90) days after the purchase of any such obligation; and (v)
money market funds which invest solely in obligations described in clause (i);
provided that if all of the above investments are unavailable, the entire
amounts to be invested may be used to purchase Federal funds from an entity
described in clause (iii) above; and provided further that no investment shall
be eligible as a "Specified Investment" unless the final maturity or date of
return of such investment is on or before the date which is ninety (90) days
from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date
during the Basic Term the amount set forth on Exhibit A hereto and, thereafter,
the amount described in Section 20 (it being understood and agreed that the
amounts set forth in Exhibit A take into account fully the amount
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<PAGE> 20
and application of each installment of Basic Rent or Renewal Rent on each
Stipulated Loss Value Date (other than a Stipulated Loss Value Date that is a
Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional
credit of such Basic Rent or Renewal Rent is to be made in respect thereof
except as expressly provided herein on a Basic Rent Payment Date or a Renewal
Rent Payment Date). In the event that it is necessary to determine a separate
Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value
shall be based on the ratio that the original cost to Lessor of the Airframe or
such Engine bears to Lessor's Cost (as set forth in the Original Head Lease) for
the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date listed,
or with respect to any Renewal Term determined as set forth, on Exhibit A
hereto.
"Supplemental Rent" shall mean any and all amounts, liabilities
and obligations other than Basic Rent and Renewal Rent which Lessee assumes or
agrees to pay to Lessor or any other Indemnitee hereunder or under any other
Operative Document, including, without limitation, (i) any payment of Stipulated
Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of
indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount
equal to average daily Basic Rent or Renewal Rent in connection with an
extension of the Term of this Lease as a result of (a) an incipient Event of
Loss and the operation of Section 11 hereof or (b) the need to correct any
failure of the Aircraft to satisfy the requirements of Section 16 and Exhibit E
hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due
to the Owner Trustee in respect of fees or expenses as provided in Section 21(j)
hereof; (vi) an amount equal to any payment due to the Indenture Trustee in
respect of fees or expenses as provided in the Indenture and/or Section 21(j)
hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee
in respect of fees or expenses pursuant to the Pass Through Trust Agreement;
(viii) the Pro Rata Share of any payment due to the Subordination Agent in
respect of fees, compensation, costs or expenses pursuant to the Intercreditor
Agreement; (ix) an amount equal to the amount specified in clause (b) of the
fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent
permitted by applicable Law, interest at the Interest Rate calculated: (1) on
any part of any installment of Basic Rent or Renewal Rent, or average daily
Basic Rent referred to in clause (iii) of this definition of "Supplemental
Rent", as the case may be, not paid on the due
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<PAGE> 21
date thereof for the period for which the same shall be overdue and (2) on any
Supplemental Rent not paid when due hereunder from and including the due date
until the same shall be paid. As used herein, "Pro Rata Share" means as of any
date of determination a fraction the numerator of which is the aggregate
Principal Amount then outstanding of the Equipment Notes issued under the
Indenture and the denominator of which is the aggregate principal balance then
outstanding of all "equipment notes" issued under the Indentures (as defined in
the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-14], dated as of
September 21, 1990, and as amended and restated as of November 26, 1996, between
Original Head Lessee and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in Lease
Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20,
the Renewal Term, in either case as extended or deemed extended as a result of
the occurrence of an event described in clause (iii) to the definition of
"Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1990 AWA-14]
dated as of September 21, 1990 as amended by Trust Supplement No. 1, and as
further amended by Trust Supplement No. 2, between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust Agreement"
shall also include each Trust Supplement.
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<PAGE> 22
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement
[GPA 1990 AWA-14] No. 1 dated the Delivery Date between Lessor and Owner
Participant for the purpose of bringing the Aircraft and the Original Head Lease
into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement
[GPA 1990 AWA-14] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government of
the United States of America and any board, commission, department, division,
organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees to
furnish the Aircraft or the Airframe and Engine or engines installed thereon at
that time to a third party pursuant to which such Aircraft or the Airframe and
Engine or engines (i) shall be operated solely by regular employees of Lessee
possessing all current certificates and licenses required under the Federal
Aviation Act (it is understood that cabin attendants need not be regular
employees of Lessee) and Lessee otherwise maintains operational control and
possession thereof, and (ii) shall be maintained by Lessee in accordance with
its normal maintenance practices and this Lease, and otherwise the insurance
required hereunder shall be maintained and the Aircraft shall be used and
operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease the
Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor,
on the terms and subject to the conditions set forth in this Lease.
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<PAGE> 23
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Aircraft was delivered to Lessee, and
Lessee accepted delivery of the Aircraft, on September 28, 1990.
(b) [Intentionally Left Blank.]
(c) Acceptance of Aircraft. The Aircraft leased hereunder was
delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER
OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for all
purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive
evidence that, as between Lessor and Lessee, the Aircraft was in all respects
satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall commence on
the Delivery Date and shall continue until the Expiration Date; provided,
however, that the Term of this Lease may be earlier terminated pursuant to the
provisions hereof.
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the following as Rent
hereunder:
(i) Basic Rent. The Basic Rent, as set forth in Exhibit C
throughout the Basic Term hereof, in consecutive installments, in arrears as set
forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent
Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all Supplemental Rent, which shall
be due and payable ten (10) Business Days after demand unless otherwise
specifically provided. In the event of any failure on the part of Lessee to pay
any Supplemental Rent when due, Lessor shall have all rights, powers and
remedies provided for herein or by law or equity or otherwise in the case of
nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to pay
Supplemental Rent which is due and owing pursuant to the terms hereof shall
survive the expiration or termination of Lessee's obligation to pay Basic Rent
or Renewal Rent hereunder.
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<PAGE> 24
(b) Minimum Payments. Notwithstanding any provision in this Lease
or in any other Operative Document to the contrary, under all circumstances and
in any event, (i) the Stipulated Loss Value, together with the payment of
Supplemental Rent and all other Rent then due hereunder, as of any time and as
of the date of any payment thereof shall (both before and after giving effect to
any reductions therefrom) be in an amount at least sufficient to pay in full as
of such time or date the aggregate unpaid principal amount of the Equipment
Notes then outstanding and all accrued and unpaid interest (assuming interest
has been timely paid) thereon, and (ii) Basic Rent payable on any Basic Rent
Payment Date shall at least equal the aggregate amount of principal and interest
due and payable on the Equipment Notes on such Basic Rent Payment Date. It is
agreed, however, that no installment of Basic Rent or Stipulated Loss Value
shall be increased or adjusted by reason of (A) any attachment or diversion of
Rent on account of any Lessor's Lien or Lenders' Lien, (B) any modification of
the terms of the Equipment Notes or the other Financing Documents made without
the prior written consent of Lessee or (C) the acceleration of any Equipment
Note due to the occurrence of any "Indenture Event of Default" (as defined in
the Indenture) which does not constitute an Event of Default hereunder. It is
further agreed that nothing in this Lease or any other Operative Document shall
be deemed to constitute a guaranty of the value, utility or useful life of the
Aircraft or a guaranty in respect of interest, principal or any other amounts
payable in respect of or under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on which a
payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in the City of New York or Hartford, Connecticut as Indenture
Trustee may direct by thirty (30) days prior written notice to Lessee, except
for all Excepted Payments. All Excepted Payments, and, upon discharge of the
Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be
paid in such immediately available funds no later than 12:00 p.m. (noon), New
York City time, on the
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<PAGE> 25
date payable hereunder, to Lessor or to Owner Participant, as appropriate, in
accordance with the payment instructions set forth in Exhibit C or at such other
address as Lessor may direct by thirty (30) days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a
net lease. Lessee's obligations to pay all Rent and to perform all other
obligations hereunder are absolute and unconditional and shall not be affected
or reduced by any circumstances, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense, or other right which Lessee may have against
Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Aircraft, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
limitation, any breach by Lessor of its representations, warranties or covenants
contained herein or in the other Operative Documents; (ii) any defect in the
title, airworthiness, eligibility for registration under the Federal Aviation
Act, condition, design, operation, or fitness for use of, or any damage to or
loss or destruction of, the Aircraft (subject to the provisions of Section
11(a)(ii) hereof), any interruption or cessation in the use of or possession
thereof by or availability to Lessee for any reason whatsoever, whether arising
out of or related to an act or omission of Lessee, Lessor, Original Head Lessee,
Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any
Person providing services with respect to the Aircraft or any other Person;
(iii) any Liens with respect to the Aircraft; (iv) the invalidity or
unenforceability or lack of due authorization or other infirmity of this Lease
or any sublease or any absence of right, power or authority of Lessor, Original
Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the
Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization,
or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any
sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any
other circumstance or happening of any nature whatsoever, whether or not similar
to any of the foregoing; it being the expressed intention of Lessor and Lessee
that all Rent payable hereunder shall be payable in all events, unless the
obligation to pay the same shall be terminated pursuant to the express
provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement, Lessee
hereby waives, to the extent permitted by
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<PAGE> 26
applicable Law, any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, to terminate,
abate, cancel, quit, reduce, defer, suspend or surrender this Lease or the
Aircraft or any obligation imposed upon Lessee hereunder or under the other
Operative Documents (including, without limitation, payment of Rent), except in
accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee will
not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law, except as specifically provided herein,
Lessee waives all rights (if any) to any diminution in its Rent obligations
hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as
provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal
Rent, as the case may be, payment and any Supplemental Rent payment at the time
such payments would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part, and so long as
such payments are made and all other terms and conditions hereof are complied
with by Lessee, Lessor and Lessee will deem this Lease to remain in full force
and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall
be liable therefor, on account of any failure of the Original Head Lessee,
Lessor, Indenture Trustee or any other such Person to perform its express
obligations under this Lease and the other Operative Documents, or to enforce
any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS
DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE
EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND
SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED
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<PAGE> 27
THE AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR
FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND
LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE
OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR
USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER
CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR
WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY
THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR
ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS
OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv)
THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN
THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND
LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR
GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that (x)
on the Delivery Date Lessor had, and on the Restatement Date Lessor has, the
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<PAGE> 28
right to lease the Aircraft hereunder and (y) on the Delivery Date the Aircraft
was free of Head Lessor's Liens and on the Restatement Date the Aircraft is free
of Lessor's Liens and Head Lessor's Liens and (B) Lessor covenants that it shall
not create, incur, assume or suffer to exist any Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor. Lessor hereby
represents and warrants, as of the Restatement Date that its representations and
warranties set forth in Section 9(b) of the Refunding Agreement were true when
made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor covenants and
agrees that Lessor will not, without the prior written consent of Lessee, amend,
modify, supplement or waive any provision of any Financing Document in such a
way as to materially increase Lessee's obligations hereunder or materially
reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor under
Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and
delivery of this Lease and the delivery of the Aircraft and the Restatement
Date.
(d) Suppliers' Warranties. So long as a Default or an Event of
Default has not occurred and is continuing and provided that the Aircraft
continues to be maintained, modified and repaired as required hereunder, Lessor
hereby assigns or, if by their terms not assignable, agrees otherwise to make
available to Lessee the right to exercise in Lessee's name such rights as Lessor
may have or may subsequently obtain (but without representation or warranty by
or recourse to Lessor) with respect to any product warranty, service life
policy, trademark, patent or copyright infringement indemnity, or airframe or
propulsion system performance guaranty, of Airbus Industrie, the Manufacturer's
Subsidiary, IAE or any subcontractor or vendor with respect thereto under the
Purchase Agreement (except those which were given directly to Parent, the
Original Head Lessee or any of their Affiliates and are not directly related to
the operator's use of the Aircraft), to the extent that the same may be assigned
or otherwise made available to Lessee, and Lessor agrees to exert its reasonable
efforts, at Lessee's expense and upon its request, to enforce such rights as
Lessor may have with respect thereto for the benefit of Lessee; provided,
however, that upon and during the continuance of a Default or an Event of
Default, such assignment or other rights which are otherwise made available to
Lessee shall
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immediately and automatically without further action be deemed cancelled and, to
the extent of any remaining interest held by Lessee, deemed reassigned to Lessor
and all such rights shall revert to Lessor automatically including all claims
thereunder whether or not perfected and all amounts payable shall be paid to and
held by Lessor. In no event, however, shall Lessee have any right to amend,
supplement or otherwise modify the Purchase Agreement (by change order or
otherwise). In connection with the foregoing, Lessee agrees to be bound by and
comply with all applicable terms, conditions and limitations of the provisions
of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS
LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS
PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY
MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT,
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE
INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no
Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as all necessary approvals of the FAA
and any other Governmental Entity having jurisdiction have been obtained, then
Lessee, without the prior written consent of Lessor, may, only to the extent
provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii)
below:
(1) subject any Engine to a normal interchange, maintenance,
servicing or pooling agreement or similar arrangement with a Permitted
Sublessee, in each case customary in the airline industry of which
Lessee is a part and entered into in the ordinary course of its
business; provided that no transfer of the registration of any Engine
shall be effected in connection therewith; and provided, further, that
(A) no such agreement or arrangement contemplates, results in or
requires the transfer of title to any Engine, and (B) if Lessor's title
to any Engine shall be divested under any such agreement or
arrangement, such divestiture
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<PAGE> 30
shall be deemed to be an Event of Loss with respect to such Engine and
not an Event of Default and Lessee shall comply with Section 11(b)
hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or any Engine
to the manufacturer thereof, or in accordance with the Maintenance
Program to an FAA certified repair station, for testing, service,
storage, repair, maintenance, inspection or overhaul work on such
Aircraft, Airframe or Engine or any part thereof or for alterations or
modifications in or additions to such Aircraft, Airframe or Engine to
the extent required or permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe to the
United States of America or any instrumentality or agency thereof
pursuant to a sublease;
(4) (i) subject the Airframe to the Civil Reserve Air Fleet
Program and transfer possession of the Airframe or any Engine to the
United States Government pursuant to the Civil Reserve Air Fleet
Program, so long as Lessee shall promptly notify Lessor upon
transferring possession of the Airframe or any Engine to the United
States Government pursuant to the Civil Reserve Air Fleet Program and
provide Lessor with the name and address of the Contracting Office
Representative for the Military Airlift Command of the United States
Air Force to whom notices must be given; or
(ii) subject the Airframe to (a) a service contract with the
United States Government, a copy of which shall be provided to Lessor,
providing for possession to be held by the United States Government for
a period not extending beyond the end of the Term, or (b) a requisition
for use by the United States Government not constituting an Event of
Loss;
(5) install an Engine on an airframe (other than the Airframe)
owned by Lessee free and clear of all Liens except (A) Permitted Liens
and Liens which apply only to engines (other than the Engines),
appliances, parts, instruments, appurtenances, accessories, furnishings
and other equipment (other than Parts) installed on such airframe (but
not to the airframe as an entirety) and (B) the rights of participants
under
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<PAGE> 31
normal interchange agreements which are customary in the airline
industry and do not contemplate, permit, result in or require the
transfer of title to the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or owned by
Lessee subject to a conditional sale or other security agreement;
provided that: (A) such airframe is free and clear of all Liens except
the rights of the parties to the lease or conditional sale or other
security agreement covering such airframe and except Liens of the type
permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of
any mortgage which provides that each Engine leased to Lessee hereby
shall not become subject to the Lien thereof or to any rights of any
party thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of such
Engine on any airframe subject to the Lien of such mortgage, unless and
until Lessee shall become the owner of such Engine and Lessor shall
have no further interest therein, all pursuant to the express terms of
this Lease; and (B) there shall be in effect a written agreement of the
lessor or secured party of such airframe (which may be contained in the
lease or conditional sale or other security agreement covering such
airframe) substantially similar in effect to the agreement of Lessor in
Section 6(b) below whereby such lessor or secured party effectively and
expressly agrees that neither it nor its successors or assigns will
acquire or claim any right, title or interest in any Engine by reason
of such Engine being installed on such airframe at any time while such
Engine is subject to this Lease or is owned by Lessor, and a copy of
such agreement shall be provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee, leased to
Lessee or purchased by Lessee subject to a conditional sale or other
security agreement under circumstances where neither Section 6(a)(i)(5)
or Section 6(a)(i)(6) is applicable; provided that such installation
shall be deemed an Event of Loss with respect to such Engine and Lessee
shall comply with Section 11(b) hereof in respect thereof, Lessor not
intending hereby to waive any right or interest it may have to or in
such Engine under applicable Law until compliance by Lessee with such
Section 11(b);
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<PAGE> 32
(8) enter into a Wet Lease for the Aircraft or the Airframe and
engines installed thereon in the ordinary course of Lessee's business
for a period not extending beyond the Term; provided that if Lessee
shall enter into any Wet Lease for a period of more than six months
(including renewal options) Lessee shall provide to Lessor written
notice of such Wet Lease (such notice to be given at least ten (10)
Business Days prior to entering into such Wet Lease); or
(9) sublease the Aircraft or the Airframe to any Permitted
Sublessee on the terms and conditions set forth in Section 6(a)(iii)
below.
(ii) Certain Limitations on Transfers. With respect to any
transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession by
reason of a transfer permitted by Section 6(a) hereof (other than the
transfer of an Engine which is deemed to have been an Event of Loss)
and any Wet Lease shall be expressly subject and subordinate to all the
terms of this Lease and the Lien of the Indenture (if it has not been
discharged);
(2) Lessee's obligations hereunder and under the other Operative
Documents shall continue in full force and effect and Lessee shall
remain primarily liable hereunder for the performance of all of the
terms of this Lease to the same extent as if such transfer had not
occurred and no provision of this Lease shall be deemed a waiver of the
Lessor's rights hereunder or under the other Operative Documents nor
discharge or diminish any of Lessee's obligations hereunder or under
the other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease, Permitted
Sublease or other relinquishment of possession of the Aircraft, the
Airframe or any Engine pursuant to the terms of this Section 6(a) shall
be permitted if such Wet Lease, Permitted Sublease or other
relinquishment of possession would cause the Aircraft, the Airframe or
such Engine to be "tax-exempt use property" within the meaning of
Section 168(h) of the Code or cease to be "Section 38 property" within
the meaning of Section 48(a) of the Code (as determined after the
application of Section 47(a)(7) of the Code);
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<PAGE> 33
(4) The term of any transfer, Wet Lease, Permitted Sublease or
other relinquishment of possession shall not extend beyond the Basic
Term or the Renewal Term (if Lessee shall have exercised its option to
renew this Lease in accordance with the terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable;
(6) The sublessee under any Permitted Sublease, in its consent
thereto, shall confirm that from and after the occurrence and
continuance of an Event of Default and, unless an Event of Default
specified in Section 17(e), (f) or (g) of this Lease has occurred and
is continuing, this Lease being deemed or declared in default, Lessor
(and, so long as the Lien of the Indenture shall not have been
discharged, Indenture Trustee) shall be entitled to enforce directly
and in its own name all representations, warranties, indemnities,
covenants and agreements under the applicable Permitted Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I) the
Aircraft or Airframe may not be operated or used other than as provided
in this Lease and shall be maintained and operated as required
hereunder, (II) Lessor may avoid or terminate such sublease following
an Event of Default hereunder and (III) to the extent not accomplished
by an assignment of the Permitted Sublease, upon the occurrence of an
Event of Default hereunder, Lessee's rights under such Permitted
Sublease shall automatically be deemed assigned to Lessor; and (B) be a
"net lease" in accordance with industry practice and shall be
comparable to, or more restrictive than, this Lease and under such
Permitted Sublease (except a sublease to the United States Government
or a Foreign Air Carrier after the Restricted Use Period), Lessee as
lessor under such Permitted Sublease, must be entitled to the same
benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder
and such Permitted Sublease shall contain provisions regarding such
Section 1110 which are substantially the same as the related provisions
of this Lease. In addition, from and after the occurrence and
continuance of an Event of Default, all rent and other amounts
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<PAGE> 34
payable by the Permitted Sublessee under such Permitted Sublease shall
be paid directly to Indenture Trustee and, upon discharge of the Lien
of the Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any sublease
pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or
Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under such
sublease is not subject to a proceeding or final order under applicable
bankruptcy, insolvency or reorganization laws on the date such sublease
is entered into, (B) in the event that the Permitted Sublessee under
such sublease is a Foreign Air Carrier (other than a Foreign Air
Carrier principally based in Taiwan), the United States maintains
diplomatic relations with the country in which such proposed Permitted
Sublessee is principally based at the time such sublease is entered
into (or, in the case of a sublease to a proposed Permitted Sublessee
principally based in Taiwan, maintains diplomatic relations at least as
good as those in effect on the Restatement Date) and (C) in the event
that the Permitted Sublessee under such sublease is a Foreign Air
Carrier, Lessor and the Indenture Trustee shall have received an
opinion of counsel to Lessee, in form and substance reasonably
satisfactory to Owner Participant and the Indenture Trustee, to the
effect that (I) the terms of the proposed sublease will be legal,
valid, binding and (subject to customary exceptions in foreign opinions
generally) enforceable against the proposed Permitted Sublessee in the
country in which the Permitted Sublessee is principally based, (II)
there exist no possessory rights in favor of the Permitted Sublessee
under such sublease under the laws of such Permitted Sublessee's
country of domicile that would, upon bankruptcy or insolvency of or
other default by Lessee, prevent the return or repossession of the
Aircraft in accordance with the terms of this Lease, (III) (unless
Lessee shall have agreed or is required to provide insurance covering
the risk of requisition of use of the Aircraft by the government of the
country of such Permitted Sublessee's country of domicile) the laws of
such Permitted Sublessee's country of domicile require fair
compensation by the government of such jurisdiction payable in currency
freely convertible into dollars for the loss of use of
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<PAGE> 35
the Aircraft in the event of the requisition by such government of such
use, (IV) the Permitted Sublessee is either not entitled to sovereign
immunity, or has effectively waived such sovereign immunity, with
respect to its rights and obligations under the proposed sublease; (V)
the laws of such Permitted Sublessee's country of domicile would give
recognition to Lessor's title to the Aircraft, to the registry of the
Aircraft in the name of the Lessor (or Lessee, as "lessee", or the
proposed Permitted Sublessee, as "sublessee", as appropriate) and to
the Lien of the Indenture; (VI) it is not necessary under the laws of
such Permitted Sublessee's country of domicile, solely as a consequence
of such subleasing and without giving effect to any other activity of
Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate
thereof, as the case may be, for the Owner Trustee, the Owner
Participant or the Indenture Trustee to qualify to do business in such
jurisdiction and (VII) if the Owner Participant so requests, (x) under
the laws of such Permitted Sublessee's country of domicile there is no
tort liability of the owner of an aircraft not in possession thereof
(it being agreed that in the event this opinion cannot be given in a
form reasonably satisfactory to Owner Participant, such opinion shall
be waived if insurance reasonably satisfactory to Owner Participant is
provided to cover such risk), and (y) such other matters as the Owner
Participant reasonably requests, provided, however, that no sublease
shall extend beyond the expiration of the Basic Term or any Renewal
Term then in effect.
Any Permitted Sublease shall expressly provide that the rights of
any Permitted Sublessee shall be expressly subject and subordinate to all the
terms of this Lease and to the Lien of the Indenture (if it has not been
discharged), including, without limitation, the covenants contained in Sections
6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to
Section 18 hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder or under the other Operative Documents, and such rights shall
continue as if such Permitted Sublease had not occurred. Any Permitted Sublease
shall expressly prohibit
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<PAGE> 36
any further sub-sublease or assignment or any other similar transfer of the
Aircraft, Airframe or any Engine or rights thereto by the Permitted Sublessee.
Lessee shall provide to the Owner Participant and the Indenture Trustee (i)
written notice of any Permitted Sublease hereunder (such notice to be given not
later than ten Business Days prior to entering into any Permitted Sublease with
any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease
together with an assignment, as security for Lessee's obligations hereunder, of
such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a
consent thereto from such Permitted Sublessee, substantially in the form of
Exhibit F-3 hereto, within ten (10) Business Days following the effective date
of such Permitted Sublease.
(b) Reciprocal Recognition of Rights. In the event the lessor or
secured party of any airframe leased to Lessee (or a Permitted Sublessee) or
owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or
other security agreement in accordance with Section 6(a)(i)(6) hereof, and the
lease or conditional sale or other security agreement covering such airframe
also covers an engine or engines owned by the lessor under such lease or subject
to a security interest in favor of the secured party under such conditional sale
or other security agreement, Lessor hereby agrees for the benefit of such lessor
or secured party that Lessor will not acquire or claim, as against such lessor
or secured party, any right, title or interest in any such engine as the result
of such engine being installed on the Airframe at any time while such engine is
subject to such lease or conditional sale or other security agreement and owned
by such lessor or subject to a security interest in favor of such secured party.
Lessor also hereby agrees for the benefit of the mortgagee under any mortgage
complying with Section 6(a)(i)(6) hereof, relating to installation of an Engine
on an airframe leased to Lessee (or a Permitted Sublessee), that Lessor will not
acquire or claim, as against such mortgagee, any right, title or interest in any
engine subject to the lien of such mortgage as the result of such engine being
installed on the Airframe at any time while such engine is subject to the lien
of such mortgage.
(c) Lawful Insured Operations. Lessee will not permit the
Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used
or operated in violation of any Law of any Governmental Entity having
jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration
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<PAGE> 37
issued by any such authority or any manufacturer's specifications, service
bulletins or other requirements, including, without limitation, any
manufacturer's requirements as may be applicable to keep in full force and
effect each material warranty, product or performance guaranty, service life
policy or the like, in each case, to the extent made mandatory for Part 121
operators similarly situated to Lessee or the Permitted Sublessee if the
Aircraft is registered with the FAA, or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered in accordance with
Section 11 of the Refunding Agreement, unless the validity thereof is being
contested in good faith and by appropriate proceedings, but only so long as such
proceedings do not involve any danger of sale, forfeiture or loss of the
Aircraft or impair the interest of Lessor therein or impair the validity or
priority of the Lien of the Indenture or result in a risk of criminal liability
of Lessor, Owner Participant or Indenture Trustee and are not inconsistent with
any insurance required to be maintained by Lessee hereunder. In the event that
such Law or other requirement requires alteration of the Aircraft during the
Basic Term or the then-current Renewal Term, Lessee shall comply therewith at
its sole expense and shall maintain the same in proper condition for operation
under such Laws and other requirements. Lessee shall not operate in any manner
or locate in any place the Aircraft, or suffer or permit the Aircraft to be
operated by a Permitted Sublessee or otherwise in any manner or located by a
Permitted Sublessee or otherwise in any place (i) unless the Aircraft is covered
by insurance or United States Government indemnity as required by the provisions
hereof or (ii) contrary to the terms of such insurance or United States
Government indemnity. Lessee also agrees not to operate or locate the Aircraft
or suffer or permit the Aircraft to be operated or located in any area excluded
from coverage by any insurance policy issued pursuant to the requirements of
this Lease or in any war zone unless insured or indemnified by the United States
of America therefor, except in the case of operation pursuant to a sublease or
contract with, or as a result of a requisition (not constituting an Event of
Loss) by, the United States of America, and then only if Lessee has obtained
insurance or an indemnity (in lieu of such insurance) from the United States of
America covering such risks, in the amounts and otherwise as required by this
Lease.
(d) Maintenance. Lessee, at its own cost and expense, shall: (i)
perform or cause to be performed all service, repair, maintenance, overhaul,
inspections, alterations, modifications, and testing (A) in accordance
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<PAGE> 38
with good airline industry practice and in such manner to provide complete data
and documentation necessary to substantiate certification, (B) as may be
necessary and required under, and in compliance with, applicable Law, including,
without limitation, FAA rules, regulations and other requirements, any other
applicable rules, regulations and requirements by any other applicable
Governmental Entity, the Maintenance Program, airworthiness directives having a
compliance date during the Term, and the service bulletins and other
requirements of any manufacturer, including, without limitation, such
requirements as may be applicable to keep in full force and effect any and all
material warranties, product and performance guaranties, service life policies,
indemnities or the like, (C) except during any period that a Permitted Sublease
is in effect, in the same manner and with the same care, including regard for
the status and technical condition of the Aircraft, as shall be the case with
respect to similar aircraft and engines owned by Lessee without discrimination
and as if Lessee owned the Aircraft and was going to use the Aircraft in
continued regular customer service after the expiration of the Term, and
consistent with good industry practice, and during any period in which a
Permitted Sublease is in effect, in the same manner and with the same care,
including regard for the status and technical condition of the Aircraft, as
shall be the case with respect to similar aircraft and engines owned by such
Permitted Sublessee without discrimination and as if the Permitted Sublessee
owned the Aircraft and was going to use the Aircraft in continued regular
customer service after the expiration of the Permitted Sublease, and consistent
with good industry practice, provided, however, that in all circumstances the
Aircraft shall be maintained by Lessee (or any Permitted Sublessee) in
accordance with maintenance standards required by, or substantially equivalent
to those required by the central civil aviation authority of the country of
registry, and, to the extent not inconsistent therewith, the FAA and (D) so as
to keep the Aircraft in as good a condition as when delivered to Lessee,
ordinary wear and tear excepted, and in good operating condition; (ii) keep the
Aircraft or cause the Aircraft to be kept in such condition as is necessary to
enable the airworthiness certification of such Aircraft to be maintained in good
standing at all times under the Federal Aviation Act and any other applicable
law, or the applicable laws of any other jurisdiction in which the Aircraft may
be registered in accordance with Section 11 of the Refunding Agreement (provided
that if any grounding is fleetwide in nature and so long as Lessee or a
Permitted Sublessee is contesting in good faith such grounding, Lessee shall not
be deemed in violation of this maintenance
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<PAGE> 39
covenant); and (iii) maintain in English all records, logs and other materials
required by, and in a manner acceptable to, the FAA or any other Governmental
Entity having jurisdiction and as provided under the Maintenance Program and
Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the Aircraft at
all times, at its expense, to be duly registered during the Restricted Use
Period and, subject to Section 11 of the Refunding Agreement, thereafter under
the Federal Aviation Act in the name of Lessor or any successor or assignee, so
long as (i) while the Aircraft is registered under the Federal Aviation Act,
each of the Lessor or its successors or assigns is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal Aviation Act and (ii)
the applicable parties to the Refunding Agreement cooperate with Lessee with
respect thereto as reasonably requested by Lessee. Lessee shall not register the
Aircraft or permit the Aircraft to be registered under any Laws other than the
Federal Aviation Act at any time except as provided in Section 11 of the
Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this Lease
at all times. At any time after the Restricted Use Period, Lessor, upon
compliance with all of the terms of Section 11 of the Refunding Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions reasonably required to change the registration of the Aircraft to
another country.
Lessee agrees at its expense to place such appropriate insignia,
plates and other identification ("Lease Identification") in the cockpit of the
Aircraft and on each Engine showing title thereto and the Lien of the Indenture
as designated by Lessor and as Lessor may from time to time reasonably request.
Unless otherwise requested, upon delivery of the Aircraft, Lessee shall fasten
or cause to be fastened in the cockpit of the Airframe in a location reasonably
adjacent to and not less prominent than the airworthiness certificate for the
Aircraft, and on each Engine (if not prohibited by applicable Law), a Lease
Identification in the form set forth in Exhibit C hereto or with any other
appropriate information in any other form subsequently designated by Lessor to
Lessee. Except as provided herein, Lessee will not allow the name of any Person
to be placed on the Aircraft or either Engine as a designation that would be
reasonably interpreted as a claim of ownership or Lien; provided, however, that
Lessee may cause the Airframe and Engines to have placed thereon the customary
colors and
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<PAGE> 40
insignia of Lessee or any Permitted Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor,
Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Aircraft as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause any sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee on reasonable prior notice at reasonable times
to visit, inspect and survey the Aircraft (including, without limitation, a
visual "walk around" inspection which may include going on board the Aircraft,
and inspecting the Aircraft during maintenance checks when panels and bays are
open and subject to view), its condition, use, and operation, and the records
maintained in connection therewith, and to visit and inspect the properties and
to discuss the affairs, finances and accounts of Lessee with the principal
officers of Lessee, provided, that so long as no Default or Event of Default has
occurred hereunder inspections shall be endeavored to be performed during
regularly scheduled maintenance checks of the Aircraft. Each such inspection or
survey shall be conducted so as to not unreasonably interfere with the business
of Lessee or the maintenance or operation of the Aircraft. Upon Lessor's, Owner
Participant's or Indenture Trustee's request, Lessee will notify such Person of
the next scheduled maintenance check for the Airframe or any Engine. Lessor,
Owner Participant and Indenture Trustee shall have no duty to make any such
inspection and shall not incur any liability or obligation by reason of not
making any such inspection. Lessor's, Owner Participant's or Indenture Trustee's
failure to object to any condition or procedure observed or observable in the
course of an inspection hereunder shall not be deemed to waive or modify any of
the terms of this Lease with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish Lessor, until
the expiration or other termination of the Term of this Lease, the following:
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<PAGE> 41
(i) within sixty (60) days following the end of each quarter
of Lessee's fiscal year, except the last such quarter of such year, commencing
after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such report, an unaudited consolidated balance sheet of Lessee and its
consolidated subsidiaries prepared by it as of the close of the period ended,
together with the related statements of income and cash flows for such period,
and in each case certified by a Responsible Officer of Lessee as having been
prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close of
each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such reports, an audited consolidated balance sheet, income statement, and cash
flow statement of Lessee and its consolidated subsidiaries, as of the close of
such fiscal year, and in each case as certified by independent public
accountants, including their certificate and accompanying comments, as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices, without
qualification as to the scope of the audit or non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of all
reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934,
as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of insurance
required to be maintained hereunder, a certificate signed by the Approved Broker
of Lessee as to the due compliance with the insurance provisions of Section 12
hereof with respect to the Aircraft, together with certificates of insurance
evidencing such insurance and the opinion provided for in Section 12(f);
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(v) together with each set of financial statements referred
to in clauses (i) and (ii), a certificate signed by a Responsible Officer of
Lessee, to the effect that such officer has reviewed the relevant terms of this
Lease and has made, or caused to be made under his or her supervision, a review
of the transactions and condition of Lessee during the accounting period covered
by such financial statements, and that such review has not disclosed the
existence during such accounting period, nor does such officer have any
knowledge of the existence, as at the date of such certificate, of any condition
or event which constitutes a Default or an Event of Default, or, if such
condition or event which constitutes a Default or an Event of Default existed or
exists, specifying the nature and period of existence thereof and what action
Lessee has taken or is taking or proposes to take with respect thereto;
(vi) as soon as practicable after becoming aware thereof,
notice of damage or destruction to the Aircraft, either Engine or any Part with
a repair or replacement cost (including labor charges) in excess of $1,000,000;
(vii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default;
and
(viii) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in
Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so long as
it shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier, including,
without limitation, its status so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all
Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have
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<PAGE> 43
been duly obtained or granted; provided, however, that Lessee shall not be
required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal liability
on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with or merge into or with any other
corporation or other Person, and Lessee shall not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and other assets
(in one or a series of transactions) to any corporation or other Person, unless:
(i) the Person formed by or surviving such consolidation or
merger or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
(the "Successor Entity"): (A) shall be a corporation organized and existing
under the Laws of the United States of America or any State thereof or the
District of Columbia; (B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded to all or substantially all
of such property and other assets (including, without limitation, all or
substantially all of Lessee's property and other assets) as an entirety and,
unless the Owner Participant otherwise agrees, shall have a Net Worth of not
less than Lessee's Net Worth immediately prior to such transaction; (C) shall be
a "citizen of the United States" of America as defined in Section 40102(a)(15)
of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall
execute and deliver to Lessor and Indenture Trustee such recordations and
filings with any Governmental Entity and such other documents as Lessor
determines shall be reasonably necessary or advisable (including, without
limitation, to preserve and protect the interests of the Lessor and the priority
of the Lien of the Indenture (if it has not been discharged)) to evidence, or in
connection with, such consolidation, merger, sale, lease, transfer or other
disposition and an agreement, in form and substance reasonably satisfactory to
Lessor, which is a legal, valid, binding and enforceable assumption by such
Successor Entity of the due and punctual performance and observance of each
covenant and condition of this Lease and the other Operative Documents to which
Lessee is a party and agreement to be bound thereby, and an officer's
certificate to such effect,
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<PAGE> 44
and to the effect that the other requirements of this paragraph have been
satisfied, and a legal opinion from counsel to such effect and otherwise in such
form and substance reasonably satisfactory to Lessor; and
(ii) prior to and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing.
No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each calendar
year and within 60 days of a request by Lessor or Owner Participant, or such
shorter period as may be set forth in any written request by the Internal
Revenue Service for information or documents, Lessee shall furnish in writing to
Lessor or Owner Participant such information and documents (or copies thereof)
regarding the Aircraft as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its Federal and state income tax returns (or to permit the filing of the Federal
and state income tax returns of any affiliated group of corporations filing a
consolidated return of which Lessor is a member), or to maintain or defend any
claims related thereto and promptly, after reasonable notice, furnish to Lessor
or Owner Participant such information as may be reasonably requested by Lessor
or Owner Participant or the applicable Governmental Entity as may be required to
enable Lessor or Owner Participant to file any reports required to be filed by
it with any Governmental Entity because of its ownership or other interest in
the Aircraft, the Airframe or the Engines.
(g) Place of Business. At all times while this Lease is in effect,
Lessee will not, without thirty (30) days prior written notice to Lessor and
Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the Aircraft,
Airframe or Engines only in commercial passenger operations and related cargo
operations. Unless Owner Participant otherwise agrees, during the Restricted
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<PAGE> 45
Use Period, Lessee shall not use the Aircraft, Airframe or Engines or permit the
Aircraft, Airframe or Engines to be used either "predominantly outside the
United States" within the meaning of Section 48(a)(2) of the Code, or in such
manner that the percentage of the income, deduction or credit attributable to
the Aircraft, Airframe or Engines for federal income tax purposes during any
taxable year of the Lessor considered to be from foreign sources exceeds the
Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees,
prior to permitting the Aircraft to be operated in any member state of the
European Union or other European country, Lessee shall deliver to Lessor (i) a
representation and warranty to the effect that Lessee (or any Permitted
Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant
air traffic control authority over delinquent charges payable by it and (ii) a
letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or
other relevant air traffic control authority pursuant to which Lessee (or such
Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's
request from time to time, a statement of account of all sums due by Lessee (or
such Permitted Sublessee) to the authority in respect of all aircraft
(including, without limitation,the Aircraft) operated by Lessee (or such
Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would not have
entered into this amended and restated Lease unless it had available to it the
benefits of a lessor under Section 1110 of Title 11 of the United States Code.
Lessee covenants and agrees with Lessor that to better ensure the availability
of such benefits, Lessee shall support any motion, petition or application filed
by Lessor with any bankruptcy court having jurisdiction over Lessee, whereby
Lessor seeks recovery of possession of the Aircraft under said Section 1110 and
shall not in any way oppose such action by Lessor unless Lessee shall have
complied with the requirements of said Section 1110 to be fulfilled in order to
entitle Lessee to continued use and possession of the Aircraft hereunder. The
acknowledgement, covenant and agreement contained in this Section 8(i) shall
continue in full force and effect and survive the expiration or other
termination of this Lease and are expressly made for the benefit of and shall be
enforceable by the Lessor, the Owner Participant and, if the Lien of the
Indenture has not been discharged, the Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or obtain, and
maintain in full force and effect, each and every consent, license, approval,
notice, registration,
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<PAGE> 46
filing or other action with any Governmental Entity necessary or advisable in
connection with the operation or use of the Aircraft, the Airframe, any Engine
or Part or the execution, delivery or performance of this Lease or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During such times
that the Aircraft is registered under the Federal Aviation Act, Lessee shall
furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period covered
by the opinion of counsel rendered on the Restatement
Date, any opinion of counsel rendered pursuant to
Section 11(C) of the Refunding Agreement, and any
opinion of counsel rendered pursuant to this Section
8(k)(i) and (Y) upon any change in Law that would render
the opinion of counsel rendered on the Restatement Date
or such immediately preceding opinion of counsel
inaccurate, an opinion of counsel with respect to Lessee
and the FAA reasonably satisfactory to each addressee of
such opinion (which counsel may be internal legal
counsel of Lessee and FAA counsel) stating, in the
opinion of such counsel, that such action has been taken
with respect to the recording, filing, rerecording and
refiling of (i) the appropriate Operative Documents and
any supplements and amendments thereto and (ii) such
other appropriate documents, as is necessary to maintain
the perfection of Lessor's title to and/or interest in
and Indenture Trustee's security interest in the
Aircraft and the Operative Documents for such period of
time as reflects the then-current applicable Law,
reciting the details of such actions; or
(2) at any time that an opinion is not required pursuant to
Section 8(k)(i)(1), annually, a certificate reasonably
satisfactory to each recipient thereof signed by a
Responsible Officer of Lessee certifying that no such
action is necessary to maintain the perfection of such
title and/or interest and security interest.
(ii) During such times that the Aircraft is registered under
any Laws other than the Federal Aviation
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<PAGE> 47
Act, Lessee shall furnish to Lessor and to Indenture Trustee annually (but in
any case, (X) prior to the expiration of the time period covered by any opinion
of counsel rendered pursuant to Section 11(C) of the Refunding Agreement, and
any opinion of counsel rendered pursuant to this Section 8(k)(ii) and (Y)
promptly upon any change in Law that would render such immediately preceding
opinion of counsel inaccurate), an opinion of counsel reasonably satisfactory to
each addressee of such opinion stating, in the opinion of such counsel, that
such action has been taken with respect to the recording, filing, re-recording
and refiling of (i) the appropriate Operative Documents and any supplements and
amendments thereto and (ii) such other appropriate documents, as is necessary to
maintain the perfection of Owner Trustee's title to and/or interest in and
Indenture Trustee's security interest in the Aircraft and the Operative
Documents for such period of time as reflects the then-current applicable Law,
reciting the details of such actions.
(l) Letter of Credit. As security for the obligations to Lessor,
Lessee shall provide to Lessor, as named beneficiary thereof, one or more
irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof shall be available
for drawdown thereunder and payable in New York, New York, on demand at any
time, if a Default under Section 17(e), (f) or (g) or an Event of Default has
occurred, which amount may be applied, retained or utilized as provided in the
penultimate paragraph of this Section 8(l).
(ii) be maintained in full force and effect at all times
until ninety-one (91) days after the Expiration Date with a commercial bank
acceptable to Lessor, in its sole and absolute discretion, having a long-term
unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if the
issuing bank's credit rating is lower than such rating, Lessee shall replace
such Letter of Credit issuer within five Business Days of any such reduction in
rating with a commercial bank meeting such rating requirement), provided, that a
Letter of Credit set forth in Exhibit D-2 issued by The Industrial Bank of
Japan, Limited, will be acceptable to Lessor for so long as The Industrial
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<PAGE> 48
Bank of Japan, Limited maintains a long term unsecured debt rating at least
equal to its rating on the date hereof;
(iii) be expressly designated as transferrable and
assignable; and
(iv) permit partial drawings. If the Letter of Credit is
still in effect at the end of the Term or the Lessor is holding proceeds of the
Letter of Credit that were retained and not applied as provided herein, then
Lessor shall return the Letter of Credit to Lessee or terminate it, and/or
return any retained and unapplied proceeds, ninety-one (91) days following the
date of such expiration or other termination of this Lease so long as no Default
or Event of Default has occurred or is continuing hereunder or under any Other
Lease, upon payment in full of all amounts then due and owing to Owner Trustee
and Owner Participant under the Operative Documents.
If an Event of Default has occurred or is continuing under this
Lease or an Event of Default has occurred or is continuing under any Other Lease
(as therein defined), in addition to any other rights and remedies Lessor may
have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform Commercial
Code as adopted in New York) or equity and upon exercising its rights under the
Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
payment of Rent, Lessee's right to apply the same to such claim shall be limited
to amounts which would (absent such Event of Default) be distributable under the
Indenture at the time such payment is made to Lessor, Owner Participant or any
of their respective Affiliates (and shall not include any amounts distributable
to Indenture Trustee in its individual capacity or to the Note Holders);
provided further, however, that neither the amount so applied at any one time
nor the aggregate amount
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<PAGE> 49
so applied at different times shall reduce the amount of any installment or
payment of Rent (whether upon the termination of the Lease or otherwise) payable
by Lessee to an amount insufficient to pay in full the amounts required to be
paid on account of the principal of and any interest on the Equipment Notes or
otherwise owing to a Note Holder. Lessee shall not be entitled to any refund or
credit with respect to any amounts so applied. Any amount retained shall be
considered the property of Lessor and Lessor may commingle such amount with its
general funds and Lessee, further, hereby absolutely and irrevocably disclaims,
to the maximum extent permitted by applicable Law, any interest therein. Lessee
shall not be entitled to any interest or other earnings on such retained amount
and such amount shall not be refundable.
On application of all or any portion of the amounts drawn under
the Letter of Credit or any Other Letters of Credit in accordance with this
Section 8(l) or the Other Leases, Lessee shall on demand reinstate the amount of
the Letter of Credit or Other Letters of Credit, as the case may be, to its or
their full Face Amount or provide to Lessor one or more additional Letters of
Credit meeting the requirements of this Section 8(l), so that the Letter of
Credit and each of the Other Letters of Credit at all times equals the original
Face Amount provided for herein. During such times as Lessor shall elect to hold
all or part of the proceeds of the Letter of Credit or Other Letters of Credit
as security for Lessee's obligations to Lessor under the Lease and the Other
Leases, Lessee shall not be obligated to reinstate the amount of the Letter of
Credit or Letters of Credit, as the case may be, in respect of the proceeds so
held.
Section 9. Replacement of Parts; Alterations, Modifications and
Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense,
will promptly replace, or cause to be replaced, all Parts which may from time to
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever.
In addition, in the ordinary course of maintenance, service, repair, overhaul or
testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may at its own cost and expense remove any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) shall replace
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<PAGE> 50
at its own cost and expense such Parts as promptly as possible. All replacement
Parts shall be free and clear of all Liens (except for pooling arrangements to
the extent permitted by paragraph (c) of this Section and Permitted Liens), be
in at least the equivalent or better modification status and service bulletin
accomplishment status, be fully interchangeable as to form, fit and function and
shall be in as good operating condition as, and have a value, remaining useful
life and utility at least equal to, the Parts replaced (assuming such replaced
parts were in the condition and repair in which they were required to be
maintained by the terms hereof).
All Parts which are at any time removed from the Aircraft shall
remain the property of Lessor, subject to the Lien of the Indenture if it has
not been discharged, and subject to this Lease no matter where located until
such time as such Parts shall be replaced by parts which have been incorporated
or installed in or attached to the Aircraft and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Aircraft as above
provided, or as provided in Section 9(c), without further act, (i) title to the
removed Part shall thereupon vest in Lessee free and clear of all rights of
Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no
longer be deemed a Part hereunder, (ii) title to such replacement Part shall
thereupon vest in Lessor and become subject to the Lien of the Indenture if it
has not been discharged, and (iii) such replacement Part shall become subject to
the Lien of the Indenture (if it has not been discharged) and this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(b) Alterations, Modifications and Additions. Lessee, at its own
cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine to the extent
made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines
or Parts from time to time to meet the applicable standards of the FAA or under
any Law of any Governmental Entity having jurisdiction or issued by the
manufacturer of the Airframe, Engines or Parts. In addition, so long as no
Default or Event of Default has occurred and is continuing, Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may
from time to time make such alterations and modifications in and additions to
the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee)
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<PAGE> 51
may deem desirable in the proper conduct of its business, provided, no such
alteration, modification or addition diminishes the value, remaining useful life
or utility, or impairs the condition or airworthiness, of the Airframe, either
Engine or any Part below that immediately prior to such alteration, modification
or addition assuming that the Airframe, Engines and Parts were then of the
value, utility and remaining useful life and in the condition and airworthiness
required by the terms of this Lease. Except as otherwise provided herein, title
to all Parts incorporated or installed in or attached or added to the Aircraft
as the result of such alteration, modification or addition, shall immediately
vest in Lessor and become subject to the Lien of the Indenture (if it has not
been discharged) and this Lease, without the necessity for any further act of
transfer, document or notice. Notwithstanding the foregoing sentence of this
Section 9(b), Lessor agrees that so long as no Default or Event of Default shall
have occurred and be continuing Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may, at such time during the Term for the
Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in
addition to, and not in replacement or substitution for, any Part originally
incorporated or installed in or attached to, or delivered with, the Aircraft on
the Delivery Date or any Part in replacement of, or substitution for, any such
originally incorporated, installed, attached or delivered Part, (ii) such Part
is not required to be incorporated or installed in or attached or added to the
Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the
insurance required by Section 12 and (iii) such Part can be removed from the
Aircraft without causing any material damage thereto and without diminishing or
impairing the value, utility, remaining useful life, condition or airworthiness
which the Aircraft would have had at such time had such alteration, modification
or addition not occurred. Upon the removal by Lessee of any such Part as
provided in the preceding sentence, title thereto shall, without further act,
vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
and such Part shall no longer be deemed part of the Aircraft (such a part is
herein called a "Removable Part"). Any Part not removed by Lessee as above
provided prior to the return of the Aircraft to Lessor hereunder, whether
pursuant to Section 16, Section 18 or otherwise, shall remain the property of
Lessor.
If any Removable Part is (i) owned by any third party and leased
to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee),
(ii) sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee)
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<PAGE> 52
subject to a conditional sale contract or other security interest or (iii)
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) pursuant to a lease which is subject to a security interest in favor
of any third party, then Lessor will not acquire or claim, as against such
lessor, conditional vendor or secured party, any right, title or interest in any
such Removable Part as the result of such Removable Part being installed on the
Aircraft; provided, however, that (A) Lessor's inability to so acquire or claim
is subject to the express condition that such lessor, conditional vendor, or
secured party shall have agreed in writing (which agreement may be contained in
the lease, conditional sale agreement or security agreement) not to acquire or
claim, as against Lessor, any right, title or interest in the Aircraft, or any
Part other than its interest in such Removable Part by reason of such Removable
Part being installed thereon, and (B) any Removable Part not removed by Lessee
upon the termination or expiration of this Lease, at such time, shall become the
property of Lessor and be subject to this Lease, and provided, further, that (1)
if removal of any such Part shall affect the operation of the Aircraft in any
way whatsoever, Lessee shall replace such Part with an owned Part of the same
value, utility and remaining useful life and (2) Lessee shall repair any
unsightly area of the Aircraft as a result of such removal and make all other
repairs which are advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) replaces a Part which is not required to be replaced under
Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) may remove the replacement Part so long as it reinstalls
the original Part and such original Part is free and clear of all Liens, other
than Permitted Liens, is in at least the same modification status and service
bulletin accomplishment status, is fully interchangeable as to form, fit and
function, has been overhauled, repaired and inspected by an agency acceptable to
the FAA or other Governmental Entity having jurisdiction, and is in as good
operating condition as, and has a utility, remaining useful life and a value at
least equal to that of such Part when it was removed from the Aircraft.
Notwithstanding any other provision hereof, and without limiting
the foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted
Sublessee) may install in the Aircraft audio visual, entertainment or telephonic
equipment (including seats with such equipment installed therein) (any or all of
which are hereafter referred to as
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<PAGE> 53
"Excluded Property") in the ordinary course of business, and Lessor shall not
claim or acquire title thereto and the rights of the owners thereof therein
shall not constitute a default hereunder; provided that (i) any such Excluded
Property shall be removed prior to the date of a Return Occasion without causing
any damage to the Aircraft and without diminishing or impairing the value,
utility, remaining useful life or condition which the Aircraft would have had at
such time had such Excluded Property not been installed, (ii) any equipment or
seats which such Excluded Property replaces shall be properly stored with the
interests of Lessor and, if the Lien of the Indenture is in effect, the
Indenture Trustee, duly noted thereon and acknowledged by any applicable bailee
or warehouse, and properly reinstalled on the Aircraft prior to the date of a
Return Occasion, and (iii) Lessee (or such Permitted Sublessee) shall make all
repairs which are required as a result of such removal and/or reinstallation.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Airframe or either Engine
as provided in Section 9(a) may so long as no Default or Event of Default shall
have occurred and be continuing or would result therefrom be subjected by Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a normal
pooling arrangement customary in the airline industry of which Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into
in the ordinary course of Lessee's or such Permitted Sublessee's business,
provided the Part replacing such removed Part shall be incorporated or installed
in or attached to the Aircraft in accordance with Section 9(a) as promptly as
possible, and in any event within sixty (60) days, after the removal of such
removed Part. In addition, any Replacement Part when incorporated or installed
in or attached to the Airframe or any Engine in accordance with Section 9(a) may
be owned by another Person subject to such a normal pooling agreement; provided,
however, that Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), at its own expense, as promptly thereafter as possible, and in any
event within sixty (60) days, either (i) causes title to such replacement Part
to vest with Lessor in accordance with Section 9(a) (and to be subjected to the
Lien of the Indenture if it has not been discharged) by Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto
for the benefit
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<PAGE> 54
of and transferring title to Lessor free and clear of all Liens except Permitted
Liens, whereupon such replacement Part shall become subject to this Lease and
the Lien of the Indenture (if in effect) without the necessity for any further
act, document or notice, or (ii) replaces such replacement Part by incorporating
or installing in or attaching to the Aircraft a further replacement Part owned
by Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) free
and clear of all Liens other than Permitted Liens and by causing title to such
further replacement Part to vest in Lessor as above provided and to be subjected
to the Lien of the Indenture if it has not been discharged, whereupon such
replacement Part shall become subject to this Lease and the Lien of the
Indenture (if in effect) without the necessity for any further act, document or
notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment of Basic Rent
hereunder shall be free and clear of, and without deduction for, any and all
withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such payments
of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the
net amount actually received by Lessor, after such deduction or withholding,
will be equal to all such amounts that would be received by Lessor if no such
deduction or withholding had been required, but only to the extent necessary to
ensure that the holders of the outstanding Equipment Notes receive such amount
as may be required by the Indenture. If Lessee pays any amount to Lessor (or to
any taxing authority for the account of Lessor) as a result of the application
of the preceding sentence with respect to any withholding Tax which is an
excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in
the case of Taxes imposed on the Owner Trustee, the Owner Participant to the
extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant would be liable) shall reimburse Lessee for such withholding Tax
within 30 days of written notice accompanied by evidence of payment for such
withholding Taxes (exclusive of interest, penalties and additions to Tax) paid
by Lessee provided that in any circumstance in which the Lessor is required to
reimburse the Lessee for any such withholding Taxes and the Lessee has not
received such reimbursement from Lessor or the Owner Participant, then to the
extent of such shortfall and so long as no Lease Event of Default has
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occurred and is continuing, Lessee shall be entitled to obtain reimbursement
from Lessor by reducing the succeeding payments of Rent payable to Lessor (other
than any portion of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder) until the
aggregate amount of reduction is equal to the sum of the amount of such
shortfall and interest on that amount at the Interest Rate from the date
reimbursement is required to be made until the date of such reduction in Rent.
Except as provided in Section 10(b), and taking into account any payments
received by Lessor pursuant to the second sentence of this Section 10(a), Lessee
agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and
all Taxes, howsoever levied or imposed, whether levied or imposed upon or with
respect to or asserted against any Indemnitee, Lessee, the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or otherwise, with
respect to any period beginning, or events or circumstances occurring, on or
after the Restatement Date, by any federal, state or local government or taxing
authority in the United States of America or by any foreign government or any
taxing authority or governmental subdivision of a foreign country or of a
territory or possession of the United States (each such governmental subdivision
or taxing authority referred to as a Taxing Authority"):
(i) upon or with respect to, based upon or measured by (A)
the Aircraft, the Airframe, any Engine or any Part thereof, or interest
therein, (B) the manufacture, purchase, ownership, delivery, leasing,
acceptance, rejection, assigning, possession, use, operation, location,
settlement of any insurance claim, sale, mortgaging, pledging,
financing, subleasing, rental, retirement, abandonment, registration,
re- registration, deregistration, preparation, installation,
modification, repair, maintenance, replacement, transportation,
storage, transfer of title, return or other disposition of the
Aircraft, the Airframe, any Engine or any Part thereof or interest
therein; or (C) the rentals, receipts, income or earnings arising
therefrom (including without limitation the Rent), or
(ii) upon or with respect to the Operative Documents
(including the Equipment Notes), any interest in any thereof, or any
future amendment, supplement, waiver or consent thereto requested by
Lessee with respect to any thereof, or the execution, delivery, or
performance of any thereof, or the acquisition or subsequent transfer
thereof or the issuance of the
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Equipment Notes or any other document executed and delivered in
connection with the consummation or confirmation of the transactions
contemplated by the Operative Documents or any Indemnitee's interest in
any of the foregoing, or the execution, amendment, supplement,
issuance, reissuance, refinancing or delivery of any of the foregoing,
or
(iii) the Trust Indenture Estate or the property, or the
income or other proceeds received with respect to the property, held by
the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or premium
on, or other amounts payable with respect to the Equipment Notes,
whether as originally issued or pursuant to any modification or
reissuance, or
(v) otherwise with respect to or in connection with the
transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be subject to
indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, Taxes imposed on, based
on, or measured by, the gross or net income of such Indemnitee or Taxes
in lieu thereof (including minimum taxes, withholding taxes and taxes
on or measured by any item of tax preference) imposed by the federal
government of the United States of America (other than taxes in the
nature of sales or use taxes, license taxes, or property taxes),
(ii) In the case of any Indemnitee, Taxes imposed on, based
on, or measured by the gross or net income, receipts, capital, or net
worth, franchises, excess profits or conduct of business of such
Indemnitee (including minimum taxes, withholding taxes and taxes on or
measured by any items of tax preference), imposed by any state, local
or foreign government or taxing authority (other than Taxes in the
nature of sales Taxes, use Taxes, license Taxes or property Taxes, and
Covered Income Taxes described in subsection (c) of this Section 10),
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(iii) In the case of any Indemnitee, Taxes which arise out of
or are caused by any gross negligence or willful misconduct of such
Indemnitee,
(iv) In the case of any Indemnitee, any Taxes imposed as a
result of a voluntary or involuntary bankruptcy of such Indemnitee or
any sale, transfer of title, transfer or other disposition by such
Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and
Owner Participant are related Indemnitees with respect to each other)
of the Aircraft, the Airframe, any Engine or any Part thereof or
interest therein, or any interest in the Rent or part thereof or any
interest in the Operative Documents or part thereof, unless such sale,
transfer or disposition occurs in connection with (A) an Event of
Default and the exercise by any Indemnitee of its remedies under this
Lease or the Indenture, as the case may be or (B) the substitution,
pooling or interchange of the Aircraft, the Airframe, any Engine or any
Part pursuant to the terms hereof; provided, however, that in all cases
Owner Participant and Owner Trustee shall consider in good faith such
request as Lessee shall make concerning the appropriate jurisdiction in
which such sale, transfer or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed on a
transferee of such Indemnitee of any interest in the Aircraft, the
Airframe, any Engine or any Part or any interest in the Operative
Documents to the extent the amount of any such Taxes exceeds the amount
of such Taxes that would have been imposed had there not been any such
transfer, unless such transfer results from action by or on behalf of
such Indemnitee taken in connection with any Event of Default that has
occurred and is continuing or upon the request of the Lessee,
(vi) Any interest, penalties, fines and additions to tax
imposed on an Indemnitee (other than Taxes that are due and payable
with a return when properly filed) resulting from such Indemnitee's
failure to file returns that are timely and proper, provided such
failure was not attributable to such Indemnitee contesting any claim in
accordance with this Section 10(b) or to a failure by Lessee to satisfy
its obligations related to such return,
(vii) With respect to an Indemnitee other than the Indenture
Trustee or the Trust Indenture
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<PAGE> 58
Estate, Taxes which arise out of or are caused by (i) any act or
omission or material misrepresentation of any Indemnitee where such act
or omission is not permitted by the Financing Documents or the
Operative Documents, or (ii) a failure by an Indemnitee to fulfill its
contest obligations, and, in the case of the Indenture Trustee and the
Trust Indenture Estate, Taxes imposed as a result of a breach of such
Indemnitee's representations, warranties, or covenants contained in
Sections 9(a), 12 or 16 of the Refunding Agreement in any material
respect, or from a failure by such Indemnitee to fulfill its contest
obligations,
(viii) So long as no Event of Default shall have occurred and
be continuing, Taxes attributable to the Aircraft related to acts or
events occurring after the later of the termination of the Lease and
the redelivery of the Aircraft, or
(ix) In the case of each Pass-Through Trust, each
Pass-Through Trustee (in its individual capacity and as trustee under
the Pass-Through Trusts), the Subordination Agent and each Liquidity
Provider, United States withholding taxes imposed as a result of the
place of organization or other status of a holder of an interest in a
Pass-Through Trust, or
(x) In the case of the Indenture Trustee, each Pass-
Through Trust, each Pass-Through Trustee (in its individual capacity),
the Subordination Agent and each Liquidity Provider, Taxes imposed with
respect to the Equipment Notes as a result of activities of such
Indemnitee unrelated to the transactions contemplated by the Operative
Documents.
(c) Covered Income Tax. For purposes of clause (ii) of subsection
(b) of this Section 10, a Covered Income Tax includes:
(i) in the case of an Indemnitee other than the Indenture
Trustee or the Trust Indenture Estate, any Tax imposed on, based on or
measured by gross or net income, receipts, capital or net worth,
franchises, excess profits or conduct of business (other than taxes
which are in the nature of sales or use taxes, license taxes or
property taxes) imposed on an Indemnitee (A) by any state or local
Taxing Authority other than Taxes imposed by any such state or local
jurisdiction in which the Indemnitee has its principal place of
business or is subject to such Tax as a result of business transactions
or other presence unrelated to the transactions contemplated by the
Financing
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<PAGE> 59
Documents or the Operative Documents, unless such Taxes are imposed by such
jurisdiction solely as a result of (x) the operation of the Aircraft in such
jurisdiction or (y) the transactions contemplated by the Operative Documents, to
the extent such taxes are directly attributable to such operation of the
Aircraft or to such transactions, and (B) by any foreign jurisdiction which are
imposed as a result of Lessee's or sublessee's activities in such foreign
jurisdiction in connection with the transactions contemplated by the Financing
Documents or the Operative Documents, provided, however, a Covered Income Tax
also includes the incremental amount of franchise taxes, taxes on doing
business, capital stock taxes or taxes on, based on or measured by gross or net
income of the original Owner Participant attributable to the Lease (excluding,
however, any taxes that would be excluded under any provision other than clauses
(i) and (ii) of subsection (b) of this Section 10) which are imposed by the
"Home State" of a sublessee (the Home State of a sublessee being the
jurisdiction in which such sublessee maintains its principal operations and
maintenance center), or in the absence of a Permitted Sublessee, the
jurisdiction where the Aircraft is stored, but only to the extent such
incremental taxes result from activities of Lessee or Permitted Sublessee under
the Lease in or with respect to the Home State or the jurisdiction where the
Aircraft is stored, and taking into account in calculating such incremental
taxes all state tax benefits and savings in the Home State resulting from
activities of Lessee or Permitted Sublessee under the Lease, disregarding for
such purpose any actual or constructive changes in ownership of the original
Owner Participant, provided, however, that Owner Participant and Lessee agree to
negotiate, in good faith, a cap to Lessee's liability for indemnity payments
attributable to taxes incurred in sublessee's Home State with respect to each
Permitted Sublessee; and
(ii) in the case of the Indenture Trustee or the Trust Indenture
Estate, any Tax based on or measured by gross or net income, receipts, capital
or net worth, franchises, excess profits or conduct of business (including
minimum taxes, withholding taxes, and taxes on or measured by any item of tax
preference) imposed on such Indemnitee by a Taxing Authority in or of any
foreign jurisdiction or a territory or possession of the United States, other
than any such Tax which would not have been imposed in the absence of
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such Indemnitee's (including for purposes of this definition, all
entities with which such Indemnitee is combined, integrated, or
consolidated in such Taxing Authority's jurisdiction) engaging in
business, maintaining an office or other place of business or
otherwise being located in such jurisdiction other than merely by
reason of such Indemnitee's participation in the transactions
contemplated by the Operative Documents.
(d) Reports and Returns. In case any report or return is
required to be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to the Owner Participant or Owner Trustee
or will notify the Owner Participant or Owner Trustee of such requirement and
make such report or return in such manner as shall be reasonably satisfactory to
Owner Participant or Owner Trustee. If actual notice is given by any taxing
authority to an Indemnitee that a report or return is required to be filed with
respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such
required report or return and Lessee shall either file such report or return in
the manner prescribed in the preceding sentence, or shall use its best efforts
to cause such report or return to be filed by the appropriate entity. Each
Indemnitee agrees to respond to any reasonable request of Lessee for information
not within Lessee's control and within the control of and reasonably available
to such Indemnitee with respect to the filing of any such report or return, but
Lessee agrees to pay any reasonable costs, fees, disbursements or other charges
of independent counsel or independent accountants incurred in connection with
such request.
(e) After-Tax Basis. Lessee further agrees that, with
respect to any payment or indemnity under this Section 10 and under Section 13
hereof, such payment or indemnity shall include the net amount necessary to hold
the recipient of the payment or indemnity harmless on an after-tax basis from
all Taxes required to be paid or credited by such recipient with respect to such
payment or indemnity under the laws of any Taxing Authority; provided, however,
that in the case of Taxes imposed on the Owner Participant, such Taxes shall be
calculated on the basis of the assumption that Owner Participant shall be
subject to the highest federal corporate income tax rate applicable to Owner
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Participant in the year of payment and the highest corporate income tax rate in
the jurisdiction in which Owner Participant files a consolidated state income
tax return (currently Virginia).
(f) Tax Benefit. If, by reason of any payment made to or
for the account of an Indemnitee by Lessee pursuant to this Section 10 or
Section 13 hereof, such Indemnitee subsequently actually realizes a tax
deduction or credit (including foreign tax credit and any reduction in Taxes)
not previously taken into account in computing the amount of such payment, such
Indemnitee shall promptly pay to Lessee, but only if there shall then be no
Lease Event of Default and if Lessee shall have made all payments then due and
owing to such Indemnitee under the Operative Documents, an amount equal to the
sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee
which is attributable to such deduction or credit and (ii) the reduction
calculated on the same basis as the gross up in Section 10(e) hereof in Taxes
realized by such Indemnitee as a result of any payment made by such Indemnitee
pursuant to this sentence; provided, however, that such Indemnitee shall not be
obligated to make any payment pursuant to this Section 10 or Section 13 hereof
to the extent that the amount calculated pursuant to (i) above would exceed (A)
the amount of all prior payments by Lessee to such Indemnitee, pursuant to this
Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes
required to be paid by such Indemnitee in respect of the receipt or accrual of
such amounts received by such Indemnitee from Lessee, less (B) the portion of
all prior payments computed pursuant to (i) above by such Indemnitee to Lessee
hereunder.
(g) Payment. If a claim is made against any Indemnitee for
any Taxes which may be subject to indemnification by Lessee hereunder and if
such Indemnitee has notice thereof, such Indemnitee shall promptly notify
Lessee; provided that the failure to provide such notice shall not release
Lessee from any of its obligations hereunder except to the extent Lessee's right
to contest such claim is precluded thereby. Any amount payable as an indemnity
to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is
to be paid to such party directly, in immediately available funds, within thirty
(30) days after receipt of a written demand therefor from such Indemnitee or
Lessee, as the case may be, except in the case of a payment to an Indemnitee to
the extent that such Taxes are being contested in good faith pursuant to this
Section 10, in which event the payment of such indemnity shall be made by the
due date for the payment of any Taxes that are
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the subject of such contest taking into account all extensions of the due date
that are available as a result of the contest. In the event an Indemnitee makes
a tax payment with respect to any such Taxes (other than with funds advanced to
such Indemnitee on an interest-free basis by Lessee pursuant to this Section
10), Lessee shall reimburse the amount of such payment and also shall pay to the
Indemnitee interest on the amount of such payment by such Indemnitee at the
Interest Rate from the date of any such payment by such Indemnitee to the date
of such reimbursement by Lessee to the Indemnitee hereunder. In the event an
amount is payable to Lessee under this Section 10, the Indemnitee owing such
amount shall pay interest on such amount at the Interest Rate from the date of
receipt by such Indemnitee of any amount giving rise to such obligation to pay
Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee receives a
written notice of a claim which, if sustained, would require the payment of an
indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly
notify Lessee of such claim and, if requested by Lessee in writing, shall, at
Lessee's sole expense, in good faith contest or shall permit Lessee, if desired
by Lessee and such contest may be conducted in whole or in part separately in
the name of Lessee without involving Taxes of such Indemnitee not indemnified
hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity,
applicability or amount of such Taxes by (x) resisting payment thereof if
practicable, (y) not paying the same except under protest, if protest is
necessary and proper, and (z) if payments be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings;
provided, however, the Lessee shall not be permitted to contest in the name of
such Indemnitee if such contest involves Taxes imposed against such Indemnitee
that are unrelated to the transactions contemplated by the Financing Documents
or the Operative Documents or Taxes based on or measured by the gross or net
income of the Indemnitee, and provided, that if the Indemnitee determines in
good faith that there is a material possibility of a material adverse impact
upon the Indemnitee with respect to such contest, such Indemnitee may retain or
reassert control of any contest that Lessee would otherwise be permitted to
contest; provided, further, that the Indemnitee shall not be required to
undertake or allow in its name or on its behalf any contest unless the following
conditions are satisfied:
(i) Lessee shall have (a) furnished Indemnitee with a
written opinion of tax counsel
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selected by Indemnitee and reasonably acceptable to Lessee to the
effect that a reasonable basis (as defined in ABA Opinion 85-352)
exists to contest such claim (which opinion shall be obtained at
Lessee's sole cost and expense), provided however, that in the
event the subject matter of the contest is of a continuing nature
and has previously been decided adversely pursuant to the contest
provisions of this Section 10, there has been a change in the law
(including, without limitation, amendments to statutes or
regulations, administrative rulings and court decisions) after
such claim shall have been so previously decided and such
Indemnitee shall have received an opinion of tax counsel, to the
effect that, as a result of such change other than a change in
statutory law, it is more likely than not that the position which
the Indemnitee or the Lessee, as the case may be, had asserted in
such previous contest would prevail and, in the case of statutory
changes-in-law, it is as likely as not that the position will
prevail, and (b) agreed to pay Indemnitee for all reasonable costs
and expenses which Indemnitee may incur in contesting such claim
(including without limitation, payment on demand of all
out-of-pocket costs, expenses, additions to tax because of
underpayment of estimated taxes, losses, legal and accounting and
investigatory fees and disbursements, penalties, and interests),
(ii) a threshold amount of $50,000 for any individual
claim is at issue,
(iii) there is no substantial risk or danger of the
sale, loss or forfeiture of the Aircraft,
(iv) Lessee shall have admitted its liability to
indemnify Owner Participant for such claim or set forth in writing
why it is not so liable,
(v) if such contest is to be initiated by the payment
of, and the claiming of a refund for, such Taxes, the Lessee shall
have advanced to such Indemnitee sufficient funds (on an interest
free basis) to make such payments,
(vi) no claim shall be appealed to the U.S. Supreme
Court,
(vii) no appeal of a trial court decision shall be
undertaken unless Lessee at its sole cost and expense shall have
furnished Indemnitee with a written
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opinion of tax counsel selected by Indemnitee and reasonably
acceptable to Lessee to the effect that Indemnitee is more likely
than not to prevail in such appeal, and
(viii) no Event of Default has occurred and is
continuing.
(i) Refund. If any Indemnitee shall obtain a refund of all
or any part of any Taxes paid by Lessee or from an advance by Lessee, such
Indemnitee shall pay Lessee the amount of such refund together with any interest
paid thereon attributable to the Taxes paid or advanced by Lessee less the
amount of any Taxes payable by such Indemnitee in respect of the receipt of such
refund and interest after giving credit to Lessee for any savings by such
Indemnitee in respect to any such Taxes by reason of deductions, credits,
allocations or allowances in respect of the payment of any such Taxes; provided
that such amount shall not be payable before such time as Lessee shall have made
all payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default
under any of the above indemnification provisions of this Section 10 so long as
Lessee or the Indemnitee shall diligently prosecute such contest in accordance
with the provisions of this Section 10. Notwithstanding the foregoing, if a
claim is made against any Indemnitee for any Taxes which, if successful, would
result in the imposition of Taxes under circumstances which would require Lessee
to indemnify such Indemnitee, the Indemnitee shall be released from its
responsibility to contest such claim or part thereof, if it agrees in writing
not to seek indemnification from Lessee in respect of the claim, or such part
thereof to be contested. In the event an Indemnitee fails to contest, or refuses
to permit Lessee to contest, a claim or part thereof which the Indemnitee has
the obligation to contest or to permit Lessee to contest under this Section 10,
then Lessee shall not be obligated to indemnify the Indemnitee for such claim or
such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a
member of an affiliated group (within the meaning of Section 1504(a) of the
Code) which files a
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consolidated Federal income tax return, the term "Indemnitee" shall mean and
include any member of such affiliated group.
(l) Verification. At Lessee's request, the amount of any
indemnity payment by Lessee pursuant to this Section 10 or any payment by an
Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified
by an independent public accounting firm selected by such Indemnitee and
reasonably satisfactory to Lessee. In order to enable such accountants to verify
the indemnity amount, such Indemnitee shall provide to the accountants (for
their own confidential use) information reasonably necessary for such
verification to which Lessor has access; provided, however, such information
shall not be disclosed to Lessee or any person other than such accountants. The
fee of such firm shall be payable by Lessee unless such verification shall
result in an adjustment in Lessee's favor exceeding 10% of the amount of the
indemnity payment.
(m) Survival. All of the obligations and rights of Lessee
and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the
Engines or any Part thereof shall survive the assignment, or expiration or other
termination, of the Lease with respect to the Aircraft for a period of six (6)
years from the occurrence of such assignment, or expiration or termination,
except that such obligations shall survive the expiration of such six (6) year
period with respect to any claim asserted prior to the expiration of such six
(6) year period but in either case only to the extent such obligation or claim
relates to events which occurred or conditions which existed during the Term.
Such obligations are expressly undertaken by Lessee for the benefit of, and
shall be enforceable by, Lessor. The provisions of this Section 10(m) are
subject to the exclusions of Section 10(b)(viii).
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe. Subject to
the other provisions of this Section 11, upon an Event of Loss with respect to
the Airframe or the Airframe and any Engines then installed thereon, Lessee
shall forthwith (and, in any event, within five (5) Business Days after such
occurrence) give Lessor written notice of such occurrence and within thirty (30)
days after such occurrence give Lessor written notice of its election, subject
to the terms hereof and of the Indenture, to perform one of the following two
options (it being agreed that if Lessee shall not have given Lessor notice of
such election within thirty
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(30) days after such occurrence, Lessee shall be deemed to have elected to
perform the option set forth in the following clause (ii)), provided, that
Lessee shall not have the right to select the option set forth in clause (i) if
a Default or an Event of Default shall have occurred and be continuing at the
time of such election or at the time of replacement:
(i) within one hundred twenty (120) days (the "Replacement
Period") after the date of the Event of Loss (but in no event later than the
last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as
provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture
if it has not been discharged, and to be leased by Lessee hereunder in
replacement of the Airframe and such Engines then installed thereon, title to a
replacement Airframe (together with the same number of replacement Engines as
the Engines), such replacement Airframe and Engines (A) to be free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe and replacement Engines may be subject to Permitted Liens), (B) to have
a value, utility and remaining useful life, determined in accordance with the
Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and
to be in at least as good operating condition as, the Airframe and the Engines,
if any, so replaced (assuming the Airframe and the Engines were maintained in
accordance with the requirements of this Agreement, whether or not they are in
fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with
equivalent or better modification status delivered by the Manufacturer not
earlier than June 30, 1988 and, in the case of Engines, in compliance with
Section 11(b); provided that if Lessee shall not perform its obligation to
effect such replacement under this clause by the end of the Replacement Period,
Lessee shall then be deemed to have elected to comply, and shall comply, with
the provisions of clause (ii) of this Section 11(a); provided, further, that the
payment specified therein shall be deemed to have become due and payable on the
Stipulated Loss Value Date occurring on or immediately preceding the last day of
the Replacement Period. Upon compliance with the foregoing, Lessor will, subject
to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without
recourse, representation or warranty (except a warranty that such Airframe and
Engines are free and clear of Lessor's Liens), all of Lessor's right, title and
interest, if any, in and to the Airframe and the Engines suffering the Event of
Loss as well as all of Lessor's right, title and interest in and to any Engine
constituting part of the Aircraft and replaced as provided
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above but not installed thereon at the time of the Event of Loss. For all
purposes hereof, a replacement Airframe shall be deemed part of the property
leased hereunder and shall be deemed the "Airframe" as defined herein. No Event
of Loss resulting in replacement of the Airframe or Engines under this Section
11(a)(i) shall result in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or before one
hundred twenty (120) days after the date of the Event of Loss (or, if earlier,
with respect to insurance proceeds, on the date on which insurance proceeds with
respect to the Event of Loss are received by the loss payee) Lessee shall pay to
Lessor in immediately available funds the sum of (A) the Stipulated Loss Value
of the Aircraft as shown on Exhibit A for such Stipulated Loss Value Date, plus
all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent
Payment Date or Renewal Rent Payment Date, respectively, prior to the date of
payment of such Stipulated Loss Value which has not been paid when due, plus, if
such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal
Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be,
payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated
Loss Value Date occurs after the last day of the Term, plus an amount equal to
the average daily Basic Rent or Renewal Rent, as the case may be, in effect on
the last day of the Term, for each day from and including the last day of the
Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental
Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or
Renewal Rent, as the case may be, hereunder with respect to the Aircraft for any
period commencing after the date on which such Stipulated Loss Value is paid
shall terminate; provided that Lessee shall remain liable for, and shall pay on
or before the date the Stipulated Loss Value and Supplemental Rent are paid, all
payments of Basic Rent or Renewal Rent, as the case may be, for the Aircraft due
on or before the date of such payment of Stipulated Loss Value and Supplemental
Rent, (2) the Term shall terminate with respect to such Aircraft, and (3) Lessor
will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE
IS," without recourse, representation or warranty (except a warranty that such
Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's
right, title and interest, if any, in and to the Airframe and Engines suffering
the Event of Loss, as well as all of Lessor's right, title and interest, if any,
in and to any Engine constituting part of the Aircraft but not installed thereon
at the time of the Event of Loss.
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(b) Event of Loss with Respect to an Engine. Upon an Event
of Loss with respect to an Engine only, Lessee shall give Lessor prompt written
notice thereof and shall, at its own cost and expense, within sixty (60) days
after such occurrence convey or cause to be conveyed to Lessor as replacement
for the Engine suffering an Event of Loss, title to another IAE Model V2500
engine of like model and equivalent or better modification status or, at
Lessee's option, an IAE engine of an improved model, in each such case which has
a value, remaining useful life and utility determined in accordance with the
Appraisal Procedure at least equal to such Engine and is suitable for
installation and use on the Airframe without diminishing the value, remaining
useful life or utility of such Airframe, free of all Liens (it being understood
that, upon such conveyance, such replacement Engine may be subject to Permitted
Liens) and being in as good operating condition as (including no greater number
of cycles or hours than) the Engine being replaced assuming the Engine being
replaced was serviceable and otherwise in the condition and repair required by
the terms hereof immediately prior to the Event of Loss. Prior to or at the time
of any such conveyance, Lessee, at its own cost and expense, will (i) furnish
Lessor with a full warranty bill of sale, in form and substance reasonably
satisfactory to Owner Participant and Indenture Trustee, as applicable, with
respect to such replacement Engine; (ii) cause supplements, in form and
substance reasonably satisfactory to Owner Participant and Indenture Trustee (if
the Lien of the Indenture has not been discharged), subjecting such replacement
Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if
in effect), to be duly executed by Lessee, if applicable, and duly filed for
recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and
Indenture Trustee (if the Lien of the Indenture has not been discharged) with
such evidence of title to such Replacement Engine and of compliance with the
insurance provisions of Section 12 hereof with respect to such Replacement
Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture
has not been discharged) may reasonably request; (iv) furnish Owner Participant
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
with an opinion of Lessee's counsel addressed to such parties and to Lessor to
the effect that title to such Replacement Engine has been duly conveyed to
Lessor free and clear of all Liens (except Permitted Liens), and is duly leased
hereunder and subject to the Lien of the Indenture (if it has not been
discharged), the instruments subjecting such Replacement Engine to the Lien of
the Indenture and the Lease, and subjecting to any relevant Assigned Sublease
and Sublease
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<PAGE> 69
Agreement, as the case may be, have been duly filed for recordation pursuant to
the Federal Aviation Act or any other law then applicable to the registration of
the Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Engine and the Lien of the
Indenture on such Replacement Engine; (v) furnish a certificate signed by a
Responsible Officer of Lessee certifying that, upon consummation of such
replacement, no Default or Event of Default will exist hereunder; (vi) furnish
such documents and evidence with respect to Lessee, Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged), as
such parties or their respective counsel may reasonably request in order to
establish the consummation of the transactions contemplated by this Section
11(b), the taking of all corporate proceedings in connection therewith and
compliance with the conditions set forth in this Section 11(b), in each case in
form and substance satisfactory to such party; (vii) furnish such Uniform
Commercial Code financing statements covering the Replacement Engine as may be
requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not
been discharged); (viii) furnish Owner Participant with an opinion of tax
counsel mutually satisfactory to Owner Participant and Lessee and which opinion
is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner
Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in
Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the
terms of this Section 11(b), Lessor will, subject to the rights of any insurers,
transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or
warranty (except a warranty that such Engine is free and clear of Lessor's
Liens), all of Lessor's right, title and interest, if any, in the Engine which
suffered the Event of Loss. For all purposes hereof, each such Replacement
Engine shall be deemed an "Engine" as defined herein and shall be deemed part of
the same Aircraft as was the Engine replaced thereof. No Event of Loss covered
by this Section 11(b) shall result in any reduction in Rent.
(c) Conveyance of Replacement Airframe. Prior to or at the
time of any conveyance of a replacement Airframe pursuant to Section 11(a)
above, Lessee, at its own cost and expense, will furnish Lessor with the
following documents
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which shall have been duly authorized, executed and delivered by the respective
parties thereto and shall be in full force and effect on said date: (i) a full
warranty bill of sale, in form and substance satisfactory to Owner Participant
and Indenture Trustee (if the Lien of the Indenture has not been discharged),
and an AC Form 8050-2 Bill of Sale (or such other form of bill of sale as may be
approved by the FAA on said date), executed by the owner thereof, in favor of
Lessor and, cause supplements, reasonably satisfactory to Owner Participant and
Indenture Trustee (if the Lien of the Indenture has not been discharged), to
this Lease, the Indenture (if then in effect) and the Trust Agreement (if then
in effect), with respect to such replacement Airframe and to be duly filed for
recordation pursuant to the Federal Aviation Act or other applicable
Governmental Entity; (ii) the certificate specified in Section 12(f) hereof
demonstrating compliance with the insurance requirements of Section 12 with
respect to the replacement Airframe and Engines; (iii) an opinion (addressed to
Indenture Trustee, Lessor, and Owner Participant) of Lessee's counsel (and such
other evidence of title as Owner Participant or Indenture Trustee (if the Lien
of the Indenture has not been discharged) may reasonably request) to the effect
that, upon such conveyance, Lessor will acquire good title to such replacement
Airframe free and clear of all Liens (it being understood that, upon such
conveyance, such replacement Airframe may be subject to Permitted Liens), that
such replacement Airframe will be leased hereunder to the same extent as the
Airframe replaced thereby and will be subject to the Lien of the Indenture (if
it has not been discharged), the instruments subjecting such Replacement
Airframe and Replacement Engine to the Lien of the Indenture and the Lease, and
subjecting to any relevant Assigned Sublease and Sublease Assignment, as the
case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Airframe and Replacement
Engine and the Lien of the Indenture on such Replacement Airframe and
Replacement Engine; and that Lessor, and Indenture Trustee as assignee of
Lessor, is entitled to the benefits of Section 1110 of Title 11 of the United
States Code with respect to such replacement airframe and engines to the same
extent as with respect to the Airframe and Engines then installed thereon prior
to such replacement; (iv) a certificate signed by a Responsible Officer of
Lessee certifying that, upon
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consummation of such replacement, no Default or Event of Default will exist
hereunder; (v) such documents and evidence with respect to Lessee, Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged), as such parties or their respective counsel may reasonably request
in order to establish the consummation of the transactions contemplated by this
Section 11(c), the taking of all corporate proceedings in connection therewith
and compliance with the conditions set forth in this Section 11(c), in each case
in form and substance satisfactory to each such party, including evidence that
the Aircraft of which the replacement Airframe is a part has been duly
certificated by the FAA as to type and airworthiness in accordance with the
terms of this Lease and application for registration of such replacement
Airframe in the name of Lessor has been duly made with the FAA or other
applicable Governmental Entity and Lessee has temporary or permanent authority
to operate the replacement Airframe; (vi) furnish such Uniform Commercial Code
financing statements covering the replacement Airframe as may be reasonably
requested by Lessor or Indenture Trustee; (vii) furnish Owner Participant with
an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee
and which opinion is reasonably satisfactory to Owner Participant to the effect
that such replacement will have no adverse tax consequences to Lessor and Owner
Participant; (viii) an appraisal prepared in accordance with the Appraisal
Procedure which confirms that the replacement Airframe and any replacement
Engine has a value, utility and remaining useful life at least equal to that of
the Airframe and Engines which suffered the Event of Loss assuming that the same
were maintained in accordance with the requirements of this Lease whether or not
they are in fact so maintained; and (ix) furnish Owner Trustee and Indenture
Trustee with the opinion of counsel to Lessee specified in Section 5.06(a)(5)(i)
of the Indenture. Upon full compliance by Lessee with the terms of this Section
11(c), Lessor will, subject to the rights of any insurers, transfer to Lessee
"AS IS, WHERE IS," without recourse, representation or warranty (except a
warranty that such Airframe is free and clear of Lessor's Liens), all of
Lessor's right, title and interest in and to the Aircraft which suffered the
Event of Loss. No Event of Loss with respect to the Aircraft under the
circumstances contemplated by the terms of this Section 11(c) shall result in
any reduction in Rent.
For all purposes of this Lease, each such replacement
Aircraft (together with any Engines constituting part of the Aircraft being
replaced as to which an Event of Loss has not occurred) shall be deemed part of
the property
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<PAGE> 72
leased hereunder and shall be deemed the "Aircraft" as defined herein.
(d) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer (including a
Governmental Entity providing an indemnity in lieu thereof) with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(f) below, any payments (other than insurance or
such indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of
such payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value and other payments, if not already paid by Lessee, or, if already
paid by Lessee, shall (unless a Default or an Event of Default shall have
occurred and be continuing) be applied by Lessor to reimburse Lessee for its
payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a result of an
Event of Loss with respect to the Airframe or an Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid over to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c) or
Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect
to the Event of Loss for which such payments are made and if no Default or Event
of Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect to the
Aircraft. Subject to Section 11(f) below, in the event of the requisition for
use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other
than a requisition constituting an Event of Loss), Lessee shall promptly notify
Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as
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if such requisition had not occurred. All payments received by Lessor or Lessee
from the Governmental Entity for the use of such Airframe or Engine during the
Term shall be paid over to, or retained by, Lessee if no Default or Event of
Default shall have occurred and be continuing; and all other payments received
by Lessor or Lessee from the Governmental Entity shall be paid over to, or
retained by, Lessor. If the Airframe and such Engines or engines are not
returned by the end of the Term, an Event of Loss shall be deemed to have
occurred on the last day of the Term and, on the last day of the Term, Lessee
shall either pay to Lessor the amount provided herein for an Event of Loss to
the Airframe and such Engines or engines on such date or provide a replacement
Aircraft and Engine on such date in the condition provided for in Section 16 and
Exhibit E. In the event of the requisition for use by the Governmental Entity of
any Engine without the requisition for use of the Airframe, Lessee will replace
such Engine hereunder by complying with the terms of Section 11(b) to the same
extent as if an Event of Loss had occurred with respect to such Engine, and
thereafter any payments received by Lessor or Lessee from the Governmental
Entity with respect to such requisition shall be paid over to, or retained by,
Lessee.
(f) Application in Default. Any amount referred to in
clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable
to Lessee shall not be paid to Lessee, or, if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such
payment or retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without limitation,
by reason of this Lease being declared or deemed in default. At such time as
there shall not be continuing any such Event of Default or Default, all such
amounts at the time held by Lessor or Indenture Trustee in excess of the amount,
if any, which Lessor or Indenture Trustee has elected for application as
provided above, shall be paid to Lessee.
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Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability
products, completed operation liability covering maintenance of aircraft, but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Aircraft, in an amount not less than three hundred
fifty million dollars ($350,000,000), combined single limit, per occurrence or
such higher amount, and of such type and terms, as are customarily carried by
prudent Certificated Air Carriers, similarly situated to Lessee, operating
aircraft of similar size and engines and as hereinafter provided. Each and any
policy of insurance carried in accordance with this Section 12(a), and each and
any policy obtained in substitution or replacement for any of such policies, (i)
shall designate Lessor (in both its individual and trustee capacity), Owner
Participant, Indenture Trustee (in both its individual and trustee capacity) and
the other Indemnitees and their respective permitted assigns, as additional
insureds as their interests may appear (but without imposing upon any such
Person any obligation imposed upon the insured, including, without limitation,
the liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, in such policies, the insurance shall not be invalidated as to an
insured or additional insured by any act or omission of Lessee or any other
insured or additional insured and shall insure Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, regardless as to any insured or additional insured of any breach or
violation by Lessee or any other insured or additional insured of any warranty,
declaration or condition contained in such policies, (iii) shall provide that if
such insurance is cancelled for any reason whatsoever, or is changed in any
adverse way with respect to the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees or if such insurance is allowed to
lapse for non-payment of premium, such cancellation, change or lapse shall not
be effective as to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees, and their respective permitted assigns, until thirty (30) days, in
each instance (seven (7) days or such lesser period of time
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as is the insurance industry standard for war/allied perils coverage), after
notice to Lessor, Owner Participant and Indenture Trustee from such insurer or
insurers, of such prospective cancellation, change or lapse, (iv) shall include
coverage for any country in or over which the Aircraft is located or operated,
and (v) shall provide that, as against Lessor, Owner Participant, Indenture
Trustee and the other Indemnitees, and their respective permitted assigns, each
insurer shall waive any rights of set-off, counterclaim or any other deduction,
whether by attachment or otherwise, and waives any rights it may have to be
subrogated to any right of any insured against Lessor, Owner Participant,
Indenture Trustee, or the other Indemnitees, or their respective permitted
assigns, with respect to the Aircraft. Each liability policy shall be primary
without right of contribution from any other insurance which may be carried by
Lessor, Owner Participant, Indenture Trustee or the other Indemnitees, or their
respective permitted assigns, and shall expressly provide that all of the
provisions thereof shall operate in the same manner as if there were a separate
policy covering each insured, provided, that such policies shall not operate to
increase the insurer's limit of liability. Lessee shall cause its insurers to
agree that the indemnity and hold harmless provisions of Section 13 are insured
as a contractual assumption of liability by Lessee's insurers, subject to the
terms, coverage, conditions, limitations and exclusions of the policy of
insurance. Without limiting the foregoing, the type and amount of the insurance
carried by Lessee hereunder shall be no less in amount and no less comprehensive
or favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees then that carried by Lessee with respect to other A320-231 aircraft
or similar-size aircraft owned or leased by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own
expense, will maintain in effect, or cause to be carried and maintained in
effect, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the consent of Lessee) covering the Aircraft,
and "all-risk" coverage including transit insurance with respect to Engines and
Parts while not installed on such Aircraft or an aircraft, which in each case
considering all policy terms, limitations and exclusions is of the type, terms
and amount customarily
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maintained by prudent Certificated Air Carriers similarly situated to Lessee and
operating similar size aircraft and engines and as hereinafter provided. Lessee
shall also maintain, or cause to be maintained, war risk and allied perils hull
insurance reasonably acceptable to Lessor with Approved Insurers. In addition,
at least ten (10) Business Days (or, in the case of an emergency, at least two
(2) Business Days) prior to permitting the Aircraft, Airframe or Engines to be
operated or located outside of the United States of America, other than in
Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or
Indenture Trustee reasonably requests at any time and if such insurance is then
customarily being obtained by or for Persons leasing or financing
similarly-sized aircraft operating on similar routes to operators located in the
jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted
Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for
political risk, repossession, expropriation, confiscation and similar insurance
as Lessor may arrange or cause to be arranged; provided that Indenture Trustee
shall not be obligated to request such insurance and shall not be liable for any
failure to request such insurance. Anything herein to the contrary
notwithstanding, at all times while the Aircraft is subject to this Lease, the
insurance required by this Section 12(b) shall be for an amount on an "agreed
value" basis not less than the Stipulated Loss Value from time to time
determined for the Aircraft. Without limiting the foregoing, the type and amount
of insurance carried by Lessee hereunder shall be no less comprehensive or
favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees than that carried by Lessee with respect to similar-size aircraft
owned or leased by Lessee.
Each and any policy of insurance obtained and maintained
pursuant to this Section 12(b), and each and any policy obtained in substitution
or replacement for any such policies, (i) shall designate Lessor as owner of the
Aircraft, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns as additional insureds, as
their respective interests may appear (but without imposing upon Lessor, Owner
Participant, Indenture Trustee and their respective permitted assigns, any
obligation imposed upon the insured, including, without limitation, the
liability to pay any premiums for any such policies), (ii) shall
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expressly provide that, in respect of the interests of such an additional
insured and its permitted assigns, in such policies, the insurance shall not be
invalidated as to an insured by any act or omission of Lessee or any other
additional insured, and shall insure each such additional insured and its
permitted assigns, regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or another
additional insured, (iii) shall provide that if such insurance is cancelled for
any reason whatsoever, or is changed in any adverse way with respect to the
interests of Lessor, Owner Participant, Indenture Trustee and to the other
Indemnitees and their respective permitted assigns, or if such insurance is
allowed to lapse, such cancellation, change or lapse shall not be effective as
to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their
respective permitted assigns, until thirty (30) days (seven (7) days or such
lesser period of time as is the insurance industry standard for war/allied
perils coverage) after written notice to Lessor, Owner Participant and Indenture
Trustee from such insurer or insurers, as the case may be, of such prospective
cancellation, change or lapse, (iv) shall include coverage for any country in or
over which the Aircraft may at any time be located or operated, (v) shall
provide that, as against Lessor, Owner Participant, Indenture Trustee the other
Indemnitees and their respective permitted assigns, each insurer shall waive any
rights of set-off, counterclaim or any other deduction, whether by attachment or
otherwise, and waives any rights it may have to be subrogated to any right of
any insured against Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees and their respective permitted assigns, with respect to the
Aircraft, (vi) shall provide that in the event of any damage or loss which is an
Event of Loss hereunder and which results in a payment, such payment shall be
payable directly to Indenture Trustee as sole loss payee, so long as the Lien of
the Indenture shall not have been discharged and thereafter to Lessor, as sole
loss payee, and (vii) shall provide that in the event of any damage or loss
which is not an Event of Loss hereunder and which results in a payment, such
payment shall be payable directly to Indenture Trustee, as sole loss payee for
the account of all interests, so long as the Lien of the Indenture shall not
have been discharged and thereafter to Lessor, as sole loss payee for the
account of all interests. The insurance required under this Section 12(b) may
incorporate deductible amounts which shall not exceed one million dollars
($1,000,000).
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Each of Lessor and Owner Participant shall have the right
to carry additional and separate excess or contingent insurance for its own
benefit at its own expense, without, however, thereby limiting Lessee's
obligations under this Section 12, and Lessee shall not carry any such insurance
if it would conflict with or adversely affect other insurance carried by Lessor
or Owner Participant. Lessee shall have the right to carry insurance in excess
of the amounts required hereunder and the proceeds of such excess insurance
shall be payable to Lessee, provided, however, that such insurance does not
conflict with or adversely affect the insurance required hereunder or any excess
or contingent insurance carried by Lessor or Owner Participant. Lessee shall
give Lessor reasonable prior written notice of any insurance to be carried by
Lessee in addition to that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained to cover
"all-risk" ground and flight aircraft, hull and war risks and allied perils
insurance, Lessee shall include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by Lessee with respect to all
other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of Loss.
It is agreed that insurance payments which arise from insurance required to be
carried by Lessee pursuant to this Section 12 and received as the result of the
occurrence of an Event of Loss shall be applied as follows (after reimbursement
of Lessor, Owner Participant and Indenture Trustee for their reasonable
out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of
such payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Indenture Trustee so long as the Lien of the Indenture has not been
discharged and thereafter to Lessor in reduction of Lessee's obligation to pay
such Stipulated Loss Value and any other payments if not already paid by Lessee,
or, if already paid by Lessee, shall (unless a Default or an Event of Default
shall have occurred and be continuing) be applied by Indenture Trustee or
Lessor, as the case may be, to reimburse Lessee for its payment of such
Stipulated Loss Value and other payments and the balance, if any, of such
payment remaining thereafter shall be paid over to, or retained by, Lessor; or
(ii) if such payments are received as a result of an
Event of Loss with respect to the Airframe or an Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid over by the Indenture Trustee or Lessor, as the case may be, to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs,
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the terms of Section 11(a)(i) and (c) or Section 11(b) hereof, as the case may
be, and of Section 15 hereof with respect to the Event of Loss for which such
payments are made and if no Default or Event of Default shall have occurred and
be continuing.
(d) Application of Insurance Proceeds for Other than an
Event of Loss. The insurance payments of any property damage loss to the
Airframe or any Engine not constituting an Event of Loss with respect thereto
will be applied in payment for the actual costs of repairs or for replacement
property which Lessee has incurred in accordance with the terms of Section 9, 11
or 12(c) of this Lease against such documentation evidencing payment by Lessee
as Lessor may reasonably request to reimburse Lessee for such repairs or
replacements already paid for by Lessee, and any balance remaining after
compliance with such Sections with respect to such loss shall be paid to Lessor.
Lessee shall be entitled to receive from the insurer any insurance proceeds not
in excess of five hundred thousand dollars ($500,000) as soon as such funds are
paid and shall promptly receive such additional insurance proceeds from the loss
payee upon invoices for repair work in progress, replacement parts which are
ordered or for work completed as provided above in this Section 12(d). Any
amount referred to in this Section 12(d) which is payable to Lessee shall not be
paid to Lessee if at the time of such payment any Default or Event of Default
shall have occurred and be continuing, but shall be held by Lessor as security
for the obligations of Lessee under this Lease or applied as provided in Section
12(e).
(e) Application in Default. Any amount referred to in
clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to
Lessee shall not be paid to Lessee, or if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the
Lien of the Indenture shall not have been discharged, and thereafter to Lessor,
if at the time of such payment or retention a Default or an Event of Default
shall have
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occurred and be continuing. In such case, all such amounts shall be paid to and
held by Indenture Trustee, so long as the Lien of the Indenture shall not have
been discharged, and thereafter held by Lessor as security for the obligations
of Lessee, or, at the option of Indenture Trustee or Lessor, applied by
Indenture Trustee or Lessor toward payment of any of Lessee's obligations at the
time due hereunder, including, without limitation, by reason of this Lease being
declared or deemed declared in default, as Indenture Trustee or Lessor may
elect. At such time as there shall not be continuing any such Event of Default
or Default, all such amounts at the time held by Indenture Trustee or Lessor in
excess of the amount, if any, which Indenture Trustee or Lessor has elected for
application as provided above, shall be paid to Lessee.
(f) Certificates. On or before the Delivery Date, and
thereafter on any renewal by the Lessee of the insurance required hereby (but in
no event less than once in every twelve (12) month period), Lessee will furnish
to Lessor and Indenture Trustee a certificate executed and delivered by an
Approved Insurer or the Approved Broker, describing in reasonable detail, and in
accordance with customary practice, insurance carried on the Aircraft and Lessee
shall also furnish an opinion or report by the Approved Insurer or the Approved
Broker certifying that the insurance then maintained on the Aircraft complies
with the terms of this Lease. Lessee will cause the Approved Broker to agree to
advise Lessor, Owner Participant and Indenture Trustee in writing at least
thirty (30) days (seven (7) days or such lesser period of time as is the
insurance industry standard for war/allied perils coverage) prior to the
expiration, non-renewal, termination or cancellation for any reason (including,
without limitation, failure to pay premium therefor) or material modification of
any such insurance.
In the event Lessee shall fail to maintain insurance as
herein provided, Lessor, Owner Participant or Indenture Trustee at their
respective options, may provide such insurance and, in such event, Lessee shall,
upon demand, reimburse Lessor, as Supplemental Rent, or any other such other
Person who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in
effect, the Permitted Sublessee) may carry primary insurance outside of the
aviation insurance markets in New York, London or Paris if the relevant primary
insurer shall have obtained reinsurance and such reinsurance (i) is
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on the same terms as the original insurance and includes the provisions required
by this Agreement; (ii) provides in case of any bankruptcy, insolvency,
liquidation, dissolution or similar proceedings of or affecting the original
insurer that the reinsurers' liability will be to make such payment as would
have fallen due under the relevant policy of reinsurance if the original insurer
had (immediately before such bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full under the original
insurance policies in respect of which the then relevant policy of reinsurance
has been effected; and (iii) contains a "cut-through" clause in the following
form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the
Reinsured hereby mutually agree that in the event of any claim arising under the
reinsurances in respect of a total loss or other claim where as provided by the
Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14] dated as of
November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee,
and America West Airlines, Inc. such claim is to be paid to the person named as
sole loss payee under the primary insurances, the Reinsurers will in lieu of
payment to the original insured, its successors in interest and assigns pay to
the person named as sole loss payee under the primary insurances effected by the
original insured that portion of any loss due for which the Reinsurers would
otherwise be liable to pay the original insurer (subject to proof of loss), it
being understood and agreed that any such payment by the Reinsurers will (to the
extent of such payment) fully discharge and release the Reinsurers from any and
all further liability in connection therewith."
(h) Storage. During any period that the Aircraft is in
storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu
of the insurance required by Sections 12(a) and (b) above, insurance otherwise
conforming with the provisions of said Sections 12(a) and (b) except that the
scope of the risk and the type of insurance, and the amount of the insurance in
the case of the insurance described in Section 12(a) above (but not the amount
of insurance to be carried under Section 12(b) above), shall be the same as from
time to time applicable to similar size passenger aircraft that comprise
Lessee's fleet in similar storage or grounding, and in any event (including,
without limitation, at any time when there shall be in existence a Permitted
Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
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(i) Amounts Held. So long as no Default or Event of Default
has occurred and is continuing, any amount held by Lessor or Indenture Trustee,
as the case may be, until application by Lessor or Indenture Trustee, as the
case may be, pursuant to this Section 12 shall be invested as provided in
Section 21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at
its expense the insurance described in Section 12(a) for three years after the
expiration or termination of the Basic Term or Renewal Term, if Lessee has
elected to renew the Lease in accordance with Section 20, covering each
Indemnitee as its interest may appear and specifically insuring the indemnity
contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of the
insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the extent and subject to the terms and conditions
specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and
hold harmless each Indemnitee on a net after-tax basis, as provided in Section
10(e), within fifteen (15) days after demand from and against any and all claims
(whether or not based on strict liability), damages (whether direct, indirect,
incidental, special or consequential), losses, charges, fees, liabilities,
obligations, demands, suits, judgments, actions and other legal proceedings
(whether civil or criminal), penalties, fines, other sanctions, and any
reasonable costs and expenses, in connection herewith, including, without
limitation, costs and expenses set forth in Section 21(j) hereof and reasonable
attorney's fees and expenses of whatever kind or nature (any and all of which
are hereafter referred to as "Claims") imposed on, or asserted by or against, or
suffered or incurred by, any Indemnitee, from (and including) the Restatement
Date, including, without limitation, injury, death or property damage of
passengers, shippers and others, environmental control, noise and pollution
regulations, which in any way may result from, pertain to, or arise in any
manner out of, or are in any manner related to (1) the Operative Documents, the
Purchase Documents or the Financing Documents, or any of the transactions
contemplated thereby; (2) the Aircraft, the Airframe, any Engine or any engine
used in connection with the Airframe or any Part thereof, including, but not
limited to, (A) the
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importation, exportation, condition, manufacture, design, purchase, ownership,
registration, reregistration, deregistration (other than any deregistration
caused by the failure of the registered owner of the Aircraft to be a "citizen
of the United States" as defined under the Federal Aviation Act and the
regulations thereunder or to file the documentation necessary to continue FAA
registration of the Aircraft), delivery, nondelivery, assignment, leasing,
subleasing, sub-subleasing, acceptance, rejection, possession, repossession,
control, return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens
and Lenders' Liens, but including the Lien of the Indenture), use, performance,
modification, maintenance, overhaul, operation, pooling, interchange, repair,
testing, sale, return or other disposition or application of the Aircraft, the
Airframe, any Engine, any engine used in connection with the Airframe or any
Part (including, but not limited to, latent and other defects whether or not
discoverable by Lessee or Lessor, Claims related to any actual or alleged
violation of Law, loss or damage to any property of passengers, shippers or
otherwise or any Claim related to patent, copyright, trademark or other
infringement) either in the air or on the ground, and, including, without
limitation, any interest therein of an Indemnitee or imposition of a Lien
thereon (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens but
including the Lien of the Indenture), or the rentals, receipts or earnings
therefrom (including, without limitation, the Rent and any other amounts paid or
payable with respect thereto); or (B) any defect in the Aircraft, the Airframe,
any Engine, any engine used in connection with the Airframe or any Part thereof
arising from the material or any article used therein, whether from the design,
testing or use thereof from any maintenance, service, repair, overhaul or
testing of such Aircraft, Airframe, Engine, engine or Part, or otherwise
regardless of when such defect shall be discovered, whether or not such
Aircraft, Airframe, Engine, engine or Part is at the time in the possession of
Lessee, and regardless of where such Aircraft, Airframe, Engine, engine or Part
may then be located; or (3) the breach of any representation, warranty or
covenant made by Lessee hereunder or under any of the other Operative Documents
or any Default or Event of Default; provided, however, that the indemnity
provided for in this Section 13 shall not apply to any portion of a Claim of an
Indemnitee to the extent it results from: (i) the gross negligence or willful
misconduct of such Indemnitee or any of its directors, officers, employees,
servants or agents (except any such gross negligence or willful misconduct as
may be attributed to an Indemnitee due to its interest in the Aircraft, the
Airframe, an Engine, any Operative Document,
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any Purchase Document or any Financing Document), (ii) the material breach of
any express representation, warranty or covenant made by such Indemnitee herein
or in any other Operative Document, or the Financing Documents (not resulting
from a breach by Lessee of any of its representations, warranties or covenants
in the Operative Documents or in the Financing Documents), (iii) any Taxes,
whether or not Lessee is required to indemnify such Taxes under Section 10
hereof or the Tax Indemnification Agreement (it being understood that Section 10
hereof and the Tax Indemnification Agreement exclusively provide for Lessee's
liability with respect to Taxes), (iv) any Claim which relates solely to events
which occurred prior to (but excluding) the Restatement Date (other than Claims
related to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to Lessor in
accordance with the terms hereof and the Term of this Lease has been terminated
or has expired and the return is not related to an Event of Default, (vi) as to
such Indemnitee, an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the Aircraft, the Airframe, any Engine, or any Part, or in the
Financing Documents, the Purchase Documents or the Operative Documents, except
as contemplated under or pursuant to the Operative Documents, the Financing
Documents or the Purchase Documents and except as resulting from the exercise of
its remedies during the period while an Event of Default has occurred and is
continuing and prior to the time such Indemnitee has received payment of all
amounts owing to it hereunder or thereunder and except any Claim which is
alleged or does relate to the period prior to such disposition or (vii) the
authorization or giving or withholding of any future amendments, supplements,
waivers or consents with respect to any of the Financing Documents, the Purchase
Documents or the Operative Documents, which amendments, supplements, waivers or
consents were not requested by Lessee or are not required to give effect to the
provisions of the Operative Documents, the Financing Documents or the Purchase
Documents (provided, however, in no event will Lessee be liable for any Claims
resulting from, pertaining to or arising from or related to Lessor's granting or
creating a Lessor's Lien or the granting or creation of a Head Lessor's Lien).
Upon full payment of the indemnities herein, Lessee shall be subrogated to all
rights and remedies which such Indemnitee may have against any third party
against whom such Indemnitee has the right to assert a Claim which arises under
any action described in
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this Section 13 (except Claims under such Indemnitee's own insurance policies or
under the indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may result
from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as and to the extent such Indemnitee
is responsible under the Refunding Agreement for Claims related to such
deregistration), delivery, non-delivery, assignment, leasing, subleasing,
manufacture, acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Aircraft, the
Airframe, any Engine or any engine used in connection with the Airframe or any
Part thereof, either in the air or on the ground, or which may be caused by any
defect in such Aircraft, Airframe, Engine, engine or Part from the material or
any article used therein or from the design or testing thereof, or use thereof
or from any maintenance, service, repair, overhaul, or testing of such Aircraft,
Airframe, Engine, engine or Part, claims for infringement, loss of or injury to
any person, loss of or damage to any property or environmental damage,
regardless of when such defect may be discovered, whether or not such Aircraft,
Airframe, Engine, engine or Part is at the time in the possession of Lessee, and
regardless of the location of such Aircraft at any such time except to the
extent that such Claim results from (i) the gross negligence or willful
misconduct of such Indemnitee (except any such gross negligence or willful
misconduct as may be attributed to an Indemnitee due to its interest in the
Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document
or any Financing Document), (ii) the material breach of any of its express
representations, warranties or covenants hereunder, under any other Operative
Document or Financing Document (not resulting from a breach by Lessee of any of
its representations, warranties or covenants in the Operative Documents or in
the Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively
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provide for Lessee's liability with respect to Taxes), (iv) any Claim which
relates solely to events which occurred prior to but excluding the Restatement
Date (other than Claims related to the condition, manufacture or design of the
Aircraft) and any Claim concerning payment for or the ownership of Buyer
Furnished Equipment, (v) an underlying act which occurs after the Aircraft has
been returned to Lessor in accordance with the terms hereof and the Term of this
Lease has been terminated or has expired and the return is not related to an
Event of Default, (vi) an underlying act which occurs after a disposition or
other transfer (voluntary or involuntary) by such Indemnitee of all or any part
of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in
the Financing Documents, the Purchase Documents or the Operative Documents
(except as contemplated under or pursuant to the Operative Documents, the
Financing Documents or the Purchase Documents and except as resulting from the
exercise of its remedies during the period while an Event of Default has
occurred and is continuing and prior to the time such Indemnitee has received
payment of all amounts owing to it hereunder and except any Claim which is
alleged or does relate to the period prior to such disposition), (vii) the
authorization or giving or withholding of any future amendments, supplements,
waivers or consents with respect to any of the Financing Documents, the Purchase
Documents or the Operative Documents, which amendments, supplements, waivers or
consents were not requested by Lessee or are not required to give effect to the
provisions of the Operative Documents, the Financing Documents or the Purchase
Documents, or (viii) a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien
attributable to such Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense
and with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by
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Lessee to such Indemnitee in advance, or reasonable security shall be provided
by Lessee to such Indemnitee for such payments. Neither Lessee nor an Indemnitee
shall enter into a settlement or other compromise with respect to any Claim
which Lessee or such Indemnitee is defending hereunder in excess of $100,000
without the prior written consent of the other, which consent shall not be
unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense thereof
where Lessee has the right to control the defense thereof is materially
prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section.
Nothing in this Section shall be construed as a guaranty by
Lessee of payments due pursuant to any indebtedness incurred with respect to the
purchase of the Aircraft or of the residual value of the Aircraft.
Notwithstanding anything herein or in any other Operative
Document to the contrary, with respect to any Claim for which any Indemnitee is
entitled to indemnification under more than one provision of this Lease or any
other Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue
in full force and effect notwithstanding the expiration or other termination of
this Lease or any of the other Operative Documents and are expressly made for
the benefit of and shall be enforceable by each Indemnitee.
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Section 14. Liens.
Lessee shall not directly or indirectly create, incur,
assume, or suffer to exist any Lien on or with respect to the Aircraft, the
Airframe, any Engine or any Part thereof, title thereto, or any interest of
Lessor therein or in this Lease, except (i) the respective rights of Lessor,
Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein
provided or provided under the other Operative Documents or the Financing
Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii)
Liens for Taxes either not yet due or being diligently contested in good faith
by appropriate proceedings in accordance with Section 10 and so long as adequate
reserves are maintained with respect to such Liens and only so long as neither
such proceedings nor such Liens involve any material danger of the sale,
forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any
Part, or any interest of Lessor or Indenture Trustee therein or any risk of
criminal liability of Lessor or Indenture Trustee; (iv) inchoate materialmen's,
mechanics', workmen's, repairmen's employees', or other like inchoate Liens
arising in the ordinary course of business for sums not overdue by more than 45
days or being diligently contested in good faith and only so long as neither
such proceedings nor any such Liens involve any material danger of the sale,
forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any
Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of
other Persons to the extent expressly permitted by the provisions of Section
6(a), 9(c) or 19; (vi) Liens arising out of any judgment or award against Lessee
(or any Permitted Sublessee) unless the judgment or award shall not, within
thirty (30) days after the entry thereof, have been discharged, vacated,
reversed, or execution thereof stayed pending appeal or shall not have been
discharged, vacated or reversed within thirty (30) days after the expiration of
such stay and only so long as such Liens shall not involve any material danger
of the sale, forfeiture or loss of any of the Aircraft, the Airframe or any
Engine or any Part, or any interest of Lessor or Indenture Trustee therein and
provided that the execution of such judgment or award or an attachment relating
thereto shall not have occurred within such thirty (30) day period; and, (vii)
any other Lien with respect to which Lessee (or a Permitted Sublessee) shall
have provided a bond adequate in the reasonable opinion of Indenture Trustee (if
the Lien of the Indenture has not been discharged) and Owner Participant. Lessee
shall promptly, at its own expense, take or cause to be taken such action as may
be necessary to duly discharge any Lien (except for the Liens referred to in
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clauses (i) through (vii) of this Section 14) directly or indirectly created,
incurred, assumed, or suffered to exist by Lessee if the same shall arise at any
time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease,
the Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and
Trust Supplement, and any other supplement from time to time required by the
terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement,
Lease Supplement, Indenture Supplement, Trust Supplement and such other
supplements to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and
expense (except it shall be at Lessor's expense if in connection with a change
in ownership of the Aircraft or any other transfer or assignment by Lessor other
than as contemplated hereunder or under the Financing Documents or in connection
with an Event of Default) and upon request by Lessor, cause any financing
statements and any and all additional instruments and other documents, so far as
permitted by applicable Law, to be kept, filed, and recorded and to be
re-executed, refiled and re-recorded at all times in the appropriate office
pursuant or in relation to any applicable Laws of any Governmental Entity, to
protect and preserve the rights and interests of Lessor or Indenture Trustee
hereunder, under the Indenture and in the Aircraft, and Lessee shall furnish to
Lessor and Indenture Trustee, evidence, reasonably satisfactory to Lessor and
Indenture Trustee, of each such filing or refiling and recordation and
re-recordation.
Without limiting the foregoing, Lessee shall do or cause to
be done, at Lessee's cost and expense (except it shall be at Lessor's expense if
in connection with a change in ownership of the Aircraft or any other transfer
or assignment by Lessor other than as contemplated hereunder or under the
Financing Documents or in connection with an Event of Default), any and all acts
and things within its control which may be required under the terms of the
Mortgage Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease, and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the
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<PAGE> 90
Aircraft, as Lessor may reasonably request. Lessee shall also do or cause to be
done, at its own expense (except it shall be at Lessor's expense if in
connection with a change in the ownership of the Aircraft or any other transfer
or assignment by Lessor other than as contemplated hereunder or under the
Financing Documents or in connection with an Event of Default), any and all acts
and things which may be required under the terms of any other Law involving any
jurisdiction in which Lessee, any Permitted Sublessee or any wet lessee may
operate the Aircraft, which Lessor may reasonably request, to protect and
preserve the title of the Lessor, this Lease, the Indenture and Lessor's and
Indenture Trustee's interest in the Aircraft and under any of the Operative
Documents or Financing Documents within any such jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and
duly execute and deliver to Lessor or Indenture Trustee, as applicable, such
further documents and assurances and take such further actions as Owner
Participant or Indenture Trustee may from time to time reasonably request in
order to more effectively carry out the intent and purpose of this Lease and the
other Operative Documents and the Financing Documents and to protect the rights
and remedies created or intended to be created in favor of Lessor or Indenture
Trustee hereunder and the other Operative Documents and the Financing Documents
including, without limitation, if reasonably requested by Owner Participant or
Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's
expense if in connection with a change in the ownership of the Aircraft or any
other transfer or assignment by Lessor or Indenture Trustee other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default), the execution and delivery of supplements or amendments
hereto in recordable form, subjecting to this Lease, the Indenture and the other
Financing Documents, any replacement Aircraft or Engine and the recording or
filing of counterparts thereof in accordance with the laws of any appropriate
jurisdiction.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at its own
expense and risk, shall return the Aircraft to Lessor (or any Person designated
by Lessor) in at least the condition specified in this Section and Exhibit E
hereto at any Lessee system location in the continental United States selected
by Lessor, as Lessor may elect, or such other location as Lessor and Lessee may
agree, fully equipped with
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all required Engines, or other engines owned by Lessee (which shall thereupon
become Engines as hereinafter provided) meeting the conditions specified in this
Section and Exhibit E, duly installed thereon by delivering the same to the
Lessor at such location. Lessee shall comply with Section 11(b) and this Section
16 with respect to any engines installed on the Aircraft returned to Lessor
hereunder and meeting the conditions described herein which were not originally
installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion hereunder,
the Aircraft shall be: (i) free and clear of all Liens, except for the Lien of
the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly
certified as an airworthy aircraft by the FAA under Part 121 of the regulations
promulgated under the Federal Aviation Act and with a current and valid
Airworthiness Certificate installed on the Aircraft, unless such certificate
shall have been suspended or revoked as a result of the suspension or revocation
of the registration of the Aircraft under the Federal Aviation Act due to the
ineligibility of the Aircraft to be registered in the name of Lessor under the
Federal Aviation Act (whether by means of a voting trust agreement or otherwise)
in which case the Aircraft shall nevertheless meet all conditions for such
certification and for the issuance of such certificate; (iii) in full airworthy
condition for over water and EROPS operation according to the FAA standards
required to allow the Aircraft to be operated under, and in full compliance
with, such Airworthiness Certificate and Part 121 of the regulations promulgated
under the Federal Aviation Act for such operation, such compliance to be by
means of such mechanical repairs or modifications or such inspections as may be
required thereby, but not by operational restrictions, by logbook entries or
other method of acceptance of such restrictions; (iv) in full compliance with
Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of the
Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense
with respect to effecting such registration, duly registered in the name of the
Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi)
in full compliance with the maintenance and operation provisions of this Lease
and all FAA airworthiness directives, mandatory service bulletins and equivalent
requirements which by their terms require compliance on or before the last day
of the Term (without regard to any deferral, waiver, deviation or exemption
granted by the FAA specifically to Lessee delaying such compliance); (vii) in
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good and airworthy operating condition, and in the same condition (including,
without limitation, in a passenger configuration suitable for passenger revenue
service) as when delivered to Lessee hereunder, ordinary wear and tear excepted,
with no open or outstanding deferred maintenance items, scheduled or
unscheduled, with all systems and components fully serviceable and operational
and with no placards restricting operation or use, and (viii) with all remaining
warranties, indemnities, policies and guarantees referred to in Section 5(d)
made available to Lessor in a manner and by documents in form and substance
reasonably satisfactory to Lessor.
(c) Engines. In the event any engine not owned by Lessor
shall be installed on the Aircraft on any Return Occasion, without limiting
Lessee's obligations under the Tax Indemnification Agreement, such engine shall
be of the same model and equivalent modification status as the Engines or, at
Lessee's option, an IAE engine of an improved model suitable for installation
and use on the Airframe without diminishing the value, remaining useful life or
utility of such Airframe, in each such case having a value, remaining useful
life and utility at least equal to (as determined in accordance with the
Appraisal Procedure), and be in an operating condition as good as the Engines,
assuming the Engines were in the condition and repair as required by the terms
hereof immediately prior to such termination and shall conform to the return
condition requirements set forth in this Section 16 and Exhibit E, and Lessee,
at its own expense and concurrently with such delivery, shall cause such engine
to become an Engine by complying with Section 11(b) hereof. Lessee's obligation
to comply with the terms of this Section 16(c) shall be conditioned on Lessor's
transferring to Lessee all of Lessor's right, title and interest in and to any
Engine not installed on the Aircraft at the Return Occasion "AS IS, WHERE IS,"
without any representation, warranty or recourse of any kind whatsoever, express
or implied, except a warranty that such Engine is free and clear of Lessor's
Liens.
(d) Records and Documents. Upon the return of the Aircraft,
Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection,
modification, overhaul and other records, related to the Aircraft, including,
without limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Aircraft and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Aircraft
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under an FAA approved maintenance program after the Term or to transition
maintenance to another program, including, without limitation, another registry,
or, in the event an Event of Default shall have occurred, to continue to
maintain the Aircraft under the Maintenance Program, in each case as Lessor may
reasonably request, and all documentation with respect to the Aircraft set forth
on Exhibit B or otherwise delivered to Lessee at delivery thereof, and (ii) all
records necessary or required by the FAA to certify and place the Aircraft on an
FAA or other country's, as the case may be, approved maintenance program. All of
the foregoing shall, at Lessee's expense, be up-to-date and in the latest
revision status as of the last day of the Term, including, without limitation,
all software and other electronically-held materials which have been supplied by
or on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee,
which must be updated to the latest revision status as of the last day of the
Term within such software base and all data therein or pertaining thereto shall
be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the maintenance records by part numbers and serial
numbers other than the manufacturer's shall be provided with interchange or
cross reference listing necessary to establish complete traceability. All
documentation, flight, and maintenance records as specified by United States
Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation
121.380 which normally accompany the transfer of an aircraft which has been
operating in regulated commercial air service, shall be delivered to Lessor with
the Aircraft. Any documents or records required to be delivered hereunder shall
be in English.
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(e) Condition of Aircraft. Upon any Return Occasion, Lessee
shall return such Aircraft to Lessor in such condition that the Aircraft shall
also comply with each and every condition and requirement set forth elsewhere in
this Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion, Lessee
shall make the Aircraft available to Lessor at the location where the "block 'C'
Check" (or equivalent level designated check or checks) required hereunder to be
performed immediately prior to redelivery is to be performed for detailed
inspection of the documents referred to in paragraph (d) above and the Airframe,
Engines and Parts structure and parts, at Lessee's expense (excluding
compensation to representatives of Lessor), in order to verify that the
condition of such Aircraft complies with the requirements set forth above (such
inspection being hereinafter referred to as the "Final Inspection"). The Final
Inspection shall be combined with such "block 'C' Check" (or equivalent level
check or checks) and may include such other items as reasonably requested by
Lessor. Lessee shall give Lessor not less than thirty (30) days prior written
notice of the commencement date of such Final Inspection. The period allowed for
the Final Inspection shall be the same period during which such "block 'C'
Check" is being performed and shall have such duration as to permit the opening
of any areas of the Aircraft which are necessary or advisable to satisfy Lessor
as to compliance with the requirements of this Section 16 and Exhibit E. The
Final Inspection shall commence on the date so noticed which shall be on or
before the expiration of the Term with respect to the Aircraft and shall
continue on consecutive days until all activity required above to be conducted
has been concluded. To the extent that any portion of the Final Inspection
extends beyond the expiration of the Term, unless Lessor has terminated the
Lease pursuant to Section 18(g) hereof, the Term with respect to the Aircraft
undergoing the Final Inspection shall be deemed to have been automatically
extended, and all obligations hereunder continued, on a daily basis until the
Final Inspection shall have been concluded and Lessee shall pay Rent during any
such extension in an amount equal to the average daily Basic Rent or Renewal
Rent, as the case may be, paid in respect of the last year of the Basic Term or
Renewal Term, as the case may be (and Stipulated Loss Value during such
extension shall equal the Stipulated Loss Value on the last day of the Basic
Term or Renewal Term, as the case may be); provided, however, that Lessee shall
not be required to pay Rent with respect to the Aircraft during the period of
extension to the extent that Lessor is responsible for the delay in
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completion of the Final Inspection. All storage expenses attributable to any
Term extension pursuant to the preceding sentence shall be payable by Lessee,
except that Lessee shall not be liable for any storage expenses which are
incurred after the sixtieth (60th) day after the Term to the extent that storage
continues thereafter due to Lessor's delay in completion of the Final
Inspection.
(g) Aircraft Records and Documents. In order to enable
Lessor to prepare for the Final Inspection of the Aircraft pursuant to
Subsection 16(f) above, Lessee agrees to make available to Lessor at a
maintenance base of Lessee with adequate facilities for short-term maintenance,
where the Final Inspection is to occur, not later than ten (10) days prior to
the commencement of such Final Inspection, the Aircraft Records and Documents
listed in Exhibit B hereto, together with such other documentation (including,
without limitation, original airworthiness directive compliance documents and
other work documents) regarding the condition, use, maintenance, or operation as
Lessor may reasonably request or require to substantiate the status of the
Aircraft.
(h) Corrections and Subsequent Corrections. To the extent
that the Aircraft or any Engine fails upon a Return Occasion to conform to any
requirement imposed by this Lease Lessor may, at its option, (i) continue the
Lease in effect in the manner provided for in Section 16(f) above with regard to
automatic extension until such time as such Aircraft is brought up to the
condition required by this Section 16, including Exhibit E, or (ii) accept the
return of such Aircraft and thereafter have any such nonconformance corrected,
at such time as Lessor may deem appropriate but not to commence later than
ninety (90) days following the return of such Aircraft, at commercial rates then
charged by the Person selected by Lessor to perform such correction. Lessee's
obligations to pay such Supplemental Rent shall survive the Expiration Date or
other termination of this Lease. Nothing set forth in this paragraph shall
constitute a limitation on Lessor's or Owner Participant's ability to recover
from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof
suffered as a result of Lessee's failure to effect the return of the Aircraft at
the time, in the place and in the condition as specified in this Section 16 and
Exhibit E hereto.
(i) Functional Flight Check. Immediately prior to the
expiration of the Term, Lessor will be permitted to conduct a non-commercial
functional flight check flight of no more than two (2) hours duration in
accordance with the
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Manufacturer's functional flight check procedures at Lessee's expense to
demonstrate the airworthiness of the Aircraft and proper functioning of all
systems and components. A qualified pilot and up to five (5) other
representatives selected by Lessor may take part in such flight to verify
compliance of the Aircraft with the requirements of this Lease, provided, that
Lessor shall be responsible for the charges of such qualified pilot and
representatives. Lessee may combine the functional flight check provided in this
Section 16(i) with the delivery flight specified in Section 16(a) and such
functional flight check shall include the landing. Any discrepancy or
malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any actions
to correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee shall, at
Lessee's expense, take such action as Lessor may reasonably request to assist
Lessor in obtaining any required documents in relation to the export of the
Aircraft from the United States (including, without limitation, a valid and
subsisting export certificate of airworthiness with respect to the Aircraft and
export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee shall
deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished
without charge by the manufacturer for installation on the Aircraft which have
not been so installed together with appropriate instructions for installation.
In the event such uninstalled kits were purchased or manufactured by Lessee,
then Lessor shall be advised of such kits by Lessee and have a right of first
refusal to purchase such kits at Lessee's cost for a period of ninety (90) days
after return.
(l) Storage Upon Return. Upon any Return Occasion, Lessee
shall, at Lessor's request and at Lessee's risk and expense, in addition to
other storage referred to above, arrange for the parking, storage and insurance
of the Aircraft for a period not exceeding sixty (60) days at such reasonable
location as Lessor requests where Lessee has or can arrange for storage. Lessee
shall pay or cause to be
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paid all costs and expenses for such parking, storage and insurance.
(m) Resale/Release Cooperation. During the last twelve (12)
months of the Term, with reasonable notice and at reasonable times, Lessee will
cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable
respects, with the efforts of Lessor to sell or lease the Aircraft after the end
of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Aircraft and the records
relating thereto to the extent it does not unreasonably interfere with the
operation or maintenance of the Aircraft or the conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of Law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic
Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business
Days after the date on which such payment is due, or (ii) any other payment of
Supplemental Rent due hereunder within ten Business Days after the date on which
such payment is due and Lessee has received written demand therefor by the party
entitled thereto; provided that any failure of Lessee to pay to Lessor or the
Owner Participant when due any Excepted Payments (as defined in the Indenture)
shall not constitute an Event of Default unless Lessor or Owner Participant
delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force
and effect any insurance required under the provisions of Section 12 hereof or
shall operate the Aircraft outside of the scope or in violation of the terms of
the insurance or United States Government indemnity coverage required to be
maintained with respect to such Aircraft; or
(c) Any representation or warranty made by Lessee herein or
in the Refunding Agreement or in any certificate furnished by Lessee in
connection herewith or therewith is or was incorrect at the time made in any
material respect
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<PAGE> 98
and such incorrectness shall not have been cured within thirty (30) days after
the receipt by Lessee of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant,
condition, or agreement to be performed or observed by it pursuant to this Lease
or the Refunding Agreement, and such failure shall continue uncured for thirty
(30) days after written notice thereof is given by Lessor or Indenture Trustee
to Lessee; provided, however, that if Lessee shall have undertaken to cure any
such failure which arises under the first or second sentence of Section 6(c) or
Section 6(d), as such provisions of Section 6 relate to maintenance, service,
repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in
attempting to cure such failure, such failure is not cured within said thirty
(30) day period but is curable with future due diligence, there shall exist no
Event of Default under this Section 17 so long as Lessee is proceeding with due
diligence to cure such failure and such failure is remedied not later than one
hundred eighty (180) days after receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a custodian,
receiver, trustee or liquidator of itself or all or any material part of
Lessee's property or Lessee's consolidated property, or Lessee admits in writing
its inability to, or is unable to, or does not, pay its debts generally as they
come due, or makes a general assignment for the benefit of creditors, or Lessee
files a voluntary petition in bankruptcy or a voluntary petition seeking
reorganization in a proceeding under any bankruptcy or insolvency Laws (as now
or hereafter in effect), or an answer admitting the material allegations of a
petition filed against Lessee in any such proceeding, or Lessee by voluntary
petition, answer or consent seeks relief under the provisions of any other
bankruptcy, insolvency or other similar Law providing for the reorganization or
winding-up of corporations, or provides for an agreement, composition, extension
or adjustment with its creditors, or any corporate action (including, without
limitation, any board of directors or shareholder action) is taken by Lessee in
furtherance of any of the foregoing, whether or not the same is fully effected
or accomplished; or
(f) An order, judgment or decree is entered by any court
appointing, without the consent of Lessee, a custodian, receiver, trustee or
liquidator of Lessee, or of all or any material part of Lessee's property, or
Lessee's
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consolidated property, or all or any material part of Lessee's property or
Lessee's consolidated property is sequestered, and any such order, judgment or
decree of appointment or sequestration remains in effect, undismissed, unstayed
or unvacated for a period of ninety (90) days after the date of entry thereof or
at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding
under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter
in effect) is filed and is not withdrawn or dismissed within ninety (90) days
thereafter or at any time an order for relief is granted in such proceeding, or
if, under the provisions of any Law providing for reorganization or winding-up
of corporations which may apply to Lessee, any court of competent jurisdiction
assumes jurisdiction over, or custody or control of, Lessee or of all or any
material part of Lessee's property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of ninety (90) days or at any time an order for relief
is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial
passenger Certificated Air Carrier or, except in either case in connection with
a labor dispute, announcement thereof or Lessee's suspension of its business as
a commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States air
carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor may, at its option,
declare by written notice to Lessee this Lease to be in default, provided,
however, that this Lease shall be deemed to be declared in default automatically
without the necessity of such written declaration upon the occurrence of any
Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof;
and at any time thereafter, so long as any outstanding Event of Default shall
not have been remedied, Lessor may do one or
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more of the following with respect to all or any part of the Airframe and any or
all of the Engines as Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with any mandatory requirements of,
applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's cost and expense, immediately return, and the
Lessee hereby agrees that it shall return promptly all or such part of, the
Aircraft to Lessor in the manner specified in such notice, in which event such
return shall not be delayed for the purposes of complying with the return
conditions specified in Section 16 and Exhibit E hereof (none of which
conditions shall be deemed to affect Lessor's possession of the Aircraft) or
delayed for any other reason; provided, however, that Lessee shall remain and be
liable to Lessor for amounts provided for herein or other damages resulting from
the Aircraft or any Engine not being in the condition required by Section 16 and
Exhibit E. Notwithstanding the foregoing, at Lessor's option, Lessee shall be
required thereafter to take such actions as would be required by the provisions
of this Lease if such Aircraft were being returned at the end of the Term hereof
with respect to such Aircraft. In addition, Lessor or Lessor's agent, at its
option and to the extent permitted by applicable Law, may but shall not be
obligated to enter upon the premises where all or any part of the Aircraft,
Airframe and/or Engines are located to take immediate possession of and, at
Lessor's option, remove the same (and/or any engine which is not an Engine but
which is installed on the Airframe, subject to the rights of the owner, lessor
or secured party thereof) by summary proceedings or otherwise, all without
liability accruing to Lessor or Lessor's agent for or by reason of such entry or
taking of possession or removal whether for the restoration of damage to
property, or otherwise, caused by such entry or taking, except direct damages to
the extent caused by Lessor's gross negligence or willful misconduct.
(b) With or without taking possession thereof, sell or
cause to be sold, the Aircraft, Airframe or Engine or any part thereof, or
Lessor's interest therein, at private or public sale, as Lessor in its sole
discretion may determine, or otherwise dispose of, hold, use, operate, or lease
to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole
discretion may determine, all free and clear of any rights of Lessee or any
Permitted Sublessee and except as hereinafter set forth in this Section 18.
Lessor may be the purchaser at any such sale.
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(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date specified for payment
in such notice), any unpaid Rent for the Aircraft to and including the
Stipulated Loss Value Date specified in such notice, plus whichever of the
following amounts as Lessor may specify, in its sole and absolute discretion, in
such notice: (i) an amount equal to the excess, if any, of the sum of the
Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the
date specified in such notice plus, if such date is a Basic Rent Payment Date or
a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent,
as the case may be, due on such date, over the fair market sale value of the
Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an
amount equal to the excess, if any, of the sum of the Stipulated Loss Value for
the Aircraft, Airframe or Engine computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment
Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due
on such date, over the fair market rental value of the Aircraft for the
remainder of the Term as of the date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above,
shall have sold the Aircraft, Airframe or Engine or its interest therein,
Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it
shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on
such demand, as liquidated damages for loss of bargain and not as a penalty (in
lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period
commencing after the Stipulated Loss Value Date immediately prior to the date
such sale occurs), any unpaid Rent due to and including the date of sale, plus
the amount by which the Stipulated Loss Value of such Aircraft, Airframe or
Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds
of such sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph (b),
(c) or (d) above, by notice to Lessee, Lessor
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may require Lessee to pay, on the next Stipulated Loss Value Date, to Lessor,
and Lessee hereby agrees that it will so pay to Lessor, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent, as the case may be, payable in advance for the period on and after the
Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case
may be, for such Aircraft due and unpaid for any period prior to and including,
and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date,
plus, an amount equal to the Stipulated Loss Value for the Aircraft computed as
of such Stipulated Loss Value Date; and upon such payment of liquidated damages
and the payment of all other Rent then due hereunder and the discharge of the
Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at
Lessee's expense, transfer, without recourse or warranty (except as to the
absence of Lessor's Liens and the Lien of the Indenture), all right, title and
interest of Lessor in and to the Aircraft to Lessee or as it may direct and
Lessor shall, at Lessee's expense, execute and deliver such documents evidencing
such transfer and take such further action as Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to paragraph (b)
above, shall have relet the Aircraft, Airframe or Engine under a long term
lease, Lessor, in lieu of exercising its rights under paragraph (c) above with
respect to such Aircraft, Airframe or Engine, may, if it shall so elect, demand
that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the
time of reletting) any unpaid Rent for such Aircraft due up to the date of
reletting, plus the amount, if any, by which the aggregate Basic Rent or Renewal
Rent, as the case may be, for such Aircraft which would otherwise have become
due over the Basic Term or Renewal Term, as the case may be, discounted
periodically (equal to installment frequency) to present worth as of the date of
reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental
payments to become due under the reletting from the date of such reletting to
the date upon which the Term for such Aircraft, Airframe or Engine would have
expired but for Lessee's default, discounted periodically (equal to installment
frequency) to present worth as of the date of the reletting at the rate of 8.50%
per annum.
(g) Cancel, rescind and/or terminate this Lease by written
notice to Lessee which cancellation, rescission and/or termination shall be
effective upon dispatch,
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whereupon Lessee's right to possess and use the Aircraft, Airframe or Engine
shall immediately cease, however, Lessee shall be and remain liable for damages
and losses suffered by Lessor and all other amounts payable by Lessee hereunder.
(h) Lessor may exercise any other right or remedy which may
be available to it under applicable laws, or may proceed by appropriate court
action or actions, either at law or in equity, to enforce any other remedy or
right Lessor may have hereunder, under the other Operative Documents, at law or
in equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable
(without duplication of the remedies above and of Lessee's obligations under
Section 10 and Section 13 hereof and subject to the exclusions set forth
therein) for any and all unpaid Rent before, during or after the exercise of any
of the above mentioned remedies (including without limitation interest on unpaid
amounts with respect to all amounts not paid when due, including, without
limitation, any amounts payable pursuant to the foregoing provisions of this
Section 18), and, except as specified above, until satisfaction of all of
Lessee's obligations to Lessor hereunder and for all legal fees and other costs
and expenses incurred by any Indemnitee by reason of the occurrence of any Event
of Default or the exercise of an Indemnitee's remedies with respect thereto,
including all costs and expenses incurred in connection with the return of the
Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in
placing the Aircraft, Airframe or Engine in the condition and with airworthiness
certification as required by such Section and such Exhibit and costs and
expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass
Through Trust Agreements, the Intercreditor Agreement or each Liquidity
Facility. All liquidated damages payable pursuant to the foregoing shall bear
interest, which shall be payable on the date the payment of such liquidated
damages is due at a rate equal to the Interest Rate from and including the date
due to and excluding the date actually paid.
In effecting any repossession, Lessor, its representatives
and agents, to the extent permitted by applicable Law, (i) shall have the right
to enter upon any premises where it reasonably believes the Aircraft, the
Airframe, an Engine or Part to be located, (ii) shall not be liable, in
conversion or otherwise, for the taking of any
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personal property of Lessee which is in or attached to the Aircraft, the
Airframe, an Engine or Part which is repossessed, (iii) shall not be liable or
responsible, in any manner, for any damage or injury to any of Lessee's property
in repossessing and holding the Aircraft, the Airframe, an Engine or Part except
for direct damages caused by Lessor's gross negligence or willful misconduct and
(iv) shall have the right to maintain possession of and dispose of the Aircraft,
the Airframe, an Engine or Part on any premises owned by Lessee or under
Lessee's control.
If requested by Lessor, Lessee shall, at its sole expense,
assemble and make the Aircraft, the Airframe, an Engine or Part available at a
place designated by Lessor in accordance with Section 16 and Exhibit E hereof.
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the
occurrence of an Event of Default, any rights in any warranty (express or
implied), service life policy, infringement indemnity, performance guaranty or
the like heretofore made available to Lessee or otherwise held by Lessee shall
without further act, notice or writing be deemed automatically cancelled and
shall be enforceable solely by and for the benefit of, and assigned to, Lessor.
Lessee shall be liable to Lessor (without duplication) for all expenses,
disbursements, costs and fees incurred in (i) repossessing, storing, preserving,
shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 16 and Exhibit E hereof and
(ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease,
advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part
and selling or releasing the Aircraft, the Airframe, an Engine or Part. Lessor
is hereby authorized and instructed, at its option, to make expenditures which
Lessor considers advisable to repair and restore the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 16 and Exhibit E hereof, all
at Lessee's sole expense.
For the purpose of this Section 18, the "fair market rental
value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or
Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or
Part pursuant to this Section, Owner Participant may bid for and purchase such
property and Lessee agrees that the amounts paid therefor shall be used in the
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computations contemplated herein and Lessee shall remain liable for any
deficiency.
No remedy referred to in this Section is intended to be
exclusive, but, to the extent permitted by Law, each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d), (e) or (f)
above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Aircraft leased hereunder or otherwise to more effectively carry out
Lessor's rights and remedies and to file said documents for recordation with the
FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full
force and effect and survive the expiration or other termination of this Lease
and are expressly made for the benefit of and shall be enforceable by Lessor,
Owner Participant and, if the Lien of the Indenture has not been discharged,
Indenture Trustee.
Section 19. Security for Obligations. In order to secure
the Equipment Notes, Lessor has created, by the Indenture, a security interest
in the Trust Indenture Estate, including, without limitation, this Lease and all
Rent and other sums payable hereunder, except as provided in the Indenture and
subject in each case to Liens permitted hereunder. The Indenture provides, among
other things for the assignment by Lessor to Indenture Trustee of its right,
title and interest in, to and under this Lease, to the extent set forth in the
Indenture, for the creation of a first-mortgage lien on and perfected security
interest in
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all of Lessor's right, title and interest in and to the Aircraft in favor of
Indenture Trustee. Lessee hereby consents to such assignment and to the creation
of such mortgage and security interest and acknowledges receipt of copies of the
Trust Agreement and the Indenture, it being understood that such consent shall
not affect any requirement or the absence of any requirement for any consent
under any other circumstances. Until the Lien of the Indenture has been
discharged, Lessee will furnish to Indenture Trustee counterparts of all notices
and other writings of any kind required to be delivered hereunder by Lessee to
Lessor. Until the Lien of the Indenture has been discharged, (a) Lessee shall
make all payments of Rent, Stipulated Loss Value and all other amounts payable
hereunder (other than Excepted Payments) to or as directed by Indenture Trustee
as provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be
entitled to exercise the rights of Lessor (but not Owner Participant) (other
than Expected Rights) herein as and to the extent provided herein or in the
Indenture and any express reference to Indenture Trustee in any Section of this
Lease shall not give rise to any implication that Indenture Trustee may not
exercise the rights of Lessor in any other Section of this Lease as and to the
extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement
which require or permit action by, the payment of monies to, the consent or
approval of, the furnishing of any instrument or information to, or the
performance of any other obligation to, Indenture Trustee, shall not be
effective, and the Sections hereof containing such provisions shall be read as
though there were no such requirements or provisions and all moneys otherwise
payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee
shall have received from Indenture Trustee notice of discharge of the Lien of
the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee under
this Lease by a Permitted Sublessee shall constitute payment or performance of
such obligation by Lessee.
Section 20. Renewal Option. Lessee may renew this Lease as
provided in the following clause (i) and subject to the following clause (ii):
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<PAGE> 107
(i) Exercise of Renewal Option. Provided that this
Lease has not been previously terminated and that no Default or
Event of Default shall have occurred and be continuing at the time
of the giving of irrevocable notice hereinafter referred to in
this clause (i) or at the time of the commencement of the Renewal
Term, Lessee, at its option, may renew this Lease for one Renewal
Term consisting of a period equal to five years. The right to
renew this Lease for such Renewal Term pursuant to this clause (i)
shall be exercised upon irrevocable notice from Lessee received by
Lessor of Lessee's election to so renew this Lease not less than
twelve (12) months and not more than twenty-four (24) months prior
to the last day of the Basic Term. The Renewal Rent for the
Renewal Term shall be the "fair market rental value" of the
Aircraft for such Renewal Term (the "renewal fair market rental
value") as determined in accordance with the Appraisal Procedure.
For purposes of this paragraph (i), the Appraisal Procedure shall
be initiated by Lessee no earlier than nine (9) months prior to
the end of the Basic Term. If Lessee shall fail to exercise its
option to extend the term of this Lease for the Renewal Term in
accordance with the provisions of this paragraph, all of Lessee's
rights to extend the Term for such Renewal Term shall expire.
Lessee shall pay all reasonable costs and expenses, including,
without limitation, reasonable legal fees and expenses, incurred
by Lessor, Owner Participant and the Indenture Trustee in
connection with the exercise of such option.
(ii) Provisions Applicable During Renewal Term. All
provisions of this Lease, including, without limitation, as to
Rent and Stipulated Loss Value (which shall be, with appropriate
adjustments, in no event less than the greater of 120% of the
"fair market sales value" of the Aircraft as of the first day of
the Renewal Term as determined pursuant to the Appraisal Procedure
or the amount set forth on Exhibit A as of the end of the Basic
Term), shall remain in effect and be applicable during such
Renewal Term, except that Lessee shall pay to the Lessor,
semi-annually in arrears as Renewal Rent on each Renewal Rent
Payment Date, the amount for such Renewal Term as determined in
accordance with clause (i) of this Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any
provision of this Lease which is prohibited or
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<PAGE> 108
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Law, each of Lessor and Lessee
hereby waives any provision of Law which renders any provision hereof prohibited
or unenforceable in any respect. No term or provision of this Lease may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing expressed to be a supplement or amendment to, or waiver or termination
of this Lease signed by an officer of the party against which the enforcement of
the change, waiver, discharge, or termination is sought. This Lease shall
constitute an agreement of lease, and nothing herein shall be construed as
conveying to Lessee any right, title, or interest in the Aircraft or any Engine
or Part except as a lessee only. Without limiting the foregoing, the parties
hereto agree to treat this Agreement as a lease for United States federal income
tax purposes and Lessee will not file a tax return which is inconsistent with
the foregoing and nothing contained herein shall be construed as an election by
Lessor to treat Lessee as having acquired the Aircraft for the purpose of the
investment credit allowed by Section 38 of the 1954 Code or any similar or
successor statute. The headings in this Lease are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT
REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor
and Lessee required or permitted under the terms and provisions hereof shall be
in writing and shall be sent to Lessor or Lessee at their respective addresses
set forth in Exhibit C hereto (or such other addresses as the parties may
designate from time to time in writing). All notices, reports or other documents
provided to Lessor or Lessee shall be provided concurrently to Indenture Trustee
(until such time as the Lien of the Indenture is discharged) and to Owner
Participant, at such address as Owner Participant and Indenture Trustee,
respectively, may
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<PAGE> 109
designate from time to time. All notices and instructions hereunder shall
become effective when received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails
to make any payment of Rent required to be made by it hereunder or fails to
perform or comply with any covenant, agreement, or obligation contained herein,
Lessor shall have the right but not the obligation to make such payment or
conform or comply with such agreement, covenant, or obligation, and the amount
of such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by or on behalf of Indenture Trustee on
the signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing and this Lease has not
been declared or deemed to be in default, Lessor shall not take or cause to be
taken any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Aircraft
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
Trustee, Note Holder or any other Person lawfully claiming by or through them,
and provided further, that the
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<PAGE> 110
foregoing shall not be deemed to have modified the obligations of Lessee
pursuant to Section 4(d) hereof, which obligations remain absolute and
unconditional.
(g) Brokers. Lessee and Lessor agree that, except as
provided in the Refunding Agreement, there has been no third party as agent
involved in this Lease and each indemnifies the other from liability for fees,
commissions, or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by
Lessor or Indenture Trustee and are payable to Lessee shall, unless a Default or
an Event of Default shall have occurred and be continuing, be invested as
provided below until paid to Lessee or applied by Lessor or Indenture Trustee to
the extent provided herein. Until paid to Lessee or applied as provided herein
or in the Indenture such monies shall be invested by Lessor or Indenture Trustee
from time to time at the expense of Lessee in Specified Investments, as directed
by Lessee in accordance with the provisions of Section 3.07 of the Indenture if
the Lien of the Indenture shall not have been discharged and thereafter as
provided below. There shall be promptly (but not more frequently than monthly)
remitted to Lessee any gain (including interest received) realized as the result
of any such investment (net of any fees, commissions and other reasonable
expenses, if any, incurred in connection with such investment) unless a Default
or an Event of Default shall have occurred and be continuing. Lessee will
promptly pay to Lessor or Indenture Trustee, as the case may be, and hold Lessor
or Indenture Trustee harmless from, on demand, the amount of any loss realized
as the result of any such investment (together with any Taxes, fees, commission
and other reasonable expenses, if any, incurred in connection with such
investment).
(i) Entire Agreement; Amendment. This Lease (including the
Exhibits hereto), any related letter agreements and the other Operative
Documents, the Financing Documents and the Purchase Documents (including the
Exhibits thereto) and all closing documents delivered in connection with any of
the foregoing embody the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof. This Lease may be changed,
waived, discharged, amended, revised or terminated only by an instrument in
writing signed by the party against which enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18, Lessee
agrees within fifteen (15) days after demand to pay
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<PAGE> 111
or reimburse Lessor for all reasonable out-of-pocket costs and expenses
(including, without limitation, legal and other professional fees and expenses)
incurred or payable by Lessor in connection with or related to (i) the fees and
expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested by
or relating to acts or omissions of Lessee or as otherwise provided herein or to
give effect to the provisions hereof, or the other Operative Documents, the
Financing Documents or the Purchase Documents, any future amendments,
supplements or other modifications hereof or thereof, or waivers or consents
hereunder or thereunder, and (iii) any Default or Event of Default or the
enforcement of any of Lessor's rights, remedies or privileges hereunder or at
law or in equity, but not Lessor's legal fees and expenses in connection with
the negotiation and execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
and take such other action not inconsistent with this Lease as Lessor reasonably
deems necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor
shall use its best efforts to have the Aircraft registered under the United
States Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process; Waiver
of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submits for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United States District Court for the Southern District
of New York. Each of Lessee and Lessor represents and warrants that it is not
currently entitled to, and agrees that to the extent that Lessee or Lessor
hereinafter may acquire, any immunity (including, without limitation, sovereign
immunity) from jurisdiction of any court or from any legal process, it hereby,
to the extent permitted by Law, waives such immunity, and agrees not to assert,
by way of motion, as a
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<PAGE> 112
defense, or otherwise, in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of the above-named courts that it
is immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Lease or any of the other Operative
Documents or the subject matter hereof or thereof or any of the transactions
contemplated hereby and thereby may not be enforced in or by such courts. Each
of Lessee and Lessor hereby generally consents to service of process by
registered mail, return receipt requested, addressed to it at its address set
forth in Exhibit C, or at such other office of Lessee or Lessor as from time to
time may be designated by Lessee or Lessor (as applicable) in writing to Lessee
or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of
Lessee and Lessor hereby agrees that its submission to jurisdiction and its
designation of service of process by mail set forth above is made for the
express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each
Note Holder and their successors and assigns (as applicable). Final (after all
appeals) judgment (the enforcement of which has not been stayed) against either
Lessee or Lessor obtained in any suit originally brought in the court of the
State of New York in New York County or in the United States District of New
York shall be conclusive, and, to the extent permitted by applicable Law, may be
enforced in other jurisdictions by suit on the judgment, a certified or true
copy of which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Lessee therein described; provided that the
plaintiff at its option may bring suit, or institute other judicial proceedings,
against Lessee or Lessor, as the case may be, or any of their assets in the
courts of any country or place where such Person or such assets may be found.
EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE LESSOR/LESSEE
RELATIONSHIP BEING ESTABLISHED, including, without limitation, contract claims,
tort claims, breach of duty claims and other common law and statutory claims.
Lessor and Lessee represent and warrant that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with such legal counsel. THIS WAIVER IS
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IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
(n) Limitation on Recourse. The parties hereto agree that
all statements, representations, covenants and agreements made by Lessor (when
made in its capacity as such and not in its individual capacity) contained in
this Agreement, unless expressly otherwise stated, are made and intended only
for the purpose of binding the Trust Estate and establishing the existence of
rights and remedies that can be exercised and enforced against the Trust Estate.
Therefore, no recourse shall be had with respect to anything contained in this
Agreement (except for any express provisions that Lessor is responsible for in
its individual capacity), against Lessor in its individual capacity or against
any institution or person that becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them; provided that (i) this Section 21(n) shall not
be construed to prohibit any action or proceeding against any party hereto for
its own willful misconduct or grossly negligent conduct for which it would
otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of
the appointment of any successor Owner Trustee pursuant to the terms of the
Trust Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 14(d) of the Refunding Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
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<PAGE> 114
(p) Article 2-A of the UCC. The parties hereto agree that
the Original Head Lease, as amended and restated by this Amended and Restated
Aircraft Lease Agreement [GPA 1990 AWA-14] (and as otherwise extended, amended,
modified, renewed or supplemented), shall be governed by Article 2-A of the
Uniform Commercial Code of New York.
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<PAGE> 115
IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Lease to be executed by its duly authorized
officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By:__________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:___________________________
Title:
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<PAGE> 116
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 1. Definitions ................................................ 1
Section 2. Agreement to Lease ......................................... 21
Section 3. Delivery and Acceptance; Term .............................. 22
(a) Time of Delivery .......................................... 22
(b) [Intentionally Left Blank.] ............................... 22
(c) Acceptance of Aircraft .................................... 22
(d) Term of Lease ............................................. 22
Section 4. Rent ....................................................... 22
(a) Rent ...................................................... 22
(b) Minimum Payments .......................................... 23
(c) Date, Place and Method of Payment ......................... 23
(d) Prohibition Against Setoff, Counterclaim,
Etc ....................................................... 24
Section 5. Representations, Warranties and Covenants .................. 25
(a) Warranties and Disclaimer of Warranties ................... 25
(b) Representations and Warranties of Lessor .................. 27
(c) No Amendments to Financing Documents ...................... 27
(d) Suppliers' Warranties ..................................... 27
Section 6. Possession and Use ......................................... 28
(a) Possession ................................................ 28
(b) Reciprocal Recognition of Rights .......................... 35
(c) Lawful Insured Operations ................................. 35
(d) Maintenance ............................................... 36
(e) Registration and Insignia ................................. 38
Section 7. Inspection ................................................. 39
Section 8. Additional Covenants of Lessee ............................. 39
(a) Financial Information ..................................... 39
(b) Maintenance of Corporate Existence ........................ 41
(c) Maintenance of Status ..................................... 41
(d) Payment of Taxes .......................................... 41
(e) Consolidation, Merger, Etc ................................ 42
(f) Information ............................................... 43
(g) Place of Business ......................................... 43
(h) Certain Limitations on Use ................................ 43
(i) Section 1110 .............................................. 44
(j) Permits and Licenses ...................................... 44
(k) Security Opinion; Annual Certificate ...................... 45
(l) Letter of Credit .......................................... 46
</TABLE>
i
<PAGE> 117
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 9. Replacement of Parts; Alterations,
Modifications and Additions .................................... 48
(a) Replacement of Parts ..................................... 48
(b) Alterations, Modifications and Additions ................. 49
(c) Pooling .................................................. 52
Section 10. General Tax Indemnity ..................................... 53
(a) ......................................................... 53
(b) Exclusions .............................................. 55
(c) Covered Income Tax ...................................... 57
(d) Reports and Returns ..................................... 59
(e) After-Tax Basis ......................................... 59
(f) Tax Benefit ............................................. 60
(g) Payment ................................................. 60
(h) Contest ................................................. 61
(i) Refund .................................................. 63
(j) Diligence ............................................... 63
(k) Affiliated Group ........................................ 63
(l) Verification ............................................ 64
(m) Survival ................................................ 64
Section 11. Loss, Damage and Requisition .............................. 64
(a) Event of Loss with Respect to the Airframe .............. 64
(b) Event of Loss with Respect to an Engine ................. 67
(c) Conveyance of Replacement Airframe ...................... 68
(d) Application of Proceeds and Payments .................... 71
(e) Requisition for Use by Government with
Respect to the Aircraft ................................. 71
(f) Application in Default .................................. 72
Section 12. Insurance ................................................. 73
(a) Public Liability and Property Damage
Insurance ............................................... 73
(b) Insurance Against Loss or Damage ........................ 74
(c) Application of Insurance Proceeds for an
Event of Loss ........................................... 77
(d) Application of Insurance Proceeds for Other
than an Event of Loss ................................... 78
(e) Application in Default .................................. 78
(f) Certificates ............................................ 79
(g) Reinsurance ............................................. 79
(h) Storage ................................................. 80
(i) Amounts Held ............................................ 81
(j) After the Term .......................................... 81
(k) Governmental Indemnity .................................. 81
Section 13. General Indemnity ......................................... 81
</TABLE>
ii
<PAGE> 118
<TABLE>
<S> <C>
Section 14. Liens .................................................... 87
Section 15. Protection of Title and Further Assurances ............... 88
Section 16. Return of Aircraft and Records ........................... 89
(a) Return ................................................... 89
(b) Status Upon Return ....................................... 90
(c) Engines .................................................. 91
(d) Records and Documents .................................... 91
(e) Condition of Aircraft .................................... 93
(f) Final Inspection ......................................... 93
(g) Aircraft Records and Documents ........................... 94
(h) Corrections and Subsequent Corrections ................... 94
(i) Functional Flight Check .................................. 94
(j) Export Certificate of Airworthiness ...................... 95
(k) Service Bulletin and Modification Kits ................... 95
(l) Storage Upon Return ...................................... 95
(m) Resale/Release Cooperation ............................... 96
Section 17. Events of Default ........................................ 96
Section 18. Remedies ................................................. 98
Section 19. Security for Obligations ................................. 104
Section 20. Renewal Option ........................................... 105
Section 21. Miscellaneous ............................................ 106
(a) Severability, Amendment, and Construction ................ 106
(b) GOVERNING LAW ............................................ 107
(c) Notices .................................................. 107
(d) Lessor's Right to Perform for Lessee ..................... 108
(e) Counterparts ............................................. 108
(f) Quiet Enjoyment .......................................... 108
(g) Brokers .................................................. 109
(h) Investment of Funds ...................................... 109
(i) Entire Agreement; Amendment .............................. 109
(j) Expenses ................................................. 109
(k) Federal Bankruptcy Code .................................. 110
(l) U.S. Registration Number ................................. 110
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non Conveniens;
Waiver of Jury Trial ..................................... 110
(n) Limitation on Recourse ................................... 112
(o) Successor Trustee ........................................ 112
(p) Article 2-A of the UCC ................................... 113
</TABLE>
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<PAGE> 119
ANNEXES
Annex I - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Assignment of Permitted Sublessee
iv
<PAGE> 1
EXHIBIT 4.28
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1990 AWA-15] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN
ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
FLEET NATIONAL BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-15] DATED AS OF NOVEMBER 26,
1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART
OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY FLEET NATIONAL BANK, AS
INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
- -------------------------------------------------------------------------------
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1990 AWA-15]
Dated as of September 21, 1990
Amended and Restated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1990 AWA-15] dated
as of September 21, 1990, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 098
U.S. Registration No. N636AW
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<PAGE> 2
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of September 21,
1990 and amended and restated as of November 26, 1996 is entered into between
WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise
expressly provided herein, but solely as Owner Trustee under a Trust Agreement
[GPA 1990 AWA-15] dated as of September 21, 1990, as amended, and with its
principal place of business at Rodney Square North, Wilmington, Delaware 19890
(together with its successors and permitted assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors
and permitted assigns, "Lessee").
W I T N E S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease", "Equipment
Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass
Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past
Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as defined in the Pass Through Trust Agreement); and the term
<PAGE> 3
"Lease Amendment No. 1" shall have the meaning specified in the Refunding
Agreement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or indirectly, owns or controls, is controlled
by or is under common control with such specified Person. Control will be deemed
to exist based on (i) ownership of 25% or more of the voting securities of a
Person or (ii) the power to direct or elect or cause the direction or election
of the management and policies of a Person whether by contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and
described in Lease Supplement No. 1 (or any airframe from time to time
substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with
the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any
Engine substituted therefor hereunder) with respect to such Airframe, whether or
not any such initial or substituted Engines may from time to time no longer be
installed on the Airframe or may be installed on any other airframe, (ii) Parts
or components thereof, (iii) spare parts or ancillary equipment or devices
furnished therewith under this Lease (including any separate equipment described
on one or more Lease Supplements hereto), (iv) the Aircraft Records and
Documents and all other logs, manuals and records with respect to such Aircraft,
and (v) all substitutions, replacements and renewals of any and all thereof.
"Aircraft Records and Documents" shall mean the items
identified in Exhibit B hereto, all of which shall be maintained in the English
language.
"Airframe" shall mean (a) the Airbus Industrie model A320-231
aircraft (except Engines or engines from time to time installed thereon)
described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder,
and any such model aircraft (except Engines or engines from time to time
installed thereon) which may from time to time be substituted for such aircraft
(except Engines or engines from time to time installed thereon) pursuant to
Section 11(a)(i); and (b) any and all Parts so long as the same shall be
incorporated or installed on or attached to the Airframe, or so long as title
thereto shall remain vested in Lessor in
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<PAGE> 4
accordance with the terms of Section 9 hereof after removal from the Airframe;
provided, however, that at such time as an aircraft (except Engines or engines
from time to time installed thereon) shall be deemed part of the property leased
hereunder in substitution for the Airframe pursuant to the applicable provisions
hereof and the replacement Airframe shall have been subjected to the Lien of the
Indenture (if the Lien of the Indenture has not been discharged), the replaced
Airframe shall cease to be the Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18, "fair
market sales value" or "fair market rental value" shall mean the value that
would be obtained in an arm's-length transaction between an informed and willing
seller or lessor, as the case may be, and an informed and willing buyer or
lessee, as the case may be, both under no compulsion to sell and purchase or to
lease (and other than a lessee in possession or a used equipment scrap dealer),
as the case may be, as such value is determined by an appraisal which assumes:
(i) that such Aircraft, such Airframe, such Engine or such Part is unencumbered
by this Lease (or any sublease) or any of the other Operative Documents or any
of the Financing Documents and the terms thereof; (ii) that such Aircraft,
Airframe, Engine or Part has been maintained in all respects in accordance with
the terms of this Lease (whether or not in fact in such condition), (iii) that
such Aircraft, Airframe, Engine or Part meets the return conditions specified in
Section 16 and Exhibit E (whether or not in fact meeting such conditions) and
(iv) that Lessee has removed the Removable Parts entitled to be removed under
Section 9(b) (it being agreed that no such removal is permitted in connection
with an appraisal pursuant to Section 18) and replaced any part which was
removed from the Aircraft as a result of such Removable Part being installed;
provided, however, that costs of removal from the location of current use and
costs of sale shall not be a consideration in determining such value except in
connection with any determination of "fair market sales value" or "fair market
rental value" pursuant to Section 18; and provided, further, that any
determination of "fair market sales value" or "fair market rental value"
pursuant to Section 18 shall be on an "as is, where is" basis in its actual
condition and location subject to this Lease and any sublease and any and all
Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee
shall, except for any appraisal
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<PAGE> 5
pursuant to Section 18 in which case only Lessor shall select such appraiser
(which appraiser does not have to be acceptable to Lessee), select an
independent nationally-recognized aircraft appraiser, mutually acceptable to
each of them, who shall make the determination as to the "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part
for which such appraisal is to be conducted. If Lessor and Lessee fail to agree
upon a mutually acceptable appraiser within ten (10) days, then each of Lessor
and Lessee shall select an appraiser and such determination shall be made by
such appraisers (if either party shall fail to appoint an appraiser within ten
(10) days after notice from the other party of the selection of its appraiser,
then the appraisal made by the other party's appraiser shall be determinative).
If the two appraisers chosen pursuant to the preceding sentence fail to agree
upon a determination of the "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after
their appointment, then such appraisers shall mutually choose a third appraiser
within ten (10) days thereafter, provided that if such appraisers fail to
mutually choose a third appraiser within said 10-day period, such appointment
shall be made by the American Arbitration Association (or any successor) in New
York, New York, and the three appraisers so chosen shall each make such
determination. The appraisal determined by each of the three appraisers chosen
pursuant to the preceding sentence shall be averaged and the appraisal furthest
from the average of the three appraisals shall be disregarded. The appraisal
determined by each of the two remaining appraisers shall be averaged and such
average shall be the appraised "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the
fees and expenses of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Aircraft
pursuant to Section 4(a)(i).
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<PAGE> 6
"Basic Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If
a Basic Rent Payment Date shall fall on a day which is not a Business Day, any
payment due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 3.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Hartford, Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which was
to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation (except
the United States Government) domiciled in the United States of America and
holding a Certificate of Convenience and Necessity issued under Section 41102(a)
of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States Government)
domiciled in the United States of America and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is a citizen of the United States
(as defined in Section 40102 of the Federal Aviation Act) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve
Air Fleet Program administered by the United States Government and authorized
under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar
or substitute program of the United States Government.
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<PAGE> 7
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as
amended and the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether or
not incorporated, which is under common control with Lessee within the meaning
of Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated
Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended
and restated as of December 30, 1988, in the form attached to the Purchase
Agreement.
"Default" shall mean an event or condition which would
constitute an Event of Default with the lapse of time or the giving of notice or
both.
"Delivery Date" shall mean September 28, 1990, being the date
the Aircraft was delivered to and accepted by the Original Head Lessee as Lessee
hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United
States of America.
"Engine" shall mean (i) each of the two IAE Model V2500
engines listed by manufacturer's serial number in Lease Supplement No. 1 and
initially installed on the Airframe covered by such Lease Supplement, whether or
not from time to time thereafter no longer installed on the Airframe or
installed on any other aircraft or airframe, and (ii) any replacement engine
which may from time to time be substituted, pursuant to Section 6(a), 11(a),
11(b) or 16(c), for any Engine leased hereunder; together in each case with any
and all Parts incorporated or installed in or attached thereto or any and all
Parts removed therefrom so long as title thereto after removal from such Engine
shall remain vested in Lessor in accordance with the terms of Section 9 hereof.
Except as otherwise set forth herein, at such time as a replacement engine shall
be so substituted and leased hereunder and the replacement Engine shall have
been subjected to the Lien of the Indenture (if the Lien of the Indenture has
not been discharged), such replaced Engine shall cease to be an Engine
hereunder. The term "Engines"
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<PAGE> 8
means, as of any date of determination, both Engines then leased hereunder.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one
or more clauses in Section 17.
"Event of Loss" shall mean any of the following events with
respect to the Aircraft, Airframe or either Engine: (a) loss of such property or
the use thereof due to theft or disappearance for a period in excess of sixty
(60) consecutive days, but in no event later than the last day of the Term; (b)
destruction or damage of such property that renders repair uneconomic or such
property permanently unfit for normal use by Lessee (or, if a Permitted Sublease
is in effect, the Permitted Sublessee) for any reason whatsoever; (c) any loss
or disappearance of or damage to or destruction of such property which results
in an insurance settlement with respect to such property on the basis of an
actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any law, rule, regulation,
order or other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or
Engine in the normal course of Lessee's (or, if a Permitted Sublease is in
effect, the Permitted
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<PAGE> 9
Sublessee's) business of air transportation of passengers shall have been
prohibited for a period of six (6) consecutive months, unless Lessee (or the
Permitted Sublessee), prior to the expiration of such six-month period, shall
have undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit such normal use of such item of equipment by
Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall
have been so prohibited by any such Governmental Entity for a period of twelve
(12) consecutive months or is continuing on the last day of the Term; or (h) as
otherwise provided herein. An Event of Loss with respect to the Aircraft shall
be deemed to have occurred if an Event of Loss occurs with respect to the
Airframe which is a part of such Aircraft. An Event of Loss with respect to an
Engine shall not, absent an Event of Loss with respect to the Airframe, be
deemed an Event of Loss with respect to the Airframe.
"Excluded Property" shall have the meaning set forth in
Section 9(b) hereto.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administra- tion of the
United States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Bill of
Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from
Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale
for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original
Head Lessee to Lessor.
"Federal Aviation Act" shall mean the sections of Title 49 of
the United States Code relating to aviation, as amended and in effect from time
to time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal year-end
audited consolidated balance sheet and statements of income and cash flow for
the period then ending, copies of which for the fiscal year ending December 31,
1995, have been provided to Lessor prior to the date hereof.
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<PAGE> 10
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement,
the Equipment Notes issued under the Indenture, the Intercreditor Agreement,
each Liquidity Facility, each Pass Through Trust Agreement and each supplement
thereto and any certificate delivered or entered into in accordance with the
foregoing, as amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made mandatory
to the Aircraft by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Aircraft by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its
operations.
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<PAGE> 11
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and
as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the
Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee
(in its individual capacity and as trustee under the Pass Through Trusts), the
Subordination Agent and each Liquidity Provider, and their respective successors
and permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership), and any
combination thereof and their respective officers, directors, agents, servants,
employees, subsidiaries, Affiliates and shareholders.
"Indenture" shall mean the Amended and Restated Trust
Indenture and Security Agreement [GPA 1990 AWA-15] dated as of September 21,
1990, and amended and restated as of November 26, 1996, as the same may be
further amended, supplemented or modified from time to time, between Indenture
Trustee and Lessor. The term "Indenture" shall also include the Indenture
Supplements entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
"Interest Rate" shall mean (i) with respect to the portion of
any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture computed on the basis of a 360-day year and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate from
time to time in effect from the date the amount becomes due to the date it is
paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as
the case may be, and actual number of days elapsed.
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<PAGE> 12
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any Governmental
Entity; (ii) any treaty, pact, compact or other agreement to which any
Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as originally executed and as amended, supplemented or otherwise
modified from time to time, including, without limitation, by one or more Lease
Supplements, as a whole and not to any particular Section or other subdivision,
and any reference to a "Section " or an "Exhibit" shall refer to a Section or
Exhibit of this Lease, as so amended, supplemented or modified, unless expressly
provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1, Lease
Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement
entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1990
AWA-15] No. 1 dated the Delivery Date between Lessor and Original Head Lessee,
as Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1990
AWA-15] No. 2 dated December 31, 1991 between Lessor and Original Head Lessee,
as Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA 1990
AWA-15] No. 3, substantially in the form of Exhibit D-1 hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its
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<PAGE> 13
individual capacity (and not as Indenture Trustee) not related to its interest
in the Aircraft or the administration of the Trust Estate or the Trust Indenture
Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the
Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture
Trustee in its individual capacity (and not as Indenture Trustee) not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of Indenture Trustee in its individual capacity (and not as Indenture
Trustee) which are in violation of any of the Operative Documents, or (iii)
Taxes imposed on or Claims against Indenture Trustee in its individual capacity
(and not as Indenture Trustee) which are excluded from indemnification by
Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) arising out of the voluntary or involuntary transfer
by Indenture Trustee in its individual capacity (and not as Indenture Trustee)
of all or any portion of its interest in the Aircraft, the Airframe, any Engine,
the Trust Estate, the Trust Indenture Estate or the Operative Documents (except
a Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals
hereto.
"Lessor" shall have the meaning set forth in the Recitals
hereto.
"Lessor's Lien" shall mean any Lien or disposition of title
affecting the Aircraft, the Airframe, any Engine or any Part arising as a result
of (i) any claim against Lessor, Owner Participant, Trust Company or any of
their Affiliates not related to the transactions contemplated by this Lease or
the other Operative Documents, the Financing Documents or the Purchase
Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company
or any of their Affiliates not expressly contemplated by this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents or not
permitted without consent (which consent has not been granted) by any party
hereto or thereto or that is in violation of any term of this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents; (iii)
Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner
Participant or any of their Affiliates or the consolidated group of taxpayers of
which any of them is a member which are not to be indemnified against by Lessee
under the Operative
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<PAGE> 14
Documents, the Purchase Documents or the Financing Documents or by Original Head
Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims
against the Trust Estate, Trust Company, Owner Participant or Lessor or any of
their Affiliates arising out of the transfer of all or any part of their
respective interest in the Aircraft, the Airframe, either Engine, the Trust
Estate, the Operative Documents or the Financing Documents other than any
transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or 20
(except Liens resulting from a transfer not permitted by such Section ) of this
Lease or pursuant to Section 10 of the Refunding Agreement; provided, however,
that there shall be excluded from this definition and Lessor shall not be
required to remove any Lien which would otherwise constitute a Lessor's Lien, if
it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Aircraft or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge,
lien, charge, encumbrance, lease, exercise of rights, security interest, lease
in the nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft in effect on the date hereof or as modified with the approval of the
FAA without affecting, or any other FAA approved maintenance program which does
not affect, the return condition standards set forth in Section 16 and Exhibit E
or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air
Carrier, any other maintenance program for the Aircraft which is approved by the
aviation authority of the country of registry and complies with the requirements
applicable to maintenance of the Aircraft contained in the definition of Foreign
Air Carrier. The Maintenance Program shall encompass scheduled maintenance,
condition monitored maintenance, and on-condition maintenance of the Airframe,
Engines, and components of the Aircraft, including, but not
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<PAGE> 15
limited to, servicing, testing, preventive maintenance, repairs, structural
inspections, structure life improvements, system checks, overhauls, approved
modifications, service bulletins, engineering orders, airworthiness directives,
and corrosion control inspections and treatments. All modifications and
supplements to the Maintenance Program shall be provided to Lessor upon its
reasonable request and Lessor shall be given reasonable access to the
Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a
French societe a responsabilite limitee, which as of the date hereof is owned by
Airbus Industrie.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, any sublease, the Tax Indemnification Agreement, the Financing
Documents, and any certificate delivered or entered into pursuant to the
foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease Agreement
[GPA 1990 AWA-15], with respect to the Aircraft, dated as of September 21, 1990,
between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect
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<PAGE> 16
immediately prior to the Restatement Date, as more particularly described in
Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall mean
the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-15], dated as of
September 21, 1990, and amended and restated as of the Restatement Date, between
the Original Head Lessee and Owner Participant, as amended, supplemented or
otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc.,
a Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as
defined in the Original Head Lease) as in effect immediately prior to the
Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft
Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA
1990 AWA-13] amended and restated as of the Restatement Date between Wilmington
Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as
Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14]
amended and restated as of the Restatement Date between Wilmington Trust Company
as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended
and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as
of the Restatement Date between Wilmington Trust Company as Owner Trustee,
Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated
Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of the
Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor and
America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor and America West
Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement
[GPA 1991 AWA-E3] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee, each as amended, supplemented or otherwise modified from time to
time.
"Other Letters of Credit" shall mean any and all letters of
credit pursuant to Section 8(l) of the Other Leases.
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<PAGE> 17
"Owner Participant" shall mean ____________________________,
a Delaware corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as Owner
Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial Assignment,
Assumption, Release and Amendment Agreement, dated as of December 30, 1988,
among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as amended,
supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, among Original Head
Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the
"Lender" named therein, as amended by the Letter Agreement dated as of July 29,
1993, as the same may be further amended, supplemented or otherwise modified
from time to time and as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (excluding complete Engines or engines), including Buyer
Furnished Equipment, which may now or from time to time be incorporated or
installed in or attached to or were provided by the Manufacturer with the
Airframe or any Engine or so long as title thereto shall remain vested in Lessor
in accordance with the terms of Section 9 hereof after removal from such
Airframe or Engine. Except as otherwise set forth herein, at such time as a
replacement part shall be substituted for a Part in accordance with Section 9
hereof, the Part so replaced shall cease to be a Part hereunder.
"Payment Location" shall have the meaning set forth in Exhibit
C, as the same may be changed from time to time by Lessor as provided in Section
4(c).
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<PAGE> 18
"Permitted Lien" shall mean any Lien referred to in clauses
(i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier
or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United
States Government or an agency or instrumentality thereof which bears the full
faith and credit of the United States of America or (c) any other Person
approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or association of which any of the above is a member or a
participant.
"Purchase Agreement" shall mean the Amended and Restated
Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and
restated as of December 30, 1988 (insofar as the same relates to Model A320
Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the
Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices
thereto, as partially assigned to Parent pursuant to the Partial Assignment, to
which Airbus Industrie, as guarantor, has consented, and as the same may from
time to time be further amended, supplemented or otherwise modified to the
extent permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement, the
Partial Assignment and any other agreement, document or certificate delivered or
entered into pursuant to the foregoing, as amended, supplemented or otherwise
modified.
"Removable Part" shall have the meaning set forth in Section
9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section
20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment
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<PAGE> 19
of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a
day which is not a Business Day, any payment due on such Renewal Rent Payment
Date shall be made on the next succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20
following the end of the Basic Term if Lessee shall have exercised its renewal
option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may
be, and Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have the
meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee, any
of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer
or Controller.
"Restricted Use Period" shall have the meaning specified in
Exhibit C.
"Return Occasion" shall mean the event that occurs when
possession of the Aircraft is to be returned from Lessee to Lessor at the end of
the Term of this Lease or upon Lessor taking possession pursuant to Section 18
or for any other reason.
"Specified Investments" shall mean (i) direct obligations of
the United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral
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<PAGE> 20
pursuant to which an entity referred to in clause (iii) above or another
financial institution having a net worth of at least $750,000,000 and having a
rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase
any such obligation not later than ninety (90) days after the purchase of any
such obligation; and (v) money market funds which invest solely in obligations
described in clause (i); provided that if all of the above investments are
unavailable, the entire amounts to be invested may be used to purchase Federal
funds from an entity described in clause (iii) above; and provided further that
no investment shall be eligible as a "Specified Investment" unless the final
maturity or date of return of such investment is on or before the date which is
ninety (90) days from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date
during the Basic Term the amount set forth on Exhibit A hereto and, thereafter,
the amount described in Section 20 (it being understood and agreed that the
amounts set forth in Exhibit A take into account fully the amount and
application of each installment of Basic Rent or Renewal Rent on each Stipulated
Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent
Payment Date or Renewal Rent Payment Date) so that no additional credit of such
Basic Rent or Renewal Rent is to be made in respect thereof except as expressly
provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In
the event that it is necessary to determine a separate Stipulated Loss Value for
the Airframe or an Engine, such Stipulated Loss Value shall be based on the
ratio that the original cost to Lessor of the Airframe or such Engine bears to
Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth, on Exhibit
A hereto.
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any
payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of
an amount equal to average daily Basic Rent or Renewal Rent in connection with
an extension of the Term of this Lease as a result of (a) an
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<PAGE> 21
incipient Event of Loss and the operation of Section 11 hereof or (b) the need
to correct any failure of the Aircraft to satisfy the requirements of Section 16
and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to
any payment due to the Owner Trustee in respect of fees or expenses as provided
in Section 21(j) hereof; (vi) an amount equal to any payment due to the
Indenture Trustee in respect of fees or expenses as provided in the Indenture
and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any
Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through
Trust Agreement; (viii) the Pro Rata Share of any payment due to the
Subordination Agent in respect of fees, compensation, costs or expenses pursuant
to the Intercreditor Agreement; (ix) an amount equal to the amount specified in
clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to
the extent permitted by applicable Law, interest at the Interest Rate
calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or
average daily Basic Rent referred to in clause (iii) of this definition of
"Supplemental Rent", as the case may be, not paid on the due date thereof for
the period for which the same shall be overdue and (2) on any Supplemental Rent
not paid when due hereunder from and including the due date until the same shall
be paid. As used herein, "Pro Rata Share" means as of any date of determination
a fraction the numerator of which is the aggregate Principal Amount then
outstanding of the Equipment Notes issued under the Indenture and the
denominator of which is the aggregate principal balance then outstanding of all
"equipment notes" issued under the Indentures (as defined in the Intercreditor
Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-15], dated as of
September 21, 1990, and as amended and restated as of November 26, 1996, between
Original Head Lessee and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
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<PAGE> 22
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in
Lease Supplement No. 3 and, if Lessee extends the Term in accordance with
Section 20, the Renewal Term, in either case as extended or deemed extended as a
result of the occurrence of an event described in clause (iii) to the definition
of "Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1990
AWA-15] dated as of September 21, 1990 as amended by Trust Supplement No. 1 and
as further amended by Trust Supplement No. 2 between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust Agreement"
shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement
[GPA 1990 AWA-15] No. 1 dated the Delivery Date between Lessor and Owner
Participant for the purpose of bringing the Aircraft and the Original Head Lease
into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement
[GPA 1990 AWA-15] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government
of the United States of America and any board, commission, department, division,
organ, instrumentality, court or agency thereof.
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<PAGE> 23
"Wet Lease" shall mean any arrangement whereby Lessee agrees
to furnish the Aircraft or the Airframe and Engine or engines installed thereon
at that time to a third party pursuant to which such Aircraft or the Airframe
and Engine or engines (i) shall be operated solely by regular employees of
Lessee possessing all current certificates and licenses required under the
Federal Aviation Act (it is understood that cabin attendants need not be regular
employees of Lessee) and Lessee otherwise maintains operational control and
possession thereof, and (ii) shall be maintained by Lessee in accordance with
its normal maintenance practices and this Lease, and otherwise the insurance
required hereunder shall be maintained and the Aircraft shall be used and
operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease
the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from
Lessor, on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Aircraft was delivered to Lessee,
and Lessee accepted delivery of the Aircraft, on September 28, 1990.
(b) [Intentionally Left Blank]
(c) Acceptance of Aircraft. The Aircraft leased hereunder was
delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER
OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for all
purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive
evidence that, as between Lessor and Lessee, the Aircraft was in all respects
satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall commence
on the Delivery Date and shall continue until the Expiration Date; provided,
however, that the Term of this Lease may be earlier terminated pursuant to the
provisions hereof.
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<PAGE> 24
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the following as
Rent hereunder:
(i) Basic Rent. The Basic Rent, as set forth in Exhibit C
throughout the Basic Term hereof, in consecutive installments, in arrears as set
forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent
Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all Supplemental Rent, which
shall be due and payable ten (10) Business Days after demand unless otherwise
specifically provided. In the event of any failure on the part of Lessee to pay
any Supplemental Rent when due, Lessor shall have all rights, powers and
remedies provided for herein or by law or equity or otherwise in the case of
nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to pay
Supplemental Rent which is due and owing pursuant to the terms hereof shall
survive the expiration or termination of Lessee's obligation to pay Basic Rent
or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any provision in this
Lease or in any other Operative Document to the contrary, under all
circumstances and in any event, (i) the Stipulated Loss Value, together with the
payment of Supplemental Rent and all other Rent then due hereunder, as of any
time and as of the date of any payment thereof shall (both before and after
giving effect to any reductions therefrom) be in an amount at least sufficient
to pay in full as of such time or date the aggregate unpaid principal amount of
the Equipment Notes then outstanding and all accrued and unpaid interest
(assuming interest has been timely paid) thereon, and (ii) Basic Rent payable on
any Basic Rent Payment Date shall at least equal the aggregate amount of
principal and interest due and payable on the Equipment Notes on such Basic Rent
Payment Date. It is agreed, however, that no installment of Basic Rent or
Stipulated Loss Value shall be increased or adjusted by reason of (A) any
attachment or diversion of Rent on account of any Lessor's Lien or Lenders'
Lien, (B) any modification of the terms of the Equipment Notes or the other
Financing Documents made without the prior written consent of Lessee or (C) the
acceleration of any Equipment Note due to the occurrence of any "Indenture Event
of Default" (as defined in the Indenture) which does not constitute an Event of
Default hereunder. It is further agreed that nothing in this Lease or any other
Operative Document shall be deemed
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<PAGE> 25
to constitute a guaranty of the value, utility or useful life of the Aircraft or
a guaranty in respect of interest, principal or any other amounts payable in
respect of or under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on which a
payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in the City of New York or Hartford, Connecticut as Indenture
Trustee may direct by thirty (30) days prior written notice to Lessee, except
for all Excepted Payments. All Excepted Payments, and, upon discharge of the
Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be
paid in such immediately available funds no later than 12:00 p.m. (noon), New
York City time, on the date payable hereunder, to Lessor or to Owner
Participant, as appropriate, in accordance with the payment instructions set
forth in Exhibit C or at such other address as Lessor may direct by thirty (30)
days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This Lease
is a net lease. Lessee's obligations to pay all Rent and to perform all other
obligations hereunder are absolute and unconditional and shall not be affected
or reduced by any circumstances, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense, or other right which Lessee may have against
Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Aircraft, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
limitation, any breach by Lessor of its representations, warranties or covenants
contained herein or in the other Operative Documents; (ii) any defect in the
title, airworthiness, eligibility for registration under the Federal Aviation
Act, condition, design, operation, or fitness for use of, or any damage to or
loss or destruction of, the Aircraft (subject to the provisions of Section
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<PAGE> 26
11(a)(ii) hereof), any interruption or cessation in the use of or possession
thereof by or availability to Lessee for any reason whatsoever, whether arising
out of or related to an act or omission of Lessee, Lessor, Original Head Lessee,
Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any
Person providing services with respect to the Aircraft or any other Person;
(iii) any Liens with respect to the Aircraft; (iv) the invalidity or
unenforceability or lack of due authorization or other infirmity of this Lease
or any sublease or any absence of right, power or authority of Lessor, Original
Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the
Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization,
or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any
sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any
other circumstance or happening of any nature whatsoever, whether or not similar
to any of the foregoing; it being the expressed intention of Lessor and Lessee
that all Rent payable hereunder shall be payable in all events, unless the
obligation to pay the same shall be terminated pursuant to the express
provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Aircraft or any obligation imposed
upon Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law, except as specifically provided herein,
Lessee waives all rights (if any) to any diminution in its Rent obligations
hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as
provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal
Rent, as the case may be, payment and any Supplemental Rent payment at the time
such payments would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or
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in part, and so long as such payments are made and all other terms and
conditions hereof are complied with by Lessee, Lessor and Lessee will deem this
Lease to remain in full force and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall
be liable therefor, on account of any failure of the Original Head Lessee,
Lessor, Indenture Trustee or any other such Person to perform its express
obligations under this Lease and the other Operative Documents, or to enforce
any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS
DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE
EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT AND
SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER
THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY ACT OR
ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE, AND
NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER
PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED),
AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS
FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR
OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRE- SENTATION
OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT,
INCLUDING WITHOUT LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY
ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM
COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF
USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY
WAIVES, RELEASES, RENOUNCES AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY
SUCH GUARANTY, REPRESENTATION OR WARRANTIES. NEITHER LESSOR
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NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR
ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN
THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES,
RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i)
ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR
INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT
THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE,
OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii)
ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING,
MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES
AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF
ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT,
EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER
IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and
warrants that (x) on the Delivery Date Lessor had, and on the Restatement Date
Lessor has, the right to lease the Aircraft hereunder and (y) on the Delivery
Date the Aircraft was free of Head Lessor's Liens and on the Restatement Date
the Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor
covenants that it shall not create, incur, assume or suffer to exist any
Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor.
Lessor hereby represents and warrants, as of the Restatement Date that its
representations and warranties set forth in Section 9(b) of the Refunding
Agreement were true when made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor
covenants and agrees that Lessor will not, without the prior written consent of
Lessee, amend, modify, supplement or waive any provision of any Financing
Document in such a way as to materially increase Lessee's obligations hereunder
or materially reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor
under Sections 5(a) and 5(b) and this Section 5(c)
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shall survive the execution and delivery of this Lease and the delivery of the
Aircraft and the Restatement Date.
(d) Suppliers' Warranties. So long as a Default
or an Event of Default has not occurred and is continuing and provided that the
Aircraft continues to be maintained, modified and repaired as required
hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees
otherwise to make available to Lessee the right to exercise in Lessee's name
such rights as Lessor may have or may subsequently obtain (but without
representation or warranty by or recourse to Lessor) with respect to any product
warranty, service life policy, trademark, patent or copyright infringement
indemnity, or airframe or propulsion system performance guaranty, of Airbus
Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor
with respect thereto under the Purchase Agreement (except those which were given
directly to Parent, the Original Head Lessee or any of their Affiliates and are
not directly related to the operator's use of the Aircraft), to the extent that
the same may be assigned or otherwise made available to Lessee, and Lessor
agrees to exert its reasonable efforts, at Lessee's expense and upon its
request, to enforce such rights as Lessor may have with respect thereto for the
benefit of Lessee; provided, however, that upon and during the continuance of a
Default or an Event of Default, such assignment or other rights which are
otherwise made available to Lessee shall immediately and automatically without
further action be deemed cancelled and, to the extent of any remaining interest
held by Lessee, deemed reassigned to Lessor and all such rights shall revert to
Lessor automatically including all claims thereunder whether or not perfected
and all amounts payable shall be paid to and held by Lessor. In no event,
however, shall Lessee have any right to amend, supplement or otherwise modify
the Purchase Agreement (by change order or otherwise). In connection with the
foregoing, Lessee agrees to be bound by and comply with all applicable terms,
conditions and limitations of the provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL
NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN
(EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE
IN ANY
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MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT,
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE
INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no
Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as all necessary approvals of the FAA
and any other Governmental Entity having jurisdiction have been obtained, then
Lessee, without the prior written consent of Lessor, may, only to the extent
provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii)
below:
(1) subject any Engine to a normal interchange,
maintenance, servicing or pooling agreement or similar arrangement
with a Permitted Sublessee, in each case customary in the airline
industry of which Lessee is a part and entered into in the
ordinary course of its business; provided that no transfer of the
registration of any Engine shall be effected in connection
therewith; and provided, further, that (A) no such agreement or
arrangement contemplates, results in or requires the transfer of
title to any Engine, and (B) if Lessor's title to any Engine shall
be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to
such Engine and not an Event of Default and Lessee shall comply
with Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or
any Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for
testing, service, storage, repair, maintenance, inspection or
overhaul work on such Aircraft, Airframe or Engine or any part
thereof or for alterations or modifications in or additions to
such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the
Airframe to the United States of America or any instrumentality
or agency thereof pursuant to a sublease;
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(4) (i) subject the Airframe to the Civil Reserve Air
Fleet Program and transfer possession of the Airframe or any
Engine to the United States Government pursuant to the Civil
Reserve Air Fleet Program, so long as Lessee shall promptly notify
Lessor upon transferring possession of the Airframe or any Engine
to the United States Government pursuant to the Civil Reserve Air
Fleet Program and provide Lessor with the name and address of the
Contracting Office Representative for the Military Airlift Command
of the United States Air Force to whom notices must be given; or
(ii) subject the Airframe to (a) a service contract with
the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term,
or (b) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except (A)
Permitted Liens and Liens which apply only to engines (other than
the Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an
entirety) and (B) the rights of participants under normal
interchange agreements which are customary in the airline industry
and do not contemplate, permit, result in or require the transfer
of title to the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of
all Liens except the rights of the parties to the lease or
conditional sale or other security agreement covering such
airframe and except Liens of the type permitted by clauses (A) and
(B) of Section 6(a)(i)(5) and the Lien of any mortgage which
provides that each Engine leased to Lessee hereby shall not become
subject to the Lien thereof or to any rights of any party
thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of
such Engine on any airframe subject to the Lien of such mortgage,
unless and until Lessee shall become the
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owner of such Engine and Lessor shall have no further interest
therein, all pursuant to the express terms of this Lease; and (B)
there shall be in effect a written agreement of the lessor or
secured party of such airframe (which may be contained in the
lease or conditional sale or other security agreement covering
such airframe) substantially similar in effect to the agreement of
Lessor in Section 6(b) below whereby such lessor or secured party
effectively and expressly agrees that neither it nor its
successors or assigns will acquire or claim any right, title or
interest in any Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this
Lease or is owned by Lessor, and a copy of such agreement shall be
provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional
sale or other security agreement under circumstances where neither
Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided
that such installation shall be deemed an Event of Loss with
respect to such Engine and Lessee shall comply with Section 11(b)
hereof in respect thereof, Lessor not intending hereby to waive
any right or interest it may have to or in such Engine under
applicable Law until compliance by Lessee with such Section 11(b);
(8) enter into a Wet Lease for the Aircraft or the
Airframe and engines installed thereon in the ordinary course of
Lessee's business for a period not extending beyond the Term;
provided that if Lessee shall enter into any Wet Lease for a
period of more than six months (including renewal options) Lessee
shall provide to Lessor written notice of such Wet Lease (such
notice to be given at least ten (10) Business Days prior to
entering into such Wet Lease); or
(9) sublease the Aircraft or the Airframe to any
Permitted Sublessee on the terms and conditions set
forth in Section 6(a)(iii) below.
(ii) Certain Limitations on Transfers. With
respect to any transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives
possession by reason of a transfer permitted by Section
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6(a) hereof (other than the transfer of an Engine which is deemed
to have been an Event of Loss) and any Wet Lease shall be
expressly subject and subordinate to all the terms of this Lease
and the Lien of the Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and
Lessee shall remain primarily liable hereunder for the performance
of all of the terms of this Lease to the same extent as if such
transfer had not occurred and no provision of this Lease shall be
deemed a waiver of the Lessor's rights hereunder or under the
other Operative Documents nor discharge or diminish any of
Lessee's obligations hereunder or under the other Operative
Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the
Aircraft, the Airframe or any Engine pursuant to the terms of this
Section 6(a) shall be permitted if such Wet Lease, Permitted
Sublease or other relinquishment of possession would cause the
Aircraft, the Airframe or such Engine to be "tax-exempt use
property" within the meaning of Section 168(h) of the Code or
cease to be "Section 38 property" within the meaning of Section
48(a) of the Code (as determined after the application of Section
47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend
beyond the Basic Term or the Renewal Term (if Lessee shall have
exercised its option to renew this Lease in accordance with the
terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable;
(6) The sublessee under any Permitted Sublease, in its
consent thereto, shall confirm that from and after the occurrence
and continuance of an Event of Default and, unless an Event of
Default specified in Section 17(e), (f) or (g) of this Lease has
occurred and is continuing, this Lease being deemed or declared
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<PAGE> 34
in default, Lessor (and, so long as the Lien of the Indenture
shall not have been discharged, Indenture Trustee) shall be
entitled to enforce directly and in its own name all
representations, warranties, indemnities, covenants and agreements
under the applicable Permitted Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I) the
Aircraft or Airframe may not be operated or used other than as
provided in this Lease and shall be maintained and operated as
required hereunder, (II) Lessor may avoid or terminate such
sublease following an Event of Default hereunder and (III) to the
extent not accomplished by an assignment of the Permitted
Sublease, upon the occurrence of an Event of Default hereunder,
Lessee's rights under such Permitted Sublease shall automatically
be deemed assigned to Lessor; and (B) be a "net lease" in
accordance with industry practice and shall be comparable to, or
more restrictive than, this Lease and under such Permitted
Sublease (except a sublease to the United States Government or a
Foreign Air Carrier after the Restricted Use Period), Lessee as
lessor under such Permitted Sublease, must be entitled to the same
benefits under 11 U.S.C. Section 1110 as Lessor is entitled
hereunder and such Permitted Sublease shall contain provisions
regarding such Section 1110 which are substantially the same as
the related provisions of this Lease. In addition, from and after
the occurrence and continuance of an Event of Default, all rent
and other amounts payable by the Permitted Sublessee under such
Permitted Sublease shall be paid directly to Indenture Trustee
and, upon discharge of the Lien of the Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any sublease
pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or
Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under
such sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the
date such sublease is entered into, (B) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier
(other than a Foreign Air Carrier principally based in Taiwan),
the United
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<PAGE> 35
States maintains diplomatic relations with the country in which
such proposed Permitted Sublessee is principally based at the time
such sublease is entered into (or, in the case of a sublease to a
proposed Permitted Sublessee principally based in Taiwan,
maintains diplomatic relations at least as good as those in effect
on the Restatement Date) and (C) in the event that the Permitted
Sublessee under such sublease is a Foreign Air Carrier, Lessor and
the Indenture Trustee shall have received an opinion of counsel to
Lessee, in form and substance reasonably satisfactory to Owner
Participant and the Indenture Trustee, to the effect that (I) the
terms of the proposed sublease will be legal, valid, binding and
(subject to customary exceptions in foreign opinions generally)
enforceable against the proposed Permitted Sublessee in the
country in which the Permitted Sublessee is principally based,
(II) there exist no possessory rights in favor of the Permitted
Sublessee under such sublease under the laws of such Permitted
Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee, prevent the return or
repossession of the Aircraft in accordance with the terms of this
Lease, (III) (unless Lessee shall have agreed or is required to
provide insurance covering the risk of requisition of use of the
Aircraft by the government of the country of such Permitted
Sublessee's country of domicile) the laws of such Permitted
Sublessee's country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely
convertible into dollars for the loss of use of the Aircraft in
the event of the requisition by such government of such use, (IV)
the Permitted Sublessee is either not entitled to sovereign
immunity, or has effectively waived such sovereign immunity, with
respect to its rights and obligations under the proposed sublease;
(V) the laws of such Permitted Sublessee's country of domicile
would give recognition to Lessor's title to the Aircraft, to the
registry of the Aircraft in the name of the Lessor (or Lessee, as
"lessee", or the proposed Permitted Sublessee, as "sublessee", as
appropriate) and to the Lien of the Indenture; (VI) it is not
necessary under the laws of such Permitted Sublessee's country of
domicile, solely as a consequence of such subleasing and without
giving effect to any other activity of Owner Participant, Owner
Trustee or Indenture Trustee or any Affiliate thereof, as the case
may be, for the Owner Trustee, the Owner Participant or the
Indenture Trustee to qualify
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to do business in such jurisdiction and (VII) if the Owner
Participant so requests, (x) under the laws of such Permitted
Sublessee's country of domicile there is no tort liability of the
owner of an aircraft not in possession thereof (it being agreed
that in the event this opinion cannot be given in a form
reasonably satisfactory to Owner Participant, such opinion shall
be waived if insurance reasonably satisfactory to Owner
Participant is provided to cover such risk), and (y) such other
matters as the Owner Participant reasonably requests, provided,
however, that no sublease shall extend beyond the expiration of
the Basic Term or any Renewal Term then in effect.
Any Permitted Sublease shall expressly provide that the rights
of any Permitted Sublessee shall be expressly subject and subordinate to all the
terms of this Lease and to the Lien of the Indenture (if it has not been
discharged), including, without limitation, the covenants contained in Sections
6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to
Section 18 hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder or under the other Operative Documents, and such rights shall
continue as if such Permitted Sublease had not occurred. Any Permitted Sublease
shall expressly prohibit any further sub-sublease or assignment or any other
similar transfer of the Aircraft, Airframe or any Engine or rights thereto by
the Permitted Sublessee. Lessee shall provide to the Owner Participant and the
Indenture Trustee (i) written notice of any Permitted Sublease hereunder (such
notice to be given not later than ten Business Days prior to entering into any
Permitted Sublease with any proposed Permitted Sublessee), and (ii) a copy of
each Permitted Sublease together with an assignment, as security for Lessee's
obligations hereunder, of such Permitted Sublease, and if Lessor or the
Indenture Trustee so requests, a consent thereto from such Permitted Sublessee,
substantially in the form of Exhibit F-3 hereto, within ten (10) Business Days
following the effective date of such Permitted Sublease.
(b) Reciprocal Recognition of Rights. In the event the lessor
or secured party of any airframe leased to
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<PAGE> 37
Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee)
is subject to a conditional sale or other security agreement in accordance with
Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security
agreement covering such airframe also covers an engine or engines owned by the
lessor under such lease or subject to a security interest in favor of the
secured party under such conditional sale or other security agreement, Lessor
hereby agrees for the benefit of such lessor or secured party that Lessor will
not acquire or claim, as against such lessor or secured party, any right, title
or interest in any such engine as the result of such engine being installed on
the Airframe at any time while such engine is subject to such lease or
conditional sale or other security agreement and owned by such lessor or subject
to a security interest in favor of such secured party. Lessor also hereby agrees
for the benefit of the mortgagee under any mortgage complying with Section
6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased
to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as
against such mortgagee, any right, title or interest in any engine subject to
the lien of such mortgage as the result of such engine being installed on the
Airframe at any time while such engine is subject to the lien of such mortgage.
(c) Lawful Insured Operations. Lessee will not
permit the Aircraft, the Airframe or any Engine to be serviced, repaired,
maintained, used or operated in violation of any Law of any Governmental Entity
having jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration issued by any such authority or any manufacturer's
specifications, service bulletins or other requirements, including, without
limitation, any manufacturer's requirements as may be applicable to keep in full
force and effect each material warranty, product or performance guaranty,
service life policy or the like, in each case, to the extent made mandatory for
Part 121 operators similarly situated to Lessee or the Permitted Sublessee if
the Aircraft is registered with the FAA, or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered in accordance with
Section 11 of the Refunding Agreement, unless the validity thereof is being
contested in good faith and by appropriate proceedings, but only so long as such
proceedings do not involve any danger of sale, forfeiture or loss of the
Aircraft or impair the interest of Lessor therein or impair the validity or
priority of the
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<PAGE> 38
Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner
Participant or Indenture Trustee and are not inconsistent with any insurance
required to be maintained by Lessee hereunder. In the event that such Law or
other requirement requires alteration of the Aircraft during the Basic Term or
the then-current Renewal Term, Lessee shall comply therewith at its sole expense
and shall maintain the same in proper condition for operation under such Laws
and other requirements. Lessee shall not operate in any manner or locate in any
place the Aircraft, or suffer or permit the Aircraft to be operated by a
Permitted Sublessee or otherwise in any manner or located by a Permitted
Sublessee or otherwise in any place (i) unless the Aircraft is covered by
insurance or United States Government indemnity as required by the provisions
hereof or (ii) contrary to the terms of such insurance or United States
Government indemnity. Lessee also agrees not to operate or locate the Aircraft
or suffer or permit the Aircraft to be operated or located in any area excluded
from coverage by any insurance policy issued pursuant to the requirements of
this Lease or in any war zone unless insured or indemnified by the United States
of America therefor, except in the case of operation pursuant to a sublease or
contract with, or as a result of a requisition (not constituting an Event of
Loss) by, the United States of America, and then only if Lessee has obtained
insurance or an indemnity (in lieu of such insurance) from the United States of
America covering such risks, in the amounts and otherwise as required by this
Lease.
(d) Maintenance. Lessee, at its own cost and
expense, shall: (i) perform or cause to be performed all service, repair,
maintenance, overhaul, inspections, alterations, modifications, and testing (A)
in accordance with good airline industry practice and in such manner to provide
complete data and documentation necessary to substantiate certification, (B) as
may be necessary and required under, and in compliance with, applicable Law,
including, without limitation, FAA rules, regulations and other requirements,
any other applicable rules, regulations and requirements by any other applicable
Governmental Entity, the Maintenance Program, airworthiness directives having a
compliance date during the Term, and the service bulletins and other
requirements of any manufacturer, including, without limitation, such
requirements as may be applicable to keep in full force and effect any and all
material warranties, product and performance guaranties, service life policies,
indemnities or the like, (C) except during any period that a Permitted Sublease
is in effect, in
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the same manner and with the same care, including regard for the status and
technical condition of the Aircraft, as shall be the case with respect to
similar aircraft and engines owned by Lessee without discrimination and as if
Lessee owned the Aircraft and was going to use the Aircraft in continued regular
customer service after the expiration of the Term, and consistent with good
industry practice, and during any period in which a Permitted Sublease is in
effect, in the same manner and with the same care, including regard for the
status and technical condition of the Aircraft, as shall be the case with
respect to similar aircraft and engines owned by such Permitted Sublessee
without discrimination and as if the Permitted Sublessee owned the Aircraft and
was going to use the Aircraft in continued regular customer service after the
expiration of the Permitted Sublease, and consistent with good industry
practice, provided, however, that in all circumstances the Aircraft shall be
maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance
standards required by, or substantially equivalent to those required by the
central civil aviation authority of the country of registry, and, to the extent
not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as
good a condition as when delivered to Lessee, ordinary wear and tear excepted,
and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to
be kept in such condition as is necessary to enable the airworthiness
certification of such Aircraft to be maintained in good standing at all times
under the Federal Aviation Act and any other applicable law, or the applicable
laws of any other jurisdiction in which the Aircraft may be registered in
accordance with Section 11 of the Refunding Agreement (provided that if any
grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee
is contesting in good faith such grounding, Lessee shall not be deemed in
violation of this maintenance covenant); and (iii) maintain in English all
records, logs and other materials required by, and in a manner acceptable to,
the FAA or any other Governmental Entity having jurisdiction and as provided
under the Maintenance Program and Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the Aircraft
at all times, at its expense, to be duly registered during the Restricted Use
Period and, subject to Section 11 of the Refunding Agreement, thereafter under
the Federal Aviation Act in the name of Lessor or any successor or assignee, so
long as (i) while the Aircraft is registered under the Federal Aviation Act,
each of the Lessor or its successors or assigns is a "citizen of the United
States" as
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defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the
applicable parties to the Refunding Agreement cooperate with Lessee with respect
thereto as reasonably requested by Lessee. Lessee shall not register the
Aircraft or permit the Aircraft to be registered under any Laws other than the
Federal Aviation Act at any time except as provided in Section 11 of the
Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this Lease
at all times. At any time after the Restricted Use Period, Lessor, upon
compliance with all of the terms of Section 11 of the Refunding Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions reasonably required to change the registration of the Aircraft to
another country.
Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") in the
cockpit of the Aircraft and on each Engine showing title thereto and the Lien of
the Indenture as designated by Lessor and as Lessor may from time to time
reasonably request. Unless otherwise requested, upon delivery of the Aircraft,
Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a
location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and on each Engine (if not prohibited by
applicable Law), a Lease Identification in the form set forth in Exhibit C
hereto or with any other appropriate information in any other form subsequently
designated by Lessor to Lessee. Except as provided herein, Lessee will not allow
the name of any Person to be placed on the Aircraft or either Engine as a
designation that would be reasonably interpreted as a claim of ownership or
Lien; provided, however, that Lessee may cause the Airframe and Engines to have
placed thereon the customary colors and insignia of Lessee or any Permitted
Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor,
Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Aircraft as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause any sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee on reasonable prior notice at reasonable times
to visit,
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inspect and survey the Aircraft (including, without limitation, a visual "walk
around" inspection which may include going on board the Aircraft, and inspecting
the Aircraft during maintenance checks when panels and bays are open and subject
to view), its condition, use, and operation, and the records maintained in
connection therewith, and to visit and inspect the properties and to discuss the
affairs, finances and accounts of Lessee with the principal officers of Lessee,
provided, that so long as no Default or Event of Default has occurred hereunder
inspections shall be endeavored to be performed during regularly scheduled
maintenance checks of the Aircraft. Each such inspection or survey shall be
conducted so as to not unreasonably interfere with the business of Lessee or the
maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or
Indenture Trustee's request, Lessee will notify such Person of the next
scheduled maintenance check for the Airframe or any Engine. Lessor, Owner
Participant and Indenture Trustee shall have no duty to make any such inspection
and shall not incur any liability or obligation by reason of not making any such
inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to
object to any condition or procedure observed or observable in the course of an
inspection hereunder shall not be deemed to waive or modify any of the terms of
this Lease with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to
furnish Lessor, until the expiration or other termination of the Term of this
Lease, the following:
(i) within sixty (60) days following the end
of each quarter of Lessee's fiscal year, except the last such quarter of such
year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report
on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee
no longer files such report, an unaudited consolidated balance sheet of Lessee
and its consolidated subsidiaries prepared by it as of the close of the period
ended, together with the related statements of income and cash flows for such
period, and in each case certified by a Responsible Officer of Lessee as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial
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position for such period then ended in accordance with such principles and
practices (subject to normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close of
each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such reports, an audited consolidated balance sheet, income statement, and cash
flow statement of Lessee and its consolidated subsidiaries, as of the close of
such fiscal year, and in each case as certified by independent public
accountants, including their certificate and accompanying comments, as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices, without
qualification as to the scope of the audit or non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of all
reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934,
as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of insurance
required to be maintained hereunder, a certificate signed by the Approved Broker
of Lessee as to the due compliance with the insurance provisions of Section 12
hereof with respect to the Aircraft, together with certificates of insurance
evidencing such insurance and the opinion provided for in Section 12(f);
(v) together with each set of financial statements referred to
in clauses (i) and (ii), a certificate signed by a Responsible Officer of
Lessee, to the effect that such officer has reviewed the relevant terms of this
Lease and has made, or caused to be made under his or her supervision, a review
of the transactions and condition of Lessee during the accounting period covered
by such financial statements, and that such review has not disclosed the
existence during such accounting period, nor does such officer have any
knowledge of the existence, as at the date of such certificate, of any condition
or event which constitutes a Default or an Event of Default, or, if such
condition or event which constitutes a Default or an
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Event of Default existed or exists, specifying the nature and period of
existence thereof and what action Lessee has taken or is taking or proposes to
take with respect thereto;
(vi) as soon as practicable after becoming aware thereof,
notice of damage or destruction to the Aircraft, either Engine or any Part with
a repair or replacement cost (including labor charges) in excess of $1,000,000;
(vii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
(viii) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in
Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so long
as it shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier, including,
without limitation, its status so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all
Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal liability
on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with
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or merge into or with any other corporation or other Person, and Lessee shall
not convey, transfer, lease or otherwise dispose of all or substantially all of
its property and other assets (in one or a series of transactions) to any
corporation or other Person, unless:
(i) the Person formed by or surviving such
consolidation or merger or the Person which acquires by conveyance, transfer,
lease or other disposition all or substantially all of such property and other
assets or stock (the "Successor Entity"): (A) shall be a corporation organized
and existing under the Laws of the United States of America or any State thereof
or the District of Columbia; (B) immediately after giving effect to such
transaction, shall be Lessee or shall have acquired or succeeded to all or
substantially all of such property and other assets (including, without
limitation, all or substantially all of Lessee's property and other assets) as
an entirety and, unless the Owner Participant otherwise agrees, shall have a Net
Worth of not less than Lessee's Net Worth immediately prior to such transaction;
(C) shall be a "citizen of the United States" of America as defined in Section
40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D)
shall execute and deliver to Lessor and Indenture Trustee such recordations and
filings with any Governmental Entity and such other documents as Lessor
determines shall be reasonably necessary or advisable (including, without
limitation, to preserve and protect the interests of the Lessor and the priority
of the Lien of the Indenture (if it has not been discharged)) to evidence, or in
connection with, such consolidation, merger, sale, lease, transfer or other
disposition and an agreement, in form and substance reasonably satisfactory to
Lessor, which is a legal, valid, binding and enforceable assumption by such
Successor Entity of the due and punctual performance and observance of each
covenant and condition of this Lease and the other Operative Documents to which
Lessee is a party and agreement to be bound thereby, and an officer's
certificate to such effect, and to the effect that the other requirements of
this paragraph have been satisfied, and a legal opinion from counsel to such
effect and otherwise in such form and substance reasonably satisfactory to
Lessor; and
(ii) prior to and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing.
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No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of
each calendar year and within 60 days of a request by Lessor or Owner
Participant, or such shorter period as may be set forth in any written request
by the Internal Revenue Service for information or documents, Lessee shall
furnish in writing to Lessor or Owner Participant such information and documents
(or copies thereof) regarding the Aircraft as may be reasonably requested by
Lessor or Owner Participant or the Internal Revenue Service in order to permit
Lessor to file its Federal and state income tax returns (or to permit the filing
of the Federal and state income tax returns of any affiliated group of
corporations filing a consolidated return of which Lessor is a member), or to
maintain or defend any claims related thereto and promptly, after reasonable
notice, furnish to Lessor or Owner Participant such information as may be
reasonably requested by Lessor or Owner Participant or the applicable
Governmental Entity as may be required to enable Lessor or Owner Participant to
file any reports required to be filed by it with any Governmental Entity because
of its ownership or other interest in the Aircraft, the Airframe or the Engines.
(g) Place of Business. At all times while this
Lease is in effect, Lessee will not, without thirty (30) days prior written
notice to Lessor and Indenture Trustee (so long as the Lien of the Indenture
shall not have been discharged), change its chief executive office (as such term
is defined under Article 9 of the Uniform Commercial Code as adopted in Arizona)
or location of its books and records, from 4000 East Sky Harbor Boulevard,
Phoenix, Arizona 85034, or such subsequent location of which Lessee shall have
so notified Lessor and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use
the Aircraft, Airframe or Engines only in commercial passenger operations and
related cargo operations. Unless Owner Participant otherwise agrees, during the
Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or
permit the Aircraft, Airframe or Engines to be used either "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code,
or in such manner that the percentage of the income, deduction or credit
attributable to the Aircraft, Airframe or Engines for federal income tax
purposes during any taxable year of the Lessor considered to be from foreign
sources exceeds the
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Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees,
prior to permitting the Aircraft to be operated in any member state of the
European Union or other European country, Lessee shall deliver to Lessor (i) a
representation and warranty to the effect that Lessee (or any Permitted
Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant
air traffic control authority over delinquent charges payable by it and (ii) a
letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or
other relevant air traffic control authority pursuant to which Lessee (or such
Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's
request from time to time, a statement of account of all sums due by Lessee (or
such Permitted Sublessee) to the authority in respect of all aircraft
(including, without limitation,the Aircraft) operated by Lessee (or such
Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that
Lessor would not have entered into this amended and restated Lease unless it had
available to it the benefits of a lessor under Section 1110 of Title 11 of the
United States Code. Lessee covenants and agrees with Lessor that to better
ensure the availability of such benefits, Lessee shall support any motion,
petition or application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the
Aircraft under said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of said Section
1110 to be fulfilled in order to entitle Lessee to continued use and possession
of the Aircraft hereunder. The acknowledgement, covenant and agreement contained
in this Section 8(i) shall continue in full force and effect and survive the
expiration or other termination of this Lease and are expressly made for the
benefit of and shall be enforceable by the Lessor, the Owner Participant and, if
the Lien of the Indenture has not been discharged, the Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or
obtain, and maintain in full force and effect, each and every consent, license,
approval, notice, registration, filing or other action with any Governmental
Entity necessary or advisable in connection with the operation or use of the
Aircraft, the Airframe, any Engine or Part or the execution, delivery or
performance of this Lease or the enforcement thereof against Lessee.
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(k) Security Opinion; Annual Certificate.
(i) During such times that the Aircraft is registered under the Federal Aviation
Act, Lessee shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period
covered by the opinion of counsel rendered on the
Restatement Date, any opinion of counsel rendered
pursuant to Section 11(C) of the Refunding
Agreement, and any opinion of counsel rendered
pursuant to this Section 8(k)(i) and (Y) upon any
change in Law that would render the opinion of
counsel rendered on the Restatement Date or such
immediately preceding opinion of counsel
inaccurate, an opinion of counsel with respect to
Lessee and the FAA reasonably satisfactory to
each addressee of such opinion (which counsel may
be internal legal counsel of Lessee and FAA
counsel) stating, in the opinion of such counsel,
that such action has been taken with respect to
the recording, filing, rerecording and refiling
of (i) the appropriate Operative Documents and
any supplements and amendments thereto and (ii)
such other appropriate documents, as is necessary
to maintain the perfection of Lessor's title to
and/or interest in and Indenture Trustee's
security interest in the Aircraft and the
Operative Documents for such period of time as
reflects the then-current applicable Law,
reciting the details of such actions; or
(2) at any time that an opinion is not required
pursuant to Section 8(k)(i)(1), annually, a
certificate reasonably satisfactory to each
recipient thereof signed by a Responsible Officer
of Lessee certifying that no such action is
necessary to maintain the perfection of such
title and/or interest and security interest.
(ii) During such times that the Aircraft is
registered under any Laws other than the Federal Aviation Act, Lessee shall
furnish to Lessor and to Indenture Trustee annually (but in any case, (X) prior
to the expiration of the time period covered by any opinion of counsel rendered
pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel
rendered pursuant to this Section
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8(k)(ii) and (Y) promptly upon any change in Law that would render such
immediately preceding opinion of counsel inaccurate), an opinion of counsel
reasonably satisfactory to each addressee of such opinion stating, in the
opinion of such counsel, that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i) the appropriate Operative
Documents and any supplements and amendments thereto and (ii) such other
appropriate documents, as is necessary to maintain the perfection of Owner
Trustee's title to and/or interest in and Indenture Trustee's security interest
in the Aircraft and the Operative Documents for such period of time as reflects
the then-current applicable Law, reciting the details of such actions.
(l) Letter of Credit. As security for the
obligations to Lessor, Lessee shall provide to Lessor, as named beneficiary
thereof, one or more irrevocable standby letters of credit, in form and
substance acceptable to Lessor in its sole and absolute discretion (the "Letter
of Credit"), including, without limitation, as to renewal provisions, with a
face amount available for drawdown at all times equal to the amount set forth on
Exhibit C (the "Face Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof
shall be available for drawdown thereunder and payable in New York, New York, on
demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of
Default has occurred, which amount may be applied, retained or utilized as
provided in the penultimate paragraph of this Section 8(l).
(ii) be maintained in full force and effect
at all times until ninety-one (91) days after the Expiration Date with a
commercial bank acceptable to Lessor, in its sole and absolute discretion,
having a long-term unsecured debt rating of "A" or better by Standard & Poor's
Rating Group (if the issuing bank's credit rating is lower than such rating,
Lessee shall replace such Letter of Credit issuer within five Business Days of
any such reduction in rating with a commercial bank meeting such rating
requirement), provided, that a Letter of Credit set forth in Exhibit D-2 issued
by The Industrial Bank of Japan, Limited, will be acceptable to Lessor for so
long as The Industrial Bank of Japan, Limited maintains a long term unsecured
debt rating at least equal to its rating on the date hereof;
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(iii) be expressly designated as transferrable
and assignable; and
(iv) permit partial drawings. If the Letter
of Credit is still in effect at the end of the Term, or the Lessor is holding
proceeds of the Letter of Credit that were retained and not applied as provided
herein, then Lessor shall return the Letter of Credit to Lessee or terminate it,
and/or return any retained and unapplied proceeds, ninety-one (91) days
following the date of such expiration or other termination of this Lease so long
as no Default or Event of Default has occurred or is continuing hereunder or
under any Other Lease, upon payment in full of all amounts then due and owing to
Owner Trustee and Owner Participant under the Operative Documents.
If an Event of Default has occurred or is continuing under
this Lease or an Event of Default has occurred or is continuing under any Other
Lease (as therein defined), in addition to any other rights and remedies Lessor
may have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform Commercial
Code as adopted in New York) or equity and upon exercising its rights under the
Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
the payment of Rent, Lessee's right to apply the same to such claim shall be
limited to amounts which would (absent such Event of Default) be distributable
under the Indenture at the time such payment is made to Lessor, Owner
Participant or any of their respective Affiliates (and shall not include any
amounts distributable to Indenture Trustee in its individual capacity or to the
Note Holders); provided further, however, that neither the amount so applied at
any one time nor the aggregate amount so applied at different times shall reduce
the amount of any installment or payment of Rent (whether
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upon the termination of the Lease or otherwise) payable by Lessee to an amount
insufficient to pay in full the amounts required to be paid on account of the
principal of and any interest on the Equipment Notes or otherwise owing to a
Note Holder. Lessee shall not be entitled to any refund or credit with respect
to any amounts so applied. Any amount retained shall be considered the property
of Lessor and Lessor may commingle such amount with its general funds and
Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum
extent permitted by applicable Law, any interest therein. Lessee shall not be
entitled to any interest or other earnings on such retained amount and such
amount shall not be refundable.
On application of all or any portion of the amounts drawn
under the Letter of Credit or any Other Letters of Credit in accordance with
this Section 8(l), or the Other Leases, Lessee shall on demand reinstate the
amount of the Letter of Credit or Other Letters of Credit, as the case may be,
to its or their full Face Amount or provide to Lessor one or more additional
Letters of Credit meeting the requirements of this Section 8(l), so that the
Letter of Credit and each of the Other Letters of Credit at all times equals the
original Face Amount provided for herein. During such times as Lessor shall
elect to hold all or part of the proceeds of the Letter of Credit or Other
Letters of Credit as security for Lessee's obligations to Lessor under the Lease
and the Other Leases, Lessee shall not be obligated to reinstate the amount of
the Letter of Credit or Letters of Credit, as the case may be, in respect of the
proceeds so held.
Section 9. Replacement of Parts; Alterations, Modifications
and Additions.
(a) Replacement of Parts. Lessee, at its own
cost and expense, will promptly replace, or cause to be replaced, all Parts
which may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for any
reason whatsoever. In addition, in the ordinary course of maintenance, service,
repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) may at its own cost and expense remove any Parts, whether
or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use, provided that Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own
cost and expense such Parts as promptly as
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possible. All replacement Parts shall be free and clear of all Liens (except for
pooling arrangements to the extent permitted by paragraph (c) of this Section
and Permitted Liens), be in at least the equivalent or better modification
status and service bulletin accomplishment status, be fully interchangeable as
to form, fit and function and shall be in as good operating condition as, and
have a value, remaining useful life and utility at least equal to, the Parts
replaced (assuming such replaced parts were in the condition and repair in which
they were required to be maintained by the terms hereof).
All Parts which are at any time removed from the
Aircraft shall remain the property of Lessor, subject to the Lien of the
Indenture if it has not been discharged, and subject to this Lease no matter
where located until such time as such Parts shall be replaced by parts which
have been incorporated or installed in or attached to the Aircraft and which
meet the requirements for replacement Parts specified above. Immediately upon
any replacement Part becoming incorporated or installed in or attached to the
Aircraft as above provided, or as provided in Section 9(c), without further act,
(i) title to the removed Part shall thereupon vest in Lessee free and clear of
all rights of Lessor, Indenture Trustee, Owner Participant and Note Holders and
shall no longer be deemed a Part hereunder, (ii) title to such replacement Part
shall thereupon vest in Lessor and become subject to the Lien of the Indenture
if it has not been discharged, and (iii) such replacement Part shall become
subject to the Lien of the Indenture (if it has not been discharged) and this
Lease and be deemed a Part for all purposes hereof to the same extent as the
Part which it has replaced.
(b) Alterations, Modifications and Additions.
Lessee, at its own cost and expense, shall make or cause to be made such
alterations and modifications in and additions to the Airframe and each Engine
to the extent made mandatory for Lessee (or a sublessee) in respect of the
Aircraft, Engines or Parts from time to time to meet the applicable standards of
the FAA or under any Law of any Governmental Entity having jurisdiction or
issued by the manufacturer of the Airframe, Engines or Parts. In addition, so
long as no Default or Event of Default has occurred and is continuing, Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee), at its own
expense, may from time to time make such alterations and modifications in and
additions to the Airframe and either Engine as Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee)
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may deem desirable in the proper conduct of its business, provided, no such
alteration, modification or addition diminishes the value, remaining useful life
or utility, or impairs the condition or airworthiness, of the Airframe, either
Engine or any Part below that immediately prior to such alteration, modification
or addition assuming that the Airframe, Engines and Parts were then of the
value, utility and remaining useful life and in the condition and airworthiness
required by the terms of this Lease. Except as otherwise provided herein, title
to all Parts incorporated or installed in or attached or added to the Aircraft
as the result of such alteration, modification or addition, shall immediately
vest in Lessor and become subject to the Lien of the Indenture (if it has not
been discharged) and this Lease, without the necessity for any further act of
transfer, document or notice. Notwithstanding the foregoing sentence of this
Section 9(b), Lessor agrees that so long as no Default or Event of Default shall
have occurred and be continuing Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may, at such time during the Term for the
Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in
addition to, and not in replacement or substitution for, any Part originally
incorporated or installed in or attached to, or delivered with, the Aircraft on
the Delivery Date or any Part in replacement of, or substitution for, any such
originally incorporated, installed, attached or delivered Part, (ii) such Part
is not required to be incorporated or installed in or attached or added to the
Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the
insurance required by Section 12 and (iii) such Part can be removed from the
Aircraft without causing any material damage thereto and without diminishing or
impairing the value, utility, remaining useful life, condition or airworthiness
which the Aircraft would have had at such time had such alteration, modification
or addition not occurred. Upon the removal by Lessee of any such Part as
provided in the preceding sentence, title thereto shall, without further act,
vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
and such Part shall no longer be deemed part of the Aircraft (such a part is
herein called a "Removable Part"). Any Part not removed by Lessee as above
provided prior to the return of the Aircraft to Lessor hereunder, whether
pursuant to Section 16, Section 18 or otherwise, shall remain the property of
Lessor.
If any Removable Part is (i) owned by any third party and
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), (ii) sold to Lessee (or,
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if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a
conditional sale contract or other security interest or (iii) leased to Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a
lease which is subject to a security interest in favor of any third party, then
Lessor will not acquire or claim, as against such lessor, conditional vendor or
secured party, any right, title or interest in any such Removable Part as the
result of such Removable Part being installed on the Aircraft; provided,
however, that (A) Lessor's inability to so acquire or claim is subject to the
express condition that such lessor, conditional vendor, or secured party shall
have agreed in writing (which agreement may be contained in the lease,
conditional sale agreement or security agreement) not to acquire or claim, as
against Lessor, any right, title or interest in the Aircraft, or any Part other
than its interest in such Removable Part by reason of such Removable Part being
installed thereon, and (B) any Removable Part not removed by Lessee upon the
termination or expiration of this Lease, at such time, shall become the property
of Lessor and be subject to this Lease, and provided, further, that (1) if
removal of any such Part shall affect the operation of the Aircraft in any way
whatsoever, Lessee shall replace such Part with an owned Part of the same value,
utility and remaining useful life and (2) Lessee shall repair any unsightly area
of the Aircraft as a result of such removal and make all other repairs which are
advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) replaces a Part which is not required to be replaced
under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may remove the replacement Part so long as it
reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to form,
fit and function, has been overhauled, repaired and inspected by an agency
acceptable to the FAA or other Governmental Entity having jurisdiction, and is
in as good operating condition as, and has a utility, remaining useful life and
a value at least equal to that of such Part when it was removed from the
Aircraft.
Notwithstanding any other provision hereof, and without
limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect,
Permitted Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic
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equipment (including seats with such equipment installed therein) (any or all of
which are hereafter referred to as "Excluded Property") in the ordinary course
of business, and Lessor shall not claim or acquire title thereto and the rights
of the owners thereof therein shall not constitute a default hereunder; provided
that (i) any such Excluded Property shall be removed prior to the date of a
Return Occasion without causing any damage to the Aircraft and without
diminishing or impairing the value, utility, remaining useful life or condition
which the Aircraft would have had at such time had such Excluded Property not
been installed, (ii) any equipment or seats which such Excluded Property
replaces shall be properly stored with the interests of Lessor and, if the Lien
of the Indenture is in effect, the Indenture Trustee, duly noted thereon and
acknowledged by any applicable bailee or warehouse, and properly reinstalled on
the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such
Permitted Sublessee) shall make all repairs which are required as a result of
such removal and/or reinstallation.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Airframe or either
Engine as provided in Section 9(a) may so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom be subjected by
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a
normal pooling arrangement customary in the airline industry of which Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part
entered into in the ordinary course of Lessee's or such Permitted Sublessee's
business, provided the Part replacing such removed Part shall be incorporated or
installed in or attached to the Aircraft in accordance with Section 9(a) as
promptly as possible, and in any event within sixty (60) days, after the removal
of such removed Part. In addition, any Replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with
Section 9(a) may be owned by another Person subject to such a normal pooling
agreement; provided, however, that Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee), at its own expense, as promptly thereafter as
possible, and in any event within sixty (60) days, either (i) causes title to
such replacement Part to vest with Lessor in accordance with Section 9(a) (and
to be subjected
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to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto
for the benefit of and transferring title to Lessor free and clear of all Liens
except Permitted Liens, whereupon such replacement Part shall become subject to
this Lease and the Lien of the Indenture (if in effect) without the necessity
for any further act, document or notice, or (ii) replaces such replacement Part
by incorporating or installing in or attaching to the Aircraft a further
replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) free and clear of all Liens other than Permitted Liens and
by causing title to such further replacement Part to vest in Lessor as above
provided and to be subjected to the Lien of the Indenture if it has not been
discharged, whereupon such replacement Part shall become subject to this Lease
and the Lien of the Indenture (if in effect) without the necessity for any
further act, document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment
of Basic Rent hereunder shall be free and clear of, and without deduction for,
any and all withholdings on account of Taxes of any nature whatsoever, whether
or not an exclusion pursuant to Section 10(b) applies, except as required by
law. If any such deduction or withholding of Taxes is required with respect to
such payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent
such that the net amount actually received by Lessor, after such deduction or
withholding, will be equal to all such amounts that would be received by Lessor
if no such deduction or withholding had been required, but only to the extent
necessary to ensure that the holders of the outstanding Equipment Notes receive
such amount as may be required by the Indenture. If Lessee pays any amount to
Lessor (or to any taxing authority for the account of Lessor) as a result of the
application of the preceding sentence with respect to any withholding Tax which
is an excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor
(or, in the case of Taxes imposed on the Owner Trustee, the Owner Participant to
the extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant would be liable) shall reimburse Lessee for such withholding Tax
within 30 days of written notice accompanied by evidence of payment for such
withholding Taxes (exclusive of interest, penalties and additions to Tax) paid
by Lessee provided that in any circumstance in which the Lessor is
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required to reimburse the Lessee for any such withholding Taxes and the Lessee
has not received such reimbursement from Lessor or the Owner Participant, then
to the extent of such shortfall and so long as no Lease Event of Default has
occurred and is continuing, Lessee shall be entitled to obtain reimbursement
from Lessor by reducing the succeeding payments of Rent payable to Lessor (other
than any portion of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder) until the
aggregate amount of reduction is equal to the sum of the amount of such
shortfall and interest on that amount at the Interest Rate from the date
reimbursement is required to be made until the date of such reduction in Rent.
Except as provided in Section 10(b), and taking into account any payments
received by Lessor pursuant to the second sentence of this Section 10(a), Lessee
agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and
all Taxes, howsoever levied or imposed, whether levied or imposed upon or with
respect to or asserted against any Indemnitee, Lessee, the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or otherwise, with
respect to any period beginning, or events or circumstances occurring, on or
after the Restatement Date, by any federal, state or local government or taxing
authority in the United States of America or by any foreign government or any
taxing authority or governmental subdivision of a foreign country or of a
territory or possession of the United States (each such governmental subdivision
or taxing authority referred to as a Taxing Authority"):
(i) upon or with respect to, based upon or
measured by (A) the Aircraft, the Airframe, any Engine or any Part
thereof, or interest therein, (B) the manufacture, purchase,
ownership, delivery, leasing, acceptance, rejection, assigning,
possession, use, operation, location, settlement of any insurance
claim, sale, mortgaging, pledging, financing, subleasing, rental,
retirement, abandonment, registration, re- registration,
deregistration, preparation, installation, modification, repair,
maintenance, replacement, transportation, storage, transfer of
title, return or other disposition of the Aircraft, the Airframe,
any Engine or any Part thereof or interest therein; or (C) the
rentals, receipts, income or earnings arising therefrom (including
without limitation the Rent), or
(ii) upon or with respect to the Operative
Documents (including the Equipment Notes), any interest
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in any thereof, or any future amendment, supplement, waiver or
consent thereto requested by Lessee with respect to any thereof,
or the execution, delivery, or performance of any thereof, or the
acquisition or subsequent transfer thereof or the issuance of the
Equipment Notes or any other document executed and delivered in
connection with the consummation or confirmation of the
transactions contemplated by the Operative Documents or any
Indemnitee's interest in any of the foregoing, or the execution,
amendment, supplement, issuance, reissuance, refinancing or
delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property,
or the income or other proceeds received with respect to the
property, held by the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest
or premium on, or other amounts payable with respect to the
Equipment Notes, whether as originally issued or pursuant to any
modification or reissuance, or
(v) otherwise with respect to or in
connection with the transactions contemplated by the
Operative Documents.
(b) Exclusions. The following Taxes shall not be
subject to indemnification under subsection (a) of this
Section 10:
(i) In the case of any Indemnitee, Taxes imposed
on, based on, or measured by, the gross or net income of such
Indemnitee or Taxes in lieu thereof (including minimum taxes,
withholding taxes and taxes on or measured by any item of tax
preference) imposed by the federal government of the United States
of America (other than taxes in the nature of sales or use taxes,
license taxes, or property taxes),
(ii) In the case of any Indemnitee, Taxes imposed
on, based on, or measured by the gross or net income, receipts,
capital, or net worth, franchises, excess profits or conduct of
business of such Indemnitee (including minimum taxes, withholding
taxes and taxes on or measured by any items of tax preference),
imposed by any state, local or foreign government or taxing
authority (other than Taxes in the
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nature of sales Taxes, use Taxes, license Taxes or property Taxes,
and Covered Income Taxes described in subsection (c) of this
Section 10),
(iii) In the case of any Indemnitee, Taxes which
arise out of or are caused by any gross negligence or willful
misconduct of such Indemnitee,
(iv) In the case of any Indemnitee, any Taxes
imposed as a result of a voluntary or involuntary bankruptcy of
such Indemnitee or any sale, transfer of title, transfer or other
disposition by such Indemnitee or a related Indemnitee (for such
purpose, Owner Trustee and Owner Participant are related
Indemnitees with respect to each other) of the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or
any interest in the Rent or part thereof or any interest in the
Operative Documents or part thereof, unless such sale, transfer or
disposition occurs in connection with (A) an Event of Default and
the exercise by any Indemnitee of its remedies under this Lease or
the Indenture, as the case may be or (B) the substitution, pooling
or interchange of the Aircraft, the Airframe, any Engine or any
Part pursuant to the terms hereof; provided, however, that in all
cases Owner Participant and Owner Trustee shall consider in good
faith such request as Lessee shall make concerning the appropriate
jurisdiction in which such sale, transfer or disposition shall be
made,
(v) In the case of any Indemnitee, Taxes imposed
on a transferee of such Indemnitee of any interest in the
Aircraft, the Airframe, any Engine or any Part or any interest in
the Operative Documents to the extent the amount of any such Taxes
exceeds the amount of such Taxes that would have been imposed had
there not been any such transfer, unless such transfer results
from action by or on behalf of such Indemnitee taken in connection
with any Event of Default that has occurred and is continuing or
upon the request of the Lessee,
(vi) Any interest, penalties, fines and additions
to tax imposed on an Indemnitee (other than Taxes that are due and
payable with a return when properly filed) resulting from such
Indemnitee's failure to file returns that are timely and proper,
provided such failure was not attributable to such Indemnitee
contesting any claim in accordance with this
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Section 10(b) or to a failure by Lessee to satisfy its
obligations related to such return,
(vii) With respect to an Indemnitee other than
the Indenture Trustee or the Trust Indenture Estate, Taxes which
arise out of or are caused by (i) any act or omission or material
misrepresentation of any Indemnitee where such act or omission is
not permitted by the Financing Documents or the Operative
Documents, or (ii) a failure by an Indemnitee to fulfill its
contest obligations, and, in the case of the Indenture Trustee and
the Trust Indenture Estate, Taxes imposed as a result of a breach
of such Indemnitee's representations, warranties, or covenants
contained in Sections 9(a), 12 or 16 of the Refunding Agreement in
any material respect, or from a failure by such Indemnitee to
fulfill its contest obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft
related to acts or events occurring after the later of the
termination of the Lease and the redelivery of the Aircraft,
(ix) In the case of each Pass-Through Trust,
each Pass-Through Trustee (in its individual capacity and as trustee under the
Pass-Through Trusts), the Subordination Agent and each Liquidity Provider,
United States withholding taxes imposed as a result of the place of organization
or other status of a holder of an interest in a Pass-Through Trust, or
(x) In the case of the Indenture Trustee,
each Pass-Through Trust, each Pass-Through Trustee (in its individual capacity),
the Subordination Agent and each Liquidity Provider, Taxes imposed with respect
to the Equipment Notes as a result of activities of such Indemnitee unrelated to
the transactions contemplated by the Operative Documents.
(c) Covered Income Tax. For purposes of clause
(ii) of subsection (b) of this Section 10, a Covered Income
Tax includes:
(i) in the case of an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, any Tax imposed
on, based on or measured by gross or net income, receipts, capital
or net worth, franchises, excess profits or conduct of business
(other than taxes which are in the nature of sales or use taxes,
license taxes or property taxes) imposed on an Indemnitee (A)
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by any state or local Taxing Authority other than Taxes imposed by
any such state or local jurisdiction in which the Indemnitee has
its principal place of business or is subject to such Tax as a
result of business transactions or other presence unrelated to the
transactions contemplated by the Financing Documents or the
Operative Documents, unless such Taxes are imposed by such
jurisdiction solely as a result of (x) the operation of the
Aircraft in such jurisdiction or (y) the transactions contemplated
by the Operative Documents, to the extent such taxes are directly
attributable to such operation of the Aircraft or to such
transactions, and (B) by any foreign jurisdiction which are
imposed as a result of Lessee's or sublessee's activities in such
foreign jurisdiction in connection with the transactions
contemplated by the Financing Documents or the Operative
Documents, provided, however, a Covered Income Tax also includes
the incremental amount of franchise taxes, taxes on doing
business, capital stock taxes or taxes on, based on or measured by
gross or net income of the original Owner Participant attributable
to the Lease (excluding, however, any taxes that would be excluded
under any provision other than clauses (i) and (ii) of subsection
(b) of this Section 10) which are imposed by the "Home State" of a
sublessee (the Home State of a sublessee being the jurisdiction in
which such sublessee maintains its principal operations and
maintenance center), or in the absence of a Permitted Sublessee,
the jurisdiction where the Aircraft is stored, but only to the
extent such incremental taxes result from activities of Lessee or
Permitted Sublessee under the Lease in or with respect to the Home
State or the jurisdiction where the Aircraft is stored, and taking
into account in calculating such incremental taxes all state tax
benefits and savings in the Home State resulting from activities
of Lessee or Permitted Sublessee under the Lease, disregarding for
such purpose any actual or constructive changes in ownership of
the original Owner Participant, provided, however, that Owner
Participant and Lessee agree to negotiate, in good faith, a cap to
Lessee's liability for indemnity payments attributable to taxes
incurred in sublessee's Home State with respect to each Permitted
Sublessee; and
(ii) in the case of the Indenture Trustee or
the Trust Indenture Estate, any Tax based on or measured by gross
or net income, receipts, capital or
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net worth, franchises, excess profits or conduct of business
(including minimum taxes, withholding taxes, and taxes on or
measured by any item of tax preference) imposed on such Indemnitee
by a Taxing Authority in or of any foreign jurisdiction or a
territory or possession of the United States, other than any such
Tax which would not have been imposed in the absence of such
Indemnitee's (including for purposes of this definition, all
entities with which such Indemnitee is combined, integrated, or
consolidated in such Taxing Authority's jurisdiction) engaging in
business, maintaining an office or other place of business or
otherwise being located in such jurisdiction other than merely by
reason of such Indemnitee's participation in the transactions
contemplated by the Operative Documents.
(d) Reports and Returns. In case any report or
return is required to be made by Lessee with respect to any Taxes which are
subject to indemnification by Lessee under this Section 10, Lessee will either
make such report or return in such manner as will show the ownership of the
Aircraft in Owner Trustee or the interest of Owner Participant or its permitted
assigns and send a copy of such report or return to the Owner Participant or
Owner Trustee or will notify the Owner Participant or Owner Trustee of such
requirement and make such report or return in such manner as shall be reasonably
satisfactory to Owner Participant or Owner Trustee. If actual notice is given by
any taxing authority to an Indemnitee that a report or return is required to be
filed with respect to any such Taxes, the Indemnitee shall promptly notify
Lessee of such required report or return and Lessee shall either file such
report or return in the manner prescribed in the preceding sentence, or shall
use its best efforts to cause such report or return to be filed by the
appropriate entity. Each Indemnitee agrees to respond to any reasonable request
of Lessee for information not within Lessee's control and within the control of
and reasonably available to such Indemnitee with respect to the filing of any
such report or return, but Lessee agrees to pay any reasonable costs, fees,
disbursements or other charges of independent counsel or independent accountants
incurred in connection with such request.
(e) After-Tax Basis. Lessee further agrees that,
with respect to any payment or indemnity under this Section 10 and under Section
13 hereof, such payment or indemnity shall include the net amount necessary to
hold the recipient
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of the payment or indemnity harmless on an after-tax basis from all Taxes
required to be paid or credited by such recipient with respect to such payment
or indemnity under the laws of any Taxing Authority; provided, however, that in
the case of Taxes imposed on the Owner Participant, such Taxes shall be
calculated on the basis of the assumption that Owner Participant shall be
subject to the highest federal corporate income tax rate applicable to Owner
Participant in the year of payment and the highest corporate income tax rate in
the jurisdiction in which Owner Participant files a consolidated state income
tax return (currently Virginia).
(f) Tax Benefit. If, by reason of any payment
made to or for the account of an Indemnitee by Lessee pursuant to this Section
10 or Section 13 hereof, such Indemnitee subsequently actually realizes a tax
deduction or credit (including foreign tax credit and any reduction in Taxes)
not previously taken into account in computing the amount of such payment, such
Indemnitee shall promptly pay to Lessee, but only if there shall then be no
Lease Event of Default and if Lessee shall have made all payments then due and
owing to such Indemnitee under the Operative Documents, an amount equal to the
sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee
which is attributable to such deduction or credit and (ii) the reduction
calculated on the same basis as the gross up in Section 10(e) hereof in Taxes
realized by such Indemnitee as a result of any payment made by such Indemnitee
pursuant to this sentence; provided, however, that such Indemnitee shall not be
obligated to make any payment pursuant to this Section 10 or Section 13 hereof
to the extent that the amount calculated pursuant to (i) above would exceed (A)
the amount of all prior payments by Lessee to such Indemnitee, pursuant to this
Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes
required to be paid by such Indemnitee in respect of the receipt or accrual of
such amounts received by such Indemnitee from Lessee, less (B) the portion of
all prior payments computed pursuant to (i) above by such Indemnitee to Lessee
hereunder.
(g) Payment. If a claim is made against any
Indemnitee for any Taxes which may be subject to indemnification by Lessee
hereunder and if such Indemnitee has notice thereof, such Indemnitee shall
promptly notify Lessee; provided that the failure to provide such notice shall
not release Lessee from any of its obligations hereunder except to the extent
Lessee's right to contest such claim is precluded thereby. Any amount payable as
an
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indemnity to any Indemnitee or any amount payable to Lessee pursuant to this
Section 10 is to be paid to such party directly, in immediately available funds,
within thirty (30) days after receipt of a written demand therefor from such
Indemnitee or Lessee, as the case may be, except in the case of a payment to an
Indemnitee to the extent that such Taxes are being contested in good faith
pursuant to this Section 10, in which event the payment of such indemnity shall
be made by the due date for the payment of any Taxes that are the subject of
such contest taking into account all extensions of the due date that are
available as a result of the contest. In the event an Indemnitee makes a tax
payment with respect to any such Taxes (other than with funds advanced to such
Indemnitee on an interest-free basis by Lessee pursuant to this Section 10),
Lessee shall reimburse the amount of such payment and also shall pay to the
Indemnitee interest on the amount of such payment by such Indemnitee at the
Interest Rate from the date of any such payment by such Indemnitee to the date
of such reimbursement by Lessee to the Indemnitee hereunder. In the event an
amount is payable to Lessee under this Section 10, the Indemnitee owing such
amount shall pay interest on such amount at the Interest Rate from the date of
receipt by such Indemnitee of any amount giving rise to such obligation to pay
Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee
receives a written notice of a claim which, if sustained, would require the
payment of an indemnity by Lessee pursuant to this Section 10, such Indemnitee
shall promptly notify Lessee of such claim and, if requested by Lessee in
writing, shall, at Lessee's sole expense, in good faith contest or shall permit
Lessee, if desired by Lessee and such contest may be conducted in whole or in
part separately in the name of Lessee without involving Taxes of such Indemnitee
not indemnified hereunder, to contest in the name of Lessee and/or the
Indemnitee, the validity, applicability or amount of such Taxes by (x) resisting
payment thereof if practicable, (y) not paying the same except under protest, if
protest is necessary and proper, and (z) if payments be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings; provided, however, the Lessee shall not be permitted to contest in
the name of such Indemnitee if such contest involves Taxes imposed against such
Indemnitee that are unrelated to the transactions contemplated by the Financing
Documents or the Operative Documents or Taxes based on or measured by the gross
or net income of the Indemnitee, and provided, that if the Indemnitee determines
in good faith
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that there is a material possibility of a material adverse impact upon the
Indemnitee with respect to such contest, such Indemnitee may retain or reassert
control of any contest that Lessee would otherwise be permitted to contest;
provided, further, that the Indemnitee shall not be required to undertake or
allow in its name or on its behalf any contest unless the following conditions
are satisfied:
(i) Lessee shall have (a) furnished Indemnitee
with a written opinion of tax counsel selected by Indemnitee and
reasonably acceptable to Lessee to the effect that a reasonable
basis (as defined in ABA Opinion 85-352) exists to contest such
claim (which opinion shall be obtained at Lessee's sole cost and
expense), provided however, that in the event the subject matter
of the contest is of a continuing nature and has previously been
decided adversely pursuant to the contest provisions of this
Section 10, there has been a change in the law (including, without
limitation, amendments to statutes or regulations, administrative
rulings and court decisions) after such claim shall have been so
previously decided and such Indemnitee shall have received an
opinion of tax counsel, to the effect that, as a result of such
change other than a change in statutory law, it is more likely
than not that the position which the Indemnitee or the Lessee, as
the case may be, had asserted in such previous contest would
prevail and, in the case of statutory changes-in-law, it is as
likely as not that the position will prevail, and (b) agreed to
pay Indemnitee for all reasonable costs and expenses which
Indemnitee may incur in contesting such claim (including without
limitation, payment on demand of all out-of-pocket costs,
expenses, additions to tax because of underpayment of estimated
taxes, losses, legal and accounting and investigatory fees and
disbursements, penalties, and interests),
(ii) a threshold amount of $50,000 for any
individual claim is at issue,
(iii) there is no substantial risk or danger of the sale,
loss or forfeiture of the Aircraft,
(iv) Lessee shall have admitted its liability
to indemnify Owner Participant for such claim or set
forth in writing why it is not so liable,
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(v) if such contest is to be initiated by the
payment of, and the claiming of a refund for, such Taxes, the
Lessee shall have advanced to such Indemnitee sufficient funds (on
an interest free basis) to make such payments,
(vi) no claim shall be appealed to the U.S.
Supreme Court,
(vii) no appeal of a trial court decision shall
be undertaken unless Lessee at its sole cost and expense shall
have furnished Indemnitee with a written opinion of tax counsel
selected by Indemnitee and reasonably acceptable to Lessee to the
effect that Indemnitee is more likely than not to prevail in such
appeal, and
(viii) no Event of Default has occurred and is continuing.
(i) Refund. If any Indemnitee shall obtain a
refund of all or any part of any Taxes paid by Lessee or from an advance by
Lessee, such Indemnitee shall pay Lessee the amount of such refund together with
any interest paid thereon attributable to the Taxes paid or advanced by Lessee
less the amount of any Taxes payable by such Indemnitee in respect of the
receipt of such refund and interest after giving credit to Lessee for any
savings by such Indemnitee in respect to any such Taxes by reason of deductions,
credits, allocations or allowances in respect of the payment of any such Taxes;
provided that such amount shall not be payable before such time as Lessee shall
have made all payments or indemnities then due to the Lessor and the Indemnitee
under the Lease and all other Operative Documents, and provided further that no
amount shall be payable during any period in which an Event of Default under the
Lease has occurred and is continuing unremedied unless this Lease has terminated
and Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be
in default under any of the above indemnification provisions of this Section 10
so long as Lessee or the Indemnitee shall diligently prosecute such contest in
accordance with the provisions of this Section 10. Notwithstanding the
foregoing, if a claim is made against any Indemnitee for any Taxes which, if
successful, would result in the imposition of Taxes under circumstances which
would require Lessee to indemnify such Indemnitee, the Indemnitee shall be
released
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from its responsibility to contest such claim or part thereof, if it agrees in
writing not to seek indemnification from Lessee in respect of the claim, or such
part thereof to be contested. In the event an Indemnitee fails to contest, or
refuses to permit Lessee to contest, a claim or part thereof which the
Indemnitee has the obligation to contest or to permit Lessee to contest under
this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee
for such claim or such part thereof.
(k) Affiliated Group. In the event that the
Indemnitee is a member of an affiliated group (within the meaning of Section
1504(a) of the Code) which files a consolidated Federal income tax return, the
term "Indemnitee" shall mean and include any member of such affiliated group.
(l) Verification. At Lessee's request, the
amount of any indemnity payment by Lessee pursuant to this Section 10 or any
payment by an Indemnitee to Lessee pursuant to this Section 10 shall be verified
and certified by an independent public accounting firm selected by such
Indemnitee and reasonably satisfactory to Lessee. In order to enable such
accountants to verify the indemnity amount, such Indemnitee shall provide to the
accountants (for their own confidential use) information reasonably necessary
for such verification to which Lessor has access; provided, however, such
information shall not be disclosed to Lessee or any person other than such
accountants. The fee of such firm shall be payable by Lessee unless such
verification shall result in an adjustment in Lessee's favor exceeding 10% of
the amount of the indemnity payment.
(m) Survival. All of the obligations and rights
of Lessee and Lessor under this Section 10 with respect to the Aircraft, the
Airframe, the Engines or any Part thereof shall survive the assignment, or
expiration or other termination, of the Lease with respect to the Aircraft for a
period of six (6) years from the occurrence of such assignment, or expiration or
termination, except that such obligations shall survive the expiration of such
six (6) year period with respect to any claim asserted prior to the expiration
of such six (6) year period but in either case only to the extent such
obligation or claim relates to events which occurred or conditions which existed
during the Term. Such obligations are expressly undertaken by Lessee for the
benefit of, and shall be enforceable by, Lessor. The provisions of this Section
10(m) are subject to the exclusions of Section 10(b)(viii).
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Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe.
Subject to the other provisions of this Section 11, upon an Event of Loss with
respect to the Airframe or the Airframe and any Engines then installed thereon,
Lessee shall forthwith (and, in any event, within five (5) Business Days after
such occurrence) give Lessor written notice of such occurrence and within thirty
(30) days after such occurrence give Lessor written notice of its election,
subject to the terms hereof and of the Indenture, to perform one of the
following two options (it being agreed that if Lessee shall not have given
Lessor notice of such election within thirty (30) days after such occurrence,
Lessee shall be deemed to have elected to perform the option set forth in the
following clause (ii)), provided, that Lessee shall not have the right to select
the option set forth in clause (i) if a Default or an Event of Default shall
have occurred and be continuing at the time of such election or at the time of
replacement:
(i) within one hundred twenty (120) days
(the "Replacement Period") after the date of the Event of Loss (but in no event
later than the last day of the Term) Lessee shall convey, or cause to be
conveyed to Lessor as provided in Section 11(c) hereof, to be subjected to the
Lien of the Indenture if it has not been discharged, and to be leased by Lessee
hereunder in replacement of the Airframe and such Engines then installed
thereon, title to a replacement Airframe (together with the same number of
replacement Engines as the Engines), such replacement Airframe and Engines (A)
to be free and clear of all Liens (it being understood that, upon such
conveyance, such replacement Airframe and replacement Engines may be subject to
Permitted Liens), (B) to have a value, utility and remaining useful life,
determined in accordance with the Appraisal Procedure as provided in Section
11(c) hereof, at least equal to, and to be in at least as good operating
condition as, the Airframe and the Engines, if any, so replaced (assuming the
Airframe and the Engines were maintained in accordance with the requirements of
this Agreement, whether or not they are in fact so maintained), and (C) to be a
like Airbus A320-231 model aircraft with equivalent or better modification
status delivered by the Manufacturer not earlier than June 30, 1988 and, in the
case of Engines, in compliance with Section 11(b); provided that if Lessee shall
not perform its obligation to effect such replacement under this clause by the
end of the Replacement Period, Lessee shall then be deemed to have elected to
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comply, and shall comply, with the provisions of clause (ii) of this Section
11(a); provided, further, that the payment specified therein shall be deemed to
have become due and payable on the Stipulated Loss Value Date occurring on or
immediately preceding the last day of the Replacement Period. Upon compliance
with the foregoing, Lessor will, subject to the rights of any insurers, transfer
to Lessee, "AS IS, WHERE IS," without recourse, representation or warranty
(except a warranty that such Airframe and Engines are free and clear of Lessor's
Liens), all of Lessor's right, title and interest, if any, in and to the
Airframe and the Engines suffering the Event of Loss as well as all of Lessor's
right, title and interest in and to any Engine constituting part of the Aircraft
and replaced as provided above but not installed thereon at the time of the
Event of Loss. For all purposes hereof, a replacement Airframe shall be deemed
part of the property leased hereunder and shall be deemed the "Airframe" as
defined herein. No Event of Loss resulting in replacement of the Airframe or
Engines under this Section 11(a)(i) shall result in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or
before one hundred twenty (120) days after the date of the Event of Loss (or, if
earlier, with respect to insurance proceeds, on the date on which insurance
proceeds with respect to the Event of Loss are received by the loss payee)
Lessee shall pay to Lessor in immediately available funds the sum of (A) the
Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated
Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be,
payable on each Basic Rent Payment Date or Renewal Rent Payment Date,
respectively, prior to the date of payment of such Stipulated Loss Value which
has not been paid when due, plus, if such Stipulated Loss Value Date is also a
Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent
or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss
Value Date, or, if such Stipulated Loss Value Date occurs after the last day of
the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent,
as the case may be, in effect on the last day of the Term, for each day from and
including the last day of the Term to and excluding such Stipulated Loss Value
Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of
Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with
respect to the Aircraft for any period commencing after the date on which such
Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain
liable for, and shall pay on or before the date the Stipulated Loss Value and
Supplemental Rent are
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paid, all payments of Basic Rent or Renewal Rent, as the case may be, for the
Aircraft due on or before the date of such payment of Stipulated Loss Value and
Supplemental Rent, (2) the Term shall terminate with respect to such Aircraft,
and (3) Lessor will, subject to the rights of any insurers, transfer to Lessee,
"AS IS, WHERE IS," without recourse, representation or warranty (except a
warranty that such Airframe and Engines are free and clear of Lessor's Liens),
all of Lessor's right, title and interest, if any, in and to the Airframe and
Engines suffering the Event of Loss, as well as all of Lessor's right, title and
interest, if any, in and to any Engine constituting part of the Aircraft but not
installed thereon at the time of the Event of Loss.
(b) Event of Loss with Respect to an Engine.
Upon an Event of Loss with respect to an Engine only, Lessee shall give Lessor
prompt written notice thereof and shall, at its own cost and expense, within
sixty (60) days after such occurrence convey or cause to be conveyed to Lessor
as replacement for the Engine suffering an Event of Loss, title to another IAE
Model V2500 engine of like model and equivalent or better modification status
or, at Lessee's option, an IAE engine of an improved model, in each such case
which has a value, remaining useful life and utility determined in accordance
with the Appraisal Procedure at least equal to such Engine and is suitable for
installation and use on the Airframe without diminishing the value, remaining
useful life or utility of such Airframe, free of all Liens (it being understood
that, upon such conveyance, such replacement Engine may be subject to Permitted
Liens) and being in as good operating condition as (including no greater number
of cycles or hours than) the Engine being replaced assuming the Engine being
replaced was serviceable and otherwise in the condition and repair required by
the terms hereof immediately prior to the Event of Loss. Prior to or at the time
of any such conveyance, Lessee, at its own cost and expense, will (i) furnish
Lessor with a full warranty bill of sale, in form and substance reasonably
satisfactory to Owner Participant and Indenture Trustee, as applicable, with
respect to such replacement Engine; (ii) cause supplements, in form and
substance reasonably satisfactory to Owner Participant and Indenture Trustee (if
the Lien of the Indenture has not been discharged), subjecting such replacement
Engine to this Lease, the Indenture (if in effect) and the Trust Agreement (if
in effect), to be duly executed by Lessee, if applicable, and duly filed for
recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor and
Indenture Trustee (if the Lien of the Indenture has not been discharged) with
such evidence
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of title to such Replacement Engine and of compliance with the insurance
provisions of Section 12 hereof with respect to such Replacement Engine as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request; (iv) furnish Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged) with an opinion
of Lessee's counsel addressed to such parties and to Lessor to the effect that
title to such Replacement Engine has been duly conveyed to Lessor free and clear
of all Liens (except Permitted Liens), and is duly leased hereunder and subject
to the Lien of the Indenture (if it has not been discharged), the instruments
subjecting such Replacement Engine to the Lien of the Indenture and the Lease,
and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the
case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Engine and the Lien of the
Indenture on such Replacement Engine; (v) furnish a certificate signed by a
Responsible Officer of Lessee certifying that, upon consummation of such
replacement, no Default or Event of Default will exist hereunder; (vi) furnish
such documents and evidence with respect to Lessee, Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged), as
such parties or their respective counsel may reasonably request in order to
establish the consummation of the transactions contemplated by this Section
11(b), the taking of all corporate proceedings in connection therewith and
compliance with the conditions set forth in this Section 11(b), in each case in
form and substance satisfactory to such party; (vii) furnish such Uniform
Commercial Code financing statements covering the Replacement Engine as may be
requested by Lessor or Indenture Trustee (if the Lien of the Indentures has not
been discharged); (viii) furnish Owner Participant with an opinion of tax
counsel mutually satisfactory to Owner Participant and Lessee and which opinion
is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner
Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in
Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the
terms of this Section 11(b),
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Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS,
WHERE IS" without recourse, representation or warranty (except a warranty that
such Engine is free and clear of Lessor's Liens), all of Lessor's right, title
and interest, if any, in the Engine which suffered the Event of Loss. For all
purposes hereof, each such Replacement Engine shall be deemed an "Engine" as
defined herein and shall be deemed part of the same Aircraft as was the Engine
replaced thereof. No Event of Loss covered by this Section 11(b) shall result in
any reduction in Rent.
(c) Conveyance of Replacement Airframe. Prior to
or at the time of any conveyance of a replacement Airframe pursuant to Section
11(a) above, Lessee, at its own cost and expense, will furnish Lessor with the
following documents which shall have been duly authorized, executed and
delivered by the respective parties thereto and shall be in full force and
effect on said date: (i) a full warranty bill of sale, in form and substance
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such
other form of bill of sale as may be approved by the FAA on said date), executed
by the owner thereof, in favor of Lessor and, cause supplements, reasonably
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), to this Lease, the Indenture (if then in
effect) and the Trust Agreement (if then in effect), with respect to such
replacement Airframe and to be duly filed for recordation pursuant to the
Federal Aviation Act or other applicable Governmental Entity; (ii) the
certificate specified in Section 12(f) hereof demonstrating compliance with the
insurance requirements of Section 12 with respect to the replacement Airframe
and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner
Participant) of Lessee's counsel (and such other evidence of title as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request) to the effect that, upon such conveyance,
Lessor will acquire good title to such replacement Airframe free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe may be subject to Permitted Liens), that such replacement Airframe will
be leased hereunder to the same extent as the Airframe replaced thereby and will
be subject to the Lien of the Indenture (if it has not been discharged), the
instruments subjecting such Replacement Airframe and Replacement Engine to the
Lien of the Indenture and the Lease, and subjecting to any relevant
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Assigned Sublease and Sublease Assignment, as the case may be, have been duly
filed for recordation pursuant to the Federal Aviation Act or any other law then
applicable to the registration of the Aircraft, and no further action, filing or
recording of any document is necessary in order to establish and perfect, in the
United States and, if the Aircraft is registered outside the United States, in
the jurisdiction of registration, the legal title to such Replacement Airframe
and Replacement Engine and the Lien of the Indenture on such Replacement
Airframe and Replacement Engine; and that Lessor, and Indenture Trustee as
assignee of Lessor, is entitled to the benefits of Section 1110 of Title 11 of
the United States Code with respect to such replacement airframe and engines to
the same extent as with respect to the Airframe and Engines then installed
thereon prior to such replacement; (iv) a certificate signed by a Responsible
Officer of Lessee certifying that, upon consummation of such replacement, no
Default or Event of Default will exist hereunder; (v) such documents and
evidence with respect to Lessee, Owner Participant or Indenture Trustee (if the
Lien of the Indenture has not been discharged), as such parties or their
respective counsel may reasonably request in order to establish the consummation
of the transactions contemplated by this Section 11(c), the taking of all
corporate proceedings in connection therewith and compliance with the conditions
set forth in this Section 11(c), in each case in form and substance satisfactory
to each such party, including evidence that the Aircraft of which the
replacement Airframe is a part has been duly certificated by the FAA as to type
and airworthiness in accordance with the terms of this Lease and application for
registration of such replacement Airframe in the name of Lessor has been duly
made with the FAA or other applicable Governmental Entity and Lessee has
temporary or permanent authority to operate the replacement Airframe; (vi)
furnish such Uniform Commercial Code financing statements covering the
replacement Airframe as may be reasonably requested by Lessor or Indenture
Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually
satisfactory to Owner Participant and Lessee and which opinion is reasonably
satisfactory to Owner Participant to the effect that such replacement will have
no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal
prepared in accordance with the Appraisal Procedure which confirms that the
replacement Airframe and any replacement Engine has a value, utility and
remaining useful life at least equal to that of the Airframe and Engines which
suffered the Event of Loss assuming that the same were maintained in accordance
with the requirements of this Lease whether or not they are in fact so
maintained; and (ix) furnish Owner Trustee and
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Indenture Trustee with the opinion of counsel to Lessee specified in Section
5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of
this Section 11(c), Lessor will, subject to the rights of any insurers, transfer
to Lessee "AS IS, WHERE IS," without recourse, representation or warranty
(except a warranty that such Airframe is free and clear of Lessor's Liens), all
of Lessor's right, title and interest in and to the Aircraft which suffered the
Event of Loss. No Event of Loss with respect to the Aircraft under the
circumstances contemplated by the terms of this Section 11(c) shall result in
any reduction in Rent.
For all purposes of this Lease, each such replacement Aircraft
(together with any Engines constituting part of the Aircraft being replaced as
to which an Event of Loss has not occurred) shall be deemed part of the property
leased hereunder and shall be deemed the "Aircraft" as defined herein.
(d) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer (including a
Governmental Entity providing an indemnity in lieu thereof) with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(f) below, any payments (other than insurance or
such indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value and other payments, if not already paid by Lessee, or, if already
paid by Lessee, shall (unless a Default or an Event of Default shall have
occurred and be continuing) be applied by Lessor to reimburse Lessee for its
payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a result of an Event
of Loss with respect to the Airframe or an Engine which is being replaced
pursuant to Section
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11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section
11(b) hereof, as the case may be, and of Section 15 hereof with respect to the
Event of Loss for which such payments are made and if no Default or Event of
Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect to the
Aircraft. Subject to Section 11(f) below, in the event of the requisition for
use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other
than a requisition constituting an Event of Loss), Lessee shall promptly notify
Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as if such
requisition had not occurred. All payments received by Lessor or Lessee from the
Governmental Entity for the use of such Airframe or Engine during the Term shall
be paid over to, or retained by, Lessee if no Default or Event of Default shall
have occurred and be continuing; and all other payments received by Lessor or
Lessee from the Governmental Entity shall be paid over to, or retained by,
Lessor. If the Airframe and such Engines or engines are not returned by the end
of the Term, an Event of Loss shall be deemed to have occurred on the last day
of the Term and, on the last day of the Term, Lessee shall either pay to Lessor
the amount provided herein for an Event of Loss to the Airframe and such Engines
or engines on such date or provide a replacement Aircraft and Engine on such
date in the condition provided for in Section 16 and Exhibit E. In the event of
the requisition for use by the Governmental Entity of any Engine without the
requisition for use of the Airframe, Lessee will replace such Engine hereunder
by complying with the terms of Section 11(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine, and thereafter any payments
received by Lessor or Lessee from the Governmental Entity with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application in Default. Any amount referred to in clause
(i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable to
Lessee shall not be paid to Lessee, or, if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such
payment or retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all
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such amounts shall be paid to and held by Indenture Trustee so long as the Lien
of the Indenture shall not have been discharged and thereafter by Lessor as
security for the obligations of Lessee, or, at the option of Lessor or the
Indenture Trustee, as the case may be, applied by Lessor or the Indenture
Trustee, as the case may be, toward payment of any of Lessee's obligations at
the time due hereunder, as Lessor or the Indenture Trustee, as the case may be,
may elect, including, without limitation, by reason of this Lease being declared
or deemed in default. At such time as there shall not be continuing any such
Event of Default or Default, all such amounts at the time held by Lessor or
Indenture Trustee in excess of the amount, if any, which Lessor or Indenture
Trustee has elected for application as provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability
products, completed operation liability covering maintenance of aircraft, but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Aircraft, in an amount not less than three hundred
fifty million dollars ($350,000,000), combined single limit, per occurrence or
such higher amount, and of such type and terms, as are customarily carried by
prudent Certificated Air Carriers, similarly situated to Lessee, operating
aircraft of similar size and engines and as hereinafter provided. Each and any
policy of insurance carried in accordance with this Section 12(a), and each and
any policy obtained in substitution or replacement for any of such policies, (i)
shall designate Lessor (in both its individual and trustee capacity), Owner
Participant, Indenture Trustee (in both its individual and trustee capacity) and
the other Indemnitees and their respective permitted assigns, as additional
insureds as their interests may appear (but without imposing upon any such
Person any obligation imposed upon the insured, including, without limitation,
the liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, in such policies, the insurance shall not be invalidated as to an
insured or
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additional insured by any act or omission of Lessee or any other insured or
additional insured and shall insure Lessor, Owner Participant, Indenture Trustee
and the other Indemnitees and their respective permitted assigns, regardless as
to any insured or additional insured of any breach or violation by Lessee or any
other insured or additional insured of any warranty, declaration or condition
contained in such policies, (iii) shall provide that if such insurance is
cancelled for any reason whatsoever, or is changed in any adverse way with
respect to the interests of Lessor, Owner Participant, Indenture Trustee and the
other Indemnitees or if such insurance is allowed to lapse for non-payment of
premium, such cancellation, change or lapse shall not be effective as to Lessor,
Owner Participant, Indenture Trustee and the other Indemnitees, and their
respective permitted assigns, until thirty (30) days, in each instance (seven
(7) days or such lesser period of time as is the insurance industry standard for
war/allied perils coverage), after notice to Lessor, Owner Participant and
Indenture Trustee from such insurer or insurers, of such prospective
cancellation, change or lapse, (iv) shall include coverage for any country in or
over which the Aircraft is located or operated, and (v) shall provide that, as
against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees,
and their respective permitted assigns, each insurer shall waive any rights of
set-off, counterclaim or any other deduction, whether by attachment or
otherwise, and waives any rights it may have to be subrogated to any right of
any insured against Lessor, Owner Participant, Indenture Trustee, or the other
Indemnitees, or their respective permitted assigns, with respect to the
Aircraft. Each liability policy shall be primary without right of contribution
from any other insurance which may be carried by Lessor, Owner Participant,
Indenture Trustee or the other Indemnitees, or their respective permitted
assigns, and shall expressly provide that all of the provisions thereof shall
operate in the same manner as if there were a separate policy covering each
insured, provided, that such policies shall not operate to increase the
insurer's limit of liability. Lessee shall cause its insurers to agree that the
indemnity and hold harmless provisions of Section 13 are insured as a
contractual assumption of liability by Lessee's insurers, subject to the terms,
coverage, conditions, limitations and exclusions of the policy of insurance.
Without limiting the foregoing, the type and amount of the insurance carried by
Lessee hereunder shall be no less in amount and no less comprehensive or
favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees then that
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carried by Lessee with respect to other A320-231 aircraft or similar-size
aircraft owned or leased by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at
its own expense, will maintain in effect, or cause to be carried and maintained
in effect, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the consent of Lessee) covering the Aircraft,
and "all-risk" coverage including transit insurance with respect to Engines and
Parts while not installed on such Aircraft or an aircraft, which in each case
considering all policy terms, limitations and exclusions is of the type, terms
and amount customarily maintained by prudent Certificated Air Carriers similarly
situated to Lessee and operating similar size aircraft and engines and as
hereinafter provided. Lessee shall also maintain, or cause to be maintained, war
risk and allied perils hull insurance reasonably acceptable to Lessor with
Approved Insurers. In addition, at least ten (10) Business Days (or, in the case
of an emergency, at least two (2) Business Days) prior to permitting the
Aircraft, Airframe or Engines to be operated or located outside of the United
States of America, other than in Canada or Mexico, Lessee shall notify Lessor
thereof. If Owner Participant or Indenture Trustee reasonably requests at any
time and if such insurance is then customarily being obtained by or for Persons
leasing or financing similarly-sized aircraft operating on similar routes to
operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is
in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay
or reimburse Lessor for political risk, repossession, expropriation,
confiscation and similar insurance as Lessor may arrange or cause to be
arranged; provided that Indenture Trustee shall not be obligated to request such
insurance and shall not be liable for any failure to request such insurance.
Anything herein to the contrary notwithstanding, at all times while the Aircraft
is subject to this Lease, the insurance required by this Section 12(b) shall be
for an amount on an "agreed value" basis not less than the Stipulated Loss Value
from time to time determined for the Aircraft. Without limiting the foregoing,
the type and amount of insurance carried by Lessee hereunder shall be no less
comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and
the
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other Indemnitees than that carried by Lessee with respect to similar-size
aircraft owned or leased by Lessee.
Each and any policy of insurance obtained and maintained
pursuant to this Section 12(b), and each and any policy obtained in substitution
or replacement for any such policies, (i) shall designate Lessor as owner of the
Aircraft, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns as additional insureds, as
their respective interests may appear (but without imposing upon Lessor, Owner
Participant, Indenture Trustee and their respective permitted assigns, any
obligation imposed upon the insured, including, without limitation, the
liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of such an additional insured and its
permitted assigns, in such policies, the insurance shall not be invalidated as
to an insured by any act or omission of Lessee or any other additional insured,
and shall insure each such additional insured and its permitted assigns,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their respective
permitted assigns, or if such insurance is allowed to lapse, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee, the other Indemnitees or their respective permitted assigns,
until thirty (30) days (seven (7) days or such lesser period of time as is the
insurance industry standard for war/allied perils coverage) after written notice
to Lessor, Owner Participant and Indenture Trustee from such insurer or
insurers, as the case may be, of such prospective cancellation, change or lapse,
(iv) shall include coverage for any country in or over which the Aircraft may at
any time be located or operated, (v) shall provide that, as against Lessor,
Owner Participant, Indenture Trustee the other Indemnitees and their respective
permitted assigns, each insurer shall waive any rights of set-off, counterclaim
or any other deduction, whether by attachment or otherwise, and waives any
rights it may have to be subrogated to any right of any insured
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against Lessor, Owner Participant, Indenture Trustee and the other Indemnitees
and their respective permitted assigns, with respect to the Aircraft, (vi) shall
provide that in the event of any damage or loss which is an Event of Loss
hereunder and which results in a payment, such payment shall be payable directly
to Indenture Trustee as sole loss payee, so long as the Lien of the Indenture
shall not have been discharged and thereafter to Lessor, as sole loss payee, and
(vii) shall provide that in the event of any damage or loss which is not an
Event of Loss hereunder and which results in a payment, such payment shall be
payable directly to Indenture Trustee, as sole loss payee for the account of all
interests, so long as the Lien of the Indenture shall not have been discharged
and thereafter to Lessor, as sole loss payee for the account of all interests.
The insurance required under this Section 12(b) may incorporate deductible
amounts which shall not exceed one million dollars ($1,000,000).
Each of Lessor and Owner Participant shall have the right to
carry additional and separate excess or contingent insurance for its own benefit
at its own expense, without, however, thereby limiting Lessee's obligations
under this Section 12, and Lessee shall not carry any such insurance if it would
conflict with or adversely affect other insurance carried by Lessor or Owner
Participant. Lessee shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to Lessee, provided, however, that such insurance does not conflict with
or adversely affect the insurance required hereunder or any excess or contingent
insurance carried by Lessor or Owner Participant. Lessee shall give Lessor
reasonable prior written notice of any insurance to be carried by Lessee in
addition to that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained to cover
"all-risk" ground and flight aircraft, hull and war risks and allied perils
insurance, Lessee shall include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by Lessee with respect to all
other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of Loss. It
is agreed that insurance payments which
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arise from insurance required to be carried by Lessee pursuant to this Section
12 and received as the result of the occurrence of an Event of Loss shall be
applied as follows (after reimbursement of Lessor, Owner Participant and
Indenture Trustee for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and other
payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this
Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture
has not been discharged and thereafter to Lessor in reduction of Lessee's
obligation to pay such Stipulated Loss Value and any other payments if not
already paid by Lessee, or, if already paid by Lessee, shall (unless a Default
or an Event of Default shall have occurred and be continuing) be applied by
Indenture Trustee or Lessor, as the case may be, to reimburse Lessee for its
payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a
result of an Event of Loss with respect to the Airframe or an Engine which is
being replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such
payments shall be paid over by the Indenture Trustee or Lessor, as the case may
be, to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or
Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect
to the Event of Loss for which such payments are made and if no Default or Event
of Default shall have occurred and be continuing.
(d) Application of Insurance Proceeds for Other
than an Event of Loss. The insurance payments of any property damage loss to the
Airframe or any Engine not constituting an Event of Loss with respect thereto
will be applied in payment for the actual costs of repairs or for replacement
property which Lessee has incurred in accordance with the terms of Section 9, 11
or 12(c) of this Lease against such documentation evidencing payment by Lessee
as Lessor may reasonably request to reimburse Lessee for such repairs or
replacements already paid for by Lessee, and any balance remaining after
compliance with such Sections with respect to such loss shall be paid to Lessor.
Lessee shall be entitled to receive from the insurer any insurance
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proceeds not in excess of five hundred thousand dollars ($500,000) as soon as
such funds are paid and shall promptly receive such additional insurance
proceeds from the loss payee upon invoices for repair work in progress,
replacement parts which are ordered or for work completed as provided above in
this Section 12(d). Any amount referred to in this Section 12(d) which is
payable to Lessee shall not be paid to Lessee if at the time of such payment any
Default or Event of Default shall have occurred and be continuing, but shall be
held by Lessor as security for the obligations of Lessee under this Lease or
applied as provided in Section 12(e).
(e) Application in Default. Any amount referred
to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable
to Lessee shall not be paid to Lessee, or if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the
Lien of the Indenture shall not have been discharged, and thereafter to Lessor,
if at the time of such payment or retention a Default or an Event of Default
shall have occurred and be continuing. In such case, all such amounts shall be
paid to and held by Indenture Trustee, so long as the Lien of the Indenture
shall not have been discharged, and thereafter held by Lessor as security for
the obligations of Lessee, or, at the option of Indenture Trustee or Lessor,
applied by Indenture Trustee or Lessor toward payment of any of Lessee's
obligations at the time due hereunder, including, without limitation, by reason
of this Lease being declared or deemed declared in default, as Indenture Trustee
or Lessor may elect. At such time as there shall not be continuing any such
Event of Default or Default, all such amounts at the time held by Indenture
Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or
Lessor has elected for application as provided above, shall be paid to Lessee.
(f) Certificates. On or before the Delivery
Date, and thereafter on any renewal by the Lessee of the insurance required
hereby (but in no event less than once in every twelve (12) month period),
Lessee will furnish to Lessor and Indenture Trustee a certificate executed and
delivered by an Approved Insurer or the Approved Broker, describing in
reasonable detail, and in accordance with customary practice, insurance carried
on the Aircraft and Lessee shall also furnish an opinion or report by the
Approved Insurer or the Approved Broker certifying that the insurance then
maintained on the Aircraft complies with the terms of this Lease. Lessee will
cause the Approved Broker
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to agree to advise Lessor, Owner Participant and Indenture Trustee in writing at
least thirty (30) days (seven (7) days or such lesser period of time as is the
insurance industry standard for war/allied perils coverage) prior to the
expiration, non-renewal, termination or cancellation for any reason (including,
without limitation, failure to pay premium therefor) or material modification of
any such insurance.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in
effect, the Permitted Sublessee) may carry primary insurance outside of the
aviation insurance markets in New York, London or Paris if the relevant primary
insurer shall have obtained reinsurance and such reinsurance (i) is on the same
terms as the original insurance and includes the provisions required by this
Agreement; (ii) provides in case of any bankruptcy, insolvency, liquidation,
dissolution or similar proceedings of or affecting the original insurer that the
reinsurers' liability will be to make such payment as would have fallen due
under the relevant policy of reinsurance if the original insurer had
(immediately before such bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full under the original
insurance policies in respect of which the then relevant policy of reinsurance
has been effected; and (iii) contains a "cut-through" clause in the following
form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the
Reinsured hereby mutually agree that in the event of any claim arising under the
reinsurances in respect of a total loss or other claim where as provided by the
Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] dated as of
November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee,
and America West Airlines, Inc. such claim is to be paid to the person named as
sole loss payee under the primary insurances, the Reinsurers will in lieu of
payment to the original insured, its successors in interest and assigns pay to
the person named as sole loss payee under the primary insurances effected by the
original insured that portion of any loss due for which the Reinsurers would
otherwise be liable to pay the original insurer (subject to proof of loss), it
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being understood and agreed that any such payment by the Reinsurers will (to the
extent of such payment) fully discharge and release the Reinsurers from any and
all further liability in connection therewith."
(h) Storage. During any period that the Aircraft
is in storage or otherwise grounded, Lessee may carry or cause to be carried, in
lieu of the insurance required by Sections 12(a) and (b) above, insurance
otherwise conforming with the provisions of said Sections 12(a) and (b) except
that the scope of the risk and the type of insurance, and the amount of the
insurance in the case of the insurance described in Section 12(a) above (but not
the amount of insurance to be carried under Section 12(b) above), shall be the
same as from time to time applicable to similar size passenger aircraft that
comprise Lessee's fleet in similar storage or grounding, and in any event
(including, without limitation, at any time when there shall be in existence a
Permitted Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event
of Default has occurred and is continuing, any amount held by Lessor or
Indenture Trustee, as the case may be, until application by Lessor or Indenture
Trustee, as the case may be, pursuant to this Section 12 shall be invested as
provided in Section 21(h) hereof.
(j) After the Term. Lessee shall continue to
maintain at its expense the insurance described in Section 12(a) for three years
after the expiration or termination of the Basic Term or Renewal Term, if Lessee
has elected to renew the Lease in accordance with Section 20, covering each
Indemnitee as its interest may appear and specifically insuring the indemnity
contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain
of the insurance described in Section 12 above, Lessee may provide a United
States governmental indemnity, to the extent and subject to the terms and
conditions specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and
hold harmless each Indemnitee on a net after-tax
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basis, as provided in Section 10(e), within fifteen (15) days after demand from
and against any and all claims (whether or not based on strict liability),
damages (whether direct, indirect, incidental, special or consequential),
losses, charges, fees, liabilities, obligations, demands, suits, judgments,
actions and other legal proceedings (whether civil or criminal), penalties,
fines, other sanctions, and any reasonable costs and expenses, in connection
herewith, including, without limitation, costs and expenses set forth in Section
21(j) hereof and reasonable attorney's fees and expenses of whatever kind or
nature (any and all of which are hereafter referred to as "Claims") imposed on,
or asserted by or against, or suffered or incurred by, any Indemnitee, from (and
including) the Restatement Date, including, without limitation, injury, death or
property damage of passengers, shippers and others, environmental control, noise
and pollution regulations, which in any way may result from, pertain to, or
arise in any manner out of, or are in any manner related to (1) the Operative
Documents, the Purchase Documents or the Financing Documents, or any of the
transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or
any engine used in connection with the Airframe or any Part thereof, including,
but not limited to, (A) the importation, exportation, condition, manufacture,
design, purchase, ownership, registration, reregistration, deregistration (other
than any deregistration caused by the failure of the registered owner of the
Aircraft to be a "citizen of the United States" as defined under the Federal
Aviation Act and the regulations thereunder or to file the documentation
necessary to continue FAA registration of the Aircraft), delivery, nondelivery,
assignment, leasing, subleasing, sub-subleasing, acceptance, rejection,
possession, repossession, control, return, financing, Liens (excluding Lessor's
Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the
Indenture), use, performance, modification, maintenance, overhaul, operation,
pooling, interchange, repair, testing, sale, return or other disposition or
application of the Aircraft, the Airframe, any Engine, any engine used in
connection with the Airframe or any Part (including, but not limited to, latent
and other defects whether or not discoverable by Lessee or Lessor, Claims
related to any actual or alleged violation of Law, loss or damage to any
property of passengers, shippers or otherwise or any Claim related to patent,
copyright, trademark or other infringement) either in the air or on the ground,
and, including, without limitation, any interest therein of an Indemnitee or
imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and
Lenders'
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Liens but including the Lien of the Indenture), or the rentals, receipts or
earnings therefrom (including, without limitation, the Rent and any other
amounts paid or payable with respect thereto); or (B) any defect in the
Aircraft, the Airframe, any Engine, any engine used in connection with the
Airframe or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine
or Part, or otherwise regardless of when such defect shall be discovered,
whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in
the possession of Lessee, and regardless of where such Aircraft, Airframe,
Engine, engine or Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Aircraft, the Airframe, an Engine, any Operative Document,
any Purchase Document or any Financing Document), (ii) the material breach of
any express representation, warranty or covenant made by such Indemnitee herein
or in any other Operative Document, or the Financing Documents (not resulting
from a breach by Lessee of any of its representations, warranties or covenants
in the Operative Documents or in the Financing Documents), (iii) any Taxes,
whether or not Lessee is required to indemnify such Taxes under Section 10
hereof or the Tax Indemnification Agreement (it being understood that Section 10
hereof and the Tax Indemnification Agreement exclusively provide for Lessee's
liability with respect to Taxes), (iv) any Claim which relates solely to events
which occurred prior to but excluding to the Restatement Date (other than Claims
related to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to Lessor in
accordance with the terms hereof and the Term of this Lease has been terminated
or has expired and the return is not related to an Event of Default, (vi) as to
such Indemnitee, an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the Aircraft, the
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Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents, except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder or
thereunder and except any Claim which is alleged or does relate to the period
prior to such disposition or (vii) the authorization or giving or withholding of
any future amendments, supplements, waivers or consents with respect to any of
the Financing Documents, the Purchase Documents or the Operative Documents,
which amendments, supplements, waivers or consents were not requested by Lessee
or are not required to give effect to the provisions of the Operative Documents,
the Financing Documents or the Purchase Documents (provided, however, in no
event will Lessee be liable for any Claims resulting from, pertaining to or
arising from or related to Lessor's granting or creating a Lessor's Lien or the
granting or creation of a Head Lessor's Lien). Upon full payment of the
indemnities herein, Lessee shall be subrogated to all rights and remedies which
such Indemnitee may have against any third party against whom such Indemnitee
has the right to assert a Claim which arises under any action described in this
Section 13 (except Claims under such Indemnitee's own insurance policies or
under the indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may result
from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as and to the extent such Indemnitee
is responsible under the Refunding Agreement for Claims related to such
deregistration), delivery, non-delivery, assignment, leasing, subleasing,
manufacture, acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Aircraft, the
Airframe, any Engine or any engine used in connection with the Airframe or any
Part
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thereof, either in the air or on the ground, or which may be caused by any
defect in such Aircraft, Airframe, Engine, engine or Part from the material or
any article used therein or from the design or testing thereof, or use thereof
or from any maintenance, service, repair, overhaul, or testing of such Aircraft,
Airframe, Engine, engine or Part, claims for infringement, loss of or injury to
any person, loss of or damage to any property or environmental damage,
regardless of when such defect may be discovered, whether or not such Aircraft,
Airframe, Engine, engine or Part is at the time in the possession of Lessee, and
regardless of the location of such Aircraft at any such time except to the
extent that such Claim results from (i) the gross negligence or willful
misconduct of such Indemnitee (except any such gross negligence or willful
misconduct as may be attributed to an Indemnitee due to its interest in the
Aircraft, the Airframe, an Engine, any Operative Document, any Purchase Document
or any Financing Document), (ii) the material breach of any of its express
representations, warranties or covenants hereunder, under any other Operative
Document or Financing Document (not resulting from a breach by Lessee of any of
its representations, warranties or covenants in the Operative Documents or in
the Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to but excluding the Restatement Date (other than Claims related to the
condition, manufacture or design of the Aircraft) and any Claim concerning
payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act
which occurs after the Aircraft has been returned to Lessor in accordance with
the terms hereof and the Term of this Lease has been terminated or has expired
and the return is not related to an Event of Default, (vi) an underlying act
which occurs after a disposition or other transfer (voluntary or involuntary) by
such Indemnitee of all or any part of its interest in the Aircraft, the
Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents (except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder and
except any Claim which is alleged or does relate to the
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period prior to such disposition), (vii) the authorization or giving or
withholding of any future amendments, supplements, waivers or consents with
respect to any of the Financing Documents, the Purchase Documents or the
Operative Documents, which amendments, supplements, waivers or consents were not
requested by Lessee or are not required to give effect to the provisions of the
Operative Documents, the Financing Documents or the Purchase Documents or (viii)
a Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such
Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense and
with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter
into a settlement or other compromise with respect to any Claim which Lessee or
such Indemnitee is defending hereunder in excess of $100,000 without the prior
written consent of the other, which consent shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense thereof
where Lessee has the right to control the defense thereof is materially
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prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section .
Nothing in this Section shall be construed as a guaranty by
Lessee of payments due pursuant to any indebtedness incurred with respect to the
purchase of the Aircraft or of the residual value of the Aircraft.
Notwithstanding anything herein or in any other Operative
Document to the contrary, with respect to any Claim for which any Indemnitee is
entitled to indemnification under more than one provision of this Lease or any
other Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue in
full force and effect notwithstanding the expiration or other termination of
this Lease or any of the other Operative Documents and are expressly made for
the benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume,
or suffer to exist any Lien on or with respect to the Aircraft, the Airframe,
any Engine or any Part thereof, title thereto, or any interest of Lessor therein
or in this Lease, except (i) the respective rights of Lessor, Lessee, Owner
Participant, Indenture Trustee and any other Indemnitee as herein provided or
provided under the other Operative Documents or the Financing Documents; (ii)
Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes
either not yet due or being diligently contested in good faith by appropriate
proceedings in accordance with Section 10 and so long as adequate reserves are
maintained with respect to such Liens and only so long as neither such
proceedings nor such Liens involve any material danger of the sale, forfeiture
or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any
interest of Lessor or Indenture Trustee therein or any risk of criminal
liability of Lessor or Indenture Trustee; (iv)
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inchoate materialmen's, mechanics', workmen's, repairmen's employees', or other
like inchoate Liens arising in the ordinary course of business for sums not
overdue by more than 45 days or being diligently contested in good faith and
only so long as neither such proceedings nor any such Liens involve any material
danger of the sale, forfeiture or loss of any of the Aircraft, the Airframe or
any Engine or any Part, or any interest of Lessor or Indenture Trustee therein;
(v) the rights of other Persons to the extent expressly permitted by the
provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any judgment
or award against Lessee (or any Permitted Sublessee) unless the judgment or
award shall not, within thirty (30) days after the entry thereof, have been
discharged, vacated, reversed, or execution thereof stayed pending appeal or
shall not have been discharged, vacated or reversed within thirty (30) days
after the expiration of such stay and only so long as such Liens shall not
involve any material danger of the sale, forfeiture or loss of any of the
Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor or
Indenture Trustee therein and provided that the execution of such judgment or
award or an attachment relating thereto shall not have occurred within such
thirty (30) day period; and, (vii) any other Lien with respect to which Lessee
(or a Permitted Sublessee) shall have provided a bond adequate in the reasonable
opinion of Indenture Trustee (if the Lien of the Indenture has not been
discharged) and Owner Participant. Lessee shall promptly, at its own expense,
take or cause to be taken such action as may be necessary to duly discharge any
Lien (except for the Liens referred to in clauses (i) through (vii) of this
Section 14) directly or indirectly created, incurred, assumed, or suffered to
exist by Lessee if the same shall arise at any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease, the
Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust
Supplement, and any other supplement from time to time required by the terms
hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease
Supplement, Indenture Supplement, Trust Supplement and such other supplements to
be duly filed and recorded, and maintained of record, in accordance with the
applicable laws of the government of registry of the Aircraft. If any filing or
recording is reasonably necessary to protect the interests of Lessor or
Indenture Trustee, Lessee shall, at its own cost and expense (except
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it shall be at Lessor's expense if in connection with a change in ownership of
the Aircraft or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default) and upon request by Lessor, cause any financing statements and
any and all additional instruments and other documents, so far as permitted by
applicable Law, to be kept, filed, and recorded and to be re-executed, refiled
and re-recorded at all times in the appropriate office pursuant or in relation
to any applicable Laws of any Governmental Entity, to protect and preserve the
rights and interests of Lessor or Indenture Trustee hereunder, under the
Indenture and in the Aircraft, and Lessee shall furnish to Lessor and Indenture
Trustee, evidence, reasonably satisfactory to Lessor and Indenture Trustee, of
each such filing or refiling and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or cause to be
done, at Lessee's cost and expense (except it shall be at Lessor's expense if in
connection with a change in ownership of the Aircraft or any other transfer or
assignment by Lessor other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), any and all acts and
things within its control which may be required under the terms of the Mortgage
Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease, and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Aircraft, as Lessor may
reasonably request. Lessee shall also do or cause to be done, at its own expense
(except it shall be at Lessor's expense if in connection with a change in the
ownership of the Aircraft or any other transfer or assignment by Lessor other
than as contemplated hereunder or under the Financing Documents or in connection
with an Event of Default), any and all acts and things which may be required
under the terms of any other Law involving any jurisdiction in which Lessee, any
Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may
reasonably request, to protect and preserve the title of the Lessor, this Lease,
the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and
under any of the Operative Documents or Financing Documents within any such
jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and
duly execute and deliver to Lessor or Indenture
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Trustee, as applicable, such further documents and assurances and take such
further actions as Owner Participant or Indenture Trustee may from time to time
reasonably request in order to more effectively carry out the intent and purpose
of this Lease and the other Operative Documents and the Financing Documents and
to protect the rights and remedies created or intended to be created in favor of
Lessor or Indenture Trustee hereunder and the other Operative Documents and the
Financing Documents including, without limitation, if reasonably requested by
Owner Participant or Indenture Trustee, at the expense of Lessee (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee
other than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default), the execution and delivery of supplements
or amendments hereto in recordable form, subjecting to this Lease, the Indenture
and the other Financing Documents, any replacement Aircraft or Engine and the
recording or filing of counterparts thereof in accordance with the laws of any
appropriate jurisdiction.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at
its own expense and risk, shall return the Aircraft to Lessor (or any Person
designated by Lessor) in at least the condition specified in this Section and
Exhibit E hereto at any Lessee system location in the continental United States
selected by Lessor, as Lessor may elect, or such other location as Lessor and
Lessee may agree, fully equipped with all required Engines, or other engines
owned by Lessee (which shall thereupon become Engines as hereinafter provided)
meeting the conditions specified in this Section and Exhibit E, duly installed
thereon by delivering the same to the Lessor at such location. Lessee shall
comply with Section 11(b) and this Section 16 with respect to any engines
installed on the Aircraft returned to Lessor hereunder and meeting the
conditions described herein which were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion
hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for
the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders'
Liens, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of
the regulations promulgated under the Federal Aviation Act and with a current
and valid Airworthiness Certificate
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installed on the Aircraft, unless such certificate shall have been suspended or
revoked as a result of the suspension or revocation of the registration of the
Aircraft under the Federal Aviation Act due to the ineligibility of the Aircraft
to be registered in the name of Lessor under the Federal Aviation Act (whether
by means of a voting trust agreement or otherwise) in which case the Aircraft
shall nevertheless meet all conditions for such certification and for the
issuance of such certificate; (iii) in full airworthy condition for over water
and EROPS operation according to the FAA standards required to allow the
Aircraft to be operated under, and in full compliance with, such Airworthiness
Certificate and Part 121 of the regulations promulgated under the Federal
Aviation Act for such operation, such compliance to be by means of such
mechanical repairs or modifications or such inspections as may be required
thereby, but not by operational restrictions, by logbook entries or other method
of acceptance of such restrictions; (iv) in full compliance with Lessee's
Maintenance Program; (v) to the extent the owner of the Aircraft is a "citizen
of the United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act and reasonably cooperative with Lessee at Lessee's expense with
respect to effecting such registration, duly registered in the name of the
Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi)
in full compliance with the maintenance and operation provisions of this Lease
and all FAA airworthiness directives, mandatory service bulletins and equivalent
requirements which by their terms require compliance on or before the last day
of the Term (without regard to any deferral, waiver, deviation or exemption
granted by the FAA specifically to Lessee delaying such compliance); (vii) in
good and airworthy operating condition, and in the same condition (including,
without limitation, in a passenger configuration suitable for passenger revenue
service) as when delivered to Lessee hereunder, ordinary wear and tear excepted,
with no open or outstanding deferred maintenance items, scheduled or
unscheduled, with all systems and components fully serviceable and operational
and with no placards restricting operation or use, and (viii) with all remaining
warranties, indemnities, policies and guarantees referred to in Section 5(d)
made available to Lessor in a manner and by documents in form and substance
reasonably satisfactory to Lessor.
(c) Engines. In the event any engine not owned by Lessor shall
be installed on the Aircraft on any Return Occasion, without limiting Lessee's
obligations under the
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Tax Indemnification Agreement, such engine shall be of the same model and
equivalent modification status as the Engines or, at Lessee's option, an IAE
engine of an improved model suitable for installation and use on the Airframe
without diminishing the value, remaining useful life or utility of such
Airframe, in each such case having a value, remaining useful life and utility at
least equal to (as determined in accordance with the Appraisal Procedure), and
be in an operating condition as good as the Engines, assuming the Engines were
in the condition and repair as required by the terms hereof immediately prior to
such termination and shall conform to the return condition requirements set
forth in this Section 16 and Exhibit E, and Lessee, at its own expense and
concurrently with such delivery, shall cause such engine to become an Engine by
complying with Section 11(b) hereof. Lessee's obligation to comply with the
terms of this Section 16(c) shall be conditioned on Lessor's transferring to
Lessee all of Lessor's right, title and interest in and to any Engine not
installed on the Aircraft at the Return Occasion "AS IS, WHERE IS," without any
representation, warranty or recourse of any kind whatsoever, express or implied,
except a warranty that such Engine is free and clear of Lessor's Liens.
(d) Records and Documents. Upon the return of the Aircraft,
Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection,
modification, overhaul and other records, related to the Aircraft, including,
without limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Aircraft and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft under
the Maintenance Program, in each case as Lessor may reasonably request, and all
documentation with respect to the Aircraft set forth on Exhibit B or otherwise
delivered to Lessee at delivery thereof, and (ii) all records necessary or
required by the FAA to certify and place the Aircraft on an FAA or other
country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of
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Manufacturer, Manufacturer's Subsidiary or Original Head Lessee, which must be
updated to the latest revision status as of the last day of the Term within such
software base and all data therein or pertaining thereto shall be deemed
property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the maintenance records by part numbers and serial
numbers other than the manufacturer's shall be provided with interchange or
cross reference listing necessary to establish complete traceability. All
documentation, flight, and maintenance records as specified by United States
Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation
121.380 which normally accompany the transfer of an aircraft which has been
operating in regulated commercial air service, shall be delivered to Lessor with
the Aircraft. Any documents or records required to be delivered hereunder shall
be in English.
(e) Condition of Aircraft. Upon any Return Occasion, Lessee
shall return such Aircraft to Lessor in such condition that the Aircraft shall
also comply with each and every condition and requirement set forth elsewhere in
this Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion, Lessee shall
make the Aircraft available to Lessor at the location where the "block 'C'
Check" (or equivalent level designated check or checks) required hereunder to be
performed immediately prior to redelivery is to be performed for detailed
inspection of the documents referred to in paragraph (d) above and the Airframe,
Engines and Parts structure and parts, at Lessee's expense (excluding
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compensation to representatives of Lessor), in order to verify that the
condition of such Aircraft complies with the requirements set forth above (such
inspection being hereinafter referred to as the "Final Inspection"). The Final
Inspection shall be combined with such "block 'C' Check" (or equivalent level
check or checks) and may include such other items as reasonably requested by
Lessor. Lessee shall give Lessor not less than thirty (30) days prior written
notice of the commencement date of such Final Inspection. The period allowed for
the Final Inspection shall be the same period during which such "block 'C'
Check" is being performed and shall have such duration as to permit the opening
of any areas of the Aircraft which are necessary or advisable to satisfy Lessor
as to compliance with the requirements of this Section 16 and Exhibit E. The
Final Inspection shall commence on the date so noticed which shall be on or
before the expiration of the Term with respect to the Aircraft and shall
continue on consecutive days until all activity required above to be conducted
has been concluded. To the extent that any portion of the Final Inspection
extends beyond the expiration of the Term, unless Lessor has terminated the
Lease pursuant to Section 18(g) hereof, the Term with respect to the Aircraft
undergoing the Final Inspection shall be deemed to have been automatically
extended, and all obligations hereunder continued, on a daily basis until the
Final Inspection shall have been concluded and Lessee shall pay Rent during any
such extension in an amount equal to the average daily Basic Rent or Renewal
Rent, as the case may be, paid in respect of the last year of the Basic Term or
Renewal Term, as the case may be (and Stipulated Loss Value during such
extension shall equal the Stipulated Loss Value on the last day of the Basic
Term or Renewal Term, as the case may be); provided, however, that Lessee shall
not be required to pay Rent with respect to the Aircraft during the period of
extension to the extent that Lessor is responsible for the delay in completion
of the Final Inspection. All storage expenses attributable to any Term extension
pursuant to the preceding sentence shall be payable by Lessee, except that
Lessee shall not be liable for any storage expenses which are incurred after the
sixtieth (60th) day after the Term to the extent that storage continues
thereafter due to Lessor's delay in completion of the Final Inspection.
(g) Aircraft Records and Documents. In order to
enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to
Subsection 16(f) above, Lessee agrees to make available to Lessor at a
maintenance base of Lessee with adequate facilities for short-term maintenance,
where
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the Final Inspection is to occur, not later than ten (10) days prior to the
commencement of such Final Inspection, the Aircraft Records and Documents listed
in Exhibit B hereto, together with such other documentation (including, without
limitation, original airworthiness directive compliance documents and other work
documents) regarding the condition, use, maintenance, or operation as Lessor may
reasonably request or require to substantiate the status of the Aircraft.
(h) Corrections and Subsequent Corrections. To the extent that
the Aircraft or any Engine fails upon a Return Occasion to conform to any
requirement imposed by this Lease Lessor may, at its option, (i) continue the
Lease in effect in the manner provided for in Section 16(f) above with regard to
automatic extension until such time as such Aircraft is brought up to the
condition required by this Section 16, including Exhibit E, or (ii) accept the
return of such Aircraft and thereafter have any such nonconformance corrected,
at such time as Lessor may deem appropriate but not to commence later than
ninety (90) days following the return of such Aircraft, at commercial rates then
charged by the Person selected by Lessor to perform such correction. Lessee's
obligations to pay such Supplemental Rent shall survive the Expiration Date or
other termination of this Lease. Nothing set forth in this paragraph shall
constitute a limitation on Lessor's or Owner Participant's ability to recover
from Lessee any damages, expenses or losses pursuant to Sections 13 or 18 hereof
suffered as a result of Lessee's failure to effect the return of the Aircraft at
the time, in the place and in the condition as specified in this Section 16 and
Exhibit E hereto.
(i) Functional Flight Check. Immediately prior to the
expiration of the Term, Lessor will be permitted to conduct a non-commercial
functional flight check flight of no more than two (2) hours duration in
accordance with the Manufacturer's functional flight check procedures at
Lessee's expense to demonstrate the airworthiness of the Aircraft and proper
functioning of all systems and components. A qualified pilot and up to five (5)
other representatives selected by Lessor may take part in such flight to verify
compliance of the Aircraft with the requirements of this Lease, provided, that
Lessor shall be responsible for the charges of such qualified pilot and
representatives. Lessee may combine the functional flight check provided in this
Section 16(i) with the delivery flight specified in Section 16(a) and such
functional flight check shall include the landing. Any discrepancy or
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malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any actions
to correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee shall, at
Lessee's expense, take such action as Lessor may reasonably request to assist
Lessor in obtaining any required documents in relation to the export of the
Aircraft from the United States (including, without limitation, a valid and
subsisting export certificate of airworthiness with respect to the Aircraft and
export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee shall
deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished
without charge by the manufacturer for installation on the Aircraft which have
not been so installed together with appropriate instructions for installation.
In the event such uninstalled kits were purchased or manufactured by Lessee,
then Lessor shall be advised of such kits by Lessee and have a right of first
refusal to purchase such kits at Lessee's cost for a period of ninety (90) days
after return.
(l) Storage Upon Return. Upon any Return Occasion, Lessee
shall, at Lessor's request and at Lessee's risk and expense, in addition to
other storage referred to above, arrange for the parking, storage and insurance
of the Aircraft for a period not exceeding sixty (60) days at such reasonable
location as Lessor requests where Lessee has or can arrange for storage. Lessee
shall pay or cause to be paid all costs and expenses for such parking, storage
and insurance.
(m) Resale/Release Cooperation. During the last twelve (12)
months of the Term, with reasonable notice and at reasonable times, Lessee will
cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable
respects, with the efforts of Lessor to sell or lease the Aircraft after the end
of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Aircraft and the records
relating thereto to the extent it does not
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unreasonably interfere with the operation or maintenance of the Aircraft or the
conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic Rent,
Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days
after the date on which such payment is due, or (ii) any other payment of
Supplemental Rent due hereunder within ten Business Days after the date on which
such payment is due and Lessee has received written demand therefor by the party
entitled thereto; provided that any failure of Lessee to pay to Lessor or the
Owner Participant when due any Excepted Payments (as defined in the Indenture)
shall not constitute an Event of Default unless Lessor or Owner Participant
delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force and
effect any insurance required under the provisions of Section 12 hereof or shall
operate the Aircraft outside of the scope or in violation of the terms of the
insurance or United States Government indemnity coverage required to be
maintained with respect to such Aircraft; or
(c) Any representation or warranty made by Lessee herein or in
the Refunding Agreement or in any certificate furnished by Lessee in connection
herewith or therewith is or was incorrect at the time made in any material
respect and such incorrectness shall not have been cured within thirty (30) days
after the receipt by Lessee of a written notice from Lessor or the Indenture
Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant,
condition, or agreement to be performed or observed by it pursuant to this Lease
or the Refunding Agreement, and such failure shall continue uncured for thirty
(30) days after written notice thereof is given by Lessor or Indenture Trustee
to Lessee; provided, however,
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that if Lessee shall have undertaken to cure any such failure which arises under
the first or second sentence of Section 6(c) or Section 6(d), as such provisions
of Section 6 relate to maintenance, service, repair or overhaul, or Section 9,
and notwithstanding the diligence of Lessee in attempting to cure such failure,
such failure is not cured within said thirty (30) day period but is curable with
future due diligence, there shall exist no Event of Default under this Section
17 so long as Lessee is proceeding with due diligence to cure such failure and
such failure is remedied not later than one hundred eighty (180) days after
receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a custodian,
receiver, trustee or liquidator of itself or all or any material part of
Lessee's property or Lessee's consolidated property, or Lessee admits in writing
its inability to, or is unable to, or does not, pay its debts generally as they
come due, or makes a general assignment for the benefit of creditors, or Lessee
files a voluntary petition in bankruptcy or a voluntary petition seeking
reorganization in a proceeding under any bankruptcy or insolvency Laws (as now
or hereafter in effect), or an answer admitting the material allegations of a
petition filed against Lessee in any such proceeding, or Lessee by voluntary
petition, answer or consent seeks relief under the provisions of any other
bankruptcy, insolvency or other similar Law providing for the reorganization or
winding-up of corporations, or provides for an agreement, composition, extension
or adjustment with its creditors, or any corporate action (including, without
limitation, any board of directors or shareholder action) is taken by Lessee in
furtherance of any of the foregoing, whether or not the same is fully effected
or accomplished; or
(f) An order, judgment or decree is entered by any court
appointing, without the consent of Lessee, a custodian, receiver, trustee or
liquidator of Lessee, or of all or any material part of Lessee's property, or
Lessee's consolidated property, or all or any material part of Lessee's property
or Lessee's consolidated property is sequestered, and any such order, judgment
or decree of appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of ninety (90) days after the date of entry
thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding
under the Federal bankruptcy laws or other
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insolvency Laws (as now or hereafter in effect) is filed and is not withdrawn or
dismissed within ninety (90) days thereafter or at any time an order for relief
is granted in such proceeding, or if, under the provisions of any Law providing
for reorganization or winding-up of corporations which may apply to Lessee, any
court of competent jurisdiction assumes jurisdiction over, or custody or control
of, Lessee or of all or any material part of Lessee's property, or Lessee's
consolidated property and such jurisdiction, custody or control remains in
effect, unrelinquished, unstayed or unterminated for a period of ninety (90)
days or at any time an order for relief is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial passenger
Certificated Air Carrier or, except in either case in connection with a labor
dispute, announcement thereof or Lessee's suspension of its business as a
commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States air
carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor may, at its option,
declare by written notice to Lessee this Lease to be in default, provided,
however, that this Lease shall be deemed to be declared in default automatically
without the necessity of such written declaration upon the occurrence of any
Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof;
and at any time thereafter, so long as any outstanding Event of Default shall
not have been remedied, Lessor may do one or more of the following with respect
to all or any part of the Airframe and any or all of the Engines as Lessor in
its sole discretion shall elect, to the extent permitted by, and subject to
compliance with any mandatory requirements of, applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's cost and expense, immediately return, and the
Lessee hereby agrees that it
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shall return promptly all or such part of, the Aircraft to Lessor in the manner
specified in such notice, in which event such return shall not be delayed for
the purposes of complying with the return conditions specified in Section 16 and
Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's
possession of the Aircraft) or delayed for any other reason; provided, however,
that Lessee shall remain and be liable to Lessor for amounts provided for herein
or other damages resulting from the Aircraft or any Engine not being in the
condition required by Section 16 and Exhibit E. Notwithstanding the foregoing,
at Lessor's option, Lessee shall be required thereafter to take such actions as
would be required by the provisions of this Lease if such Aircraft were being
returned at the end of the Term hereof with respect to such Aircraft. In
addition, Lessor or Lessor's agent, at its option and to the extent permitted by
applicable Law, may but shall not be obligated to enter upon the premises where
all or any part of the Aircraft, Airframe and/or Engines are located to take
immediate possession of and, at Lessor's option, remove the same (and/or any
engine which is not an Engine but which is installed on the Airframe, subject to
the rights of the owner, lessor or secured party thereof) by summary proceedings
or otherwise, all without liability accruing to Lessor or Lessor's agent for or
by reason of such entry or taking of possession or removal whether for the
restoration of damage to property, or otherwise, caused by such entry or taking,
except direct damages to the extent caused by Lessor's gross negligence or
willful misconduct.
(b) With or without taking possession thereof, sell or cause
to be sold, the Aircraft, Airframe or Engine or any part thereof, or Lessor's
interest therein, at private or public sale, as Lessor in its sole discretion
may determine, or otherwise dispose of, hold, use, operate, or lease to others,
or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole discretion
may determine, all free and clear of any rights of Lessee or any Permitted
Sublessee and except as hereinafter set forth in this Section 18. Lessor may be
the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty
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(in lieu of the Basic Rent or Renewal Rent, as the case may be, due for the
period commencing after the Stipulated Loss Value Date specified for payment in
such notice), any unpaid Rent for the Aircraft to and including the Stipulated
Loss Value Date specified in such notice, plus whichever of the following
amounts as Lessor may specify, in its sole and absolute discretion, in such
notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated
Loss Value for the Aircraft, Airframe or Engine computed as of the date
specified in such notice plus, if such date is a Basic Rent Payment Date or a
Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent, as
the case may be, due on such date, over the fair market sale value of the
Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an
amount equal to the excess, if any, of the sum of the Stipulated Loss Value for
the Aircraft, Airframe or Engine computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment
Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due
on such date, over the fair market rental value of the Aircraft for the
remainder of the Term as of the date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above,
shall have sold the Aircraft, Airframe or Engine or its interest therein,
Lessor, in lieu of exercising its rights under paragraph (c) above, may, if it
shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor on
such demand, as liquidated damages for loss of bargain and not as a penalty (in
lieu of the Basic Rent or Renewal Rent, as the case may be, due for the period
commencing after the Stipulated Loss Value Date immediately prior to the date
such sale occurs), any unpaid Rent due to and including the date of sale, plus
the amount by which the Stipulated Loss Value of such Aircraft, Airframe or
Engine, computed as of such Stipulated Loss Value Date, exceeds the net proceeds
of such sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph (b), (c)
or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next
Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so
pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in
advance for the period on and after the Stipulated Loss Value Date), any unpaid
Basic Rent or Renewal Rent, as the case may be, for such
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Aircraft due and unpaid for any period prior to and including, and any Basic
Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount
equal to the Stipulated Loss Value for the Aircraft computed as of such
Stipulated Loss Value Date; and upon such payment of liquidated damages and the
payment of all other Rent then due hereunder and the discharge of the Lien of
the Indenture pursuant to Section 10.01 thereof, Lessor shall, at Lessee's
expense, transfer, without recourse or warranty (except as to the absence of
Lessor's Liens and the Lien of the Indenture), all right, title and interest of
Lessor in and to the Aircraft to Lessee or as it may direct and Lessor shall, at
Lessee's expense, execute and deliver such documents evidencing such transfer
and take such further action as Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to paragraph (b) above,
shall have relet the Aircraft, Airframe or Engine under a long term lease,
Lessor, in lieu of exercising its rights under paragraph (c) above with respect
to such Aircraft, Airframe or Engine, may, if it shall so elect, demand that
Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as liquidated
damages for loss of bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent, as the case may be, for such Aircraft due after the time of
reletting) any unpaid Rent for such Aircraft due up to the date of reletting,
plus the amount, if any, by which the aggregate Basic Rent or Renewal Rent, as
the case may be, for such Aircraft which would otherwise have become due over
the Basic Term or Renewal Term, as the case may be, discounted periodically
(equal to installment frequency) to present worth as of the date of reletting at
the rate of 8.50% per annum, exceeds the aggregate basic rental payments to
become due under the reletting from the date of such reletting to the date upon
which the Term for such Aircraft, Airframe or Engine would have expired but for
Lessee's default, discounted periodically (equal to installment frequency) to
present worth as of the date of the reletting at the rate of 8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by written
notice to Lessee which cancellation, rescission and/or termination shall be
effective upon dispatch, whereupon Lessee's right to possess and use the
Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall be
and remain liable for damages and losses suffered by Lessor and all other
amounts payable by Lessee hereunder.
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(h) Lessor may exercise any other right or remedy which may be
available to it under applicable laws, or may proceed by appropriate court
action or actions, either at law or in equity, to enforce any other remedy or
right Lessor may have hereunder, under the other Operative Documents, at law or
in equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable (without
duplication of the remedies above and of Lessee's obligations under Section 10
and Section 13 hereof and subject to the exclusions set forth therein) for any
and all unpaid Rent before, during or after the exercise of any of the above
mentioned remedies (including without limitation interest on unpaid amounts with
respect to all amounts not paid when due, including, without limitation, any
amounts payable pursuant to the foregoing provisions of this Section 18), and,
except as specified above, until satisfaction of all of Lessee's obligations to
Lessor hereunder and for all legal fees and other costs and expenses incurred by
any Indemnitee by reason of the occurrence of any Event of Default or the
exercise of an Indemnitee's remedies with respect thereto, including all costs
and expenses incurred in connection with the return of the Aircraft in
accordance with the terms of Section 16 and Exhibit E hereof or in placing the
Aircraft, Airframe or Engine in the condition and with airworthiness
certification as required by such Section and such Exhibit and costs and
expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass
Through Trust Agreements, the Intercreditor Agreement or each Liquidity
Facility. All liquidated damages payable pursuant to the foregoing shall bear
interest, which shall be payable on the date the payment of such liquidated
damages is due at a rate equal to the Interest Rate from and including the date
due to and excluding the date actually paid.
In effecting any repossession, Lessor, its representatives and
agents, to the extent permitted by applicable Law, (i) shall have the right to
enter upon any premises where it reasonably believes the Aircraft, the Airframe,
an Engine or Part to be located, (ii) shall not be liable, in conversion or
otherwise, for the taking of any personal property of Lessee which is in or
attached to the Aircraft, the Airframe, an Engine or Part which is repossessed,
(iii) shall not be liable or responsible, in any manner, for any damage or
injury to any of Lessee's
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property in repossessing and holding the Aircraft, the Airframe, an Engine or
Part except for direct damages caused by Lessor's gross negligence or willful
misconduct and (iv) shall have the right to maintain possession of and dispose
of the Aircraft, the Airframe, an Engine or Part on any premises owned by Lessee
or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole expense,
assemble and make the Aircraft, the Airframe, an Engine or Part available at a
place designated by Lessor in accordance with Section 16 and Exhibit E hereof.
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the
occurrence of an Event of Default, any rights in any warranty (express or
implied), service life policy, infringement indemnity, performance guaranty or
the like heretofore made available to Lessee or otherwise held by Lessee shall
without further act, notice or writing be deemed automatically cancelled and
shall be enforceable solely by and for the benefit of, and assigned to, Lessor.
Lessee shall be liable to Lessor (without duplication) for all expenses,
disbursements, costs and fees incurred in (i) repossessing, storing, preserving,
shipping, maintaining, repairing and refurbishing the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 16 and Exhibit E hereof and
(ii) preparing the Aircraft, the Airframe, an Engine or Part for sale or lease,
advertising the sale or lease of the Aircraft, the Airframe, an Engine or Part
and selling or releasing the Aircraft, the Airframe, an Engine or Part. Lessor
is hereby authorized and instructed, at its option, to make expenditures which
Lessor considers advisable to repair and restore the Aircraft, the Airframe, an
Engine or Part to the condition required by Section 16 and Exhibit E hereof, all
at Lessee's sole expense.
For the purpose of this Section 18, the "fair market rental
value" or the "fair market sales value" of the Aircraft, Airframe, an Engine or
Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or Part
pursuant to this Section , Owner Participant may bid for and purchase such
property and Lessee agrees that the amounts paid therefor shall be used in the
computations contemplated herein and Lessee shall remain liable for any
deficiency.
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No remedy referred to in this Section is intended to be
exclusive, but, to the extent permitted by Law, each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d), (e) or (f)
above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Aircraft leased hereunder or otherwise to more effectively carry out
Lessor's rights and remedies and to file said documents for recordation with the
FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full force
and effect and survive the expiration or other termination of this Lease and are
expressly made for the benefit of and shall be enforceable by Lessor, Owner
Participant and, if the Lien of the Indenture has not been discharged, Indenture
Trustee.
Section 19. Security for Obligations. In order to secure the
Equipment Notes, Lessor has created, by the Indenture, a security interest in
the Trust Indenture Estate, including, without limitation, this Lease and all
Rent and other sums payable hereunder, except as provided in the Indenture and
subject in each case to Liens permitted hereunder. The Indenture provides, among
other things for the assignment by Lessor to Indenture Trustee of its right,
title and interest in, to and under this Lease, to the extent set forth in the
Indenture, for the creation of a first-mortgage lien on and perfected security
interest in all of Lessor's right, title and interest in and to the Aircraft in
favor of Indenture Trustee. Lessee hereby
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consents to such assignment and to the creation of such mortgage and security
interest and acknowledges receipt of copies of the Trust Agreement and the
Indenture, it being understood that such consent shall not affect any
requirement or the absence of any requirement for any consent under any other
circumstances. Until the Lien of the Indenture has been discharged, Lessee will
furnish to Indenture Trustee counterparts of all notices and other writings of
any kind required to be delivered hereunder by Lessee to Lessor. Until the Lien
of the Indenture has been discharged, (a) Lessee shall make all payments of
Rent, Stipulated Loss Value and all other amounts payable hereunder (other than
Excepted Payments) to or as directed by Indenture Trustee as provided in
Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled to exercise
the rights of Lessor (but not Owner Participant) (other than Expected Rights)
herein as and to the extent provided herein or in the Indenture and any express
reference to Indenture Trustee in any Section of this Lease shall not give rise
to any implication that Indenture Trustee may not exercise the rights of Lessor
in any other Section of this Lease as and to the extent provided in the
Indenture.
The provisions of this Lease and the Refunding Agreement which
require or permit action by, the payment of monies to, the consent or approval
of, the furnishing of any instrument or information to, or the performance of
any other obligation to, Indenture Trustee, shall not be effective, and the
Sections hereof containing such provisions shall be read as though there were no
such requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received from
Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee under
this Lease by a Permitted Sublessee shall constitute payment or performance of
such obligation by Lessee.
Section 20. Renewal Option. Lessee may renew this Lease as
provided in the following clause (i) and subject to the following clause (ii):
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(i) Exercise of Renewal Option. Provided that
this Lease has not been previously terminated and that no Default
or Event of Default shall have occurred and be continuing at the
time of the giving of irrevocable notice hereinafter referred to
in this clause (i) or at the time of the commencement of the
Renewal Term, Lessee, at its option, may renew this Lease for one
Renewal Term consisting of a period equal to five years. The right
to renew this Lease for such Renewal Term pursuant to this clause
(i) shall be exercised upon irrevocable notice from Lessee
received by Lessor of Lessee's election to so renew this Lease not
less than twelve (12) months and not more than twenty-four (24)
months prior to the last day of the Basic Term. The Renewal Rent
for the Renewal Term shall be the "fair market rental value" of
the Aircraft for such Renewal Term (the "renewal fair market
rental value") as determined in accordance with the Appraisal
Procedure. For purposes of this paragraph (i), the Appraisal
Procedure shall be initiated by Lessee no earlier than nine (9)
months prior to the end of the Basic Term. If Lessee shall fail to
exercise its option to extend the term of this Lease for the
Renewal Term in accordance with the provisions of this paragraph,
all of Lessee's rights to extend the Term for such Renewal Term
shall expire. Lessee shall pay all reasonable costs and expenses,
including, without limitation, reasonable legal fees and expenses,
incurred by Lessor, Owner Participant and the Indenture Trustee in
connection with the exercise of such option.
(ii) Provisions Applicable During Renewal Term.
All provisions of this Lease, including, without limitation, as to
Rent and Stipulated Loss Value (which shall be, with appropriate
adjustments, in no event less than the greater of 120% of the
"fair market sales value" of the Aircraft as of the first day of
the Renewal Term as determined pursuant to the Appraisal Procedure
or the amount set forth on Exhibit A as of the end of the Basic
Term), shall remain in effect and be applicable during such
Renewal Term, except that Lessee shall pay to the Lessor,
semi-annually in arrears as Renewal Rent on each Renewal Rent
Payment Date, the amount for such Renewal Term as determined in
accordance with clause (i) of this Section 20.
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Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision
of this Lease 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. To the extent
permitted by Law, each of Lessor and Lessee hereby waives any provision of Law
which renders any provision hereof prohibited or unenforceable in any respect.
No term or provision of this Lease may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing expressed to be a
supplement or amendment to, or waiver or termination of this Lease signed by an
officer of the party against which the enforcement of the change, waiver,
discharge, or termination is sought. This Lease shall constitute an agreement of
lease, and nothing herein shall be construed as conveying to Lessee any right,
title, or interest in the Aircraft or any Engine or Part except as a lessee
only. Without limiting the foregoing, the parties hereto agree to treat this
Agreement as a lease for United States federal income tax purposes and Lessee
will not file a tax return which is inconsistent with the foregoing and nothing
contained herein shall be construed as an election by Lessor to treat Lessee as
having acquired the Aircraft for the purpose of the investment credit allowed by
Section 38 of the 1954 Code or any similar or successor statute. The headings in
this Lease are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
(B) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED
IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor and
Lessee required or permitted under the terms and provisions hereof shall be in
writing and shall be sent to Lessor or Lessee at their respective addresses set
forth in Exhibit C hereto (or such other addresses as the parties may designate
from time to time in writing). All
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notices, reports or other documents provided to Lessor or Lessee shall be
provided concurrently to Indenture Trustee (until such time as the Lien of the
Indenture is discharged) and to Owner Participant, at such address as Owner
Participant and Indenture Trustee, respectively, may designate from time to
time. All notices and instructions hereunder shall become effective when
received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any covenant, agreement, or obligation contained herein, Lessor
shall have the right but not the obligation to make such payment or conform or
comply with such agreement, covenant, or obligation, and the amount of such
payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by or on behalf of Indenture Trustee on
the signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing and this Lease has not
been declared or deemed to be in default, Lessor shall not take or cause to be
taken any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Aircraft
hereunder, and all rents, revenues, profits and income therefrom, in accordance
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with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
Trustee, Note Holder or any other Person lawfully claiming by or through them,
and provided further, that the foregoing shall not be deemed to have modified
the obligations of Lessee pursuant to Section 4(d) hereof, which obligations
remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as provided
in the Refunding Agreement, there has been no third party as agent involved in
this Lease and each indemnifies the other from liability for fees, commissions,
or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by Lessor
or Indenture Trustee and are payable to Lessee shall, unless a Default or an
Event of Default shall have occurred and be continuing, be invested as provided
below until paid to Lessee or applied by Lessor or Indenture Trustee to the
extent provided herein. Until paid to Lessee or applied as provided herein or in
the Indenture such monies shall be invested by Lessor or Indenture Trustee from
time to time at the expense of Lessee in Specified Investments, as directed by
Lessee in accordance with the provisions of Section 3.07 of the Indenture if the
Lien of the Indenture shall not have been discharged and thereafter as provided
below. There shall be promptly (but not more frequently than monthly) remitted
to Lessee any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions and other reasonable expenses, if
any, incurred in connection with such investment) unless a Default or an Event
of Default shall have occurred and be continuing. Lessee will promptly pay to
Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture
Trustee harmless from, on demand, the amount of any loss realized as the result
of any such investment (together with any Taxes, fees, commission and other
reasonable expenses, if any, incurred in connection with such investment).
(i) Entire Agreement; Amendment. This Lease (including the
Exhibits hereto), any related letter agreements and the other Operative
Documents, the Financing Documents and the Purchase Documents (including the
Exhibits thereto) and all closing documents delivered in connection with any of
the foregoing embody the entire agreement and understanding among the parties
hereto with respect to the
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subject matter hereof. This Lease may be changed, waived, discharged, amended,
revised or terminated only by an instrument in writing signed by the party
against which enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18, Lessee agrees
within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications hereof or thereof, or waivers or consents hereunder or thereunder,
and (iii) any Default or Event of Default or the enforcement of any of Lessor's
rights, remedies or privileges hereunder or at law or in equity, but not
Lessor's legal fees and expenses in connection with the negotiation and
execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
and take such other action not inconsistent with this Lease as Lessor reasonably
deems necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor
shall use its best efforts to have the Aircraft registered under the United
States Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process; Waiver of
Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submits for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United
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States District Court for the Southern District of New York. Each of Lessee and
Lessor represents and warrants that it is not currently entitled to, and agrees
that to the extent that Lessee or Lessor hereinafter may acquire, any immunity
(including, without limitation, sovereign immunity) from jurisdiction of any
court or from any legal process, it hereby, to the extent permitted by Law,
waives such immunity, and agrees not to assert, by way of motion, as a defense,
or otherwise, in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of the above-named courts that it is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Lease or any of the other Operative
Documents or the subject matter hereof or thereof or any of the transactions
contemplated hereby and thereby may not be enforced in or by such courts. Each
of Lessee and Lessor hereby generally consents to service of process by
registered mail, return receipt requested, addressed to it at its address set
forth in Exhibit C, or at such other office of Lessee or Lessor as from time to
time may be designated by Lessee or Lessor (as applicable) in writing to Lessee
or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of
Lessee and Lessor hereby agrees that its submission to jurisdiction and its
designation of service of process by mail set forth above is made for the
express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each
Note Holder and their successors and assigns (as applicable). Final (after all
appeals) judgment (the enforcement of which has not been stayed) against either
Lessee or Lessor obtained in any suit originally brought in the court of the
State of New York in New York County or in the United States District of New
York shall be conclusive, and, to the extent permitted by applicable Law, may be
enforced in other jurisdictions by suit on the judgment, a certified or true
copy of which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Lessee therein described; provided that the
plaintiff at its option may bring suit, or institute other judicial proceedings,
against Lessee or Lessor, as the case may be, or any of their assets in the
courts of any country or place where such Person or such assets may be found.
EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS
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BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without
limitation, contract claims, tort claims, breach of duty claims and other common
law and statutory claims. Lessor and Lessee represent and warrant that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE
DOCUMENTS. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto
agree that all statements, representations, covenants and agreements made by
Lessor (when made in its capacity as such and not in its individual capacity)
contained in this Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies that can be exercised and enforced against the
Trust Estate. Therefore, no recourse shall be had with respect to anything
contained in this Agreement (except for any express provisions that Lessor is
responsible for in its individual capacity), against Lessor in its individual
capacity or against any institution or person that becomes a successor trustee
or co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling Person or Persons of any of them; provided that (i) this
Section 21(n) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable and (ii) nothing contained in
this Section 21(n) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Agreement or such other agreements of rights
and remedies against the Trust Estate. The foregoing provisions of this Section
21(n) shall survive the termination of this Agreement and the other Operative
Documents.
(o) Successor Trustee. Lessee agrees that in the
case of the appointment of any successor Owner Trustee pursuant to the terms of
the Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the
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necessity of any consent or approval by Lessee (subject to Section 14(d) of the
Refunding Agreement) and without in any way altering the terms of this Lease or
Lessee's obligations hereunder. One such appointment and designation of a
successor Owner Trustee shall not exhaust the right to appoint and designate
further successor Owner Trustees pursuant to the Trust Agreement, but such right
may be exercised repeatedly as long as this Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto
agree that the Original Head Lease, as amended and restated by this Amended and
Restated Aircraft Lease Agreement [GPA 1990 AWA-15] (and as otherwise extended,
amended, modified, renewed or supplemented), shall be governed by Article 2-A of
the Uniform Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Lease to be executed by its duly authorized
officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By:__________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:___________________________
Title:
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TABLE OF CONTENTS
<TABLE>
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Section 1. Definitions..................................................... 1
Section 2. Agreement to Lease.............................................. 21
Section 3. Delivery and Acceptance; Term................................... 22
(a) Time of Delivery...................................... 22
(b) ...................................................... 22
[Intentionally Left Blank]
(c) Acceptance of Aircraft................................ 22
(d) Term of Lease......................................... 22
Section 4. Rent............................................................ 22
(a) Rent.................................................. 22
(b) Minimum Payments...................................... 23
(c) Date, Place and Method of Payment..................... 23
(d) Prohibition Against Setoff,
Counterclaim, Etc..................................... 24
Section 5. Representations, Warranties and Covenants....................... 26
(a) Warranties and Disclaimer of Warranties............... 26
(b) Representations and Warranties of
Lessor................................................ 27
(c) No Amendments to Financing Documents.................. 27
(d) Suppliers' Warranties................................. 27
Section 6. Possession and Use.............................................. 28
(a) Possession............................................ 28
(b) Reciprocal Recognition of Rights...................... 35
(c) Lawful Insured Operations............................. 36
(d) Maintenance........................................... 37
(e) Registration and Insignia............................. 38
Section 7. Inspection...................................................... 39
Section 8. Additional Covenants of Lessee.................................. 40
(a) Financial Information................................. 40
(b) Maintenance of Corporate Existence.................... 42
(c) Maintenance of Status................................. 42
(d) Payment of Taxes...................................... 42
(e) Consolidation, Merger, Etc............................ 42
(f) Information........................................... 43
(g) Place of Business..................................... 44
(h) Certain Limitations on Use............................ 44
(i) Section 1110.......................................... 45
</TABLE>
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<TABLE>
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(j) Permits and Licenses.................................. 45
(k) Security Opinion; Annual Certificate.................. 45
(l) Letter of Credit...................................... 46
Section 9. Replacement of Parts; Alterations,
Modifications and Additions........................... 49
(a) Replacement of Parts.................................. 49
(b) Alterations, Modifications and
Additions............................................. 50
(c) Pooling............................................... 52
Section 10. General Tax Indemnity.......................................... 53
(a) Indemnity............................................. 53
(b) Exclusions............................................ 55
(c) Covered Income Tax.................................... 57
(d) Reports and Returns................................... 59
(e) After-Tax Basis....................................... 59
(f) Tax Benefit........................................... 60
(g) Payment............................................... 60
(h) Contest............................................... 61
(i) Refund................................................ 63
(j) Diligence............................................. 63
(k) Affiliated Group...................................... 63
(l) Verification.......................................... 64
(m) Survival.............................................. 64
Section 11. Loss, Damage and Requisition................................... 64
(a) Event of Loss with Respect to the
Airframe.............................................. 64
(b) Event of Loss with Respect to an Engine............... 67
(c) Conveyance of Replacement Airframe.................... 68
(d) Application of Proceeds and Payments.................. 70
(e) Requisition for Use by Government with
Respect to the Aircraft............................... 71
(f) Application in Default................................ 72
Section 12. Insurance...................................................... 72
(a) Public Liability and Property Damage
Insurance. ........................................... 72
(b) Insurance Against Loss or Damage...................... 74
(c) Application of Insurance Proceeds for
an Event of Loss...................................... 77
(d) Application of Insurance Proceeds for
Other than an Event of Loss........................... 77
(e) Application in Default................................ 78
(f) Certificates.......................................... 78
(g) Reinsurance........................................... 79
</TABLE>
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<TABLE>
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(h) Storage............................................... 80
(i) Amounts Held.......................................... 80
(j) After the Term........................................ 80
(k) Governmental Indemnity................................ 80
Section 13. General Indemnity.............................................. 81
Section 14. Liens.......................................................... 86
Section 15. Protection of Title and Further
Assurances............................................ 87
Section 16. Return of Aircraft and Records................................. 89
(a) Return................................................ 89
(b) Status Upon Return.................................... 90
(c) Engines............................................... 91
(d) Records and Documents................................. 91
(e) Condition of Aircraft................................. 92
(f) Final Inspection...................................... 93
(g) Aircraft Records and Documents........................ 94
(h) Corrections and Subsequent Corrections................ 94
(i) Functional Flight Check............................... 94
(j) Export Certificate of Airworthiness................... 95
(k) Service Bulletin and Modification Kits................ 95
(l) Storage Upon Return................................... 95
(m) Resale/Release Cooperation............................ 96
Section 17. Events of Default.............................................. 96
Section 18. Remedies....................................................... 98
Section 19. Security for Obligations..............................104
Section 20. Renewal Option.................................................106
Section 21. Miscellaneous..................................................107
(a) Severability, Amendment, and
Construction..........................................107
(b) GOVERNING LAW.........................................107
(c) Notices...............................................108
(d) Lessor's Right to Perform for Lessee..................108
(e) Counterparts..........................................108
(f) Quiet Enjoyment.......................................108
(g) Brokers...............................................109
(h) Investment of Funds...................................109
(i) Entire Agreement; Amendment...........................110
(j) Expenses..............................................110
</TABLE>
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<TABLE>
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(k) Federal Bankruptcy Code...............................110
(l) U.S. Registration Number..............................110
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non
Conveniens; Waiver of Jury Trial......................110
(n) Limitation on Recourse................................112
(o) Successor Trustee.....................................113
(p) Article 2-A of the UCC................................113
</TABLE>
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ANNEXES
Annex I - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Assignment of Permitted Sublessee
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EXHIBIT 4.29
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1990 AWA-16] AND IN THE AIRCRAFT COVERED HEREBY WILL BE OR HAVE BEEN
ASSIGNED TO, AND ARE OR WILL BE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
FLEET NATIONAL BANK, AS INDENTURE TRUSTEE UNDER AN AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT [GPA 1990 AWA-16] DATED AS OF NOVEMBER 26,
1996. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED AIRCRAFT LEASE
AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF ANY COUNTERPART
OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY FLEET NATIONAL BANK, AS
INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1990 AWA-16]
Dated as of September 21, 1990
Amended and Restated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as otherwise expressly provided herein,
but solely as Owner Trustee under a
Trust Agreement [GPA 1990 AWA-16] dated
as of September 21, 1990, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 099
U.S. Registration No. N637AW
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AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of September 21,
1990 and amended and restated as of November 26, 1996 is entered into between
WILMINGTON TRUST COMPANY, not in its individual capacity except as otherwise
expressly provided herein, but solely as Owner Trustee under a Trust Agreement
[GPA 1990 AWA-16] dated as of September 21, 1990, as amended, and with its
principal place of business at Rodney Square North, Wilmington, Delaware 19890
(together with its successors and permitted assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors
and permitted assigns, "Lessee").
W I T N E S E T H:
WHEREAS, Lessor and Lessee desire to amend and,
solely for the convenience of the parties, restate in its entirety the Original
Head Lease (as hereinafter defined) as of the Restatement Date (as hereinafter
defined) as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises
herein contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease", "Equipment
Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass
Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past
Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as defined in the Pass Through Trust Agreement); and the term
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"Lease Amendment No. 1" shall have the meaning specified in the Refunding
Agreement.
"Affiliate" shall mean, with respect to any specified
Person, any other Person which, directly or indirectly, owns or controls, is
controlled by or is under common control with such specified Person. Control
will be deemed to exist based on (i) ownership of 25% or more of the voting
securities of a Person or (ii) the power to direct or elect or cause the
direction or election of the management and policies of a Person whether by
contract or otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and
described in Lease Supplement No. 1 (or any airframe from time to time
substituted for such Airframe pursuant to Section 11(a)(i) hereof) together with
the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1 (or any
Engine substituted therefor hereunder) with respect to such Airframe, whether or
not any such initial or substituted Engines may from time to time no longer be
installed on the Airframe or may be installed on any other airframe, (ii) Parts
or components thereof, (iii) spare parts or ancillary equipment or devices
furnished therewith under this Lease (including any separate equipment described
on one or more Lease Supplements hereto), (iv) the Aircraft Records and
Documents and all other logs, manuals and records with respect to such Aircraft,
and (v) all substitutions, replacements and renewals of any and all thereof.
"Aircraft Records and Documents" shall mean the items
identified in Exhibit B hereto, all of which shall be maintained in the English
language.
"Airframe" shall mean (a) the Airbus Industrie model
A320-231 aircraft (except Engines or engines from time to time installed
thereon) described in Lease Supplement No. 1 and leased by Lessor to Lessee
hereunder, and any such model aircraft (except Engines or engines from time to
time installed thereon) which may from time to time be substituted for such
aircraft (except Engines or engines from time to time installed thereon)
pursuant to Section 11(a)(i); and (b) any and all Parts so long as the same
shall be incorporated or installed on or attached to the Airframe, or so long as
title thereto shall remain vested in Lessor in
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accordance with the terms of Section 9 hereof after removal from the Airframe;
provided, however, that at such time as an aircraft (except Engines or engines
from time to time installed thereon) shall be deemed part of the property leased
hereunder in substitution for the Airframe pursuant to the applicable provisions
hereof and the replacement Airframe shall have been subjected to the Lien of the
Indenture (if the Lien of the Indenture has not been discharged), the replaced
Airframe shall cease to be the Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure
for determining the "fair market sales value" or "fair market rental value" of
the Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18,
"fair market sales value" or "fair market rental value" shall mean the value
that would be obtained in an arm's-length transaction between an informed and
willing seller or lessor, as the case may be, and an informed and willing buyer
or lessee, as the case may be, both under no compulsion to sell and purchase or
to lease (and other than a lessee in possession or a used equipment scrap
dealer), as the case may be, as such value is determined by an appraisal which
assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is
unencumbered by this Lease (or any sublease) or any of the other Operative
Documents or any of the Financing Documents and the terms thereof; (ii) that
such Aircraft, Airframe, Engine or Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return
conditions specified in Section 16 and Exhibit E (whether or not in fact meeting
such conditions) and (iv) that Lessee has removed the Removable Parts entitled
to be removed under Section 9(b) (it being agreed that no such removal is
permitted in connection with an appraisal pursuant to Section 18) and replaced
any part which was removed from the Aircraft as a result of such Removable Part
being installed; provided, however, that costs of removal from the location of
current use and costs of sale shall not be a consideration in determining such
value except in connection with any determination of "fair market sales value"
or "fair market rental value" pursuant to Section 18; and provided, further,
that any determination of "fair market sales value" or "fair market rental
value" pursuant to Section 18 shall be on an "as is, where is" basis in its
actual condition and location subject to this Lease and any sublease and any and
all Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and
Lessee shall, except for any appraisal
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pursuant to Section 18 in which case only Lessor shall select such appraiser
(which appraiser does not have to be acceptable to Lessee), select an
independent nationally-recognized aircraft appraiser, mutually acceptable to
each of them, who shall make the determination as to the "fair market sales
value" or "fair market rental value" of such Aircraft, Airframe, Engine or Part
for which such appraisal is to be conducted. If Lessor and Lessee fail to agree
upon a mutually acceptable appraiser within ten (10) days, then each of Lessor
and Lessee shall select an appraiser and such determination shall be made by
such appraisers (if either party shall fail to appoint an appraiser within ten
(10) days after notice from the other party of the selection of its appraiser,
then the appraisal made by the other party's appraiser shall be determinative).
If the two appraisers chosen pursuant to the preceding sentence fail to agree
upon a determination of the "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part within twenty (20) days after
their appointment, then such appraisers shall mutually choose a third appraiser
within ten (10) days thereafter, provided that if such appraisers fail to
mutually choose a third appraiser within said 10-day period, such appointment
shall be made by the American Arbitration Association (or any successor) in New
York, New York, and the three appraisers so chosen shall each make such
determination. The appraisal determined by each of the three appraisers chosen
pursuant to the preceding sentence shall be averaged and the appraisal furthest
from the average of the three appraisals shall be disregarded. The appraisal
determined by each of the two remaining appraisers shall be averaged and such
average shall be the appraised "fair market sales value" or "fair market rental
value" of such Aircraft, Airframe, Engine or Part. Lessee shall bear all the
fees and expenses of the Appraisal Procedure.
"Approved Broker" shall mean any reputable insurance
broker of recognized responsibility and standing experienced in aircraft
insurance.
"Approved Insurers" shall mean any reputable and
creditworthy insurance company of recognized responsibility and standing
experienced in aircraft insurance.
"Basic Rent" for the Aircraft shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Aircraft
pursuant to Section 4(a)(i).
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"Basic Rent Payment Date" shall mean each day determined
in accordance with Exhibit C upon which a payment of Basic Rent becomes payable.
If a Basic Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Basic Rent Payment Date shall be made on the next
succeeding Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 3.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Hartford, Connecticut are authorized or required by Law to be closed.
"Buyer Furnished Equipment" shall mean the equipment which
was to be furnished by Braniff, Inc. or, if applicable, Original Head Lessee and
installed on the Aircraft pursuant to Clause 18 of the Purchase Agreement, and
any similar equipment furnished to Lessee.
"Certificated Air Carrier" shall mean any corporation
(except the United States Government) domiciled in the United States of America
and holding a Certificate of Convenience and Necessity issued under Section
41102(a) of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States Government)
domiciled in the United States of America and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is a citizen of the United States
(as defined in Section 40102 of the Federal Aviation Act) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil
Reserve Air Fleet Program administered by the United States Government and
authorized under 10 U.S.C. Section 9511, et seq., as amended, or any
substantially similar or substitute program of the United States Government.
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"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as
amended and the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether
or not incorporated, which is under common control with Lessee within the
meaning of Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated
Consent and Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended
and restated as of December 30, 1988, in the form attached to the Purchase
Agreement.
"Default" shall mean an event or condition which would
constitute an Event of Default with the lapse of time or the giving of notice or
both.
"Delivery Date" shall mean September 28, 1990, being the
date the Aircraft was delivered to and accepted by the Original Head Lessee as
Lessee hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the
United States of America.
"Engine" shall mean (i) each of the two IAE Model V2500
engines listed by manufacturer's serial number in Lease Supplement No. 1 and
initially installed on the Airframe covered by such Lease Supplement, whether or
not from time to time thereafter no longer installed on the Airframe or
installed on any other aircraft or airframe, and (ii) any replacement engine
which may from time to time be substituted, pursuant to Section 6(a), 11(a),
11(b) or 16(c), for any Engine leased hereunder; together in each case with any
and all Parts incorporated or installed in or attached thereto or any and all
Parts removed therefrom so long as title thereto after removal from such Engine
shall remain vested in Lessor in accordance with the terms of Section 9 hereof.
Except as otherwise set forth herein, at such time as a replacement engine shall
be so substituted and leased hereunder and the replacement Engine shall have
been subjected to the Lien of the Indenture (if the Lien of the Indenture has
not been discharged), such replaced Engine shall cease to be an Engine
hereunder. The term "Engines"
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means, as of any date of determination, both Engines then leased hereunder.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any
one or more clauses in Section 17.
"Event of Loss" shall mean any of the following events
with respect to the Aircraft, Airframe or either Engine: (a) loss of such
property or the use thereof due to theft or disappearance for a period in excess
of sixty (60) consecutive days, but in no event later than the last day of the
Term; (b) destruction or damage of such property that renders repair uneconomic
or such property permanently unfit for normal use by Lessee (or, if a Permitted
Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c)
any loss or disappearance of or damage to or destruction of such property which
results in an insurance settlement with respect to such property on the basis of
an actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any law, rule, regulation,
order or other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of such Aircraft, Airframe or
Engine in the normal course of Lessee's (or, if a Permitted Sublease is in
effect, the Permitted
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Sublessee's) business of air transportation of passengers shall have been
prohibited for a period of six (6) consecutive months, unless Lessee (or the
Permitted Sublessee), prior to the expiration of such six-month period, shall
have undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit such normal use of such item of equipment by
Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall
have been so prohibited by any such Governmental Entity for a period of twelve
(12) consecutive months or is continuing on the last day of the Term; or (h) as
otherwise provided herein. An Event of Loss with respect to the Aircraft shall
be deemed to have occurred if an Event of Loss occurs with respect to the
Airframe which is a part of such Aircraft. An Event of Loss with respect to an
Engine shall not, absent an Event of Loss with respect to the Airframe, be
deemed an Event of Loss with respect to the Airframe.
"Excluded Property" shall have the meaning set forth in
Section 9(b) hereto.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 3, on which date the Basic Term of this Lease shall expire.
"FAA" shall mean the Federal Aviation Administration of
the United States Department of Transportation or any successor agency.
"FAA Bills of Sale" shall mean, collectively, (i) the Bill
of Sale for the Aircraft on AC Form 8050-2, dated the Delivery Date, from
Manufacturer's Subsidiary to the Original Head Lessee, and (ii) the Bill of Sale
for the Aircraft on AC Form 8050-2, dated the Delivery Date, from the Original
Head Lessee to Lessor.
"Federal Aviation Act" shall mean the sections of Title 49
of the United States Code relating to aviation, as amended and in effect from
time to time, or any similar legislation of the United States of America enacted
in substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal
year-end audited consolidated balance sheet and statements of income and cash
flow for the period then ending, copies of which for the fiscal year ending
December 31, 1995, have been provided to Lessor prior to the date hereof.
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"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement,
the Equipment Notes issued under the Indenture, the Intercreditor Agreement,
each Liquidity Facility, each Pass Through Trust Agreement and each supplement
thereto and any certificate delivered or entered into in accordance with the
foregoing, as amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made mandatory
to the Aircraft by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Aircraft by the FAA.
"GAAP" shall mean United States generally accepted
accounting principles and practices consistently applied as in effect from time
to time, which shall include the official interpretations thereof by the
Financial Accounting Standards Board. All accounting terms not otherwise defined
herein shall have the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any
national government, political subdivision thereof, or local jurisdiction
therein; (ii) any board, commission, department, division, organ,
instrumentality, court, or agency of any thereof, however constituted; and (iii)
any association, organization, or institution of which any entity described in
(i) or (ii) above is a member or to whose jurisdiction any such entity is
subject or in whose activities any such entity is a participant but only to the
extent that any entity described in clause (i), (ii) or (iii) has jurisdiction
over Lessor, Lessee, Indenture Trustee, Note Holders, any sublessee, the
Aircraft or its operations.
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"Head Lessor's Lien" shall mean a "Lessor's Lien" under
and as defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a
company organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity
and as trustee under the Trust Agreement), the Trust Estate, Owner Participant,
the Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture), each Pass Through Trust, each Pass Through Trustee
(in its individual capacity and as trustee under the Pass Through Trusts), the
Subordination Agent and each Liquidity Provider, and their respective successors
and permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership), and any
combination thereof and their respective officers, directors, agents, servants,
employees, subsidiaries, Affiliates and shareholders.
"Indenture" shall mean the Amended and Restated Trust
Indenture and Security Agreement [GPA 1990 AWA-16] dated as of September 21,
1990, and amended and restated as of November 26, 1996, as the same may be
further amended, supplemented or modified from time to time, between Indenture
Trustee and Lessor. The term "Indenture" shall also include the Indenture
Supplements entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
"Interest Rate" shall mean (i) with respect to the portion
of any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture computed on the basis of a 360-day year and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate from
time to time in effect from the date the amount becomes due to the date it is
paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as
the case may be, and actual number of days elapsed.
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"Law" shall mean and include (i) any statute, rule,
decree, constitution, regulation, order, judgment or other directive of any
Governmental Entity; (ii) any treaty, pact, compact or other agreement to which
any Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease,"
"this Agreement," "herein," "hereunder," "hereby," "hereof" or other like words
shall mean this Lease as originally executed and as amended, supplemented or
otherwise modified from time to time, including, without limitation, by one or
more Lease Supplements, as a whole and not to any particular Section or other
subdivision, and any reference to a "Section" or an "Exhibit" shall refer to a
Section or Exhibit of this Lease, as so amended, supplemented or modified,
unless expressly provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1,
Lease Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease
Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA
1990 AWA-16] No. 1 dated the Delivery Date between Lessor and Original Head
Lessee, as Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA
1990 AWA-16] No. 2 dated December 31, 1991 between Lessor and Original Head
Lessee, as Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA
1990 AWA-16] No. 3, substantially in the form of Exhibit D-1 hereto, entered
into between Lessor and Lessee on the Restatement Date for the purpose of
confirming the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of
title attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its
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individual capacity (and not as Indenture Trustee) not related to its interest
in the Aircraft or the administration of the Trust Estate or the Trust Indenture
Estate pursuant to the Indenture, whether under Section 9-207(2)(e) of the
Uniform Commercial Code or otherwise, (ii) acts or omissions of Indenture
Trustee in its individual capacity (and not as Indenture Trustee) not
contemplated hereunder or under the other Operative Documents, or acts or
omissions of Indenture Trustee in its individual capacity (and not as Indenture
Trustee) which are in violation of any of the Operative Documents, or (iii)
Taxes imposed on or Claims against Indenture Trustee in its individual capacity
(and not as Indenture Trustee) which are excluded from indemnification by
Lessee, or (iv) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) arising out of the voluntary or involuntary transfer
by Indenture Trustee in its individual capacity (and not as Indenture Trustee)
of all or any portion of its interest in the Aircraft, the Airframe, any Engine,
the Trust Estate, the Trust Indenture Estate or the Operative Documents (except
a Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals
hereto.
"Lessor" shall have the meaning set forth in the Recitals
hereto.
"Lessor's Lien" shall mean any Lien or disposition of
title affecting the Aircraft, the Airframe, any Engine or any Part arising as a
result of (i) any claim against Lessor, Owner Participant, Trust Company or any
of their Affiliates not related to the transactions contemplated by this Lease
or the other Operative Documents, the Financing Documents or the Purchase
Documents; (ii) any affirmative act of Lessor, Owner Participant, Trust Company
or any of their Affiliates not expressly contemplated by this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents or not
permitted without consent (which consent has not been granted) by any party
hereto or thereto or that is in violation of any term of this Lease or the other
Operative Documents, the Financing Documents or the Purchase Documents; (iii)
Taxes imposed against the Trust Estate, Trust Company, Lessor or Owner
Participant or any of their Affiliates or the consolidated group of taxpayers of
which any of them is a member which are not to be indemnified against by Lessee
under the Operative
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Documents, the Purchase Documents or the Financing Documents or by Original Head
Lessee under the Original Head Lease Tax Indemnification Agreement; (iv) claims
against the Trust Estate, Trust Company, Owner Participant or Lessor or any of
their Affiliates arising out of the transfer of all or any part of their
respective interest in the Aircraft, the Airframe, either Engine, the Trust
Estate, the Operative Documents or the Financing Documents other than any
transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or 20
(except Liens resulting from a transfer not permitted by such Section) of this
Lease or pursuant to Section 10 of the Refunding Agreement; provided, however,
that there shall be excluded from this definition and Lessor shall not be
required to remove any Lien which would otherwise constitute a Lessor's Lien, if
it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Aircraft or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge,
lien, charge, encumbrance, lease, exercise of rights, security interest, lease
in the nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft in effect on the date hereof or as modified with the approval of the
FAA without affecting, or any other FAA approved maintenance program which does
not affect, the return condition standards set forth in Section 16 and Exhibit E
or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air
Carrier, any other maintenance program for the Aircraft which is approved by the
aviation authority of the country of registry and complies with the requirements
applicable to maintenance of the Aircraft contained in the definition of Foreign
Air Carrier. The Maintenance Program shall encompass scheduled maintenance,
condition monitored maintenance, and on-condition maintenance of the Airframe,
Engines, and components of the Aircraft, including, but not
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limited to, servicing, testing, preventive maintenance, repairs, structural
inspections, structure life improvements, system checks, overhauls, approved
modifications, service bulletins, engineering orders, airworthiness directives,
and corrosion control inspections and treatments. All modifications and
supplements to the Maintenance Program shall be provided to Lessor upon its
reasonable request and Lessor shall be given reasonable access to the
Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a
French societe a responsabilite limitee, which as of the date hereof is owned by
Airbus Industrie.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, any sublease, the Tax Indemnification Agreement, the Financing
Documents, and any certificate delivered or entered into pursuant to the
foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease
Agreement [GPA 1990 AWA-16], with respect to the Aircraft, dated as of September
21, 1990, between Lessor, as lessor, and the Original Head Lessee, as lessee, as
amended, supplemented or otherwise modified and as in effect
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immediately prior to the Restatement Date, as more particularly described in
Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall
mean the Head Lease Tax Indemnification Agreement [GPA 1990 AWA-16], dated as of
September 21, 1990, and amended and restated as of the Restatement Date, between
the Original Head Lessee and Owner Participant, as amended, supplemented or
otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I,
Inc., a Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as
defined in the Original Head Lease) as in effect immediately prior to the
Restatement Date.
"Other Leases" shall mean the Amended and Restated
Aircraft Lease Agreement [GPA 1989 BN-12] amended and restated as of the
Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and
America West Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease
Agreement [GPA 1990 AWA-13] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA
1990 AWA-14] amended and restated as of the Restatement Date between Wilmington
Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as
Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-15]
amended and restated as of the Restatement Date between Wilmington Trust Company
as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended
and Restated Engine Lease Agreement [GPA 1991 AWA-E1] amended and restated as of
the Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor
and America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor and America West
Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement
[GPA 1991 AWA-E3] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee, each as amended, supplemented or otherwise modified from time to
time.
"Other Letters of Credit" shall mean any and all letters
of credit pursuant to Section 8(l) of the Other Leases.
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<PAGE> 17
"Owner Participant" shall mean _____________
___________________, a Delaware corporation, as Owner Participant under the
Trust Agreement, and its successors and permitted assigns.
"Owner Trustee" shall mean Wilmington Trust Company, as
Owner Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Partial Assignment" shall mean the A320 Partial
Assignment, Assumption, Release and Amendment Agreement, dated as of December
30, 1988, among Parent, Braniff, Inc., and Manufacturer's Subsidiary, as
amended, supplemented or otherwise modified.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1990 AWA-16], dated as of September 21, 1990, among Original Head
Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the
"Lender" named therein, as amended by the Letter Agreement dated as of July 29,
1993, as the same may be further amended, supplemented or otherwise modified
from time to time and as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (excluding complete Engines or engines), including Buyer
Furnished Equipment, which may now or from time to time be incorporated or
installed in or attached to or were provided by the Manufacturer with the
Airframe or any Engine or so long as title thereto shall remain vested in Lessor
in accordance with the terms of Section 9 hereof after removal from such
Airframe or Engine. Except as otherwise set forth herein, at such time as a
replacement part shall be substituted for a Part in accordance with Section 9
hereof, the Part so replaced shall cease to be a Part hereunder.
"Payment Location" shall have the meaning set forth in
Exhibit C, as the same may be changed from time to time by Lessor as provided in
Section 4(c).
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<PAGE> 18
"Permitted Lien" shall mean any Lien referred to in
clauses (i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air
Carrier or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b)
the United States Government or an agency or instrumentality thereof which bears
the full faith and credit of the United States of America or (c) any other
Person approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company, joint venture, trust,
estate, unincorporated organization, association, Governmental Entity, or
organization or association of which any of the above is a member or a
participant.
"Purchase Agreement" shall mean the Amended and Restated
Airbus A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and
restated as of December 30, 1988 (insofar as the same relates to Model A320
Aircraft), between Manufacturer's Subsidiary and Braniff, Inc., including the
Consent and Guaranty, together with Letter Agreements, Exhibits and Appendices
thereto, as partially assigned to Parent pursuant to the Partial Assignment, to
which Airbus Industrie, as guarantor, has consented, and as the same may from
time to time be further amended, supplemented or otherwise modified to the
extent permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement,
the Partial Assignment and any other agreement, document or certificate
delivered or entered into pursuant to the foregoing, as amended, supplemented or
otherwise modified.
"Removable Part" shall have the meaning set forth in
Section 9(b).
"Renewal Rent" shall mean the rent payable pursuant to
Section 20.
"Renewal Rent Payment Date" shall mean each day determined
in accordance with Exhibit C upon which a payment
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<PAGE> 19
of Renewal Rent becomes payable. If a Renewal Rent Payment Date shall fall on a
day which is not a Business Day, any payment due on such Renewal Rent Payment
Date shall be made on the next succeeding Business Day.
"Renewal Term" shall mean the period described in Section
20 following the end of the Basic Term if Lessee shall have exercised its
renewal option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case
may be, and Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have
the meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee,
any of the Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer or Controller.
"Restricted Use Period" shall have the meaning specified
in Exhibit C.
"Return Occasion" shall mean the event that occurs when
possession of the Aircraft is to be returned from Lessee to Lessor at the end of
the Term of this Lease or upon Lessor taking possession pursuant to Section 18
or for any other reason.
"Specified Investments" shall mean (i) direct obligations
of the United States Government, the obligations of which bear the full faith
and credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral
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<PAGE> 20
pursuant to which an entity referred to in clause (iii) above or another
financial institution having a net worth of at least $750,000,000 and having a
rating of "B" or better from Thompson BankWatch, Inc. is obligated to repurchase
any such obligation not later than ninety (90) days after the purchase of any
such obligation; and (v) money market funds which invest solely in obligations
described in clause (i); provided that if all of the above investments are
unavailable, the entire amounts to be invested may be used to purchase Federal
funds from an entity described in clause (iii) above; and provided further that
no investment shall be eligible as a "Specified Investment" unless the final
maturity or date of return of such investment is on or before the date which is
ninety (90) days from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable
date during the Basic Term the amount set forth on Exhibit A hereto and,
thereafter, the amount described in Section 20 (it being understood and agreed
that the amounts set forth in Exhibit A take into account fully the amount and
application of each installment of Basic Rent or Renewal Rent on each Stipulated
Loss Value Date (other than a Stipulated Loss Value Date that is a Basic Rent
Payment Date or Renewal Rent Payment Date) so that no additional credit of such
Basic Rent or Renewal Rent is to be made in respect thereof except as expressly
provided herein on a Basic Rent Payment Date or a Renewal Rent Payment Date). In
the event that it is necessary to determine a separate Stipulated Loss Value for
the Airframe or an Engine, such Stipulated Loss Value shall be based on the
ratio that the original cost to Lessor of the Airframe or such Engine bears to
Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth, on Exhibit
A hereto.
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any
payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of
an amount equal to average daily Basic Rent or Renewal Rent in connection with
an extension of the Term of this Lease as a result of (a) an
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<PAGE> 21
incipient Event of Loss and the operation of Section 11 hereof or (b) the need
to correct any failure of the Aircraft to satisfy the requirements of Section 16
and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to
any payment due to the Owner Trustee in respect of fees or expenses as provided
in Section 21(j) hereof; (vi) an amount equal to any payment due to the
Indenture Trustee in respect of fees or expenses as provided in the Indenture
and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any
Pass Through Trustee in respect of fees or expenses pursuant to the Pass Through
Trust Agreement; (viii) the Pro Rata Share of any payment due to the
Subordination Agent in respect of fees, compensation, costs or expenses pursuant
to the Intercreditor Agreement; (ix) an amount equal to the amount specified in
clause (b) of the fourth paragraph of Section 2.02 of the Indenture; and (x) to
the extent permitted by applicable Law, interest at the Interest Rate
calculated: (1) on any part of any installment of Basic Rent or Renewal Rent, or
average daily Basic Rent referred to in clause (iii) of this definition of
"Supplemental Rent", as the case may be, not paid on the due date thereof for
the period for which the same shall be overdue and (2) on any Supplemental Rent
not paid when due hereunder from and including the due date until the same shall
be paid. As used herein, "Pro Rata Share" means as of any date of determination
a fraction the numerator of which is the aggregate Principal Amount then
outstanding of the Equipment Notes issued under the Indenture and the
denominator of which is the aggregate principal balance then outstanding of all
"equipment notes" issued under the Indentures (as defined in the Intercreditor
Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-16], dated as of
September 21, 1990, and as amended and restated as of November 26, 1996, between
Original Head Lessee and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
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<PAGE> 22
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Taxing Authority" shall have the meaning specified in
Section 10(a).
"Term" shall mean, collectively, the Basic Term specified
in Lease Supplement No. 3 and, if Lessee extends the Term in accordance with
Section 20, the Renewal Term, in either case as extended or deemed extended as a
result of the occurrence of an event described in clause (iii) to the definition
of "Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1990
AWA-16] dated as of September 21, 1990 as amended by Trust Supplement No. 1 and
as further amended by Trust Supplement No. 2 between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust Agreement"
shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the
Trust Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and
Trust Supplement No. 2 and each subsequent Trust Supplement entered into
thereunder and any further supplement to the Trust Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement
Supplement [GPA 1990 AWA-16] No. 1 dated the Delivery Date between Lessor and
Owner Participant for the purpose of bringing the Aircraft and the Original Head
Lease into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement
Supplement [GPA 1990 AWA-16] No. 2 dated the Restatement Date between Lessor and
Owner Participant conforming the references in the Trust Agreement to this
Agreement.
"United States Government" shall mean the federal
government of the United States of America and any board, commission,
department, division, organ, instrumentality, court or agency thereof.
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<PAGE> 23
"Wet Lease" shall mean any arrangement whereby Lessee
agrees to furnish the Aircraft or the Airframe and Engine or engines installed
thereon at that time to a third party pursuant to which such Aircraft or the
Airframe and Engine or engines (i) shall be operated solely by regular employees
of Lessee possessing all current certificates and licenses required under the
Federal Aviation Act (it is understood that cabin attendants need not be regular
employees of Lessee) and Lessee otherwise maintains operational control and
possession thereof, and (ii) shall be maintained by Lessee in accordance with
its normal maintenance practices and this Lease, and otherwise the insurance
required hereunder shall be maintained and the Aircraft shall be used and
operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to
lease the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft
from Lessor, on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Aircraft was delivered to
Lessee, and Lessee accepted delivery of the Aircraft, on September 28, 1990.
(b) [Intentionally Left Blank]
(c) Acceptance of Aircraft. The Aircraft leased hereunder
was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY
DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b)
HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for
all purposes of this Lease and Lessee's acceptance of the Aircraft was
conclusive evidence that, as between Lessor and Lessee, the Aircraft was in all
respects satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall
commence on the Delivery Date and shall continue until the Expiration Date;
provided, however, that the Term of this Lease may be earlier terminated
pursuant to the provisions hereof.
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<PAGE> 24
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the following
as Rent hereunder:
(i) Basic Rent. The Basic Rent, as set
forth in Exhibit C throughout the Basic Term hereof, in consecutive
installments, in arrears as set forth on Schedule I attached to Exhibit C, due
and payable on each Basic Rent Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all
Supplemental Rent, which shall be due and payable ten (10) Business Days after
demand unless otherwise specifically provided. In the event of any failure on
the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all
rights, powers and remedies provided for herein or by law or equity or otherwise
in the case of nonpayment of Basic Rent or Renewal Rent. Lessee's obligation to
pay Supplemental Rent which is due and owing pursuant to the terms hereof shall
survive the expiration or termination of Lessee's obligation to pay Basic Rent
or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any provision in
this Lease or in any other Operative Document to the contrary, under all
circumstances and in any event, (i) the Stipulated Loss Value, together with the
payment of Supplemental Rent and all other Rent then due hereunder, as of any
time and as of the date of any payment thereof shall (both before and after
giving effect to any reductions therefrom) be in an amount at least sufficient
to pay in full as of such time or date the aggregate unpaid principal amount of
the Equipment Notes then outstanding and all accrued and unpaid interest
(assuming interest has been timely paid) thereon, and (ii) Basic Rent payable on
any Basic Rent Payment Date shall at least equal the aggregate amount of
principal and interest due and payable on the Equipment Notes on such Basic Rent
Payment Date. It is agreed, however, that no installment of Basic Rent or
Stipulated Loss Value shall be increased or adjusted by reason of (A) any
attachment or diversion of Rent on account of any Lessor's Lien or Lenders'
Lien, (B) any modification of the terms of the Equipment Notes or the other
Financing Documents made without the prior written consent of Lessee or (C) the
acceleration of any Equipment Note due to the occurrence of any "Indenture Event
of Default" (as defined in the Indenture) which does not constitute an Event of
Default hereunder. It is further agreed that nothing in this Lease or any other
Operative Document shall be deemed
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<PAGE> 25
to constitute a guaranty of the value, utility or useful life of the Aircraft or
a guaranty in respect of interest, principal or any other amounts payable in
respect of or under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on
which a payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in the City of New York or Hartford, Connecticut as Indenture
Trustee may direct by thirty (30) days prior written notice to Lessee, except
for all Excepted Payments. All Excepted Payments, and, upon discharge of the
Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be
paid in such immediately available funds no later than 12:00 p.m. (noon), New
York City time, on the date payable hereunder, to Lessor or to Owner
Participant, as appropriate, in accordance with the payment instructions set
forth in Exhibit C or at such other address as Lessor may direct by thirty (30)
days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This
Lease is a net lease. Lessee's obligations to pay all Rent and to perform all
other obligations hereunder are absolute and unconditional and shall not be
affected or reduced by any circumstances, including, without limitation, (i) any
setoff, counterclaim, recoupment, defense, or other right which Lessee may have
against Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any
Note Holder, any Manufacturer, any Person providing services with respect to the
Aircraft, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
limitation, any breach by Lessor of its representations, warranties or covenants
contained herein or in the other Operative Documents; (ii) any defect in the
title, airworthiness, eligibility for registration under the Federal Aviation
Act, condition, design, operation, or fitness for use of, or any damage to or
loss or destruction of, the Aircraft (subject to the provisions of Section
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<PAGE> 26
11(a)(ii) hereof), any interruption or cessation in the use of or possession
thereof by or availability to Lessee for any reason whatsoever, whether arising
out of or related to an act or omission of Lessee, Lessor, Original Head Lessee,
Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any
Person providing services with respect to the Aircraft or any other Person;
(iii) any Liens with respect to the Aircraft; (iv) the invalidity or
unenforceability or lack of due authorization or other infirmity of this Lease
or any sublease or any absence of right, power or authority of Lessor, Original
Head Lessee, Lessee or Indenture Trustee to enter into this Lease or the
Indenture, as the case may be; (v) any insolvency, bankruptcy, reorganization,
or similar proceedings by or against Lessor, Original Head Lessee, Lessee, any
sublessee, Indenture Trustee or any Note Holder; (vi) any Taxes or (vii) any
other circumstance or happening of any nature whatsoever, whether or not similar
to any of the foregoing; it being the expressed intention of Lessor and Lessee
that all Rent payable hereunder shall be payable in all events, unless the
obligation to pay the same shall be terminated pursuant to the express
provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Aircraft or any obligation imposed
upon Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be
terminated in whole or in part by operation of Law, except as specifically
provided herein, Lessee waives all rights (if any) to any diminution in its Rent
obligations hereunder and nonetheless agrees to pay to Indenture Trustee or
Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or
Renewal Rent, as the case may be, payment and any Supplemental Rent payment at
the time such payments would have become due and payable in accordance with the
terms hereof had this Lease not been terminated in whole or
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in part, and so long as such payments are made and all other terms and
conditions hereof are complied with by Lessee, Lessor and Lessee will deem this
Lease to remain in full force and effect.
The foregoing shall not, however, be construed as a waiver
of Lessee's other rights to seek damages, specific performance, other remedies
at law or equity or any combination thereof, as against the Original Head
Lessee, Lessor, Indenture Trustee or any other Person having an interest herein
through the Original Head Lessee, Lessor, Indenture Trustee or any other Person
as shall be liable therefor, on account of any failure of the Original Head
Lessee, Lessor, Indenture Trustee or any other such Person to perform its
express obligations under this Lease and the other Operative Documents, or to
enforce any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE AIRCRAFT
WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS".
LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS NOT
AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED THE AIRCRAFT
UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR FAILED TO DO ANY
ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS
LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF
AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY GUARANTY,
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS
HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE OF THE
AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT,
THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE,
THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR AS TO
ANY OTHER GUARANTY, REPRE- SENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION ANY LIABILITY IN
TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR
TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER
CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR
WARRANTIES. NEITHER LESSOR
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NOR ANY OTHER INDEMNITEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY TO LESSEE OR
ANY OTHER PERSON, REGARDLESS OF ANY NEGLIGENCE (OTHER THAN ITS OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS NOT ATTRIBUTABLE TO ITS INTEREST IN
THE AIRCRAFT) OF LESSOR OR ANY OTHER INDEMNITEE, AND LESSEE HEREBY WAIVES,
RELEASES, RENOUNCES AND DISCLAIMS ANY RIGHTS OR REMEDIES, WITH RESPECT TO (i)
ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR
INDIRECTLY BY THE AIRCRAFT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT
THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION THEREWITH, (ii) THE USE,
OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO, (iii)
ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION, SERVICING,
MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES
AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF
ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT,
EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER
IMPLIED WARRANTIES, OR GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and
warrants that (x) on the Delivery Date Lessor had, and on the Restatement Date
Lessor has, the right to lease the Aircraft hereunder and (y) on the Delivery
Date the Aircraft was free of Head Lessor's Liens and on the Restatement Date
the Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor
covenants that it shall not create, incur, assume or suffer to exist any
Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor. Lessor
hereby represents and warrants, as of the Restatement Date that its
representations and warranties set forth in Section 9(b) of the Refunding
Agreement were true when made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor covenants
and agrees that Lessor will not, without the prior written consent of Lessee,
amend, modify, supplement or waive any provision of any Financing Document in
such a way as to materially increase Lessee's obligations hereunder or
materially reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor
under Sections 5(a) and 5(b) and this Section 5(c)
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shall survive the execution and delivery of this Lease and the delivery of the
Aircraft and the Restatement Date.
(d) Suppliers' Warranties. So long as a Default or an
Event of Default has not occurred and is continuing and provided that the
Aircraft continues to be maintained, modified and repaired as required
hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees
otherwise to make available to Lessee the right to exercise in Lessee's name
such rights as Lessor may have or may subsequently obtain (but without
representation or warranty by or recourse to Lessor) with respect to any product
warranty, service life policy, trademark, patent or copyright infringement
indemnity, or airframe or propulsion system performance guaranty, of Airbus
Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or vendor
with respect thereto under the Purchase Agreement (except those which were given
directly to Parent, the Original Head Lessee or any of their Affiliates and are
not directly related to the operator's use of the Aircraft), to the extent that
the same may be assigned or otherwise made available to Lessee, and Lessor
agrees to exert its reasonable efforts, at Lessee's expense and upon its
request, to enforce such rights as Lessor may have with respect thereto for the
benefit of Lessee; provided, however, that upon and during the continuance of a
Default or an Event of Default, such assignment or other rights which are
otherwise made available to Lessee shall immediately and automatically without
further action be deemed cancelled and, to the extent of any remaining interest
held by Lessee, deemed reassigned to Lessor and all such rights shall revert to
Lessor automatically including all claims thereunder whether or not perfected
and all amounts payable shall be paid to and held by Lessor. In no event,
however, shall Lessee have any right to amend, supplement or otherwise modify
the Purchase Agreement (by change order or otherwise). In connection with the
foregoing, Lessee agrees to be bound by and comply with all applicable terms,
conditions and limitations of the provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL
NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN
(EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE
IN ANY
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MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT,
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE
INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as no
Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as all necessary approvals of the FAA
and any other Governmental Entity having jurisdiction have been obtained, then
Lessee, without the prior written consent of Lessor, may, only to the extent
provided below and subject to the limitations of Sections 6(a)(ii) and 6(a)(iii)
below:
(1) subject any Engine to a normal interchange,
maintenance, servicing or pooling agreement or similar arrangement
with a Permitted Sublessee, in each case customary in the airline
industry of which Lessee is a part and entered into in the
ordinary course of its business; provided that no transfer of the
registration of any Engine shall be effected in connection
therewith; and provided, further, that (A) no such agreement or
arrangement contemplates, results in or requires the transfer of
title to any Engine, and (B) if Lessor's title to any Engine shall
be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to
such Engine and not an Event of Default and Lessee shall comply
with Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or
any Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for
testing, service, storage, repair, maintenance, inspection or
overhaul work on such Aircraft, Airframe or Engine or any part
thereof or for alterations or modifications in or additions to
such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe to
the United States of America or any instrumentality or agency
thereof pursuant to a sublease;
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(4) (i) subject the Airframe to the Civil Reserve Air
Fleet Program and transfer possession of the Airframe or any
Engine to the United States Government pursuant to the Civil
Reserve Air Fleet Program, so long as Lessee shall promptly notify
Lessor upon transferring possession of the Airframe or any Engine
to the United States Government pursuant to the Civil Reserve Air
Fleet Program and provide Lessor with the name and address of the
Contracting Office Representative for the Military Airlift Command
of the United States Air Force to whom notices must be given; or
(ii) subject the Airframe to (a) a service contract with
the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term,
or (b) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except (A)
Permitted Liens and Liens which apply only to engines (other than
the Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an
entirety) and (B) the rights of participants under normal
interchange agreements which are customary in the airline industry
and do not contemplate, permit, result in or require the transfer
of title to the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of
all Liens except the rights of the parties to the lease or
conditional sale or other security agreement covering such
airframe and except Liens of the type permitted by clauses (A) and
(B) of Section 6(a)(i)(5) and the Lien of any mortgage which
provides that each Engine leased to Lessee hereby shall not become
subject to the Lien thereof or to any rights of any party
thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of
such Engine on any airframe subject to the Lien of such mortgage,
unless and until Lessee shall become the
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owner of such Engine and Lessor shall have no further interest
therein, all pursuant to the express terms of this Lease; and (B)
there shall be in effect a written agreement of the lessor or
secured party of such airframe (which may be contained in the
lease or conditional sale or other security agreement covering
such airframe) substantially similar in effect to the agreement of
Lessor in Section 6(b) below whereby such lessor or secured party
effectively and expressly agrees that neither it nor its
successors or assigns will acquire or claim any right, title or
interest in any Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this
Lease or is owned by Lessor, and a copy of such agreement shall be
provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional
sale or other security agreement under circumstances where neither
Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided
that such installation shall be deemed an Event of Loss with
respect to such Engine and Lessee shall comply with Section 11(b)
hereof in respect thereof, Lessor not intending hereby to waive
any right or interest it may have to or in such Engine under
applicable Law until compliance by Lessee with such Section 11(b);
(8) enter into a Wet Lease for the Aircraft or the
Airframe and engines installed thereon in the ordinary course of
Lessee's business for a period not extending beyond the Term;
provided that if Lessee shall enter into any Wet Lease for a
period of more than six months (including renewal options) Lessee
shall provide to Lessor written notice of such Wet Lease (such
notice to be given at least ten (10) Business Days prior to
entering into such Wet Lease); or
(9) sublease the Aircraft or the Airframe to any Permitted
Sublessee on the terms and conditions set forth in Section
6(a)(iii) below.
(ii) Certain Limitations on Transfers. With
respect to any transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession
by reason of a transfer permitted by Section
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6(a) hereof (other than the transfer of an Engine which is deemed
to have been an Event of Loss) and any Wet Lease shall be
expressly subject and subordinate to all the terms of this Lease
and the Lien of the Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and
Lessee shall remain primarily liable hereunder for the performance
of all of the terms of this Lease to the same extent as if such
transfer had not occurred and no provision of this Lease shall be
deemed a waiver of the Lessor's rights hereunder or under the
other Operative Documents nor discharge or diminish any of
Lessee's obligations hereunder or under the other Operative
Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the
Aircraft, the Airframe or any Engine pursuant to the terms of this
Section 6(a) shall be permitted if such Wet Lease, Permitted
Sublease or other relinquishment of possession would cause the
Aircraft, the Airframe or such Engine to be "tax-exempt use
property" within the meaning of Section 168(h) of the Code or
cease to be "Section 38 property" within the meaning of Section
48(a) of the Code (as determined after the application of Section
47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend
beyond the Basic Term or the Renewal Term (if Lessee shall have
exercised its option to renew this Lease in accordance with the
terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable;
(6) The sublessee under any Permitted Sublease, in its
consent thereto, shall confirm that from and after the occurrence
and continuance of an Event of Default and, unless an Event of
Default specified in Section 17(e), (f) or (g) of this Lease has
occurred and is continuing, this Lease being deemed or declared
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in default, Lessor (and, so long as the Lien of the Indenture
shall not have been discharged, Indenture Trustee) shall be
entitled to enforce directly and in its own name all
representations, warranties, indemnities, covenants and agreements
under the applicable Permitted Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I) the
Aircraft or Airframe may not be operated or used other than as
provided in this Lease and shall be maintained and operated as
required hereunder, (II) Lessor may avoid or terminate such
sublease following an Event of Default hereunder and (III) to the
extent not accomplished by an assignment of the Permitted
Sublease, upon the occurrence of an Event of Default hereunder,
Lessee's rights under such Permitted Sublease shall automatically
be deemed assigned to Lessor; and (B) be a "net lease" in
accordance with industry practice and shall be comparable to, or
more restrictive than, this Lease and under such Permitted
Sublease (except a sublease to the United States Government or a
Foreign Air Carrier after the Restricted Use Period), Lessee as
lessor under such Permitted Sublease, must be entitled to the
same benefits under 11 U.S.C. Section 1110 as Lessor is entitled
hereunder and such Permitted Sublease shall contain provisions
regarding such Section 1110 which are substantially the same as
the related provisions of this Lease. In addition, from and after
the occurrence and continuance of an Event of Default, all rent
and other amounts payable by the Permitted Sublessee under such
Permitted Sublease shall be paid directly to Indenture Trustee
and, upon discharge of the Lien of the Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any
sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law)
or Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under
such sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the
date such sublease is entered into, (B) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier
(other than a Foreign Air Carrier principally based in Taiwan),
the United
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States maintains diplomatic relations with the country in which
such proposed Permitted Sublessee is principally based at the time
such sublease is entered into (or, in the case of a sublease to a
proposed Permitted Sublessee principally based in Taiwan,
maintains diplomatic relations at least as good as those in effect
on the Restatement Date) and (C) in the event that the Permitted
Sublessee under such sublease is a Foreign Air Carrier, Lessor and
the Indenture Trustee shall have received an opinion of counsel to
Lessee, in form and substance reasonably satisfactory to Owner
Participant and the Indenture Trustee, to the effect that (I) the
terms of the proposed sublease will be legal, valid, binding and
(subject to customary exceptions in foreign opinions generally)
enforceable against the proposed Permitted Sublessee in the
country in which the Permitted Sublessee is principally based,
(II) there exist no possessory rights in favor of the Permitted
Sublessee under such sublease under the laws of such Permitted
Sublessee's country of domicile that would, upon bankruptcy or
insolvency of or other default by Lessee, prevent the return or
repossession of the Aircraft in accordance with the terms of this
Lease, (III) (unless Lessee shall have agreed or is required to
provide insurance covering the risk of requisition of use of the
Aircraft by the government of the country of such Permitted
Sublessee's country of domicile) the laws of such Permitted
Sublessee's country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely
convertible into dollars for the loss of use of the Aircraft in
the event of the requisition by such government of such use, (IV)
the Permitted Sublessee is either not entitled to sovereign
immunity, or has effectively waived such sovereign immunity, with
respect to its rights and obligations under the proposed sublease;
(V) the laws of such Permitted Sublessee's country of domicile
would give recognition to Lessor's title to the Aircraft, to the
registry of the Aircraft in the name of the Lessor (or Lessee, as
"lessee", or the proposed Permitted Sublessee, as "sublessee", as
appropriate) and to the Lien of the Indenture; (VI) it is not
necessary under the laws of such Permitted Sublessee's country of
domicile, solely as a consequence of such subleasing and without
giving effect to any other activity of Owner Participant, Owner
Trustee or Indenture Trustee or any Affiliate thereof, as the case
may be, for the Owner Trustee, the Owner Participant or the
Indenture Trustee to qualify
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to do business in such jurisdiction and (VII) if the Owner
Participant so requests, (x) under the laws of such Permitted
Sublessee's country of domicile there is no tort liability of the
owner of an aircraft not in possession thereof (it being agreed
that in the event this opinion cannot be given in a form
reasonably satisfactory to Owner Participant, such opinion shall
be waived if insurance reasonably satisfactory to Owner
Participant is provided to cover such risk), and (y) such other
matters as the Owner Participant reasonably requests, provided,
however, that no sublease shall extend beyond the expiration of
the Basic Term or any Renewal Term then in effect.
Any Permitted Sublease shall expressly provide
that the rights of any Permitted Sublessee shall be expressly subject and
subordinate to all the terms of this Lease and to the Lien of the Indenture (if
it has not been discharged), including, without limitation, the covenants
contained in Sections 6(c), 6(d) and 6(e) hereof and Lessor's rights to
repossession pursuant to Section 18 hereof and to avoid or terminate such
Permitted Sublease upon such repossession, and Lessee shall remain primarily
liable hereunder for the performance of all of the terms of this Lease to the
same extent as if such Permitted Sublease had not occurred. No Permitted
Sublease shall in any way discharge or diminish any of Lessee's obligations to
Lessor hereunder or under the other Operative Documents or constitute a waiver
of Lessor's rights or remedies hereunder or under the other Operative Documents,
and such rights shall continue as if such Permitted Sublease had not occurred.
Any Permitted Sublease shall expressly prohibit any further sub-sublease or
assignment or any other similar transfer of the Aircraft, Airframe or any Engine
or rights thereto by the Permitted Sublessee. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Permitted
Sublease hereunder (such notice to be given not later than ten Business Days
prior to entering into any Permitted Sublease with any proposed Permitted
Sublessee), and (ii) a copy of each Permitted Sublease together with an
assignment, as security for Lessee's obligations hereunder, of such Permitted
Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto
from such Permitted Sublessee, substantially in the form of Exhibit F-3 hereto,
within ten (10) Business Days following the effective date of such Permitted
Sublease.
(b) Reciprocal Recognition of Rights. In the event the
lessor or secured party of any airframe leased to
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Lessee (or a Permitted Sublessee) or owned by Lessee (or a Permitted Sublessee)
is subject to a conditional sale or other security agreement in accordance with
Section 6(a)(i)(6) hereof, and the lease or conditional sale or other security
agreement covering such airframe also covers an engine or engines owned by the
lessor under such lease or subject to a security interest in favor of the
secured party under such conditional sale or other security agreement, Lessor
hereby agrees for the benefit of such lessor or secured party that Lessor will
not acquire or claim, as against such lessor or secured party, any right, title
or interest in any such engine as the result of such engine being installed on
the Airframe at any time while such engine is subject to such lease or
conditional sale or other security agreement and owned by such lessor or subject
to a security interest in favor of such secured party. Lessor also hereby agrees
for the benefit of the mortgagee under any mortgage complying with Section
6(a)(i)(6) hereof, relating to installation of an Engine on an airframe leased
to Lessee (or a Permitted Sublessee), that Lessor will not acquire or claim, as
against such mortgagee, any right, title or interest in any engine subject to
the lien of such mortgage as the result of such engine being installed on the
Airframe at any time while such engine is subject to the lien of such mortgage.
(c) Lawful Insured Operations. Lessee will not permit the
Aircraft, the Airframe or any Engine to be serviced, repaired, maintained, used
or operated in violation of any Law of any Governmental Entity having
jurisdiction, or contrary to the Manufacturers' operating manuals or
instructions, or in violation of any airworthiness certificate or limitation,
license or registration issued by any such authority or any manufacturer's
specifications, service bulletins or other requirements, including, without
limitation, any manufacturer's requirements as may be applicable to keep in full
force and effect each material warranty, product or performance guaranty,
service life policy or the like, in each case, to the extent made mandatory for
Part 121 operators similarly situated to Lessee or the Permitted Sublessee if
the Aircraft is registered with the FAA, or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered in accordance with
Section 11 of the Refunding Agreement, unless the validity thereof is being
contested in good faith and by appropriate proceedings, but only so long as such
proceedings do not involve any danger of sale, forfeiture or loss of the
Aircraft or impair the interest of Lessor therein or impair the validity or
priority of the
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<PAGE> 38
Lien of the Indenture or result in a risk of criminal liability of Lessor, Owner
Participant or Indenture Trustee and are not inconsistent with any insurance
required to be maintained by Lessee hereunder. In the event that such Law or
other requirement requires alteration of the Aircraft during the Basic Term or
the then-current Renewal Term, Lessee shall comply therewith at its sole expense
and shall maintain the same in proper condition for operation under such Laws
and other requirements. Lessee shall not operate in any manner or locate in any
place the Aircraft, or suffer or permit the Aircraft to be operated by a
Permitted Sublessee or otherwise in any manner or located by a Permitted
Sublessee or otherwise in any place (i) unless the Aircraft is covered by
insurance or United States Government indemnity as required by the provisions
hereof or (ii) contrary to the terms of such insurance or United States
Government indemnity. Lessee also agrees not to operate or locate the Aircraft
or suffer or permit the Aircraft to be operated or located in any area excluded
from coverage by any insurance policy issued pursuant to the requirements of
this Lease or in any war zone unless insured or indemnified by the United States
of America therefor, except in the case of operation pursuant to a sublease or
contract with, or as a result of a requisition (not constituting an Event of
Loss) by, the United States of America, and then only if Lessee has obtained
insurance or an indemnity (in lieu of such insurance) from the United States of
America covering such risks, in the amounts and otherwise as required by this
Lease.
(d) Maintenance. Lessee, at its own cost and expense,
shall: (i) perform or cause to be performed all service, repair, maintenance,
overhaul, inspections, alterations, modifications, and testing (A) in accordance
with good airline industry practice and in such manner to provide complete data
and documentation necessary to substantiate certification, (B) as may be
necessary and required under, and in compliance with, applicable Law, including,
without limitation, FAA rules, regulations and other requirements, any other
applicable rules, regulations and requirements by any other applicable
Governmental Entity, the Maintenance Program, airworthiness directives having a
compliance date during the Term, and the service bulletins and other
requirements of any manufacturer, including, without limitation, such
requirements as may be applicable to keep in full force and effect any and all
material warranties, product and performance guaranties, service life policies,
indemnities or the like, (C) except during any period that a Permitted Sublease
is in effect, in
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the same manner and with the same care, including regard for the status and
technical condition of the Aircraft, as shall be the case with respect to
similar aircraft and engines owned by Lessee without discrimination and as if
Lessee owned the Aircraft and was going to use the Aircraft in continued regular
customer service after the expiration of the Term, and consistent with good
industry practice, and during any period in which a Permitted Sublease is in
effect, in the same manner and with the same care, including regard for the
status and technical condition of the Aircraft, as shall be the case with
respect to similar aircraft and engines owned by such Permitted Sublessee
without discrimination and as if the Permitted Sublessee owned the Aircraft and
was going to use the Aircraft in continued regular customer service after the
expiration of the Permitted Sublease, and consistent with good industry
practice, provided, however, that in all circumstances the Aircraft shall be
maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance
standards required by, or substantially equivalent to those required by the
central civil aviation authority of the country of registry, and, to the extent
not inconsistent therewith, the FAA and (D) so as to keep the Aircraft in as
good a condition as when delivered to Lessee, ordinary wear and tear excepted,
and in good operating condition; (ii) keep the Aircraft or cause the Aircraft to
be kept in such condition as is necessary to enable the airworthiness
certification of such Aircraft to be maintained in good standing at all times
under the Federal Aviation Act and any other applicable law, or the applicable
laws of any other jurisdiction in which the Aircraft may be registered in
accordance with Section 11 of the Refunding Agreement (provided that if any
grounding is fleetwide in nature and so long as Lessee or a Permitted Sublessee
is contesting in good faith such grounding, Lessee shall not be deemed in
violation of this maintenance covenant); and (iii) maintain in English all
records, logs and other materials required by, and in a manner acceptable to,
the FAA or any other Governmental Entity having jurisdiction and as provided
under the Maintenance Program and Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the
Aircraft at all times, at its expense, to be duly registered during the
Restricted Use Period and, subject to Section 11 of the Refunding Agreement,
thereafter under the Federal Aviation Act in the name of Lessor or any successor
or assignee, so long as (i) while the Aircraft is registered under the Federal
Aviation Act, each of the Lessor or its successors or assigns is a "citizen of
the United States" as
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defined in Section 40102(a)(15) of the Federal Aviation Act and (ii) the
applicable parties to the Refunding Agreement cooperate with Lessee with respect
thereto as reasonably requested by Lessee. Lessee shall not register the
Aircraft or permit the Aircraft to be registered under any Laws other than the
Federal Aviation Act at any time except as provided in Section 11 of the
Refunding Agreement and shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Aircraft and this Lease
at all times. At any time after the Restricted Use Period, Lessor, upon
compliance with all of the terms of Section 11 of the Refunding Agreement,
shall, at the request and sole expense of Lessee, cooperate with Lessee to take
all actions reasonably required to change the registration of the Aircraft to
another country.
Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") in the
cockpit of the Aircraft and on each Engine showing title thereto and the Lien of
the Indenture as designated by Lessor and as Lessor may from time to time
reasonably request. Unless otherwise requested, upon delivery of the Aircraft,
Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a
location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and on each Engine (if not prohibited by
applicable Law), a Lease Identification in the form set forth in Exhibit C
hereto or with any other appropriate information in any other form subsequently
designated by Lessor to Lessee. Except as provided herein, Lessee will not allow
the name of any Person to be placed on the Aircraft or either Engine as a
designation that would be reasonably interpreted as a claim of ownership or
Lien; provided, however, that Lessee may cause the Airframe and Engines to have
placed thereon the customary colors and insignia of Lessee or any Permitted
Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to
Lessor, Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Aircraft as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause any sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee on reasonable prior notice at reasonable times
to visit,
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inspect and survey the Aircraft (including, without limitation, a visual "walk
around" inspection which may include going on board the Aircraft, and inspecting
the Aircraft during maintenance checks when panels and bays are open and subject
to view), its condition, use, and operation, and the records maintained in
connection therewith, and to visit and inspect the properties and to discuss the
affairs, finances and accounts of Lessee with the principal officers of Lessee,
provided, that so long as no Default or Event of Default has occurred hereunder
inspections shall be endeavored to be performed during regularly scheduled
maintenance checks of the Aircraft. Each such inspection or survey shall be
conducted so as to not unreasonably interfere with the business of Lessee or the
maintenance or operation of the Aircraft. Upon Lessor's, Owner Participant's or
Indenture Trustee's request, Lessee will notify such Person of the next
scheduled maintenance check for the Airframe or any Engine. Lessor, Owner
Participant and Indenture Trustee shall have no duty to make any such inspection
and shall not incur any liability or obligation by reason of not making any such
inspection. Lessor's, Owner Participant's or Indenture Trustee's failure to
object to any condition or procedure observed or observable in the course of an
inspection hereunder shall not be deemed to waive or modify any of the terms of
this Lease with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish
Lessor, until the expiration or other termination of the Term of this Lease, the
following:
(i) within sixty (60) days following the end
of each quarter of Lessee's fiscal year, except the last such quarter of such
year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report
on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee
no longer files such report, an unaudited consolidated balance sheet of Lessee
and its consolidated subsidiaries prepared by it as of the close of the period
ended, together with the related statements of income and cash flows for such
period, and in each case certified by a Responsible Officer of Lessee as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial
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position for such period then ended in accordance with such principles and
practices (subject to normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close of
each fiscal year of Lessee, a copy of Lessee's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such reports, an audited consolidated balance sheet, income statement, and cash
flow statement of Lessee and its consolidated subsidiaries, as of the close of
such fiscal year, and in each case as certified by independent public
accountants, including their certificate and accompanying comments, as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices, without
qualification as to the scope of the audit or non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of
all reports on Form 8-K filed by Lessee under the Securities Exchange Act of
1934, as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of
insurance required to be maintained hereunder, a certificate signed by the
Approved Broker of Lessee as to the due compliance with the insurance provisions
of Section 12 hereof with respect to the Aircraft, together with certificates of
insurance evidencing such insurance and the opinion provided for in Section
12(f);
(v) together with each set of financial statements
referred to in clauses (i) and (ii), a certificate signed by a Responsible
Officer of Lessee, to the effect that such officer has reviewed the relevant
terms of this Lease and has made, or caused to be made under his or her
supervision, a review of the transactions and condition of Lessee during the
accounting period covered by such financial statements, and that such review has
not disclosed the existence during such accounting period, nor does such officer
have any knowledge of the existence, as at the date of such certificate, of any
condition or event which constitutes a Default or an Event of Default, or, if
such condition or event which constitutes a Default or an
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Event of Default existed or exists, specifying the nature and period of
existence thereof and what action Lessee has taken or is taking or proposes to
take with respect thereto;
(vi) as soon as practicable after becoming aware
thereof, notice of damage or destruction to the Aircraft, either Engine or any
Part with a repair or replacement cost (including labor charges) in excess of
$1,000,000;
(vii) immediately after Lessee knows or should
know of the occurrence thereof, notice of a Default; and
(viii) from time to time such other information
as Lessor may reasonably request.
(b) Maintenance of Corporate Existence. Except as provided
in Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so
long as it shall be the Lessee under this Lease, a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and
Lessee is and shall maintain its status at all times as a Certificated Air
Carrier, including, without limitation, its status so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid
all Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal liability
on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate
or dissolve; and Lessee shall not consolidate with
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or merge into or with any other corporation or other Person, and Lessee shall
not convey, transfer, lease or otherwise dispose of all or substantially all of
its property and other assets (in one or a series of transactions) to any
corporation or other Person, unless:
(i) the Person formed by or surviving such
consolidation or merger or the Person which acquires by conveyance, transfer,
lease or other disposition all or substantially all of such property and other
assets or stock (the "Successor Entity"): (A) shall be a corporation organized
and existing under the Laws of the United States of America or any State thereof
or the District of Columbia; (B) immediately after giving effect to such
transaction, shall be Lessee or shall have acquired or succeeded to all or
substantially all of such property and other assets (including, without
limitation, all or substantially all of Lessee's property and other assets) as
an entirety and, unless the Owner Participant otherwise agrees, shall have a Net
Worth of not less than Lessee's Net Worth immediately prior to such transaction;
(C) shall be a "citizen of the United States" of America as defined in Section
40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D)
shall execute and deliver to Lessor and Indenture Trustee such recordations and
filings with any Governmental Entity and such other documents as Lessor
determines shall be reasonably necessary or advisable (including, without
limitation, to preserve and protect the interests of the Lessor and the priority
of the Lien of the Indenture (if it has not been discharged)) to evidence, or in
connection with, such consolidation, merger, sale, lease, transfer or other
disposition and an agreement, in form and substance reasonably satisfactory to
Lessor, which is a legal, valid, binding and enforceable assumption by such
Successor Entity of the due and punctual performance and observance of each
covenant and condition of this Lease and the other Operative Documents to which
Lessee is a party and agreement to be bound thereby, and an officer's
certificate to such effect, and to the effect that the other requirements of
this paragraph have been satisfied, and a legal opinion from counsel to such
effect and otherwise in such form and substance reasonably satisfactory to
Lessor; and
(ii) prior to and immediately after giving effect
to such transaction, no Default or Event of Default shall have occurred and be
continuing.
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No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each
calendar year and within 60 days of a request by Lessor or Owner Participant, or
such shorter period as may be set forth in any written request by the Internal
Revenue Service for information or documents, Lessee shall furnish in writing to
Lessor or Owner Participant such information and documents (or copies thereof)
regarding the Aircraft as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its Federal and state income tax returns (or to permit the filing of the Federal
and state income tax returns of any affiliated group of corporations filing a
consolidated return of which Lessor is a member), or to maintain or defend any
claims related thereto and promptly, after reasonable notice, furnish to Lessor
or Owner Participant such information as may be reasonably requested by Lessor
or Owner Participant or the applicable Governmental Entity as may be required to
enable Lessor or Owner Participant to file any reports required to be filed by
it with any Governmental Entity because of its ownership or other interest in
the Aircraft, the Airframe or the Engines.
(g) Place of Business. At all times while this Lease is in
effect, Lessee will not, without thirty (30) days prior written notice to Lessor
and Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the
Aircraft, Airframe or Engines only in commercial passenger operations and
related cargo operations. Unless Owner Participant otherwise agrees, during the
Restricted Use Period, Lessee shall not use the Aircraft, Airframe or Engines or
permit the Aircraft, Airframe or Engines to be used either "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code,
or in such manner that the percentage of the income, deduction or credit
attributable to the Aircraft, Airframe or Engines for federal income tax
purposes during any taxable year of the Lessor considered to be from foreign
sources exceeds the
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Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees,
prior to permitting the Aircraft to be operated in any member state of the
European Union or other European country, Lessee shall deliver to Lessor (i) a
representation and warranty to the effect that Lessee (or any Permitted
Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant
air traffic control authority over delinquent charges payable by it and (ii) a
letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or
other relevant air traffic control authority pursuant to which Lessee (or such
Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's
request from time to time, a statement of account of all sums due by Lessee (or
such Permitted Sublessee) to the authority in respect of all aircraft
(including, without limitation,the Aircraft) operated by Lessee (or such
Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would
not have entered into this amended and restated Lease unless it had available to
it the benefits of a lessor under Section 1110 of Title 11 of the United States
Code. Lessee covenants and agrees with Lessor that to better ensure the
availability of such benefits, Lessee shall support any motion, petition or
application filed by Lessor with any bankruptcy court having jurisdiction over
Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said
Section 1110 and shall not in any way oppose such action by Lessor unless Lessee
shall have complied with the requirements of said Section 1110 to be fulfilled
in order to entitle Lessee to continued use and possession of the Aircraft
hereunder. The acknowledgement, covenant and agreement contained in this Section
8(i) shall continue in full force and effect and survive the expiration or other
termination of this Lease and are expressly made for the benefit of and shall be
enforceable by the Lessor, the Owner Participant and, if the Lien of the
Indenture has not been discharged, the Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or obtain, and
maintain in full force and effect, each and every consent, license, approval,
notice, registration, filing or other action with any Governmental Entity
necessary or advisable in connection with the operation or use of the Aircraft,
the Airframe, any Engine or Part or the execution, delivery or performance of
this Lease or the enforcement thereof against Lessee.
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(k) Security Opinion; Annual Certificate. (i) During such
times that the Aircraft is registered under the Federal Aviation Act, Lessee
shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period
covered by the opinion of counsel rendered on
the Restatement Date, any opinion of counsel
rendered pursuant to Section 11(C) of the
Refunding Agreement, and any opinion of counsel
rendered pursuant to this Section 8(k)(i) and
(Y) upon any change in Law that would render
the opinion of counsel rendered on the
Restatement Date or such immediately preceding
opinion of counsel inaccurate, an opinion of
counsel with respect to Lessee and the FAA
reasonably satisfactory to each addressee of
such opinion (which counsel may be internal
legal counsel of Lessee and FAA counsel)
stating, in the opinion of such counsel, that
such action has been taken with respect to the
recording, filing, rerecording and refiling of
(i) the appropriate Operative Documents and any
supplements and amendments thereto and (ii)
such other appropriate documents, as is
necessary to maintain the perfection of
Lessor's title to and/or interest in and
Indenture Trustee's security interest in the
Aircraft and the Operative Documents for such
period of time as reflects the then-current
applicable Law, reciting the details of such
actions; or
(2) at any time that an opinion is not required
pursuant to Section 8(k)(i)(1), annually, a
certificate reasonably satisfactory to each
recipient thereof signed by a Responsible
Officer of Lessee certifying that no such
action is necessary to maintain the perfection
of such title and/or interest and security
interest.
(ii) During such times that the Aircraft is registered
under any Laws other than the Federal Aviation Act, Lessee shall furnish to
Lessor and to Indenture Trustee annually (but in any case, (X) prior to the
expiration of the time period covered by any opinion of counsel rendered
pursuant to Section 11(C) of the Refunding Agreement, and any opinion of counsel
rendered pursuant to this Section
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8(k)(ii) and (Y) promptly upon any change in Law that would render such
immediately preceding opinion of counsel inaccurate), an opinion of counsel
reasonably satisfactory to each addressee of such opinion stating, in the
opinion of such counsel, that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i) the appropriate Operative
Documents and any supplements and amendments thereto and (ii) such other
appropriate documents, as is necessary to maintain the perfection of Owner
Trustee's title to and/or interest in and Indenture Trustee's security interest
in the Aircraft and the Operative Documents for such period of time as reflects
the then-current applicable Law, reciting the details of such actions.
(l) Letter of Credit. As security for the obligations to
Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or
more irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof shall be
available for drawdown thereunder and payable in New York, New York, on demand
at any time, if a Default under Section 17(e), (f) or (g) or an Event of Default
has occurred, which amount may be applied, retained or utilized as provided in
the penultimate paragraph of this Section 8(l).
(ii) be maintained in full force and effect at
all times until ninety-one (91) days after the Expiration Date with a commercial
bank acceptable to Lessor, in its sole and absolute discretion, having a
long-term unsecured debt rating of "A" or better by Standard & Poor's Rating
Group (if the issuing bank's credit rating is lower than such rating, Lessee
shall replace such Letter of Credit issuer within five Business Days of any such
reduction in rating with a commercial bank meeting such rating requirement),
provided, that a Letter of Credit set forth in Exhibit D-2 issued by The
Industrial Bank of Japan, Limited, will be acceptable to Lessor for so long as
The Industrial Bank of Japan, Limited maintains a long term unsecured debt
rating at least equal to its rating on the date hereof;
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(iii) be expressly designated as transferrable
and assignable; and
(iv) permit partial drawings. If the Letter of
Credit is still in effect at the end of the Term or the Lessor is holding
proceeds of the Letter of Credit that were retained and not applied as provided
herein, then Lessor shall return the Letter of Credit to Lessee or terminate it,
and/or return any retained and unapplied proceeds, ninety-one (91) days
following the date of such expiration or other termination of this Lease so long
as no Default or Event of Default has occurred or is continuing hereunder or
under any Other Lease, upon payment in full of all amounts then due and owing to
Owner Trustee and Owner Participant under the Operative Documents.
If an Event of Default has occurred or is continuing under
this Lease or an Event of Default has occurred or is continuing under any Other
Lease (as therein defined), in addition to any other rights and remedies Lessor
may have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform Commercial
Code as adopted in New York) or equity and upon exercising its rights under the
Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim; due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
the payment of Rent, Lessee's right to apply the same to such claim shall be
limited to amounts which would (absent such Event of Default) be distributable
under the Indenture at the time such payment is made to Lessor, Owner
Participant or any of their respective Affiliates (and shall not include any
amounts distributable to Indenture Trustee in its individual capacity or to the
Note Holders); provided further, however, that neither the amount so applied at
any one time nor the aggregate amount so applied at different times shall reduce
the amount of any installment or payment of Rent (whether
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upon the termination of the Lease or otherwise) payable by Lessee to an amount
insufficient to pay in full the amounts required to be paid on account of the
principal of and any interest on the Equipment Notes or otherwise owing to a
Note Holder. Lessee shall not be entitled to any refund or credit with respect
to any amounts so applied. Any amount retained shall be considered the property
of Lessor and Lessor may commingle such amount with its general funds and
Lessee, further, hereby absolutely and irrevocably disclaims, to the maximum
extent permitted by applicable Law, any interest therein. Lessee shall not be
entitled to any interest or other earnings on such retained amount and such
amount shall not be refundable.
On application of all or any portion of the amounts drawn
under the Letter of Credit or any Other Letters of Credit in accordance with
this Section 8(l), or the Other Leases, Lessee shall on demand reinstate the
amount of the Letter of Credit or Other Letters of Credit, as the case may be,
to its or their full Face Amount or provide to Lessor one or more additional
Letters of Credit meeting the requirements of this Section 8(l), so that the
Letter of Credit and each of the Other Letters of Credit at all times equals the
original Face Amount provided for herein. During such times as Lessor shall
elect to hold all or part of the proceeds of the Letter of Credit or Other
Letters of Credit as security for Lessee's obligations to Lessor under the Lease
and the Other Leases, Lessee shall not be obligated to reinstate the amount of
the Letter of Credit or Letters of Credit, as the case may be, in respect of the
proceeds so held.
Section 9. Replacement of Parts; Alterations,
Modifications and Additions.
(a) Replacement of Parts. Lessee, at its own cost and
expense, will promptly replace, or cause to be replaced, all Parts which may
from time to time become worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever. In addition, in the ordinary course of maintenance, service, repair,
overhaul or testing, Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) may at its own cost and expense remove any Parts, whether
or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use, provided that Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) shall replace at its own
cost and expense such Parts as promptly as
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possible. All replacement Parts shall be free and clear of all Liens (except for
pooling arrangements to the extent permitted by paragraph (c) of this Section
and Permitted Liens), be in at least the equivalent or better modification
status and service bulletin accomplishment status, be fully interchangeable as
to form, fit and function and shall be in as good operating condition as, and
have a value, remaining useful life and utility at least equal to, the Parts
replaced (assuming such replaced parts were in the condition and repair in which
they were required to be maintained by the terms hereof).
All Parts which are at any time removed from the Aircraft
shall remain the property of Lessor, subject to the Lien of the Indenture if it
has not been discharged, and subject to this Lease no matter where located until
such time as such Parts shall be replaced by parts which have been incorporated
or installed in or attached to the Aircraft and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Aircraft as above
provided, or as provided in Section 9(c), without further act, (i) title to the
removed Part shall thereupon vest in Lessee free and clear of all rights of
Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no
longer be deemed a Part hereunder, (ii) title to such replacement Part shall
thereupon vest in Lessor and become subject to the Lien of the Indenture if it
has not been discharged, and (iii) such replacement Part shall become subject to
the Lien of the Indenture (if it has not been discharged) and this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(b) Alterations, Modifications and Additions. Lessee, at
its own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine to the extent
made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines
or Parts from time to time to meet the applicable standards of the FAA or under
any Law of any Governmental Entity having jurisdiction or issued by the
manufacturer of the Airframe, Engines or Parts. In addition, so long as no
Default or Event of Default has occurred and is continuing, Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, may
from time to time make such alterations and modifications in and additions to
the Airframe and either Engine as Lessee (or,if a Permitted Sublease is in
effect, a Permitted Sublessee)
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may deem desirable in the proper conduct of its business, provided, no such
alteration, modification or addition diminishes the value, remaining useful life
or utility, or impairs the condition or airworthiness, of the Airframe, either
Engine or any Part below that immediately prior to such alteration, modification
or addition assuming that the Airframe, Engines and Parts were then of the
value, utility and remaining useful life and in the condition and airworthiness
required by the terms of this Lease. Except as otherwise provided herein, title
to all Parts incorporated or installed in or attached or added to the Aircraft
as the result of such alteration, modification or addition, shall immediately
vest in Lessor and become subject to the Lien of the Indenture (if it has not
been discharged) and this Lease, without the necessity for any further act of
transfer, document or notice. Notwithstanding the foregoing sentence of this
Section 9(b), Lessor agrees that so long as no Default or Event of Default shall
have occurred and be continuing Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may, at such time during the Term for the
Aircraft, remove any Part of such Aircraft, provided, that (i) such Part is in
addition to, and not in replacement or substitution for, any Part originally
incorporated or installed in or attached to, or delivered with, the Aircraft on
the Delivery Date or any Part in replacement of, or substitution for, any such
originally incorporated, installed, attached or delivered Part, (ii) such Part
is not required to be incorporated or installed in or attached or added to the
Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain the
insurance required by Section 12 and (iii) such Part can be removed from the
Aircraft without causing any material damage thereto and without diminishing or
impairing the value, utility, remaining useful life, condition or airworthiness
which the Aircraft would have had at such time had such alteration, modification
or addition not occurred. Upon the removal by Lessee of any such Part as
provided in the preceding sentence, title thereto shall, without further act,
vest in Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
and such Part shall no longer be deemed part of the Aircraft (such a part is
herein called a "Removable Part"). Any Part not removed by Lessee as above
provided prior to the return of the Aircraft to Lessor hereunder, whether
pursuant to Section 16, Section 18 or otherwise, shall remain the property of
Lessor.
If any Removable Part is (i) owned by any third party and
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), (ii) sold to Lessee (or,
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if a Permitted Sublease is in effect, a Permitted Sublessee) subject to a
conditional sale contract or other security interest or (iii) leased to Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) pursuant to a
lease which is subject to a security interest in favor of any third party, then
Lessor will not acquire or claim, as against such lessor, conditional vendor or
secured party, any right, title or interest in any such Removable Part as the
result of such Removable Part being installed on the Aircraft; provided,
however, that (A) Lessor's inability to so acquire or claim is subject to the
express condition that such lessor, conditional vendor, or secured party shall
have agreed in writing (which agreement may be contained in the lease,
conditional sale agreement or security agreement) not to acquire or claim, as
against Lessor, any right, title or interest in the Aircraft, or any Part other
than its interest in such Removable Part by reason of such Removable Part being
installed thereon, and (B) any Removable Part not removed by Lessee upon the
termination or expiration of this Lease, at such time, shall become the property
of Lessor and be subject to this Lease, and provided, further, that (1) if
removal of any such Part shall affect the operation of the Aircraft in any way
whatsoever, Lessee shall replace such Part with an owned Part of the same value,
utility and remaining useful life and (2) Lessee shall repair any unsightly area
of the Aircraft as a result of such removal and make all other repairs which are
advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) replaces a Part which is not required to be
replaced under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) may remove the replacement Part so long as
it reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to form,
fit and function, has been overhauled, repaired and inspected by an agency
acceptable to the FAA or other Governmental Entity having jurisdiction, and is
in as good operating condition as, and has a utility, remaining useful life and
a value at least equal to that of such Part when it was removed from the
Aircraft.
Notwithstanding any other provision hereof, and without
limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect,
Permitted Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic
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equipment (including seats with such equipment installed therein) (any or all of
which are hereafter referred to as "Excluded Property") in the ordinary course
of business, and Lessor shall not claim or acquire title thereto and the rights
of the owners thereof therein shall not constitute a default hereunder; provided
that (i) any such Excluded Property shall be removed prior to the date of a
Return Occasion without causing any damage to the Aircraft and without
diminishing or impairing the value, utility, remaining useful life or condition
which the Aircraft would have had at such time had such Excluded Property not
been installed, (ii) any equipment or seats which such Excluded Property
replaces shall be properly stored with the interests of Lessor and, if the Lien
of the Indenture is in effect, the Indenture Trustee, duly noted thereon and
acknowledged by any applicable bailee or warehouse, and properly reinstalled on
the Aircraft prior to the date of a Return Occasion, and (iii) Lessee (or such
Permitted Sublessee) shall make all repairs which are required as a result of
such removal and/or reinstallation.
In no event shall Lessor bear any liability or cost for
any alteration, modification, or addition, or for any grounding or suspension of
certification of the Aircraft, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Airframe or either
Engine as provided in Section 9(a) may so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom be subjected by
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) to a
normal pooling arrangement customary in the airline industry of which Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) is a part
entered into in the ordinary course of Lessee's or such Permitted Sublessee's
business, provided the Part replacing such removed Part shall be incorporated or
installed in or attached to the Aircraft in accordance with Section 9(a) as
promptly as possible, and in any event within sixty (60) days, after the removal
of such removed Part. In addition, any Replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with
Section 9(a) may be owned by another Person subject to such a normal pooling
agreement; provided, however, that Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee), at its own expense, as promptly thereafter as
possible, and in any event within sixty (60) days, either (i) causes title to
such replacement Part to vest with Lessor in accordance with Section 9(a) (and
to be subjected
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to the Lien of the Indenture if it has not been discharged) by Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) acquiring title thereto
for the benefit of and transferring title to Lessor free and clear of all Liens
except Permitted Liens, whereupon such replacement Part shall become subject to
this Lease and the Lien of the Indenture (if in effect) without the necessity
for any further act, document or notice, or (ii) replaces such replacement Part
by incorporating or installing in or attaching to the Aircraft a further
replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) free and clear of all Liens other than Permitted Liens and
by causing title to such further replacement Part to vest in Lessor as above
provided and to be subjected to the Lien of the Indenture if it has not been
discharged, whereupon such replacement Part shall become subject to this Lease
and the Lien of the Indenture (if in effect) without the necessity for any
further act, document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment of Basic
Rent hereunder shall be free and clear of, and without deduction for, any and
all withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such payments
of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the
net amount actually received by Lessor, after such deduction or withholding,
will be equal to all such amounts that would be received by Lessor if no such
deduction or withholding had been required, but only to the extent necessary to
ensure that the holders of the outstanding Equipment Notes receive such amount
as may be required by the Indenture. If Lessee pays any amount to Lessor (or to
any taxing authority for the account of Lessor) as a result of the application
of the preceding sentence with respect to any withholding Tax which is an
excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in
the case of Taxes imposed on the Owner Trustee, the Owner Participant to the
extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant would be liable) shall reimburse Lessee for such withholding Tax
within 30 days of written notice accompanied by evidence of payment for such
withholding Taxes (exclusive of interest, penalties and additions to Tax) paid
by Lessee provided that in any circumstance in which the Lessor is
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required to reimburse the Lessee for any such withholding Taxes and the Lessee
has not received such reimbursement from Lessor or the Owner Participant, then
to the extent of such shortfall and so long as no Lease Event of Default has
occurred and is continuing, Lessee shall be entitled to obtain reimbursement
from Lessor by reducing the succeeding payments of Rent payable to Lessor (other
than any portion of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder) until the
aggregate amount of reduction is equal to the sum of the amount of such
shortfall and interest on that amount at the Interest Rate from the date
reimbursement is required to be made until the date of such reduction in Rent.
Except as provided in Section 10(b), and taking into account any payments
received by Lessor pursuant to the second sentence of this Section 10(a), Lessee
agrees to pay, and to indemnify and hold each Indemnitee harmless from, any and
all Taxes, howsoever levied or imposed, whether levied or imposed upon or with
respect to or asserted against any Indemnitee, Lessee, the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or otherwise, with
respect to any period beginning, or events or circumstances occurring, on or
after the Restatement Date, by any federal, state or local government or taxing
authority in the United States of America or by any foreign government or any
taxing authority or governmental subdivision of a foreign country or of a
territory or possession of the United States (each such governmental subdivision
or taxing authority referred to as a Taxing Authority"):
(i) upon or with respect to, based upon or
measured by (A) the Aircraft, the Airframe, any Engine or any Part
thereof, or interest therein, (B) the manufacture, purchase,
ownership, delivery, leasing, acceptance, rejection, assigning,
possession, use, operation, location, settlement of any insurance
claim, sale, mortgaging, pledging, financing, subleasing, rental,
retirement, abandonment, registration, re-registration,
deregistration, preparation, installation, modification, repair,
maintenance, replacement, transportation, storage, transfer of
title, return or other disposition of the Aircraft, the Airframe,
any Engine or any Part thereof or interest therein; or (C) the
rentals, receipts, income or earnings arising therefrom (including
without limitation the Rent), or
(ii) upon or with respect to the Operative
Documents (including the Equipment Notes), any interest
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in any thereof, or any future amendment, supplement, waiver or
consent thereto requested by Lessee with respect to any thereof,
or the execution, delivery, or performance of any thereof, or the
acquisition or subsequent transfer thereof or the issuance of the
Equipment Notes or any other document executed and delivered in
connection with the consummation or confirmation of the
transactions contemplated by the Operative Documents or any
Indemnitee's interest in any of the foregoing, or the execution,
amendment, supplement, issuance, reissuance, refinancing or
delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property,
or the income or other proceeds received with respect to the
property, held by the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest
or premium on, or other amounts payable with respect to the
Equipment Notes, whether as originally issued or pursuant to any
modification or reissuance, or
(v) otherwise with respect to or in connection
with the transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be subject
to indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, Taxes imposed
on, based on, or measured by, the gross or net income of such
Indemnitee or Taxes in lieu thereof (including minimum taxes,
withholding taxes and taxes on or measured by any item of tax
preference) imposed by the federal government of the United States
of America (other than taxes in the nature of sales or use taxes,
license taxes, or property taxes),
(ii) In the case of any Indemnitee, Taxes imposed
on, based on, or measured by the gross or net income, receipts,
capital, or net worth, franchises, excess profits or conduct of
business of such Indemnitee (including minimum taxes, withholding
taxes and taxes on or measured by any items of tax preference),
imposed by any state, local or foreign government or taxing
authority (other than Taxes in the
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nature of sales Taxes, use Taxes, license Taxes or property Taxes,
and Covered Income Taxes described in subsection (c) of this
Section 10),
(iii) In the case of any Indemnitee, Taxes which
arise out of or are caused by any gross negligence or willful
misconduct of such Indemnitee,
(iv) In the case of any Indemnitee, any Taxes
imposed as a result of a voluntary or involuntary bankruptcy of
such Indemnitee or any sale, transfer of title, transfer or other
disposition by such Indemnitee or a related Indemnitee (for such
purpose, Owner Trustee and Owner Participant are related
Indemnitees with respect to each other) of the Aircraft, the
Airframe, any Engine or any Part thereof or interest therein, or
any interest in the Rent or part thereof or any interest in the
Operative Documents or part thereof, unless such sale, transfer or
disposition occurs in connection with (A) an Event of Default and
the exercise by any Indemnitee of its remedies under this Lease or
the Indenture, as the case may be or (B) the substitution, pooling
or interchange of the Aircraft, the Airframe, any Engine or any
Part pursuant to the terms hereof; provided, however, that in all
cases Owner Participant and Owner Trustee shall consider in good
faith such request as Lessee shall make concerning the appropriate
jurisdiction in which such sale, transfer or disposition shall be
made,
(v) In the case of any Indemnitee, Taxes imposed
on a transferee of such Indemnitee of any interest in the
Aircraft, the Airframe, any Engine or any Part or any interest in
the Operative Documents to the extent the amount of any such Taxes
exceeds the amount of such Taxes that would have been imposed had
there not been any such transfer, unless such transfer results
from action by or on behalf of such Indemnitee taken in connection
with any Event of Default that has occurred and is continuing or
upon the request of the Lessee,
(vi) Any interest, penalties, fines and additions
to tax imposed on an Indemnitee (other than Taxes that are due and
payable with a return when properly filed) resulting from such
Indemnitee's failure to file returns that are timely and proper,
provided such failure was not attributable to such Indemnitee
contesting any claim in accordance with this
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Section 10(b) or to a failure by Lessee to satisfy its
obligations related to such return,
(vii) With respect to an Indemnitee other than
the Indenture Trustee or the Trust Indenture Estate, Taxes which
arise out of or are caused by (i) any act or omission or material
misrepresentation of any Indemnitee where such act or omission is
not permitted by the Financing Documents or the Operative
Documents, or (ii) a failure by an Indemnitee to fulfill its
contest obligations, and, in the case of the Indenture Trustee and
the Trust Indenture Estate, Taxes imposed as a result of a breach
of such Indemnitee's representations, warranties, or covenants
contained in Sections 9(a), 12 or 16 of the Refunding Agreement in
any material respect, or from a failure by such Indemnitee to
fulfill its contest obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft
related to acts or events occurring after the later of the
termination of the Lease and the redelivery of the Aircraft,
(ix) In the case of each Pass-Through Trust, each
Pass-Through Trustee (in its individual capacity and as trustee under the
Pass-Through Trusts), the Subordination Agent and each Liquidity Provider,
United States withholding taxes imposed as a result of the place of organization
or other status of a holder of an interest in a Pass-Through Trust, or
(x) In the case of the Indenture Trustee, each
Pass-Through Trust, each Pass-Through Trustee (in its individual capacity), the
Subordination Agent and each Liquidity Provider, Taxes imposed with respect to
the Equipment Notes as a result of activities of such Indemnitee unrelated to
the transactions contemplated by the Operative Documents.
(c) Covered Income Tax. For purposes of clause (ii) of
subsection (b) of this Section 10, a Covered Income Tax includes:
(i) in the case of an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, any Tax imposed
on, based on or measured by gross or net income, receipts, capital
or net worth, franchises, excess profits or conduct of business
(other than taxes which are in the nature of sales or use taxes,
license taxes or property taxes) imposed on an Indemnitee (A)
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by any state or local Taxing Authority other than Taxes imposed by
any such state or local jurisdiction in which the Indemnitee has
its principal place of business or is subject to such Tax as a
result of business transactions or other presence unrelated to the
transactions contemplated by the Financing Documents or the
Operative Documents, unless such Taxes are imposed by such
jurisdiction solely as a result of (x) the operation of the
Aircraft in such jurisdiction or (y) the transactions contemplated
by the Operative Documents, to the extent such taxes are directly
attributable to such operation of the Aircraft or to such
transactions, and (B) by any foreign jurisdiction which are
imposed as a result of Lessee's or sublessee's activities in such
foreign jurisdiction in connection with the transactions
contemplated by the Financing Documents or the Operative
Documents, provided, however, a Covered Income Tax also includes
the incremental amount of franchise taxes, taxes on doing
business, capital stock taxes or taxes on, based on or measured by
gross or net income of the original Owner Participant attributable
to the Lease (excluding, however, any taxes that would be excluded
under any provision other than clauses (i) and (ii) of subsection
(b) of this Section 10) which are imposed by the "Home State" of a
sublessee (the Home State of a sublessee being the jurisdiction in
which such sublessee maintains its principal operations and
maintenance center), or in the absence of a Permitted Sublessee,
the jurisdiction where the Aircraft is stored, but only to the
extent such incremental taxes result from activities of Lessee or
Permitted Sublessee under the Lease in or with respect to the Home
State or the jurisdiction where the Aircraft is stored, and taking
into account in calculating such incremental taxes all state tax
benefits and savings in the Home State resulting from activities
of Lessee or Permitted Sublessee under the Lease, disregarding for
such purpose any actual or constructive changes in ownership of
the original Owner Participant, provided, however, that Owner
Participant and Lessee agree to negotiate, in good faith, a cap to
Lessee's liability for indemnity payments attributable to taxes
incurred in sublessee's Home State with respect to each Permitted
Sublessee; and
(ii) in the case of the Indenture Trustee or the
Trust Indenture Estate, any Tax based on or measured by gross or
net income, receipts, capital or net worth, franchises, excess
profits or conduct of business (including minimum taxes,
withholding taxes,
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and taxes on or measured by any item of tax preference) imposed on
such Indemnitee by a Taxing Authority in or of any foreign
jurisdiction or a territory or possession of the United States,
other than any such Tax which would not have been imposed in the
absence of such Indemnitee's (including for purposes of this
definition, all entities with which such Indemnitee is combined,
integrated, or consolidated in such Taxing Authority's
jurisdiction) engaging in business, maintaining an office or other
place of business or otherwise being located in such jurisdiction
other than merely by reason of such Indemnitee's participation in
the transactions contemplated by the Operative Documents.
(d) Reports and Returns. In case any report or return is
required to be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to the Owner Participant or Owner Trustee
or will notify the Owner Participant or Owner Trustee of such requirement and
make such report or return in such manner as shall be reasonably satisfactory to
Owner Participant or Owner Trustee. If actual notice is given by any taxing
authority to an Indemnitee that a report or return is required to be filed with
respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such
required report or return and Lessee shall either file such report or return in
the manner prescribed in the preceding sentence, or shall use its best efforts
to cause such report or return to be filed by the appropriate entity. Each
Indemnitee agrees to respond to any reasonable request of Lessee for information
not within Lessee's control and within the control of and reasonably available
to such Indemnitee with respect to the filing of any such report or return, but
Lessee agrees to pay any reasonable costs, fees, disbursements or other charges
of independent counsel or independent accountants incurred in connection with
such request.
(e) After-Tax Basis. Lessee further agrees that, with
respect to any payment or indemnity under this Section 10 and under Section 13
hereof, such payment or indemnity shall include the net amount necessary to hold
the recipient of the payment or indemnity harmless on an after-tax basis from
all Taxes required to be paid or credited by such recipient with respect to such
payment or indemnity under the laws of any Taxing Authority; provided, however,
that in
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the case of Taxes imposed on the Owner Participant, such Taxes shall be
calculated on the basis of the assumption that Owner Participant shall be
subject to the highest federal corporate income tax rate applicable to Owner
Participant in the year of payment and the highest corporate income tax rate in
the jurisdiction in which Owner Participant files a consolidated state income
tax return (currently Virginia).
(f) Tax Benefit. If, by reason of any payment made to or
for the account of an Indemnitee by Lessee pursuant to this Section 10 or
Section 13 hereof, such Indemnitee subsequently actually realizes a tax
deduction or credit (including foreign tax credit and any reduction in Taxes)
not previously taken into account in computing the amount of such payment, such
Indemnitee shall promptly pay to Lessee, but only if there shall then be no
Lease Event of Default and if Lessee shall have made all payments then due and
owing to such Indemnitee under the Operative Documents, an amount equal to the
sum of (i) the actual reduction in Taxes, if any, realized by such Indemnitee
which is attributable to such deduction or credit and (ii) the reduction
calculated on the same basis as the gross up in Section 10(e) hereof in Taxes
realized by such Indemnitee as a result of any payment made by such Indemnitee
pursuant to this sentence; provided, however, that such Indemnitee shall not be
obligated to make any payment pursuant to this Section 10 or Section 13 hereof
to the extent that the amount calculated pursuant to (i) above would exceed (A)
the amount of all prior payments by Lessee to such Indemnitee, pursuant to this
Section 10 or Section 13 hereof, net of any amount paid in respect of Taxes
required to be paid by such Indemnitee in respect of the receipt or accrual of
such amounts received by such Indemnitee from Lessee, less (B) the portion of
all prior payments computed pursuant to (i) above by such Indemnitee to Lessee
hereunder.
(g) Payment. If a claim is made against any Indemnitee for
any Taxes which may be subject to indemnification by Lessee hereunder and if
such Indemnitee has notice thereof, such Indemnitee shall promptly notify
Lessee; provided that the failure to provide such notice shall not release
Lessee from any of its obligations hereunder except to the extent Lessee's right
to contest such claim is precluded thereby. Any amount payable as an indemnity
to any Indemnitee or any amount payable to Lessee pursuant to this Section 10 is
to be paid to such party directly, in immediately available funds, within thirty
(30) days after receipt of a written demand therefor from such Indemnitee or
Lessee, as the case may be, except in the case of a payment to an Indemnitee to
the extent that such Taxes
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are being contested in good faith pursuant to this Section 10, in which event
the payment of such indemnity shall be made by the due date for the payment of
any Taxes that are the subject of such contest taking into account all
extensions of the due date that are available as a result of the contest. In the
event an Indemnitee makes a tax payment with respect to any such Taxes (other
than with funds advanced to such Indemnitee on an interest-free basis by Lessee
pursuant to this Section 10), Lessee shall reimburse the amount of such payment
and also shall pay to the Indemnitee interest on the amount of such payment by
such Indemnitee at the Interest Rate from the date of any such payment by such
Indemnitee to the date of such reimbursement by Lessee to the Indemnitee
hereunder. In the event an amount is payable to Lessee under this Section 10,
the Indemnitee owing such amount shall pay interest on such amount at the
Interest Rate from the date of receipt by such Indemnitee of any amount giving
rise to such obligation to pay Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee receives a
written notice of a claim which, if sustained, would require the payment of an
indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly
notify Lessee of such claim and, if requested by Lessee in writing, shall, at
Lessee's sole expense, in good faith contest or shall permit Lessee, if desired
by Lessee and such contest may be conducted in whole or in part separately in
the name of Lessee without involving Taxes of such Indemnitee not indemnified
hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity,
applicability or amount of such Taxes by (x) resisting payment thereof if
practicable, (y) not paying the same except under protest, if protest is
necessary and proper, and (z) if payments be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings;
provided, however, the Lessee shall not be permitted to contest in the name of
such Indemnitee if such contest involves Taxes imposed against such Indemnitee
that are unrelated to the transactions contemplated by the Financing Documents
or the Operative Documents or Taxes based on or measured by the gross or net
income of the Indemnitee, and provided, that if the Indemnitee determines in
good faith that there is a material possibility of a material adverse impact
upon the Indemnitee with respect to such contest, such Indemnitee may retain or
reassert control of any contest that Lessee would otherwise be permitted to
contest; provided, further, that the Indemnitee shall not be required to
undertake or allow in its name or on its behalf any contest unless the following
conditions are satisfied:
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(i) Lessee shall have (a) furnished Indemnitee
with a written opinion of tax counsel selected by Indemnitee and
reasonably acceptable to Lessee to the effect that a reasonable
basis (as defined in ABA Opinion 85-352) exists to contest such
claim (which opinion shall be obtained at Lessee's sole cost and
expense), provided however, that in the event the subject matter
of the contest is of a continuing nature and has previously been
decided adversely pursuant to the contest provisions of this
Section 10, there has been a change in the law (including, without
limitation, amendments to statutes or regulations, administrative
rulings and court decisions) after such claim shall have been so
previously decided and such Indemnitee shall have received an
opinion of tax counsel, to the effect that, as a result of such
change other than a change in statutory law, it is more likely
than not that the position which the Indemnitee or the Lessee, as
the case may be, had asserted in such previous contest would
prevail and, in the case of statutory changes-in-law, it is as
likely as not that the position will prevail, and (b) agreed to
pay Indemnitee for all reasonable costs and expenses which
Indemnitee may incur in contesting such claim (including without
limitation, payment on demand of all out-of-pocket costs,
expenses, additions to tax because of underpayment of estimated
taxes, losses, legal and accounting and investigatory fees and
disbursements, penalties, and interests),
(ii) a threshold amount of $50,000 for any
individual claim is at issue,
(iii) there is no substantial risk or danger of
the sale, loss or forfeiture of the Aircraft,
(iv) Lessee shall have admitted its liability to
indemnify Owner Participant for such claim or set forth in writing
why it is not so liable,
(v) if such contest is to be initiated by the
payment of, and the claiming of a refund for, such Taxes, the
Lessee shall have advanced to such Indemnitee sufficient funds (on
an interest free basis) to make such payments,
(vi) no claim shall be appealed to the U.S.
Supreme Court,
(vii) no appeal of a trial court decision shall
be undertaken unless Lessee at its sole cost and
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expense shall have furnished Indemnitee with a written opinion of
tax counsel selected by Indemnitee and reasonably acceptable to
Lessee to the effect that Indemnitee is more likely than not to
prevail in such appeal, and
(viii) no Event of Default has occurred and is
continuing.
(i) Refund. If any Indemnitee shall obtain a refund of all
or any part of any Taxes paid by Lessee or from an advance by Lessee, such
Indemnitee shall pay Lessee the amount of such refund together with any interest
paid thereon attributable to the Taxes paid or advanced by Lessee less the
amount of any Taxes payable by such Indemnitee in respect of the receipt of such
refund and interest after giving credit to Lessee for any savings by such
Indemnitee in respect to any such Taxes by reason of deductions, credits,
allocations or allowances in respect of the payment of any such Taxes; provided
that such amount shall not be payable before such time as Lessee shall have made
all payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default
under any of the above indemnification provisions of this Section 10 so long as
Lessee or the Indemnitee shall diligently prosecute such contest in accordance
with the provisions of this Section 10. Notwithstanding the foregoing, if a
claim is made against any Indemnitee for any Taxes which, if successful, would
result in the imposition of Taxes under circumstances which would require Lessee
to indemnify such Indemnitee, the Indemnitee shall be released from its
responsibility to contest such claim or part thereof, if it agrees in writing
not to seek indemnification from Lessee in respect of the claim, or such part
thereof to be contested. In the event an Indemnitee fails to contest, or refuses
to permit Lessee to contest, a claim or part thereof which the Indemnitee has
the obligation to contest or to permit Lessee to contest under this Section 10,
then Lessee shall not be obligated to indemnify the Indemnitee for such claim or
such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is
a member of an affiliated group (within the meaning of Section 1504(a) of the
Code) which files a
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consolidated Federal income tax return, the term "Indemnitee" shall mean and
include any member of such affiliated group.
(l) Verification. At Lessee's request, the amount of any
indemnity payment by Lessee pursuant to this Section 10 or any payment by an
Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified
by an independent public accounting firm selected by such Indemnitee and
reasonably satisfactory to Lessee. In order to enable such accountants to verify
the indemnity amount, such Indemnitee shall provide to the accountants (for
their own confidential use) information reasonably necessary for such
verification to which Lessor has access; provided, however, such information
shall not be disclosed to Lessee or any person other than such accountants. The
fee of such firm shall be payable by Lessee unless such verification shall
result in an adjustment in Lessee's favor exceeding 10% of the amount of the
indemnity payment.
(m) Survival. All of the obligations and rights of Lessee
and Lessor under this Section 10 with respect to the Aircraft, the Airframe, the
Engines or any Part thereof shall survive the assignment, or expiration or other
termination, of the Lease with respect to the Aircraft for a period of six (6)
years from the occurrence of such assignment, or expiration or termination,
except that such obligations shall survive the expiration of such six (6) year
period with respect to any claim asserted prior to the expiration of such six
(6) year period but in either case only to the extent such obligation or claim
relates to events which occurred or conditions which existed during the Term.
Such obligations are expressly undertaken by Lessee for the benefit of, and
shall be enforceable by, Lessor. The provisions of this Section 10(m) are
subject to the exclusions of Section 10(b)(viii).
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Airframe. Subject to
the other provisions of this Section 11, upon an Event of Loss with respect to
the Airframe or the Airframe and any Engines then installed thereon, Lessee
shall forthwith (and, in any event, within five (5) Business Days after such
occurrence) give Lessor written notice of such occurrence and within thirty (30)
days after such occurrence give Lessor written notice of its election, subject
to the terms hereof and of the Indenture, to perform one of the following two
options (it being agreed that if Lessee shall not have given Lessor notice of
such election within thirty (30) days after such occurrence, Lessee shall be
deemed to
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have elected to perform the option set forth in the following clause (ii)),
provided, that Lessee shall not have the right to select the option set forth in
clause (i) if a Default or an Event of Default shall have occurred and be
continuing at the time of such election or at the time of replacement:
(i) within one hundred twenty (120) days (the "Replacement
Period") after the date of the Event of Loss (but in no event later than the
last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as
provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture
if it has not been discharged, and to be leased by Lessee hereunder in
replacement of the Airframe and such Engines then installed thereon, title to a
replacement Airframe (together with the same number of replacement Engines as
the Engines), such replacement Airframe and Engines (A) to be free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe and replacement Engines may be subject to Permitted Liens), (B) to have
a value, utility and remaining useful life, determined in accordance with the
Appraisal Procedure as provided in Section 11(c) hereof, at least equal to, and
to be in at least as good operating condition as, the Airframe and the Engines,
if any, so replaced (assuming the Airframe and the Engines were maintained in
accordance with the requirements of this Agreement, whether or not they are in
fact so maintained), and (C) to be a like Airbus A320-231 model aircraft with
equivalent or better modification status delivered by the Manufacturer not
earlier than June 30, 1988 and, in the case of Engines, in compliance with
Section 11(b); provided that if Lessee shall not perform its obligation to
effect such replacement under this clause by the end of the Replacement Period,
Lessee shall then be deemed to have elected to comply, and shall comply, with
the provisions of clause (ii) of this Section 11(a); provided, further, that the
payment specified therein shall be deemed to have become due and payable on the
Stipulated Loss Value Date occurring on or immediately preceding the last day of
the Replacement Period. Upon compliance with the foregoing, Lessor will, subject
to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without
recourse, representation or warranty (except a warranty that such Airframe and
Engines are free and clear of Lessor's Liens), all of Lessor's right, title and
interest, if any, in and to the Airframe and the Engines suffering the Event of
Loss as well as all of Lessor's right, title and interest in and to any Engine
constituting part of the Aircraft and replaced as provided above but not
installed thereon at the time of the Event of Loss. For all purposes hereof, a
replacement Airframe shall
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be deemed part of the property leased hereunder and shall be deemed the
"Airframe" as defined herein. No Event of Loss resulting in replacement of the
Airframe or Engines under this Section 11(a)(i) shall result in any reduction of
Rent.
(ii) On a Stipulated Loss Value Date on or before
one hundred twenty (120) days after the date of the Event of Loss (or, if
earlier, with respect to insurance proceeds, on the date on which insurance
proceeds with respect to the Event of Loss are received by the loss payee)
Lessee shall pay to Lessor in immediately available funds the sum of (A) the
Stipulated Loss Value of the Aircraft as shown on Exhibit A for such Stipulated
Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be,
payable on each Basic Rent Payment Date or Renewal Rent Payment Date,
respectively, prior to the date of payment of such Stipulated Loss Value which
has not been paid when due, plus, if such Stipulated Loss Value Date is also a
Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent
or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss
Value Date, or, if such Stipulated Loss Value Date occurs after the last day of
the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent,
as the case may be, in effect on the last day of the Term, for each day from and
including the last day of the Term to and excluding such Stipulated Loss Value
Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of
Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with
respect to the Aircraft for any period commencing after the date on which such
Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain
liable for, and shall pay on or before the date the Stipulated Loss Value and
Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the
case may be, for the Aircraft due on or before the date of such payment of
Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with
respect to such Aircraft, and (3) Lessor will, subject to the rights of any
insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that such Airframe and Engines are
free and clear of Lessor's Liens), all of Lessor's right, title and interest, if
any, in and to the Airframe and Engines suffering the Event of Loss, as well as
all of Lessor's right, title and interest, if any, in and to any Engine
constituting part of the Aircraft but not installed thereon at the time of the
Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon an Event
of Loss with respect to an Engine only, Lessee shall give Lessor prompt written
notice thereof and shall, at its own cost and expense, within sixty (60) days
after
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such occurrence convey or cause to be conveyed to Lessor as replacement for the
Engine suffering an Event of Loss, title to another IAE Model V2500 engine of
like model and equivalent or better modification status or, at Lessee's option,
an IAE engine of an improved model, in each such case which has a value,
remaining useful life and utility determined in accordance with the Appraisal
Procedure at least equal to such Engine and is suitable for installation and use
on the Airframe without diminishing the value, remaining useful life or utility
of such Airframe, free of all Liens (it being understood that, upon such
conveyance, such replacement Engine may be subject to Permitted Liens) and being
in as good operating condition as (including no greater number of cycles or
hours than) the Engine being replaced assuming the Engine being replaced was
serviceable and otherwise in the condition and repair required by the terms
hereof immediately prior to the Event of Loss. Prior to or at the time of any
such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor
with a full warranty bill of sale, in form and substance reasonably satisfactory
to Owner Participant and Indenture Trustee, as applicable, with respect to such
replacement Engine; (ii) cause supplements, in form and substance reasonably
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), subjecting such replacement Engine to this
Lease, the Indenture (if in effect) and the Trust Agreement (if in effect), to
be duly executed by Lessee, if applicable, and duly filed for recordation
pursuant to the Federal Aviation Act; (iii) furnish Lessor and Indenture Trustee
(if the Lien of the Indenture has not been discharged) with such evidence of
title to such Replacement Engine and of compliance with the insurance provisions
of Section 12 hereof with respect to such Replacement Engine as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request; (iv) furnish Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged) with an opinion
of Lessee's counsel addressed to such parties and to Lessor to the effect that
title to such Replacement Engine has been duly conveyed to Lessor free and clear
of all Liens (except Permitted Liens), and is duly leased hereunder and subject
to the Lien of the Indenture (if it has not been discharged), the instruments
subjecting such Replacement Engine to the Lien of the Indenture and the Lease,
and subjecting to any relevant Assigned Sublease and Sublease Agreement, as the
case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in
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the United States and, if the Aircraft is registered outside the United States,
in the jurisdiction of registration, the legal title to such Replacement Engine
and the Lien of the Indenture on such Replacement Engine; (v) furnish a
certificate signed by a Responsible Officer of Lessee certifying that, upon
consummation of such replacement, no Default or Event of Default will exist
hereunder; (vi) furnish such documents and evidence with respect to Lessee,
Owner Participant or Indenture Trustee (if the Lien of the Indenture has not
been discharged), as such parties or their respective counsel may reasonably
request in order to establish the consummation of the transactions contemplated
by this Section 11(b), the taking of all corporate proceedings in connection
therewith and compliance with the conditions set forth in this Section 11(b), in
each case in form and substance satisfactory to such party; (vii) furnish such
Uniform Commercial Code financing statements covering the Replacement Engine as
may be requested by Lessor or Indenture Trustee (if the Lien of the Indentures
has not been discharged); (viii) furnish Owner Participant with an opinion of
tax counsel mutually satisfactory to Owner Participant and Lessee and which
opinion is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner
Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in
Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the
terms of this Section 11(b),
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Lessor will, subject to the rights of any insurers, transfer to Lessee, "AS IS,
WHERE IS" without recourse, representation or warranty (except a warranty that
such Engine is free and clear of Lessor's Liens), all of Lessor's right, title
and interest, if any, in the Engine which suffered the Event of Loss. For all
purposes hereof, each such Replacement Engine shall be deemed an "Engine" as
defined herein and shall be deemed part of the same Aircraft as was the Engine
replaced thereof. No Event of Loss covered by this Section 11(b) shall result in
any reduction in Rent.
(c) Conveyance of Replacement Airframe. Prior to or at the
time of any conveyance of a replacement Airframe pursuant to Section 11(a)
above, Lessee, at its own cost and expense, will furnish Lessor with the
following documents which shall have been duly authorized, executed and
delivered by the respective parties thereto and shall be in full force and
effect on said date: (i) a full warranty bill of sale, in form and substance
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), and an AC Form 8050-2 Bill of Sale (or such
other form of bill of sale as may be approved by the FAA on said date), executed
by the owner thereof, in favor of Lessor and, cause supplements, reasonably
satisfactory to Owner Participant and Indenture Trustee (if the Lien of the
Indenture has not been discharged), to this Lease, the Indenture (if then in
effect) and the Trust Agreement (if then in effect), with respect to such
replacement Airframe and to be duly filed for recordation pursuant to the
Federal Aviation Act or other applicable Governmental Entity; (ii) the
certificate specified in Section 12(f) hereof demonstrating compliance with the
insurance requirements of Section 12 with respect to the replacement Airframe
and Engines; (iii) an opinion (addressed to Indenture Trustee, Lessor, and Owner
Participant) of Lessee's counsel (and such other evidence of title as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request) to the effect that, upon such conveyance,
Lessor will acquire good title to such replacement Airframe free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe may be subject to Permitted Liens), that such replacement Airframe will
be leased hereunder to the same extent as the Airframe replaced thereby and will
be subject to the Lien of the Indenture (if it has not been discharged), the
instruments subjecting such Replacement Airframe and Replacement Engine to the
Lien of the Indenture and the Lease, and subjecting to any relevant
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Assigned Sublease and Sublease Assignment, as the case may be, have been duly
filed for recordation pursuant to the Federal Aviation Act or any other law then
applicable to the registration of the Aircraft, and no further action, filing or
recording of any document is necessary in order to establish and perfect, in the
United States and, if the the Aircraft is registered outside the United States,
in the jurisdiction of registration, the legal title to such Replacement
Airframe and Replacement Engine and the Lien of the Indenture on such
Replacement Airframe and Replacement Engine; and that Lessor, and Indenture
Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of
Title 11 of the United States Code with respect to such replacement airframe and
engines to the same extent as with respect to the Airframe and Engines then
installed thereon prior to such replacement; (iv) a certificate signed by a
Responsible Officer of Lessee certifying that, upon consummation of such
replacement, no Default or Event of Default will exist hereunder; (v) such
documents and evidence with respect to Lessee, Owner Participant or Indenture
Trustee (if the Lien of the Indenture has not been discharged), as such parties
or their respective counsel may reasonably request in order to establish the
consummation of the transactions contemplated by this Section 11(c), the taking
of all corporate proceedings in connection therewith and compliance with the
conditions set forth in this Section 11(c), in each case in form and substance
satisfactory to each such party, including evidence that the Aircraft of which
the replacement Airframe is a part has been duly certificated by the FAA as to
type and airworthiness in accordance with the terms of this Lease and
application for registration of such replacement Airframe in the name of Lessor
has been duly made with the FAA or other applicable Governmental Entity and
Lessee has temporary or permanent authority to operate the replacement Airframe;
(vi) furnish such Uniform Commercial Code financing statements covering the
replacement Airframe as may be reasonably requested by Lessor or Indenture
Trustee; (vii) furnish Owner Participant with an opinion of tax counsel mutually
satisfactory to Owner Participant and Lessee and which opinion is reasonably
satisfactory to Owner Participant to the effect that such replacement will have
no adverse tax consequences to Lessor and Owner Participant; (viii) an appraisal
prepared in accordance with the Appraisal Procedure which confirms that the
replacement Airframe and any replacement Engine has a value, utility and
remaining useful life at least equal to that of the Airframe and Engines which
suffered the Event of Loss assuming that the same were maintained in accordance
with the requirements of this Lease whether or not they are in fact so
maintained; and (ix) furnish Owner Trustee and
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Indenture Trustee with the opinion of counsel to Lessee specified in Section
5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms of
this Section 11(c), Lessor will, subject to the rights of any insurers, transfer
to Lessee "AS IS, WHERE IS," without recourse, representation or warranty
(except a warranty that such Airframe is free and clear of Lessor's Liens), all
of Lessor's right, title and interest in and to the Aircraft which suffered the
Event of Loss. No Event of Loss with respect to the Aircraft under the
circumstances contemplated by the terms of this Section 11(c) shall result in
any reduction in Rent.
For all purposes of this Lease, each such replacement
Aircraft (together with any Engines constituting part of the Aircraft being
replaced as to which an Event of Loss has not occurred) shall be deemed part of
the property leased hereunder and shall be deemed the "Aircraft" as defined
herein.
(d) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer (including a
Governmental Entity providing an indemnity in lieu thereof) with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(f) below, any payments (other than insurance or
such indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so
much of such payments as shall not exceed the Stipulated Loss Value and other
payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this
Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such
Stipulated Loss Value and other payments, if not already paid by Lessee, or, if
already paid by Lessee, shall (unless a Default or an Event of Default shall
have occurred and be continuing) be applied by Lessor to reimburse Lessee for
its payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a result of
an Event of Loss with respect to the Airframe or an Engine which is being
replaced pursuant to Section
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11(a)(i) or Section 11(b) hereof, all such payments shall be paid over to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Sections 11(a)(i) and (c) or Section
11(b) hereof, as the case may be, and of Section 15 hereof with respect to the
Event of Loss for which such payments are made and if no Default or Event of
Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect to the
Aircraft. Subject to Section 11(f) below, in the event of the requisition for
use by a Governmental Entity of the Aircraft, the Airframe or an Engine (other
than a requisition constituting an Event of Loss), Lessee shall promptly notify
Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as if such
requisition had not occurred. All payments received by Lessor or Lessee from the
Governmental Entity for the use of such Airframe or Engine during the Term shall
be paid over to, or retained by, Lessee if no Default or Event of Default shall
have occurred and be continuing; and all other payments received by Lessor or
Lessee from the Governmental Entity shall be paid over to, or retained by,
Lessor. If the Airframe and such Engines or engines are not returned by the end
of the Term, an Event of Loss shall be deemed to have occurred on the last day
of the Term and, on the last day of the Term, Lessee shall either pay to Lessor
the amount provided herein for an Event of Loss to the Airframe and such Engines
or engines on such date or provide a replacement Aircraft and Engine on such
date in the condition provided for in Section 16 and Exhibit E. In the event of
the requisition for use by the Governmental Entity of any Engine without the
requisition for use of the Airframe, Lessee will replace such Engine hereunder
by complying with the terms of Section 11(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine, and thereafter any payments
received by Lessor or Lessee from the Governmental Entity with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application in Default. Any amount referred to in
clause (i) or (ii) of Section 11(d) or Section 11(e) which is otherwise payable
to Lessee shall not be paid to Lessee, or, if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such
payment or retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
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discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without limitation,
by reason of this Lease being declared or deemed in default. At such time as
there shall not be continuing any such Event of Default or Default, all such
amounts at the time held by Lessor or Indenture Trustee in excess of the amount,
if any, which Lessor or Indenture Trustee has elected for application as
provided above, shall be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability
products, completed operation liability covering maintenance of aircraft, but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Aircraft, in an amount not less than three hundred
fifty million dollars ($350,000,000), combined single limit, per occurrence or
such higher amount, and of such type and terms, as are customarily carried by
prudent Certificated Air Carriers, similarly situated to Lessee, operating
aircraft of similar size and engines and as hereinafter provided. Each and any
policy of insurance carried in accordance with this Section 12(a), and each and
any policy obtained in substitution or replacement for any of such policies, (i)
shall designate Lessor (in both its individual and trustee capacity), Owner
Participant, Indenture Trustee (in both its individual and trustee capacity) and
the other Indemnitees and their respective permitted assigns, as additional
insureds as their interests may appear (but without imposing upon any such
Person any obligation imposed upon the insured, including, without limitation,
the liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, in such policies, the insurance shall not be invalidated as to an
insured or additional insured by any act or omission of Lessee or any other
insured or additional insured and shall insure Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns,
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regardless as to any insured or additional insured of any breach or violation by
Lessee or any other insured or additional insured of any warranty, declaration
or condition contained in such policies, (iii) shall provide that if such
insurance is cancelled for any reason whatsoever, or is changed in any adverse
way with respect to the interests of Lessor, Owner Participant, Indenture
Trustee and the other Indemnitees or if such insurance is allowed to lapse for
non-payment of premium, such cancellation, change or lapse shall not be
effective as to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees, and their respective permitted assigns, until thirty (30) days, in
each instance (seven (7) days or such lesser period of time as is the insurance
industry standard for war/allied perils coverage), after notice to Lessor, Owner
Participant and Indenture Trustee from such insurer or insurers, of such
prospective cancellation, change or lapse, (iv) shall include coverage for any
country in or over which the Aircraft is located or operated, and (v) shall
provide that, as against Lessor, Owner Participant, Indenture Trustee and the
other Indemnitees, and their respective permitted assigns, each insurer shall
waive any rights of set-off, counterclaim or any other deduction, whether by
attachment or otherwise, and waives any rights it may have to be subrogated to
any right of any insured against Lessor, Owner Participant, Indenture Trustee,
or the other Indemnitees, or their respective permitted assigns, with respect to
the Aircraft. Each liability policy shall be primary without right of
contribution from any other insurance which may be carried by Lessor, Owner
Participant, Indenture Trustee or the other Indemnitees, or their respective
permitted assigns, and shall expressly provide that all of the provisions
thereof shall operate in the same manner as if there were a separate policy
covering each insured, provided, that such policies shall not operate to
increase the insurer's limit of liability. Lessee shall cause its insurers to
agree that the indemnity and hold harmless provisions of Section 13 are insured
as a contractual assumption of liability by Lessee's insurers, subject to the
terms, coverage, conditions, limitations and exclusions of the policy of
insurance. Without limiting the foregoing, the type and amount of the insurance
carried by Lessee hereunder shall be no less in amount and no less comprehensive
or favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees then that carried by Lessee with respect to other A320-231 aircraft
or similar-size aircraft owned or leased by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own
expense, will maintain in effect, or cause to be carried and maintained in
effect, with Approved Insurers
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"all-risk" ground and flight aircraft hull insurance (which shall include, but
not be limited to, hijacking, a disappearance clause and coverage against
strikes, riots, commotions or labor disturbances, air piracy, malicious acts or
acts of sabotage and unlawful seizure or wrongful exercise of control of the
Aircraft in flight by a person on board such Aircraft acting without the consent
of Lessee) covering the Aircraft, and "all-risk" coverage including transit
insurance with respect to Engines and Parts while not installed on such Aircraft
or an aircraft, which in each case considering all policy terms, limitations and
exclusions is of the type, terms and amount customarily maintained by prudent
Certificated Air Carriers similarly situated to Lessee and operating similar
size aircraft and engines and as hereinafter provided. Lessee shall also
maintain, or cause to be maintained, war risk and allied perils hull insurance
reasonably acceptable to Lessor with Approved Insurers. In addition, at least
ten (10) Business Days (or, in the case of an emergency, at least two (2)
Business Days) prior to permitting the Aircraft, Airframe or Engines to be
operated or located outside of the United States of America, other than in
Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or
Indenture Trustee reasonably requests at any time and if such insurance is then
customarily being obtained by or for Persons leasing or financing
similarly-sized aircraft operating on similar routes to operators located in the
jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the Permitted
Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse Lessor for
political risk, repossession, expropriation, confiscation and similar insurance
as Lessor may arrange or cause to be arranged; provided that Indenture Trustee
shall not be obligated to request such insurance and shall not be liable for any
failure to request such insurance. Anything herein to the contrary
notwithstanding, at all times while the Aircraft is subject to this Lease, the
insurance required by this Section 12(b) shall be for an amount on an "agreed
value" basis not less than the Stipulated Loss Value from time to time
determined for the Aircraft. Without limiting the foregoing, the type and amount
of insurance carried by Lessee hereunder shall be no less comprehensive or
favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees than that carried by Lessee with respect to similar-size aircraft
owned or leased by Lessee.
Each and any policy of insurance obtained and
maintained pursuant to this Section 12(b), and each and any policy obtained in
substitution or replacement for any such policies, (i) shall designate Lessor as
owner of the Aircraft, shall designate, so long as the Lien of the
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Indenture has not been discharged, Indenture Trustee and, thereafter, Lessor, as
sole loss payee, as provided below and shall designate Lessor, Owner
Participant, Indenture Trustee (in both its individual capacity and its trustee
capacity) and the other Indemnitees and their respective permitted assigns as
additional insureds, as their respective interests may appear (but without
imposing upon Lessor, Owner Participant, Indenture Trustee and their respective
permitted assigns, any obligation imposed upon the insured, including, without
limitation, the liability to pay any premiums for any such policies), (ii) shall
expressly provide that, in respect of the interests of such an additional
insured and its permitted assigns, in such policies, the insurance shall not be
invalidated as to an insured by any act or omission of Lessee or any other
additional insured, and shall insure each such additional insured and its
permitted assigns, regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or another
additional insured, (iii) shall provide that if such insurance is cancelled for
any reason whatsoever, or is changed in any adverse way with respect to the
interests of Lessor, Owner Participant, Indenture Trustee and to the other
Indemnitees and their respective permitted assigns, or if such insurance is
allowed to lapse, such cancellation, change or lapse shall not be effective as
to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their
respective permitted assigns, until thirty (30) days (seven (7) days or such
lesser period of time as is the insurance industry standard for war/allied
perils coverage) after written notice to Lessor, Owner Participant and Indenture
Trustee from such insurer or insurers, as the case may be, of such prospective
cancellation, change or lapse, (iv) shall include coverage for any country in or
over which the Aircraft may at any time be located or operated, (v) shall
provide that, as against Lessor, Owner Participant, Indenture Trustee the other
Indemnitees and their respective permitted assigns, each insurer shall waive any
rights of set-off, counterclaim or any other deduction, whether by attachment or
otherwise, and waives any rights it may have to be subrogated to any right of
any insured against Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees and their respective permitted assigns, with respect to the
Aircraft, (vi) shall provide that in the event of any damage or loss which is an
Event of Loss hereunder and which results in a payment, such payment shall be
payable directly to Indenture Trustee as sole loss payee, so long as the Lien of
the Indenture shall not have been discharged and thereafter to Lessor, as sole
loss payee, and (vii) shall provide that in the event of any damage or loss
which is not an Event of Loss hereunder and which results in
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a payment, such payment shall be payable directly to Indenture Trustee, as sole
loss payee for the account of all interests, so long as the Lien of the
Indenture shall not have been discharged and thereafter to Lessor, as sole loss
payee for the account of all interests. The insurance required under this
Section 12(b) may incorporate deductible amounts which shall not exceed one
million dollars ($1,000,000).
Each of Lessor and Owner Participant shall have
the right to carry additional and separate excess or contingent insurance for
its own benefit at its own expense, without, however, thereby limiting Lessee's
obligations under this Section 12, and Lessee shall not carry any such insurance
if it would conflict with or adversely affect other insurance carried by Lessor
or Owner Participant. Lessee shall have the right to carry insurance in excess
of the amounts required hereunder and the proceeds of such excess insurance
shall be payable to Lessee, provided, however, that such insurance does not
conflict with or adversely affect the insurance required hereunder or any excess
or contingent insurance carried by Lessor or Owner Participant. Lessee shall
give Lessor reasonable prior written notice of any insurance to be carried by
Lessee in addition to that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained
to cover "all-risk" ground and flight aircraft, hull and war risks and allied
perils insurance, Lessee shall include a 50/50 provisional claims settlement
clause as contained in the policies of insurance maintained by Lessee with
respect to all other aircraft in Lessee's fleet, and a copy of the 50/50
provisional claims settlement clause in effect on the Restatement Date shall be
attached to the insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of
Loss. It is agreed that insurance payments which arise from insurance required
to be carried by Lessee pursuant to this Section 12 and received as the result
of the occurrence of an Event of Loss shall be applied as follows (after
reimbursement of Lessor, Owner Participant and Indenture Trustee for their
reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so
much of such payments as shall not exceed the Stipulated Loss Value and other
payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this
Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture
has
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not been discharged and thereafter to Lessor in reduction of Lessee's obligation
to pay such Stipulated Loss Value and any other payments if not already paid by
Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of
Default shall have occurred and be continuing) be applied by Indenture Trustee
or Lessor, as the case may be, to reimburse Lessee for its payment of such
Stipulated Loss Value and other payments and the balance, if any, of such
payment remaining thereafter shall be paid over to, or retained by, Lessor; or
(ii) if such payments are received as a result of
an Event of Loss with respect to the Airframe or an Engine which is being
replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments
shall be paid over by the Indenture Trustee or Lessor, as the case may be, to,
or retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Section 11(a)(i) and (c) or Section 11(b)
hereof, as the case may be, and of Section 15 hereof with respect to the Event
of Loss for which such payments are made and if no Default or Event of Default
shall have occurred and be continuing.
(d) Application of Insurance Proceeds for Other than an
Event of Loss. The insurance payments of any property damage loss to the
Airframe or any Engine not constituting an Event of Loss with respect thereto
will be applied in payment for the actual costs of repairs or for replacement
property which Lessee has incurred in accordance with the terms of Section 9, 11
or 12(c) of this Lease against such documentation evidencing payment by Lessee
as Lessor may reasonably request to reimburse Lessee for such repairs or
replacements already paid for by Lessee, and any balance remaining after
compliance with such Sections with respect to such loss shall be paid to Lessor.
Lessee shall be entitled to receive from the insurer any insurance proceeds not
in excess of five hundred thousand dollars ($500,000) as soon as such funds are
paid and shall promptly receive such additional insurance proceeds from the loss
payee upon invoices for repair work in progress, replacement parts which are
ordered or for work completed as provided above in this Section 12(d). Any
amount referred to in this Section 12(d) which is payable to Lessee shall not be
paid to Lessee if at the time of such payment any Default or Event of Default
shall have occurred and be continuing, but shall be held by Lessor as security
for the obligations of Lessee under this Lease or applied as provided in Section
12(e).
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(e) Application in Default. Any amount referred
to in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable
to Lessee shall not be paid to Lessee, or if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as the
Lien of the Indenture shall not have been discharged, and thereafter to Lessor,
if at the time of such payment or retention a Default or an Event of Default
shall have occurred and be continuing. In such case, all such amounts shall be
paid to and held by Indenture Trustee, so long as the Lien of the Indenture
shall not have been discharged, and thereafter held by Lessor as security for
the obligations of Lessee, or, at the option of Indenture Trustee or Lessor,
applied by Indenture Trustee or Lessor toward payment of any of Lessee's
obligations at the time due hereunder, including, without limitation, by reason
of this Lease being declared or deemed declared in default, as Indenture Trustee
or Lessor may elect. At such time as there shall not be continuing any such
Event of Default or Default, all such amounts at the time held by Indenture
Trustee or Lessor in excess of the amount, if any, which Indenture Trustee or
Lessor has elected for application as provided above, shall be paid to Lessee.
(f) Certificates. On or before the Delivery
Date, and thereafter on any renewal by the Lessee of the insurance required
hereby (but in no event less than once in every twelve (12) month period),
Lessee will furnish to Lessor and Indenture Trustee a certificate executed and
delivered by an Approved Insurer or the Approved Broker, describing in
reasonable detail, and in accordance with customary practice, insurance carried
on the Aircraft and Lessee shall also furnish an opinion or report by the
Approved Insurer or the Approved Broker certifying that the insurance then
maintained on the Aircraft complies with the terms of this Lease. Lessee will
cause the Approved Broker to agree to advise Lessor, Owner Participant and
Indenture Trustee in writing at least thirty (30) days (seven (7) days or such
lesser period of time as is the insurance industry standard for war/allied
perils coverage) prior to the expiration, non-renewal, termination or
cancellation for any reason (including, without limitation, failure to pay
premium therefor) or material modification of any such insurance.
In the event Lessee shall fail to maintain
insurance as herein provided, Lessor, Owner Participant or Indenture Trustee at
their respective options, may provide such insurance and, in such event, Lessee
shall, upon demand, reimburse Lessor, as Supplemental Rent, or any other
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such other Person who may have provided such insurance, for
the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted
Sublease is in effect, the Permitted Sublessee) may carry primary insurance
outside of the aviation insurance markets in New York, London or Paris if the
relevant primary insurer shall have obtained reinsurance and such reinsurance
(i) is on the same terms as the original insurance and includes the provisions
required by this Agreement; (ii) provides in case of any bankruptcy, insolvency,
liquidation, dissolution or similar proceedings of or affecting the original
insurer that the reinsurers' liability will be to make such payment as would
have fallen due under the relevant policy of reinsurance if the original insurer
had (immediately before such bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full under the original
insurance policies in respect of which the then relevant policy of reinsurance
has been effected; and (iii) contains a "cut-through" clause in the following
form (or otherwise, satisfactory to Owner Participant): "The Reinsurers and the
Reinsured hereby mutually agree that in the event of any claim arising under the
reinsurances in respect of a total loss or other claim where as provided by the
Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-16] dated as of
November 26, 1996 and made between Wilmington Trust Company, as Owner Trustee,
and America West Airlines, Inc. such claim is to be paid to the person named as
sole loss payee under the primary insurances, the Reinsurers will in lieu of
payment to the original insured, its successors in interest and assigns pay to
the person named as sole loss payee under the primary insurances effected by the
original insured that portion of any loss due for which the Reinsurers would
otherwise be liable to pay the original insurer (subject to proof of loss), it
being understood and agreed that any such payment by the Reinsurers will (to the
extent of such payment) fully discharge and release the Reinsurers from any and
all further liability in connection therewith."
(h) Storage. During any period that the Aircraft
is in storage or otherwise grounded, Lessee may carry or cause to be carried, in
lieu of the insurance required by Sections 12(a) and (b) above, insurance
otherwise conforming with the provisions of said Sections 12(a) and (b) except
that the scope of the risk and the type of insurance, and the amount of the
insurance in the case of the insurance described in Section 12(a) above (but not
the amount of insurance to be carried under Section 12(b) above), shall be the
same as from time to time applicable to similar size passenger aircraft that
comprise Lessee's fleet in similar
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storage or grounding, and in any event (including, without limitation, at any
time when there shall be in existence a Permitted Sublease), the same as from
time to time customarily carried by similarly-situated, prudent Certificated Air
Carriers for passenger aircraft of similar size as the Aircraft in similar
storage or grounding.
(i) Amounts Held. So long as no Default or Event
of Default has occurred and is continuing, any amount held by Lessor or
Indenture Trustee, as the case may be, until application by Lessor or Indenture
Trustee, as the case may be, pursuant to this Section 12 shall be invested as
provided in Section 21(h) hereof.
(j) After the Term. Lessee shall continue to
maintain at its expense the insurance described in Section 12(a) for three years
after the expiration or termination of the Basic Term or Renewal Term, if Lessee
has elected to renew the Lease in accordance with Section 20, covering each
Indemnitee as its interest may appear and specifically insuring the indemnity
contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain
of the insurance described in Section 12 above, Lessee may provide a United
States governmental indemnity, to the extent and subject to the terms and
conditions specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse,
defend and hold harmless each Indemnitee on a net after-tax
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basis, as provided in Section 10(e), within fifteen (15) days after demand from
and against any and all claims (whether or not based on strict liability),
damages (whether direct, indirect, incidental, special or consequential),
losses, charges, fees, liabilities, obligations, demands, suits, judgments,
actions and other legal proceedings (whether civil or criminal), penalties,
fines, other sanctions, and any reasonable costs and expenses, in connection
herewith, including, without limitation, costs and expenses set forth in Section
21(j) hereof and reasonable attorney's fees and expenses of whatever kind or
nature (any and all of which are hereafter referred to as "Claims") imposed on,
or asserted by or against, or suffered or incurred by, any Indemnitee, from (and
including) the Restatement Date, including, without limitation, injury, death or
property damage of passengers, shippers and others, environmental control, noise
and pollution regulations, which in any way may result from, pertain to, or
arise in any manner out of, or are in any manner related to (1) the Operative
Documents, the Purchase Documents or the Financing Documents, or any of the
transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine or
any engine used in connection with the Airframe or any Part thereof, including,
but not limited to, (A) the importation, exportation, condition, manufacture,
design, purchase, ownership, registration, reregistration, deregistration (other
than any deregistration caused by the failure of the registered owner of the
Aircraft to be a "citizen of the United States" as defined under the Federal
Aviation Act and the regulations thereunder or to file the documentation
necessary to continue FAA registration of the Aircraft), delivery, nondelivery,
assignment, leasing, subleasing, sub-subleasing, acceptance, rejection,
possession, repossession, control, return, financing, Liens (excluding Lessor's
Liens, Head Lessor's Liens and Lenders' Liens, but including the Lien of the
Indenture), use, performance, modification, maintenance, overhaul, operation,
pooling, interchange, repair, testing, sale, return or other disposition or
application of the Aircraft, the Airframe, any Engine, any engine used in
connection with the Airframe or any Part (including, but not limited to, latent
and other defects whether or not discoverable by Lessee or Lessor, Claims
related to any actual or alleged violation of Law, loss or damage to any
property of passengers, shippers or otherwise or any Claim related to patent,
copyright, trademark or other infringement) either in the air or on the ground,
and, including, without limitation, any interest therein of an Indemnitee or
imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens and
Lenders'
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Liens but including the Lien of the Indenture), or the rentals, receipts or
earnings therefrom (including, without limitation, the Rent and any other
amounts paid or payable with respect thereto); or (B) any defect in the
Aircraft, the Airframe, any Engine, any engine used in connection with the
Airframe or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of such Aircraft, Airframe, Engine, engine
or Part, or otherwise regardless of when such defect shall be discovered,
whether or not such Aircraft, Airframe, Engine, engine or Part is at the time in
the possession of Lessee, and regardless of where such Aircraft, Airframe,
Engine, engine or Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Aircraft, the Airframe, an Engine, any Operative Document,
any Purchase Document or any Financing Document), (ii) the material breach of
any express representation, warranty or covenant made by such Indemnitee herein
or in any other Operative Document, or the Financing Documents (not resulting
from a breach by Lessee of any of its representations, warranties or covenants
in the Operative Documents or in the Financing Documents), (iii) any Taxes,
whether or not Lessee is required to indemnify such Taxes under Section 10
hereof or the Tax Indemnification Agreement (it being understood that Section 10
hereof and the Tax Indemnification Agreement exclusively provide for Lessee's
liability with respect to Taxes), (iv) any Claim which relates solely to events
which occurred prior to but excluding the Restatement Date (other than Claims
related to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to Lessor in
accordance with the terms hereof and the Term of this Lease has been terminated
or has expired and the return is not related to an Event of Default, (vi) as to
such Indemnitee, an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the
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Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents,
the Purchase Documents or the Operative Documents, except as contemplated under
or pursuant to the Operative Documents, the Financing Documents or the Purchase
Documents and except as resulting from the exercise of its remedies during the
period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
or thereunder and except any Claim which is alleged or does relate to the period
prior to such disposition or (vii) the authorization or giving or withholding of
any future amendments, supplements, waivers or consents with respect to any of
the Financing Documents, the Purchase Documents or the Operative Documents,
which amendments, supplements, waivers or consents were not requested by Lessee
or are not required to give effect to the provisions of the Operative Documents,
the Financing Documents or the Purchase Documents (provided, however, in no
event will Lessee be liable for any Claims resulting from, pertaining to or
arising from or related to Lessor's granting or creating a Lessor's Lien or the
granting or creation of a Head Lessor's Lien). Upon full payment of the
indemnities herein, Lessee shall be subrogated to all rights and remedies which
such Indemnitee may have against any third party against whom such Indemnitee
has the right to assert a Claim which arises under any action described in this
Section 13 (except Claims under such Indemnitee's own insurance policies or
under the indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this
Section 13, Lessee hereby waives and releases any Claim now or hereafter
existing against any Indemnitee, on account of any Claims for or on account of
or arising or in any way connected with injury to or death of personnel of
Lessee or loss or damage to property of Lessee or the loss of use of any
property which may result from or arise in any manner out of or in relation to
the importation, exportation, ownership, purchase, registration, reregistration,
deregistration (except as to Owner Participant or Lessor as and to the extent
such Indemnitee is responsible under the Refunding Agreement for Claims related
to such deregistration), delivery, non-delivery, assignment, leasing,
subleasing, manufacture, acceptance, rejection, possession, return, financing,
performance, modification, maintenance, condition, use, operation, pooling,
interchange, repair, testing, sale, return or other disposition of the Aircraft,
the Airframe, any Engine or any engine used in connection with the Airframe or
any Part thereof, either in the air or on the ground, or which may be caused by
any defect in such Aircraft, Airframe, Engine,
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engine or Part from the material or any article used therein or from the design
or testing thereof, or use thereof or from any maintenance, service, repair,
overhaul, or testing of such Aircraft, Airframe, Engine, engine or Part, claims
for infringement, loss of or injury to any person, loss of or damage to any
property or environmental damage, regardless of when such defect may be
discovered, whether or not such Aircraft, Airframe, Engine, engine or Part is at
the time in the possession of Lessee, and regardless of the location of such
Aircraft at any such time except to the extent that such Claim results from (i)
the gross negligence or willful misconduct of such Indemnitee (except any such
gross negligence or willful misconduct as may be attributed to an Indemnitee due
to its interest in the Aircraft, the Airframe, an Engine, any Operative
Document, any Purchase Document or any Financing Document), (ii) the material
breach of any of its express representations, warranties or covenants hereunder,
under any other Operative Document or Financing Document (not resulting from a
breach by Lessee of any of its representations, warranties or covenants in the
Operative Documents or in the Financing Documents), (iii) any Taxes, whether or
not Lessee is required to indemnify such Taxes under Section 10 hereof or the
Tax Indemnification Agreement (it being understood that Section 10 hereof and
the Tax Indemnification Agreement exclusively provide for Lessee's liability
with respect to Taxes), (iv) any Claim which relates solely to events which
occurred prior to but excluding the Restatement Date (other than Claims related
to the condition, manufacture or design of the Aircraft) and any Claim
concerning payment for or the ownership of Buyer Furnished Equipment, (v) an
underlying act which occurs after the Aircraft has been returned to Lessor in
accordance with the terms hereof and the Term of this Lease has been terminated
or has expired and the return is not related to an Event of Default, (vi) an
underlying act which occurs after a disposition or other transfer (voluntary or
involuntary) by such Indemnitee of all or any part of its interest in the
Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents,
the Purchase Documents or the Operative Documents (except as contemplated under
or pursuant to the Operative Documents, the Financing Documents or the Purchase
Documents and except as resulting from the exercise of its remedies during the
period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
and except any Claim which is alleged or does relate to the period prior to such
disposition), (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative
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Documents, which amendments, supplements, waivers or consents were not requested
by Lessee or are not required to give effect to the provisions of the Operative
Documents, the Financing Documents or the Purchase Documents or (viii) a
Lessor's Lien, a Head Lessor's Lien or a Lenders' Lien attributable to such
Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and
expense and with Lessee's cooperation, be entitled to conduct the defense of any
Claim against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter
into a settlement or other compromise with respect to any Claim which Lessee or
such Indemnitee is defending hereunder in excess of $100,000 without the prior
written consent of the other, which consent shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt
notice of any Claims by a third party hereunder following such Indemnitee's
actual knowledge of such Claims by third parties, but the failure of such
Indemnitee to give the notice required by this Section 13 shall not constitute a
release by Lessor or such Indemnitee of, or reduce, any of the obligations or
liabilities of Lessee to such Indemnitee in respect of any such Claim or
otherwise affect the obligations or liabilities of Lessee to any Indemnitee in
respect of any such Claim, except to the extent that Lessee's ability to control
the defense thereof where Lessee has the right to control the defense thereof is
materially prejudiced as a result solely of such failure of such Indemnitee to
give such notice.
An Indemnitee or Lessee shall supply the other
with such information requested by the other as is reasonably necessary or
advisable for the other to control the defense of a Claim to the extent
permitted by this Section.
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Nothing in this Section shall be construed as a
guaranty by Lessee of payments due pursuant to any indebtedness incurred with
respect to the purchase of the Aircraft or of the residual value of the
Aircraft.
Notwithstanding anything herein or in any other
Operative Document to the contrary, with respect to any Claim for which any
Indemnitee is entitled to indemnification under more than one provision of this
Lease or any other Operative Document, such Indemnitee shall be entitled to
recovery for such Claim only pursuant to one such provision as it may select in
its sole discretion (and, for the avoidance of doubt, such Indemnitee shall not
be entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall
continue in full force and effect notwithstanding the expiration or other
termination of this Lease or any of the other Operative Documents and are
expressly made for the benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create,
incur, assume, or suffer to exist any Lien on or with respect to the Aircraft,
the Airframe, any Engine or any Part thereof, title thereto, or any interest of
Lessor therein or in this Lease, except (i) the respective rights of Lessor,
Lessee, Owner Participant, Indenture Trustee and any other Indemnitee as herein
provided or provided under the other Operative Documents or the Financing
Documents; (ii) Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii)
Liens for Taxes either not yet due or being diligently contested in good faith
by appropriate proceedings in accordance with Section 10 and so long as adequate
reserves are maintained with respect to such Liens and only so long as neither
such proceedings nor such Liens involve any material danger of the sale,
forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any
Part, or any interest of Lessor or Indenture Trustee therein or any risk of
criminal liability of Lessor or Indenture Trustee; (iv) inchoate materialmen's,
mechanics', workmen's, repairmen's employees', or other like inchoate Liens
arising in the ordinary course of business for sums not overdue by more than 45
days or being diligently contested in good faith and only so long as neither
such proceedings nor any such Liens involve any material danger of the sale,
forfeiture or loss of any of the Aircraft, the Airframe or any Engine or any
Part, or any interest of Lessor or Indenture Trustee therein; (v) the rights of
other Persons to the extent expressly permitted by the provisions of Section
6(a), 9(c)
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or 19; (vi) Liens arising out of any judgment or award against Lessee (or any
Permitted Sublessee) unless the judgment or award shall not, within thirty (30)
days after the entry thereof, have been discharged, vacated, reversed, or
execution thereof stayed pending appeal or shall not have been discharged,
vacated or reversed within thirty (30) days after the expiration of such stay
and only so long as such Liens shall not involve any material danger of the
sale, forfeiture or loss of any of the Aircraft, the Airframe or any Engine or
any Part, or any interest of Lessor or Indenture Trustee therein and provided
that the execution of such judgment or award or an attachment relating thereto
shall not have occurred within such thirty (30) day period; and, (vii) any other
Lien with respect to which Lessee (or a Permitted Sublessee) shall have provided
a bond adequate in the reasonable opinion of Indenture Trustee (if the Lien of
the Indenture has not been discharged) and Owner Participant. Lessee shall
promptly, at its own expense, take or cause to be taken such action as may be
necessary to duly discharge any Lien (except for the Liens referred to in
clauses (i) through (vii) of this Section 14) directly or indirectly created,
incurred, assumed, or suffered to exist by Lessee if the same shall arise at any
time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this
Lease, the Indenture, the Trust Agreement, Lease Supplement, Indenture
Supplement and Trust Supplement, and any other supplement from time to time
required by the terms hereof, Lessee will cause this Lease, the Indenture, the
Trust Agreement, Lease Supplement, Indenture Supplement, Trust Supplement and
such other supplements to be duly filed and recorded, and maintained of record,
in accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and
expense (except it shall be at Lessor's expense if in connection with a change
in ownership of the Aircraft or any other transfer or assignment by Lessor other
than as contemplated hereunder or under the Financing Documents or in connection
with an Event of Default) and upon request by Lessor, cause any financing
statements and any and all additional instruments and other documents, so far as
permitted by applicable Law, to be kept, filed, and recorded and to be
re-executed, refiled and re-recorded at all times in the appropriate office
pursuant or in relation to any applicable Laws of any Governmental Entity, to
protect and preserve the rights and interests of Lessor or Indenture Trustee
hereunder, under the Indenture
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and in the Aircraft, and Lessee shall furnish to Lessor and Indenture Trustee,
evidence, reasonably satisfactory to Lessor and Indenture Trustee, of each such
filing or refiling and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or
cause to be done, at Lessee's cost and expense (except it shall be at Lessor's
expense if in connection with a change in ownership of the Aircraft or any other
transfer or assignment by Lessor other than as contemplated hereunder or under
the Financing Documents or in connection with an Event of Default), any and all
acts and things within its control which may be required under the terms of the
Mortgage Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease, and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Aircraft, as Lessor may
reasonably request. Lessee shall also do or cause to be done, at its own expense
(except it shall be at Lessor's expense if in connection with a change in the
ownership of the Aircraft or any other transfer or assignment by Lessor other
than as contemplated hereunder or under the Financing Documents or in connection
with an Event of Default), any and all acts and things which may be required
under the terms of any other Law involving any jurisdiction in which Lessee, any
Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor may
reasonably request, to protect and preserve the title of the Lessor, this Lease,
the Indenture and Lessor's and Indenture Trustee's interest in the Aircraft and
under any of the Operative Documents or Financing Documents within any such
jurisdiction.
In addition, at Lessee's expense, Lessee will
promptly and duly execute and deliver to Lessor or Indenture Trustee, as
applicable, such further documents and assurances and take such further actions
as Owner Participant or Indenture Trustee may from time to time reasonably
request in order to more effectively carry out the intent and purpose of this
Lease and the other Operative Documents and the Financing Documents and to
protect the rights and remedies created or intended to be created in favor of
Lessor or Indenture Trustee hereunder and the other Operative Documents and the
Financing Documents including, without limitation, if reasonably requested by
Owner Participant or Indenture Trustee, at the expense of Lessee (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Aircraft or any other transfer or assignment by Lessor or Indenture Trustee
other
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than as contemplated hereunder or under the Financing Documents or in connection
with an Event of Default), the execution and delivery of supplements or
amendments hereto in recordable form, subjecting to this Lease, the Indenture
and the other Financing Documents, any replacement Aircraft or Engine and the
recording or filing of counterparts thereof in accordance with the laws of any
appropriate jurisdiction.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at
its own expense and risk, shall return the Aircraft to Lessor (or any Person
designated by Lessor) in at least the condition specified in this Section and
Exhibit E hereto at any Lessee system location in the continental United States
selected by Lessor, as Lessor may elect, or such other location as Lessor and
Lessee may agree, fully equipped with all required Engines, or other engines
owned by Lessee (which shall thereupon become Engines as hereinafter provided)
meeting the conditions specified in this Section and Exhibit E, duly installed
thereon by delivering the same to the Lessor at such location. Lessee shall
comply with Section 11(b) and this Section 16 with respect to any engines
installed on the Aircraft returned to Lessor hereunder and meeting the
conditions described herein which were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion
hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for
the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens and Lenders'
Liens, (ii) duly certified as an airworthy aircraft by the FAA under Part 121 of
the regulations promulgated under the Federal Aviation Act and with a current
and valid Airworthiness Certificate installed on the Aircraft, unless such
certificate shall have been suspended or revoked as a result of the suspension
or revocation of the registration of the Aircraft under the Federal Aviation Act
due to the ineligibility of the Aircraft to be registered in the name of Lessor
under the Federal Aviation Act (whether by means of a voting trust agreement or
otherwise) in which case the Aircraft shall nevertheless meet all conditions for
such certification and for the issuance of such certificate; (iii) in full
airworthy condition for over water and EROPS operation according to the FAA
standards required to allow the Aircraft to be operated under, and in full
compliance with, such Airworthiness Certificate and Part 121 of the regulations
promulgated under the Federal Aviation Act for such operation, such compliance
to be by means of such mechanical repairs or modifications or such inspections
as
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may be required thereby, but not by operational restrictions, by logbook entries
or other method of acceptance of such restrictions; (iv) in full compliance with
Lessee's Maintenance Program; (v) to the extent the owner of the Aircraft is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of the
Federal Aviation Act and reasonably cooperative with Lessee at Lessee's expense
with respect to effecting such registration, duly registered in the name of the
Lessor or other then owner of the Aircraft under the Federal Aviation Act; (vi)
in full compliance with the maintenance and operation provisions of this Lease
and all FAA airworthiness directives, mandatory service bulletins and equivalent
requirements which by their terms require compliance on or before the last day
of the Term (without regard to any deferral, waiver, deviation or exemption
granted by the FAA specifically to Lessee delaying such compliance); (vii) in
good and airworthy operating condition, and in the same condition (including,
without limitation, in a passenger configuration suitable for passenger revenue
service) as when delivered to Lessee hereunder, ordinary wear and tear excepted,
with no open or outstanding deferred maintenance items, scheduled or
unscheduled, with all systems and components fully serviceable and operational
and with no placards restricting operation or use, and (viii) with all remaining
warranties, indemnities, policies and guarantees referred to in Section 5(d)
made available to Lessor in a manner and by documents in form and substance
reasonably satisfactory to Lessor.
(c) Engines. In the event any engine not owned
by Lessor shall be installed on the Aircraft on any Return Occasion, without
limiting Lessee's obligations under the Tax Indemnification Agreement, such
engine shall be of the same model and equivalent modification status as the
Engines or, at Lessee's option, an IAE engine of an improved model suitable for
installation and use on the Airframe without diminishing the value, remaining
useful life or utility of such Airframe, in each such case having a value,
remaining useful life and utility at least equal to (as determined in accordance
with the Appraisal Procedure), and be in an operating condition as good as the
Engines, assuming the Engines were in the condition and repair as required by
the terms hereof immediately prior to such termination and shall conform to the
return condition requirements set forth in this Section 16 and Exhibit E, and
Lessee, at its own expense and concurrently with such delivery, shall cause such
engine to become an Engine by complying with Section 11(b) hereof. Lessee's
obligation to comply with the terms of this Section 16(c) shall be conditioned
on Lessor's transferring to Lessee all of Lessor's right, title and
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interest in and to any Engine not installed on the Aircraft at the Return
Occasion "AS IS, WHERE IS," without any representation, warranty or recourse of
any kind whatsoever, express or implied, except a warranty that such Engine is
free and clear of Lessor's Liens.
(d) Records and Documents. Upon the return of
the Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and
inspection, modification, overhaul and other records, related to the Aircraft,
including, without limitation, those required to be maintained with respect
thereto under applicable rules and regulations of the FAA, together with a
detailed description of the Maintenance Program then applied to the Aircraft and
shall provide Lessor and its designees access to the Maintenance Program which
is sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft under
the Maintenance Program, in each case as Lessor may reasonably request, and all
documentation with respect to the Aircraft set forth on Exhibit B or otherwise
delivered to Lessee at delivery thereof, and (ii) all records necessary or
required by the FAA to certify and place the Aircraft on an FAA or other
country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee,
which must be updated to the latest revision status as of the last day of the
Term within such software base and all data therein or pertaining thereto shall
be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories,
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accumulated cycles or flight hours as applicable and remaining service lives on
a separate listing. All components and assemblies which are identified on the
maintenance records by part numbers and serial numbers other than the
manufacturer's shall be provided with interchange or cross reference listing
necessary to establish complete traceability. All documentation, flight, and
maintenance records as specified by United States Federal Aviation Regulations
91.173, 91.174, and each paragraph of regulation 121.380 which normally
accompany the transfer of an aircraft which has been operating in regulated
commercial air service, shall be delivered to Lessor with the Aircraft. Any
documents or records required to be delivered hereunder shall be in English.
(e) Condition of Aircraft. Upon any Return
Occasion, Lessee shall return such Aircraft to Lessor in such condition that the
Aircraft shall also comply with each and every condition and requirement set
forth elsewhere in this Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion,
Lessee shall make the Aircraft available to Lessor at the location where the
"block 'C' Check" (or equivalent level designated check or checks) required
hereunder to be performed immediately prior to redelivery is to be performed for
detailed inspection of the documents referred to in paragraph (d) above and the
Airframe, Engines and Parts structure and parts, at Lessee's expense (excluding
compensation to representatives of Lessor), in order to verify that the
condition of such Aircraft complies with the requirements set forth above (such
inspection being hereinafter referred to as the "Final Inspection"). The Final
Inspection shall be combined with such "block 'C' Check" (or equivalent level
check or checks) and may include such other items as reasonably requested by
Lessor. Lessee shall give Lessor not less than thirty (30) days prior written
notice of the commencement date of such Final Inspection. The period allowed for
the Final Inspection shall be the same period during which such "block 'C'
Check" is being performed and shall have such duration as to permit the opening
of any areas of the Aircraft which are necessary or advisable to satisfy Lessor
as to compliance with the requirements of this Section 16 and Exhibit E. The
Final Inspection shall commence on the date so noticed which shall be on or
before the expiration of the Term with respect to the Aircraft and shall
continue on consecutive days until all activity required above to be conducted
has been concluded. To the extent that any portion of the Final Inspection
extends beyond the expiration of the Term, unless Lessor has terminated the
Lease pursuant to Section 18(g)
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hereof, the Term with respect to the Aircraft undergoing the Final Inspection
shall be deemed to have been automatically extended, and all obligations
hereunder continued, on a daily basis until the Final Inspection shall have been
concluded and Lessee shall pay Rent during any such extension in an amount equal
to the average daily Basic Rent or Renewal Rent, as the case may be, paid in
respect of the last year of the Basic Term or Renewal Term, as the case may be
(and Stipulated Loss Value during such extension shall equal the Stipulated Loss
Value on the last day of the Basic Term or Renewal Term, as the case may be);
provided, however, that Lessee shall not be required to pay Rent with respect to
the Aircraft during the period of extension to the extent that Lessor is
responsible for the delay in completion of the Final Inspection. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee, except that Lessee shall not be liable for any
storage expenses which are incurred after the sixtieth (60th) day after the Term
to the extent that storage continues thereafter due to Lessor's delay in
completion of the Final Inspection.
(g) Aircraft Records and Documents. In order to
enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to
Subsection 16(f) above, Lessee agrees to make available to Lessor at a
maintenance base of Lessee with adequate facilities for short-term maintenance,
where
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the Final Inspection is to occur, not later than ten (10) days prior to the
commencement of such Final Inspection, the Aircraft Records and Documents listed
in Exhibit B hereto, together with such other documentation (including, without
limitation, original airworthiness directive compliance documents and other work
documents) regarding the condition, use, maintenance, or operation as Lessor may
reasonably request or require to substantiate the status of the Aircraft.
(h) Corrections and Subsequent Corrections. To
the extent that the Aircraft or any Engine fails upon a Return Occasion to
conform to any requirement imposed by this Lease Lessor may, at its option, (i)
continue the Lease in effect in the manner provided for in Section 16(f) above
with regard to automatic extension until such time as such Aircraft is brought
up to the condition required by this Section 16, including Exhibit E, or (ii)
accept the return of such Aircraft and thereafter have any such nonconformance
corrected, at such time as Lessor may deem appropriate but not to commence later
than ninety (90) days following the return of such Aircraft, at commercial rates
then charged by the Person selected by Lessor to perform such correction.
Lessee's obligations to pay such Supplemental Rent shall survive the Expiration
Date or other termination of this Lease. Nothing set forth in this paragraph
shall constitute a limitation on Lessor's or Owner Participant's ability to
recover from Lessee any damages, expenses or losses pursuant to Sections 13 or
18 hereof suffered as a result of Lessee's failure to effect the return of the
Aircraft at the time, in the place and in the condition as specified in this
Section 16 and Exhibit E hereto.
(i) Functional Flight Check. Immediately prior
to the expiration of the Term, Lessor will be permitted to conduct a
non-commercial functional flight check flight of no more than two (2) hours
duration in accordance with the Manufacturer's functional flight check
procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft
and proper functioning of all systems and components. A qualified pilot and up
to five (5) other representatives selected by Lessor may take part in such
flight to verify compliance of the Aircraft with the requirements of this Lease,
provided, that Lessor shall be responsible for the charges of such qualified
pilot and representatives. Lessee may combine the functional flight check
provided in this Section 16(i) with the delivery flight specified in Section
16(a) and such functional flight check shall include the landing. Any
discrepancy or
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malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any actions
to correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee
shall, at Lessee's expense, take such action as Lessor may reasonably request to
assist Lessor in obtaining any required documents in relation to the export of
the Aircraft from the United States (including, without limitation, a valid and
subsisting export certificate of airworthiness with respect to the Aircraft and
export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits.
Lessee shall deliver to Lessor, at no cost to Lessor, all service bulletin kits
furnished without charge by the manufacturer for installation on the Aircraft
which have not been so installed together with appropriate instructions for
installation. In the event such uninstalled kits were purchased or manufactured
by Lessee, then Lessor shall be advised of such kits by Lessee and have a right
of first refusal to purchase such kits at Lessee's cost for a period of ninety
(90) days after return.
(l) Storage Upon Return. Upon any Return
Occasion, Lessee shall, at Lessor's request and at Lessee's risk and expense, in
addition to other storage referred to above, arrange for the parking, storage
and insurance of the Aircraft for a period not exceeding sixty (60) days at such
reasonable location as Lessor requests where Lessee has or can arrange for
storage. Lessee shall pay or cause to be paid all costs and expenses for such
parking, storage and insurance.
(m) Resale/Release Cooperation. During the last
twelve (12) months of the Term, with reasonable notice and at reasonable times,
Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all
reasonable respects, with the efforts of Lessor to sell or lease the Aircraft
after the end of the Term, by permitting prospective purchasers or lessees,
except to the extent prohibited by applicable Law, to inspect the Aircraft and
the records relating thereto to the extent it does not
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unreasonably interfere with the operation or maintenance of the Aircraft or the
conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or
events shall constitute an Event of Default (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of Law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of
Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3)
Business Days after the date on which such payment is due, or (ii) any other
payment of Supplemental Rent due hereunder within ten Business Days after the
date on which such payment is due and Lessee has received written demand
therefor by the party entitled thereto; provided that any failure of Lessee to
pay to Lessor or the Owner Participant when due any Excepted Payments (as
defined in the Indenture) shall not constitute an Event of Default unless Lessor
or Owner Participant delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in
full force and effect any insurance required under the provisions of Section 12
hereof or shall operate the Aircraft outside of the scope or in violation of the
terms of the insurance or United States Government indemnity coverage required
to be maintained with respect to such Aircraft; or
(c) Any representation or warranty made by Lessee
herein or in the Refunding Agreement or in any certificate furnished by Lessee
in connection herewith or therewith is or was incorrect at the time made in any
material respect and such incorrectness shall not have been cured within thirty
(30) days after the receipt by Lessee of a written notice from Lessor or the
Indenture Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any
covenant, condition, or agreement to be performed or observed by it pursuant to
this Lease or the Refunding Agreement, and such failure shall continue uncured
for thirty (30) days after written notice thereof is given by Lessor or
Indenture Trustee to Lessee; provided, however,
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that if Lessee shall have undertaken to cure any such failure which arises under
the first or second sentence of Section 6(c) or Section 6(d), as such provisions
of Section 6 relate to maintenance, service, repair or overhaul, or Section 9,
and notwithstanding the diligence of Lessee in attempting to cure such failure,
such failure is not cured within said thirty (30) day period but is curable with
future due diligence, there shall exist no Event of Default under this Section
17 so long as Lessee is proceeding with due diligence to cure such failure and
such failure is remedied not later than one hundred eighty (180) days after
receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a
custodian, receiver, trustee or liquidator of itself or all or any material part
of Lessee's property or Lessee's consolidated property, or Lessee admits in
writing its inability to, or is unable to, or does not, pay its debts generally
as they come due, or makes a general assignment for the benefit of creditors, or
Lessee files a voluntary petition in bankruptcy or a voluntary petition seeking
reorganization in a proceeding under any bankruptcy or insolvency Laws (as now
or hereafter in effect), or an answer admitting the material allegations of a
petition filed against Lessee in any such proceeding, or Lessee by voluntary
petition, answer or consent seeks relief under the provisions of any other
bankruptcy, insolvency or other similar Law providing for the reorganization or
winding-up of corporations, or provides for an agreement, composition, extension
or adjustment with its creditors, or any corporate action (including, without
limitation, any board of directors or shareholder action) is taken by Lessee in
furtherance of any of the foregoing, whether or not the same is fully effected
or accomplished; or
(f) An order, judgment or decree is entered by
any court appointing, without the consent of Lessee, a custodian, receiver,
trustee or liquidator of Lessee, or of all or any material part of Lessee's
property, or Lessee's consolidated property, or all or any material part of
Lessee's property or Lessee's consolidated property is sequestered, and any such
order, judgment or decree of appointment or sequestration remains in effect,
undismissed, unstayed or unvacated for a period of ninety (90) days after the
date of entry thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a
proceeding under the Federal bankruptcy laws or other insolvency Laws (as now
or hereafter in effect) is filed and
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is not withdrawn or dismissed within ninety (90) days thereafter or at any time
an order for relief is granted in such proceeding, or if, under the provisions
of any Law providing for reorganization or winding-up of corporations which may
apply to Lessee, any court of competent jurisdiction assumes jurisdiction over,
or custody or control of, Lessee or of all or any material part of Lessee's
property, or Lessee's consolidated property and such jurisdiction, custody or
control remains in effect, unrelinquished, unstayed or unterminated for a period
of ninety (90) days or at any time an order for relief is granted in such
proceeding; or
(h) Lessee's cessation of business as a
commercial passenger Certificated Air Carrier or, except in either case in
connection with a labor dispute, announcement thereof or Lessee's suspension of
its business as a commercial passenger Certificated Air Carrier, or for any
reason the preponderant business activity of Lessee shall cease to be that of a
commercial passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United
States air carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at
any time thereafter so long as the same shall be continuing, Lessor may, at its
option, declare by written notice to Lessee this Lease to be in default,
provided, however, that this Lease shall be deemed to be declared in default
automatically without the necessity of such written declaration upon the
occurrence of any Event of Default described in paragraph (e), (f) or (g) of
Section 17 hereof; and at any time thereafter, so long as any outstanding Event
of Default shall not have been remedied, Lessor may do one or more of the
following with respect to all or any part of the Airframe and any or all of the
Engines as Lessor in its sole discretion shall elect, to the extent permitted
by, and subject to compliance with any mandatory requirements of, applicable Law
then in effect:
(a) Demand that Lessee, and Lessee shall upon the
written demand of Lessor and at Lessee's cost and expense, immediately return,
and the Lessee hereby agrees that it shall return promptly all or such part of,
the Aircraft to Lessor in the manner specified in such notice, in which event
such return shall not be delayed for the purposes of
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complying with the return conditions specified in Section 16 and Exhibit E
hereof (none of which conditions shall be deemed to affect Lessor's possession
of the Aircraft) or delayed for any other reason; provided, however, that Lessee
shall remain and be liable to Lessor for amounts provided for herein or other
damages resulting from the Aircraft or any Engine not being in the condition
required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's
option, Lessee shall be required thereafter to take such actions as would be
required by the provisions of this Lease if such Aircraft were being returned at
the end of the Term hereof with respect to such Aircraft. In addition, Lessor or
Lessor's agent, at its option and to the extent permitted by applicable Law, may
but shall not be obligated to enter upon the premises where all or any part of
the Aircraft, Airframe and/or Engines are located to take immediate possession
of and, at Lessor's option, remove the same (and/or any engine which is not an
Engine but which is installed on the Airframe, subject to the rights of the
owner, lessor or secured party thereof) by summary proceedings or otherwise, all
without liability accruing to Lessor or Lessor's agent for or by reason of such
entry or taking of possession or removal whether for the restoration of damage
to property, or otherwise, caused by such entry or taking, except direct damages
to the extent caused by Lessor's gross negligence or willful misconduct.
(b) With or without taking possession thereof,
sell or cause to be sold, the Aircraft, Airframe or Engine or any part thereof,
or Lessor's interest therein, at private or public sale, as Lessor in its sole
discretion may determine, or otherwise dispose of, hold, use, operate, or lease
to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole
discretion may determine, all free and clear of any rights of Lessee or any
Permitted Sublessee and except as hereinafter set forth in this Section 18.
Lessor may be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised,
or shall thereafter at any time exercise, any of its rights under paragraph (a)
or paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date specified for payment
in such notice), any unpaid Rent for the Aircraft to and including the
Stipulated Loss Value Date specified in such notice, plus whichever of the
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following amounts as Lessor may specify, in its sole and absolute discretion, in
such notice: (i) an amount equal to the excess, if any, of the sum of the
Stipulated Loss Value for the Aircraft, Airframe or Engine computed as of the
date specified in such notice plus, if such date is a Basic Rent Payment Date or
a Renewal Rent Payment Date, an amount equal to the Basic Rent or Renewal Rent,
as the case may be, due on such date, over the fair market sale value of the
Aircraft, Airframe or Engine as of the date specified in such notice or (ii) an
amount equal to the excess, if any, of the sum of the Stipulated Loss Value for
the Aircraft, Airframe or Engine computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or a Renewal Rent Payment
Date, an amount equal to the Basic Rent or Renewal Rent, as the case may be, due
on such date, over the fair market rental value of the Aircraft for the
remainder of the Term as of the date specified in such notice.
(d) In the event Lessor, pursuant to paragraph
(b) above, shall have sold the Aircraft, Airframe or Engine or its interest
therein, Lessor, in lieu of exercising its rights under paragraph (c) above,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
to Lessor on such demand, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date immediately prior to
the date such sale occurs), any unpaid Rent due to and including the date of
sale, plus the amount by which the Stipulated Loss Value of such Aircraft,
Airframe or Engine, computed as of such Stipulated Loss Value Date, exceeds the
net proceeds of such sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under
paragraph (b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee
to pay, on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby
agrees that it will so pay to Lessor, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the
case may be, payable in advance for the period on and after the Stipulated Loss
Value Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such
Aircraft due and unpaid for any period prior to and including, and any Basic
Rent or Renewal Rent payable on, the Stipulated Loss Value Date, plus, an amount
equal to the Stipulated Loss Value for the Aircraft computed as of such
Stipulated Loss Value Date; and upon such payment of liquidated damages and the
payment of all other Rent then due hereunder and the discharge of the Lien of
the Indenture
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pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer,
without recourse or warranty (except as to the absence of Lessor's Liens and the
Lien of the Indenture), all right, title and interest of Lessor in and to the
Aircraft to Lessee or as it may direct and Lessor shall, at Lessee's expense,
execute and deliver such documents evidencing such transfer and take such
further action as Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to
paragraph (b) above, shall have relet the Aircraft, Airframe or Engine under a
long term lease, Lessor, in lieu of exercising its rights under paragraph (c)
above with respect to such Aircraft, Airframe or Engine, may, if it shall so
elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on such
demand, as liquidated damages for loss of bargain and not as a penalty (in lieu
of the Basic Rent or Renewal Rent, as the case may be, for such Aircraft due
after the time of reletting) any unpaid Rent for such Aircraft due up to the
date of reletting, plus the amount, if any, by which the aggregate Basic Rent or
Renewal Rent, as the case may be, for such Aircraft which would otherwise have
become due over the Basic Term or Renewal Term, as the case may be, discounted
periodically (equal to installment frequency) to present worth as of the date of
reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental
payments to become due under the reletting from the date of such reletting to
the date upon which the Term for such Aircraft, Airframe or Engine would have
expired but for Lessee's default, discounted periodically (equal to installment
frequency) to present worth as of the date of the reletting at the rate of 8.50%
per annum.
(g) Cancel, rescind and/or terminate this Lease
by written notice to Lessee which cancellation, rescission and/or termination
shall be effective upon dispatch, whereupon Lessee's right to possess and use
the Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall
be and remain liable for damages and losses suffered by Lessor and all other
amounts payable by Lessee hereunder.
(h) Lessor may exercise any other right or remedy
which may be available to it under applicable laws, or may proceed by
appropriate court action or actions, either at law or in equity, to enforce any
other remedy or right Lessor may have hereunder, under the other Operative
Documents, at law or in equity, including, without limitation, proceed by court
order to enforce performance by Lessee of the applicable covenants of this Lease
or to recover damages for the breach thereof.
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In addition to the foregoing, Lessee shall be
liable (without duplication of the remedies above and of Lessee's obligations
under Section 10 and Section 13 hereof and subject to the exclusions set forth
therein) for any and all unpaid Rent before, during or after the exercise of any
of the above mentioned remedies (including without limitation interest on unpaid
amounts with respect to all amounts not paid when due, including, without
limitation, any amounts payable pursuant to the foregoing provisions of this
Section 18), and, except as specified above, until satisfaction of all of
Lessee's obligations to Lessor hereunder and for all legal fees and other costs
and expenses incurred by any Indemnitee by reason of the occurrence of any Event
of Default or the exercise of an Indemnitee's remedies with respect thereto,
including all costs and expenses incurred in connection with the return of the
Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in
placing the Aircraft, Airframe or Engine in the condition and with airworthiness
certification as required by such Section and such Exhibit and costs and
expenses related to the Lease, the Refunding Agreement, the Indenture, the Pass
Through Trust Agreements, the Intercreditor Agreement or each Liquidity
Facility. All liquidated damages payable pursuant to the foregoing shall bear
interest, which shall be payable on the date the payment of such liquidated
damages is due at a rate equal to the Interest Rate from and including the date
due to and excluding the date actually paid.
In effecting any repossession, Lessor, its
representatives and agents, to the extent permitted by applicable Law, (i) shall
have the right to enter upon any premises where it reasonably believes the
Aircraft, the Airframe, an Engine or Part to be located, (ii) shall not be
liable, in conversion or otherwise, for the taking of any personal property of
Lessee which is in or attached to the Aircraft, the Airframe, an Engine or Part
which is repossessed, (iii) shall not be liable or responsible, in any manner,
for any damage or injury to any of Lessee's property in repossessing and holding
the Aircraft, the Airframe, an Engine or Part except for direct damages caused
by Lessor's gross negligence or willful misconduct and (iv) shall have the right
to maintain possession of and dispose of the Aircraft, the Airframe, an Engine
or Part on any premises owned by Lessee or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole
expense, assemble and make the Aircraft, the Airframe, an Engine or Part
available at a place designated by Lessor in accordance with Section 16 and
Exhibit E hereof. Lessee hereby agrees that, in the event of the return to or
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repossession by Lessor of the Aircraft, the Airframe, an Engine or Part, or
otherwise upon the occurrence of an Event of Default, any rights in any warranty
(express or implied), service life policy, infringement indemnity, performance
guaranty or the like heretofore made available to Lessee or otherwise held by
Lessee shall without further act, notice or writing be deemed automatically
cancelled and shall be enforceable solely by and for the benefit of, and
assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for
all expenses, disbursements, costs and fees incurred in (i) repossessing,
storing, preserving, shipping, maintaining, repairing and refurbishing the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof and (ii) preparing the Aircraft, the Airframe, an Engine
or Part for sale or lease, advertising the sale or lease of the Aircraft, the
Airframe, an Engine or Part and selling or releasing the Aircraft, the Airframe,
an Engine or Part. Lessor is hereby authorized and instructed, at its option, to
make expenditures which Lessor considers advisable to repair and restore the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof, all at Lessee's sole expense.
For the purpose of this Section 18, the "fair
market rental value" or the "fair market sales value" of the Aircraft, Airframe,
an Engine or Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an
Engine or Part pursuant to this Section, Owner Participant may bid for and
purchase such property and Lessee agrees that the amounts paid therefor shall be
used in the computations contemplated herein and Lessee shall remain liable for
any deficiency.
No remedy referred to in this Section is intended
to be exclusive, but, to the extent permitted by Law, each shall be cumulative
and in addition to any other remedy referred to above or otherwise available to
Lessor at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d), (e) or (f)
above.
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Lessee hereby irrevocably appoints Lessor as
Lessee's attorney-in-fact (which appointment is coupled with an interest) to
execute all documents deemed necessary to release, terminate and void Lessee's
interest in the Aircraft leased hereunder or otherwise to more effectively carry
out Lessor's rights and remedies and to file said documents for recordation with
the FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
The provisions of this Section 18 shall continue
in full force and effect and survive the expiration or other termination of this
Lease and are expressly made for the benefit of and shall be enforceable by
Lessor, Owner Participant and, if the Lien of the Indenture has not been
discharged, Indenture Trustee.
Section 19. Security for Obligations. In order
to secure the Equipment Notes, Lessor has created, by the Indenture, a security
interest in the Trust Indenture Estate, including, without limitation, this
Lease and all Rent and other sums payable hereunder, except as provided in the
Indenture and subject in each case to Liens permitted hereunder. The Indenture
provides, among other things for the assignment by Lessor to Indenture Trustee
of its right, title and interest in, to and under this Lease, to the extent set
forth in the Indenture, for the creation of a first-mortgage lien on and
perfected security interest in all of Lessor's right, title and interest in and
to the Aircraft in favor of Indenture Trustee. Lessee hereby consents to such
assignment and to the creation of such mortgage and security interest and
acknowledges receipt of copies of the Trust Agreement and the Indenture, it
being understood that such consent shall not affect any requirement or the
absence of any requirement for any consent under any other circumstances. Until
the Lien of the Indenture has been discharged, Lessee will furnish to Indenture
Trustee counterparts of all notices and other writings of any kind required to
be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has
been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss
Value and all other amounts payable hereunder (other than Excepted Payments) to
or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and
(b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but
not Owner Participant) (other than Expected Rights) herein as and to the extent
provided herein or in the Indenture and any express reference to Indenture
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Trustee in any Section of this Lease shall not give rise to any implication that
Indenture Trustee may not exercise the rights of Lessor in any other Section of
this Lease as and to the extent provided in the Indenture.
The provisions of this Lease and the Refunding
Agreement which require or permit action by, the payment of monies to, the
consent or approval of, the furnishing of any instrument or information to, or
the performance of any other obligation to, Indenture Trustee, shall not be
effective, and the Sections hereof containing such provisions shall be read as
though there were no such requirements or provisions and all moneys otherwise
payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee
shall have received from Indenture Trustee notice of discharge of the Lien of
the Indenture.
Any payment or performance by Lessee to or as
directed by Indenture Trustee shall constitute payment or performance of such
obligation to Lessor by Lessee under this Lease.
Any payment or performance of an obligation of
Lessee under this Lease by a Permitted Sublessee shall constitute payment or
performance of such obligation by Lessee.
Section 20. Renewal Option. Lessee may renew
this Lease as provided in the following clause (i) and
subject to the following clause (ii):
(i) Exercise of Renewal Option. Provided that
this Lease has not been previously terminated and that no Default
or Event of Default shall have occurred and be continuing at the
time of the giving of irrevocable notice hereinafter referred to
in this clause (i) or at the time of the commencement of the
Renewal Term, Lessee, at its option, may renew this Lease for one
Renewal Term consisting of a period equal to five years. The right
to renew this Lease for such Renewal Term pursuant to this clause
(i) shall be exercised upon irrevocable notice from Lessee
received by Lessor of Lessee's election to so renew this Lease not
less than twelve (12) months and not more than twenty-four (24)
months prior to the last day of the Basic Term. The Renewal Rent
for the Renewal Term shall be the "fair market rental value" of
the Aircraft for such Renewal Term (the "renewal fair market
rental value") as determined in accordance with the Appraisal
Procedure. For purposes of this paragraph (i), the Appraisal
Procedure shall be initiated by Lessee no
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earlier than nine (9) months prior to the end of the Basic Term.
If Lessee shall fail to exercise its option to extend the term of
this Lease for the Renewal Term in accordance with the provisions
of this paragraph, all of Lessee's rights to extend the Term for
such Renewal Term shall expire. Lessee shall pay all reasonable
costs and expenses, including, without limitation, reasonable
legal fees and expenses, incurred by Lessor, Owner Participant and
the Indenture Trustee in connection with the exercise of such
option.
(ii) Provisions Applicable During Renewal Term.
All provisions of this Lease, including, without limitation, as to
Rent and Stipulated Loss Value (which shall be, with appropriate
adjustments, in no event less than the greater of 120% of the
"fair market sales value" of the Aircraft as of the first day of
the Renewal Term as determined pursuant to the Appraisal Procedure
or the amount set forth on Exhibit A as of the end of the Basic
Term), shall remain in effect and be applicable during such
Renewal Term, except that Lessee shall pay to the Lessor,
semi-annually in arrears as Renewal Rent on each Renewal Rent
Payment Date, the amount for such Renewal Term as determined in
accordance with clause (i) of this Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction.
Any provision of this Lease 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. To the extent permitted by Law, each of Lessor and Lessee
hereby waives any provision of Law which renders any provision hereof prohibited
or unenforceable in any respect. No term or provision of this Lease may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing expressed to be a supplement or amendment to, or waiver or termination
of this Lease signed by an officer of the party against which the enforcement of
the change, waiver, discharge, or termination is sought. This Lease shall
constitute an agreement of lease, and nothing herein shall be construed as
conveying to Lessee any right, title, or interest in the Aircraft or any Engine
or Part except as a lessee only. Without limiting the foregoing, the parties
hereto agree to treat this Agreement as a lease for United States federal income
tax purposes and Lessee will not file
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a tax return which is inconsistent with the foregoing and nothing contained
herein shall be construed as an election by Lessor to treat Lessee as having
acquired the Aircraft for the purpose of the investment credit allowed by
Section 38 of the 1954 Code or any similar or successor statute. The headings in
this Lease are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
(B) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED
AND DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE
WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions
between Lessor and Lessee required or permitted under the terms and provisions
hereof shall be in writing and shall be sent to Lessor or Lessee at their
respective addresses set forth in Exhibit C hereto (or such other addresses as
the parties may designate from time to time in writing). All notices, reports or
other documents provided to Lessor or Lessee shall be provided concurrently to
Indenture Trustee (until such time as the Lien of the Indenture is discharged)
and to Owner Participant, at such address as Owner Participant and Indenture
Trustee, respectively, may designate from time to time. All notices and
instructions hereunder shall become effective when received.
(d) Lessor's Right to Perform for Lessee. If
Lessee fails to make any payment of Rent required to be made by it hereunder or
fails to perform or comply with any covenant, agreement, or obligation contained
herein, Lessor shall have the right but not the obligation to make such payment
or conform or comply with such agreement, covenant, or obligation, and the
amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance thereof or
compliance therewith, together with interest thereon at the Interest Rate, shall
be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The taking of
any such action by Lessor pursuant to this Section 21(d) shall not constitute a
waiver or release of any obligation of Lessee under this Lease, nor a waiver of
any Event of Default which may arise out of Lessee's nonperformance of such
obligation, nor an election or waiver by Lessor or any remedy or right available
to Lessor under or in relation to this Lease.
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(e) Counterparts. To the extent, if any, that
this Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of any
counterpart other than the original counterpart, which shall be identified as
the counterpart containing the receipt therefor executed by or on behalf of
Indenture Trustee on the signature page thereof. Subject to the preceding
sentence, this Lease may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so
long as no Event of Default shall have occurred and be continuing and this Lease
has not been declared or deemed to be in default, Lessor shall not take or cause
to be taken any action to interfere with the right of Lessee to the possession,
use, operation and quiet enjoyment of and other rights with respect to the
Aircraft hereunder, and all rents, revenues, profits and income therefrom, in
accordance with the terms of this Lease without interference from Lessor or any
Person lawfully claiming by or through it, provided that Lessor and Owner
Participant shall not be liable for any such interference by Indenture Trustee,
Pass Through Trustee, Note Holder or any other Person lawfully claiming by or
through them, and provided further, that the foregoing shall not be deemed to
have modified the obligations of Lessee pursuant to Section 4(d) hereof, which
obligations remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that,
except as provided in the Refunding Agreement, there has been no third party as
agent involved in this Lease and each indemnifies the other from liability for
fees, commissions, or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are
held by Lessor or Indenture Trustee and are payable to Lessee shall, unless a
Default or an Event of Default shall have occurred and be continuing, be
invested as provided below until paid to Lessee or applied by Lessor or
Indenture Trustee to the extent provided herein. Until paid to Lessee or applied
as provided herein or in the Indenture such monies shall be invested by Lessor
or Indenture Trustee from time to time at the expense of Lessee in Specified
Investments, as directed by Lessee in accordance with the provisions of Section
3.07 of the Indenture if the Lien of the Indenture shall not have been
discharged and thereafter as provided below. There shall be promptly (but not
more
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frequently than monthly) remitted to Lessee any gain (including interest
received) realized as the result of any such investment (net of any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment) unless a Default or an Event of Default shall have occurred and
be continuing. Lessee will promptly pay to Lessor or Indenture Trustee, as the
case may be, and hold Lessor or Indenture Trustee harmless from, on demand, the
amount of any loss realized as the result of any such investment (together with
any Taxes, fees, commission and other reasonable expenses, if any, incurred in
connection with such investment).
(i) Entire Agreement; Amendment. This Lease
(including the Exhibits hereto), any related letter agreements and the other
Operative Documents, the Financing Documents and the Purchase Documents
(including the Exhibits thereto) and all closing documents delivered in
connection with any of the foregoing embody the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof. This Lease may be changed, waived, discharged, amended, revised or
terminated only by an instrument in writing signed by the party against which
enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18,
Lessee agrees within fifteen (15) days after demand to pay or reimburse Lessor
for all reasonable out-of-pocket costs and expenses (including, without
limitation, legal and other professional fees and expenses) incurred or payable
by Lessor in connection with or related to (i) the fees and expenses of Owner
Trustee and Indenture Trustee, (ii) to the extent requested by or relating to
acts or omissions of Lessee or as otherwise provided herein or to give effect to
the provisions hereof, or the other Operative Documents, the Financing Documents
or the Purchase Documents, any future amendments, supplements or other
modifications hereof or thereof, or waivers or consents hereunder or thereunder,
and (iii) any Default or Event of Default or the enforcement of any of Lessor's
rights, remedies or privileges hereunder or at law or in equity, but not
Lessor's legal fees and expenses in connection with the negotiation and
execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event
Section 1110 of Title 11 of the United States Code is amended, or if it is
repealed and another statute is enacted in lieu thereof, Lessor and Lessee agree
to amend this Lease and take such other action not inconsistent with this Lease
as Lessor reasonably deems necessary so as to afford to Lessor the rights and
benefits as such amended or
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substituted statute confers upon owners and lessors of aircraft similarly
situated to Lessor.
(l) U.S. Registration Number. At Lessee's request,
Lessor shall use its best efforts to have the Aircraft registered under the
United States Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee
and Lessor hereby irrevocably agrees that any suit, action or proceeding related
to this Lease or any of the other Operative Documents to which it is a party or
the subject matter hereof or thereof or any of the transactions contemplated
hereby and thereby may be instituted in, and submits for itself and its property
to the non-exclusive jurisdiction of, (i) the courts of the State of New York in
New York County and (ii) the United States District Court for the Southern
District of New York. Each of Lessee and Lessor represents and warrants that it
is not currently entitled to, and agrees that to the extent that Lessee or
Lessor hereinafter may acquire, any immunity (including, without limitation,
sovereign immunity) from jurisdiction of any court or from any legal process, it
hereby, to the extent permitted by Law, waives such immunity, and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction
of the above-named courts that it is immune from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper, or that this Lease or any
of the other Operative Documents or the subject matter hereof or thereof or any
of the transactions contemplated hereby and thereby may not be enforced in or by
such courts. Each of Lessee and Lessor hereby generally consents to service of
process by registered mail, return receipt requested, addressed to it at its
address set forth in Exhibit C, or at such other office of Lessee or Lessor as
from time to time may be designated by Lessee or Lessor (as applicable) in
writing to Lessee or Lessor (as applicable), Owner Participant and Indenture
Trustee. Each of Lessee and Lessor hereby agrees that its submission to
jurisdiction and its designation of service of process by mail set forth above
is made for the express benefit of Lessor, Lessee, Owner Participant, Indenture
Trustee, each Note Holder and their successors and assigns (as applicable).
Final (after all appeals) judgment (the enforcement of which has not been
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stayed) against either Lessee or Lessor obtained in any suit originally brought
in the court of the State of New York in New York County or in the United States
District of New York shall be conclusive, and, to the extent permitted by
applicable Law, may be enforced in other jurisdictions by suit on the judgment,
a certified or true copy of which shall be conclusive evidence of the fact and
of the amount of any indebtedness or liability of Lessee therein described;
provided that the plaintiff at its option may bring suit, or institute other
judicial proceedings, against Lessee or Lessor, as the case may be, or any of
their assets in the courts of any country or place where such Person or such
assets may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without
limitation, contract claims, tort claims, breach of duty claims and other common
law and statutory claims. Lessor and Lessee represent and warrant that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE
DOCUMENTS. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto
agree that all statements, representations, covenants and agreements made by
Lessor (when made in its capacity as such and not in its individual capacity)
contained in this Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies that can be exercised and enforced against the
Trust Estate. Therefore, no recourse shall be had with respect to anything
contained in this Agreement (except for any express provisions that Lessor is
responsible for in its individual capacity), against Lessor in its individual
capacity or against any institution or person that becomes a successor trustee
or co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling Person or Persons of any of them; provided that (i) this
Section 21(n) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable and (ii) nothing contained in
this
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Section 21(n) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Agreement or such other agreements of rights
and remedies against the Trust Estate. The foregoing provisions of this Section
21(n) shall survive the termination of this Agreement and the other Operative
Documents.
(o) Successor Trustee. Lessee agrees that in the
case of the appointment of any successor Owner Trustee pursuant to the terms of
the Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the necessity of any consent or approval by
Lessee (subject to Section 14(d) of the Refunding Agreement) and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto
agree that the Original Head Lease, as amended and restated by this Amended and
Restated Aircraft Lease Agreement [GPA 1990 AWA-16] (and as otherwise extended,
amended, modified, renewed or supplemented), shall be governed by Article 2-A of
the Uniform Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each
pursuant to due authority, have each caused this Lease to be executed by its
duly authorized officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as otherwise
expressly provided herein, but
solely as Owner Trustee
By:__________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:___________________________
Title:
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TABLE OF CONTENTS
Page
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Section 1. Definitions..................................................... 1
Section 2. Agreement to Lease.............................................. 21
Section 3. Delivery and Acceptance; Term................................... 22
(a) Time of Delivery...................................... 22
(b) ...................................................... 22
[Intentionally Left Blank]
(c) Acceptance of Aircraft................................ 22
(d) Term of Lease......................................... 22
Section 4. Rent............................................................ 22
(a) Rent.................................................. 22
(b) Minimum Payments...................................... 23
(c) Date, Place and Method of Payment..................... 23
(d) Prohibition Against Setoff,
Counterclaim, Etc..................................... 24
Section 5. Representations, Warranties and Covenants....................... 26
(a) Warranties and Disclaimer of Warranties............... 26
(b) Representations and Warranties of
Lessor................................................ 27
(c) No Amendments to Financing Documents.................. 27
(d) Suppliers' Warranties................................. 27
Section 6. Possession and Use.............................................. 28
(a) Possession............................................ 28
(b) Reciprocal Recognition of Rights...................... 35
(c) Lawful Insured Operations............................. 36
(d) Maintenance........................................... 37
(e) Registration and Insignia............................. 38
Section 7. Inspection...................................................... 39
Section 8. Additional Covenants of Lessee.................................. 40
(a) Financial Information................................. 40
(b) Maintenance of Corporate Existence.................... 42
(c) Maintenance of Status................................. 42
(d) Payment of Taxes...................................... 42
(e) Consolidation, Merger, Etc............................ 42
(f) Information........................................... 43
(g) Place of Business..................................... 44
(h) Certain Limitations on Use............................ 44
(i) Section 1110.......................................... 45
(j) Permits and Licenses.................................. 45
(k) Security Opinion; Annual Certificate.................. 45
(l) Letter of Credit...................................... 46
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Page
Section 9. Replacement of Parts; Alterations,
Modifications and Additions........................... 49
(a) Replacement of Parts.................................. 49
(b) Alterations, Modifications and
Additions............................................. 50
(c) Pooling............................................... 52
Section 10. General Tax Indemnity.......................................... 53
(a) Indemnity............................................. 53
(b) Exclusions............................................ 55
(c) Covered Income Tax.................................... 57
(d) Reports and Returns................................... 59
(e) After-Tax Basis....................................... 59
(f) Tax Benefit........................................... 60
(g) Payment............................................... 60
(h) Contest............................................... 61
(i) Refund................................................ 63
(j) Diligence............................................. 63
(k) Affiliated Group...................................... 63
(l) Verification.......................................... 64
(m) Survival.............................................. 64
Section 11. Loss, Damage and Requisition................................... 64
(a) Event of Loss with Respect to the
Airframe.............................................. 64
(b) Event of Loss with Respect to an Engine............... 67
(c) Conveyance of Replacement Airframe.................... 68
(d) Application of Proceeds and Payments.................. 70
(e) Requisition for Use by Government with
Respect to the Aircraft............................... 71
(f) Application in Default................................ 72
Section 12. Insurance...................................................... 72
(a) Public Liability and Property Damage
Insurance. ........................................... 72
(b) Insurance Against Loss or Damage...................... 74
(c) Application of Insurance Proceeds for
an Event of Loss...................................... 77
(d) Application of Insurance Proceeds for
Other than an Event of Loss........................... 77
(e) Application in Default................................ 78
(f) Certificates.......................................... 78
(g) Reinsurance........................................... 79
(h) Storage............................................... 80
(i) Amounts Held.......................................... 80
(j) After the Term........................................ 80
(k) Governmental Indemnity................................ 80
Section 13. General Indemnity.............................................. 81
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Page
Section 14. Liens.......................................................... 86
Section 15. Protection of Title and Further
Assurances............................................ 87
Section 16. Return of Aircraft and Records................................. 89
(a) Return................................................ 89
(b) Status Upon Return.................................... 90
(c) Engines............................................... 91
(d) Records and Documents................................. 91
(e) Condition of Aircraft................................. 92
(f) Final Inspection...................................... 93
(g) Aircraft Records and Documents........................ 94
(h) Corrections and Subsequent Corrections................ 94
(i) Functional Flight Check............................... 94
(j) Export Certificate of Airworthiness................... 95
(k) Service Bulletin and Modification Kits................ 95
(l) Storage Upon Return................................... 95
(m) Resale/Release Cooperation............................ 96
Section 17. Events of Default.............................................. 96
Section 18. Remedies....................................................... 98
Section 19. Security for Obligations.............................. 104
Section 20. Renewal Option................................................. 106
Section 21. Miscellaneous.................................................. 107
(a) Severability, Amendment, and
Construction.......................................... 107
(b) GOVERNING LAW......................................... 107
(c) Notices............................................... 108
(d) Lessor's Right to Perform for Lessee.................. 108
(e) Counterparts.......................................... 108
(f) Quiet Enjoyment....................................... 108
(g) Brokers............................................... 109
(h) Investment of Funds................................... 109
(i) Entire Agreement; Amendment........................... 110
(j) Expenses.............................................. 110
(k) Federal Bankruptcy Code............................... 110
(l) U.S. Registration Number.............................. 110
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non
Conveniens; Waiver of Jury Trial...................... 110
(n) Limitation on Recourse................................ 112
(o) Successor Trustee..................................... 113
(p) Article 2-A of the UCC................................ 113
iii
<PAGE> 120
ANNEXES
Annex I - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Aircraft Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 3
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Assignment of Permitted Sublessee
iv
<PAGE> 1
EXHIBIT 4.30
AMENDED AND RESTATED ENGINE LEASE AGREEMENT
THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT dated as of March
15, 1991 and amended and restated as of November 26, 1996 is entered into
between WILMINGTON TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as Owner Trustee under a Trust
Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as amended, and with its
principal place of business at Rodney Square North, Wilmington, Delaware 19890
(together with its successors and permitted assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors
and permitted assigns, "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective meanings for
all purposes of this Lease (including the Recitals) and shall be equally
applicable to both the singular and the plural forms of the terms defined
herein:
As used herein, the terms "Assigned Sublease", "Equipment Notes",
"Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through
Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate",
"Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company", and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as
<PAGE> 2
defined in the Pass Through Trust Agreement); and the term "Lease Amendment No.
1" shall have the meaning specified in the Refunding Agreement.
"Affiliate" shall mean, with respect to any specified Person, any
other Person which, directly or indirectly, owns or controls, is controlled by
or is under common control with such specified Person. Control will be deemed to
exist based on (i) ownership of 25% or more of the voting securities of a Person
or (ii) the power to direct or elect or cause the direction or election of the
management and policies of a Person whether by contract or otherwise.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Engine or a Part. Except as provided in Section 18, "fair market sales value" or
"fair market rental value" shall mean the value that would be obtained in an
arm's-length transaction between an informed and willing seller or lessor, as
the case may be, and an informed and willing buyer or lessee, as the case may
be, both under no compulsion to sell and purchase or to lease (and other than a
lessee in possession or a used equipment scrap dealer), as the case may be, as
such value is determined by an appraisal which assumes: (i) that the Engine or
such Part is unencumbered by this Lease (or any sublease) or any of the other
Operative Documents or any of the Financing Documents and the terms thereof;
(ii) that the Engine or such Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that the Engine or such Part meets the return conditions
specified in Section 16 and Exhibit E (whether or not in fact meeting such
conditions) and (iv) that Lessee has removed the Removable Parts entitled to be
removed under Section 9(b) (it being agreed that no such removal is permitted in
connection with an appraisal pursuant to Section 18) and replaced any part which
was removed from the Engine as a result of such Removable Part being installed;
provided, however, that costs of removal from the location of current use and
costs of sale shall not be a consideration in determining such value except in
connection with any determination of "fair market sales value" or "fair market
rental value" pursuant to Section 18; and provided, further, that any
determination of "fair market sales value" or "fair market rental value"
pursuant to Section 18 shall be on an "as is, where is" basis in its actual
condition and location subject to this Lease and any sublease and any and all
Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee
shall, except for any appraisal pursuant to Section 18 in which case only Lessor
shall select such appraiser (which
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<PAGE> 3
appraiser does not have to be acceptable to Lessee), select an independent
nationally-recognized aircraft appraiser, mutually acceptable to each of them,
who shall make the determination as to the "fair market sales value" or "fair
market rental value" of the Engine or such Part for which such appraisal is to
be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable
appraiser within ten (10) days, then each of Lessor and Lessee shall select an
appraiser and such determination shall be made by such appraisers (if either
party shall fail to appoint an appraiser within ten (10) days after notice from
the other party of the selection of its appraiser, then the appraisal made by
the other party's appraiser shall be determinative). If the two appraisers
chosen pursuant to the preceding sentence fail to agree upon a determination of
the "fair market sales value" or "fair market rental value" of the Engine or
such Part within twenty (20) days after their appointment, then such appraisers
shall mutually choose a third appraiser within ten (10) days thereafter,
provided that if such appraisers fail to mutually choose a third appraiser
within said 10-day period, such appointment shall be made by the American
Arbitration Association (or any successor) in New York, New York, and the three
appraisers so chosen shall each make such determination. The appraisal
determined by each of the three appraisers chosen pursuant to the preceding
sentence shall be averaged and the appraisal furthest from the average of the
three appraisals shall be disregarded. The appraisal determined by each of the
two remaining appraisers shall be averaged and such average shall be the
appraised "fair market sales value" or "fair market rental value" of the Engine
or such Part. Lessee shall bear all the fees and expenses of the Appraisal
Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"Basic Rent" for the Engine shall mean the Basic Rent specified in
Exhibit C and payable throughout the Basic Term for the Engine pursuant to
Section 4(a)(i).
"Basic Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If
a Basic Rent Payment Date shall fall on a day which is not a Business Day, any
payment
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<PAGE> 4
due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease Supplement No.
2.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banking institutions in New York, New York or Hartford,
Connecticut are authorized or required by Law to be closed.
"Certificated Air Carrier" shall mean any corporation (except the
United States Government) domiciled in the United States of America and holding
a Certificate of Convenience and Necessity issued under Section 41102(a) of the
Federal Aviation Act by the Department of Transportation or any predecessor or
successor agency thereto, or, in the event such Certificates shall no longer be
issued, any corporation (except the United States Government) domiciled in the
United States of America and legally engaged in the business of transporting for
hire passengers or cargo by air predominantly to, from or between points within
the United States of America, and, in either event, operating commercial jet
aircraft, which also is a citizen of the United States (as defined in Section
40102 of the Federal Aviation Act) holding an air carrier operating certificate
issued by the Secretary of Transportation pursuant to chapter 447 of the Federal
Aviation Act for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air
Fleet Program administered by the United States Government and authorized under
10 U.S.C. Section 9511, et seq., as amended, or any substantially similar or
substitute program of the United States Government.
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether or not
incorporated, which is under common control with Lessee within the meaning of
Section 414(b) or (c) of the Code.
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<PAGE> 5
"Default" shall mean an event or condition which would constitute an
Event of Default with the lapse of time or the giving of notice or both.
"Delivery Date" shall mean March 27, 1991 being the date the Engine
was delivered to and accepted by the Original Head Lessee as Lessee hereunder
for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United
States of America.
"Engine" shall mean (i) the IAE Model V2500-A1 engine listed by
manufacturer's serial number in Lease Supplement No. 1, (ii) Parts or components
thereof, (iii) ancillary equipment or devices furnished therewith under this
Lease (including any separate equipment described on one or more Lease
Supplements hereto), (iv) the Engine Records and Documents and all other manuals
and records with respect to such Engine, and (v) all substitutions, replacements
and renewals of any and all thereof, including but not limited to, any
replacement engine which may from time to time be substituted, pursuant to
Section 6(a) or 11(a), for the Engine leased hereunder; together in each case
with any and all Parts incorporated or installed in or attached thereto or any
and all Parts removed therefrom so long as title thereto after removal from such
Engine shall remain vested in Lessor in accordance with the terms of Section 9
hereof. Except as otherwise set forth herein, at such time as a replacement
engine shall be so substituted and leased hereunder and the replacement Engine
shall have been subjected to the Lien of the Indenture (if the Lien of the
Indenture has not been discharged), such replaced Engine shall cease to be an
Engine hereunder.
"Engine Records and Documents" shall mean the items identified in
Exhibit B hereto, all of which shall be maintained in the English language.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one or
more clauses in Section 17.
"Event of Loss" shall mean any of the following events with respect
to the Engine: (a) loss of such property or the use thereof due to theft or
disappearance for a period in excess of sixty (60) consecutive days, but in no
event later than the last day of the Term;
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<PAGE> 6
(b) destruction or damage of such property that renders repair uneconomic or
such property permanently unfit for normal use by Lessee (or, if a Permitted
Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c)
any loss or disappearance of or damage to or destruction of such property which
results in an insurance settlement with respect to such property on the basis of
an actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any law, rule, regulation,
order or other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of the Engine in the normal
course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted
Sublessee's) business of air transportation of passengers shall have been
prohibited for a period of six (6) consecutive months, unless Lessee (or the
Permitted Sublessee), prior to the expiration of such six-month period, shall
have undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit such normal use of such item of equipment by
Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall
have been so prohibited by any such Governmental Entity for a period of twelve
(12) consecutive months or is continuing beyond the last day of the Term; or (h)
as otherwise provided herein.
"Expiration Date" shall mean the date specified in Lease Supplement
No. 2, on which date the Basic Term of this Lease shall expire.
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<PAGE> 7
"FAA" shall mean the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Federal Aviation Act" shall mean the sections of title 49 of the
United States Code relating to aviation, as amended and in effect from time to
time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal year-end audited
consolidated balance sheet and statements of income and cash flow for the period
then ending, copies of which for the fiscal year ending December 31, 1995, have
been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each Lease
Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust Supplement,
the Indenture, each Indenture Supplement, the Refunding Agreement, the Equipment
Notes issued under the Indenture, the Intercreditor Agreement, each Liquidity
Facility, each Pass Through Trust Agreement and each supplement thereto and any
certificate delivered or entered into in accordance with the foregoing, as
amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in Exhibit
F-1, as amended, supplemented or otherwise modified from time to time, whose
principal place of business and legal domicile at the time of entering into the
applicable sublease is located in a country listed on Exhibit F-2, as amended,
supplemented or otherwise modified from time to time, and not prohibited by the
terms of the insurance then in effect, with which the United States has
diplomatic or, such as in the case of Taiwan, similar relations, in each case
which is obligated under the applicable sublease to perform all maintenance
required by applicable foreign governmental standards made mandatory to the
Engine by such jurisdiction and, to the extent not inconsistent therewith, all
FAA-airworthiness directives and other requirements made mandatory to the Engine
by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
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<PAGE> 8
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Engine or its
operations.
"GPA Aircraft" shall mean any aircraft which is the subject of any
of the Other Leases.
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and as
trustee under the Trust Agreement), the Trust Estate, Owner Participant, the
Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture) and each Pass Through Trust, each Pass Through
Trustee (in its individual capacity and as trustee under the Pass Through
Trusts), the Subordination Agent and each Liquidity Provider, their respective
successors and permitted assigns and (and, in the case of a permitted assign of
Owner Participant that is a partnership, the partners of such partnership), and
any combination thereof and their respective officers, directors, agents,
servants, employees, subsidiaries, Affiliates and shareholders.
"Indenture" shall mean the Amended and Restated Trust Indenture and
Security Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, and amended and
restated as of November 26, 1996, as the same may be further amended,
supplemented or modified from time to time, between Indenture Trustee and
Lessor. The term "Indenture" shall also include the Indenture Supplements
entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company serving as
Indenture Trustee under the Indenture, and its successors and assigns.
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<PAGE> 9
"Interest Rate" shall mean (i) with respect to the portion of any
payment of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder, a per annum rate of
interest equal to the Past Due Rate applicable thereto under and as defined in
the Indenture computed on the basis of a 360-day year and twelve 30-day months
and (ii) with respect to any other amount, a per annum rate of interest equal to
the sum of the rate of interest publicly announced by Citibank, N.A., at its
principal office in New York City, as its prime or similar base rate from time
to time in effect from the date the amount becomes due to the date it is paid in
full, plus 2%, computed on the basis of a year of 365 or 366 days, as the case
may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any Governmental
Entity; (ii) any treaty, pact, compact or other agreement to which any
Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as originally executed and as amended, supplemented or otherwise
modified from time to time, including, without limitation, by one or more Lease
Supplements, as a whole and not to any particular Section or other subdivision,
and any reference to a "Section " or an "Exhibit" shall refer to a Section or
Exhibit of this Lease, as so amended, supplemented or modified, unless expressly
provided to the contrary.
"Lease Identification" shall have the meaning set forth in Section
6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1 and Lease
Supplement No. 2 and each subsequent Lease Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1991
AWA-E1] No. 1 dated March 27, 1991 between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1991
AWA-E1] No. 2, substantially in the
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<PAGE> 10
form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the
Restatement Date for the purpose of confirming the leasing of the Engine
hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Engine or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Engine or the
administration of the Trust Estate or the Trust Indenture Estate pursuant to the
Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or
otherwise, (ii) acts or omissions of Indenture Trustee in its individual
capacity (and not as Indenture Trustee) not contemplated hereunder or under the
other Operative Documents, or acts or omissions of Indenture Trustee in its
individual capacity (and not as Indenture Trustee) which are in violation of any
of the Operative Documents, or (iii) Taxes imposed on or Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
which are excluded from indemnification by Lessee, or (iv) Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
arising out of the voluntary or involuntary transfer by Indenture Trustee in its
individual capacity (and not as Indenture Trustee) of all or any portion of its
interest in the Engine, the Trust Estate, the Trust Indenture Estate or the
Operative Documents (except a Claim resulting from the exercise of remedies
under and in accordance with the Indenture or for a transfer provided for in the
Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals hereto.
"Lessor" shall have the meaning set forth in the Recitals hereto.
"Lessor's Lien" shall mean any Lien or disposition of title
affecting the Engine or any Part arising as a result of (i) any claim against
Lessor, Owner Participant, Trust Company or any of their Affiliates not related
to the transactions contemplated by this Lease or the other Operative Documents,
the Financing Documents or the Purchase Documents; (ii) any affirmative act of
Lessor, Owner Participant, Trust Company or any of their Affiliates not
expressly contemplated by this Lease or the other Operative Documents, the
Financing Documents or the Purchase Documents or not permitted without consent
(which consent has not been
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<PAGE> 11
granted) by any party hereto or thereto or that is in violation of any term of
this Lease or the other Operative Documents, the Financing Documents or the
Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company,
Lessor or Owner Participant or any of their Affiliates or the consolidated group
of taxpayers of which any of them is a member which are not to be indemnified
against by Lessee under the Operative Documents, the Purchase Documents or the
Financing Documents or by Original Head Lessee under the Original Head Lease Tax
Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company,
Owner Participant or Lessor or any of their Affiliates arising out of the
transfer of all or any part of their respective interest in the Engine, the
Trust Estate, the Operative Documents or the Financing Documents other than any
transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 (except
Liens resulting from a transfer not permitted by such Section ) or 20 of this
Lease or pursuant to Section 10 of the Refunding Agreement; provided, however,
that there shall be excluded from this definition and Lessor shall not be
required to remove any Lien which would otherwise constitute a Lessor's Lien, if
it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Engine or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest, lease in the
nature of a security interest, statutory right in rem, or claim of any kind,
including any thereof arising under any conditional sale agreement, equipment
trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the Indenture
on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West Maintenance
Program approved by the FAA for America West Airbus model A320-231 aircraft
which is applicable to IAE AG V2500 Engines in effect on the date hereof or as
modified with the approval of the FAA without affecting, or any other FAA
approved maintenance program which does not affect, the return condition
standards set forth in Section 16 and Exhibit E or (ii) if the Engine is subject
to a Permitted Sublease to a Foreign Air Carrier any other FAA approved
maintenance program for the Engine which is approved by the aviation authority
of the country of
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<PAGE> 12
registry and complies with the requirements applicable to maintenance of the
Engine contained in the definition of Foreign Air Carrier. The Maintenance
Program shall encompass scheduled maintenance, condition monitored maintenance,
and on-condition maintenance of the Engine, including, but not limited to,
servicing, testing, preventive maintenance, repairs, structural inspections,
structure life improvements, system checks, overhauls, approved modifications,
service bulletins, engineering orders, airworthiness directives, and corrosion
control inspections and treatments. All modifications and supplements to the
Maintenance Program shall be provided to Lessor upon its reasonable request and
Lessor shall be given reasonable access to the Maintenance Program upon its
request.
"Manufacturer" shall mean IAE in its capacity as manufacturer of the
Engine, together with any subcontractor or supplier thereof.
"Maximum Foreign Use Percentage" shall have the meaning specified in
Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such Person's
stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease Supplement,
any sublease, the Tax Indemnification Agreement, the Financing Documents, that
certain letter dated as of the Restatement Date and any certificate delivered or
entered into pursuant to the foregoing, as amended, supplemented or otherwise
modified.
"Original Head Lease" shall mean this Engine Lease Agreement [GPA
1991 AWA-E1], with respect to the Aircraft, dated as of March 15, 1991, between
Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect immediately prior to the
Restatement Date, as more particularly described in Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall mean the
Head Lease Tax Indemnification
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<PAGE> 13
Agreement [GPA 1991 AWA-E1], dated as of March 15, 1991, and amended and
restated as of the Restatement Date between the Original Head Lessee and Owner
Participant, as amended, supplemented or otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA I, Inc., a
Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as defined in
the Original Head Lease) as in effect immediately prior to the Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft Lease
Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA
1990 AWA-13] amended and restated as of the Restatement Date between Wilmington
Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as
Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14]
amended and restated as of the Restatement Date between Wilmington Trust Company
as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended
and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as
of the Restatement Date between Wilmington Trust Company as Owner Trustee,
Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated
Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the
Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and
America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E2] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor and America West
Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement
[GPA 1991 AWA-E3] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee, each as amended, supplemented or otherwise modified from time to
time.
"Other Letters of Credit" shall mean any and all letters of credit
pursuant to Section 8(l) of the Other Leases.
"Owner Participant" shall mean _____________ ___________________, a
Delaware corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
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<PAGE> 14
"Owner Trustee" shall mean Wilmington Trust Company, as Owner
Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Participation Agreement" shall mean the Participation Agreement
[GPA 1991 AWA-E1], dated as of March 15, 1991, among Original Head Lessee,
Parent, Owner Participant, Owner Trustee, Indenture Trustee and the "Lender"
named therein, as amended by the Letter Agreement dated as of July 29, 1993, as
the same may be further amended, supplemented or otherwise modified from time to
time and as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
which may now or from time to time be incorporated or installed in or attached
to or were provided by the Manufacturer with the Engine or so long as title
thereto shall remain vested in Lessor in accordance with the terms of Section 9
hereof after removal from such Engine. Except as otherwise set forth herein, at
such time as a replacement part shall be substituted for a Part in accordance
with Section 9 hereof, the Part so replaced shall cease to be a Part hereunder.
"Payment Location" shall have the meaning set forth in Exhibit C, as
the same may be changed from time to time by Lessor as provided in Section 4(c).
"Permitted Lien" shall mean any Lien referred to in clauses (i)
through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in Section
6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier or,
after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United
States Government or an agency or instrumentality thereof which bears the full
faith and credit of the United States of America or (c) any other Person
approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person, corporation,
partnership, firm, joint stock company,
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joint venture, trust, estate, unincorporated organization, association,
Governmental Entity, or organization or association of which any of the above is
a member or a participant.
"Purchase Agreement" shall mean the Engine Sale Agreement dated as
of September 28, 1990, among IAE and Original Head Lessee, as the same may be
amended, supplemented or otherwise modified to the extent permitted by the terms
thereof from time to time.
"Purchase Documents" shall mean the Purchase Agreement and any other
agreement, document or certificate delivered or entered into pursuant to the
foregoing, as amended, supplemented or otherwise modified.
"Removable Part" shall have the meaning set forth in Section 9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section 20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
If a Renewal Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Renewal Rent Payment Date shall be made on the next
succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20
following the end of the Basic Term if Lessee shall have exercised its renewal
option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may be,
and Supplemental Rent, collectively.
"Replacement Engine" shall have the meanings specified in accordance
with its description in Section 11.
"Replacement Period" shall have the meaning specified in Section 11.
"Responsible Officer" shall mean, with respect to Lessee, any of the
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or
Controller.
"Restricted Use Period" shall have the meaning specified in Exhibit
C.
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<PAGE> 16
"Return Occasion" shall mean the event that occurs when possession
of the Engine is to be returned from Lessee to Lessor at the end of the Term of
this Lease or upon Lessor taking possession pursuant to Section 18 or for any
other reason.
"Shipping Stand" shall mean the cradle designed to hold an engine
which has a suitable shock mounting system to allow the engine to be transported
by truck or other vehicle without damage, listed by part number and
manufacturer's serial number in Lease Supplement No. 1.
"Specified Investments" shall mean (i) direct obligations of the
United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an entity
referred to in clause (iii) above or another financial institution having a net
worth of at least $750,000,000 and having a rating of "B" or better from the
Thompson BankWatch, Inc. is obligated to repurchase any such obligation not
later than ninety (90) days after the purchase of any such obligation; and (v)
money market funds which invest solely in obligations described in clause (i);
provided that if all of the above investments are unavailable, the entire
amounts to be invested may be used to purchase Federal funds from an entity
described in clause (iii) above; and provided further that no investment shall
be eligible as a "Specified Investment" unless the final maturity or date of
return of such investment is on or before the date which is ninety (90) days
from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date during
the Basic Term the amount set forth on Exhibit A hereto and, thereafter, the
amount described in Section 20(ii) (it being understood and agreed that the
amounts set forth in Exhibit A take into account fully the amount and
application of each installment of Basic Rent or Renewal Rent on each Stipulated
Loss Value Date (other than
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<PAGE> 17
a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent
Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is
to be made in respect thereof except as expressly provided herein on a Basic
Rent Payment Date or a Renewal Rent Payment Date). In the event that it is
necessary to determine a separate Stipulated Loss Value for the Engine, such
Stipulated Loss Value shall be based on the ratio that the original cost to
Lessor of the Engine bears to Lessor's Cost (as set forth in the Original Head
Lease) for the Engine.
"Stipulated Loss Value Date" shall mean each monthly date listed, or
with respect to any Renewal Term determined as set forth, on Exhibit A hereto.
"Supplemental Rent" shall mean any and all amounts, liabilities and
obligations other than Basic Rent and Renewal Rent which Lessee assumes or
agrees to pay to Lessor or any other Indemnitee hereunder or under any other
Operative Document, including, without limitation, (i) any payment of Stipulated
Loss Value and any payment provided for in Section 11 or 18; (ii) any payment of
indemnity required by Section 10 or 13 hereof; (iii) any payment of an amount
equal to average daily Basic Rent or Renewal Rent in connection with an
extension of the Term of this Lease as a result of (a) an incipient Event of
Loss and the operation of Section 11 hereof or (b) the need to correct any
failure of the Engine to satisfy the requirements of Section 16 and Exhibit E
hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due
to the Owner Trustee in respect of fees or expenses as provided in Section 21(j)
hereof; (vi) an amount equal to any payment due to the Indenture Trustee in
respect of fees or expenses as provided in the Indenture and/or Section 21(j)
hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee
in respect of fees or expenses pursuant to the Pass Through Trust Agreement;
(viii) the Pro Rata Share of any payment due to the Subordination Agent in
respect of fees, compensation, costs or expenses pursuant to the Intercreditor
Agreement; (ix) an amount equal to the amount specified in clause (b) of the
fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent
permitted by applicable Law, interest at the Interest Rate calculated: (1) on
any part of any installment of Basic Rent or Renewal Rent, or average daily
Basic Rent referred to in clause (iii) of this definition of "Supplemental
Rent", not paid on the due date thereof for the period for which the same shall
be overdue and (2) on any Supplemental Rent not paid when due hereunder from and
including the due date until the same shall be paid. As used herein, "Pro Rata
Share" means as of any date of determination a fraction the numerator of which
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is the aggregate Principal Amount then outstanding of the Equipment Notes issued
under the Indenture and the denominator of which is the aggregate principal
balance then outstanding of all "equipment notes" issued under the Indentures
(as defined in the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and Restated
Sublease Tax Indemnification Agreement [GPA 1990 AWA-E1], dated as of December
12, 1990, and as amended and restated as of November 26, 1996, between Original
Head Lessee and Lessee, as the same may be amended, supplemented or otherwise
modified from time to time.
"Taxes" shall mean any and all fees (including, without limitation,
license and registration fees), taxes (including, without limitation, sales,
personal property (tangible and intangible), transfer, fuel, leasing, use,
occupational, value added, excess profits, excise, gross receipts, franchise,
stamp, and income taxes), levies, imposts, withholdings, assessments, or other
taxes, duties or charges of any nature whatsoever, together with any penalties,
fines, additions to tax charges or interest thereon or computed with reference
thereto.
"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in Lease
Supplement No. 2 and the Renewal Term, if Lessee extends the Term in accordance
with Section 20, in either case, as extended or deemed extended as a result of
the occurrence of an event described in clause (iii) to the definition of
"Supplemental Rent" in this Lease, for which the Engine is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1991 AWA-E1]
dated as of March 15, 1991 as amended by Trust Supplement No. 1, and as further
amended by Trust Supplement No. 2, between Lessor, in its individual capacity,
and Owner Participant, as beneficiary, as the same may be amended, supplemented
or otherwise modified from time to time. The term "Trust Agreement" shall also
include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
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"Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA
1991 AWA-E1] No. 1 dated the Delivery Date between Lessor and Owner Participant
for the purpose of bringing the Aircraft and the Original Head Lease into the
Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement [GPA
1991 AWA-E1] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government of the
United States of America and any board, commission, department, division, organ,
instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees to
furnish the Engine to a third party pursuant to which such Engine (i) shall be
operated solely by regular employees of Lessee possessing all current
certificates and licenses required under the Federal Aviation Act (it is
understood that cabin attendants need not be regular employees of Lessee) and
Lessee otherwise maintains operational control and possession thereof, and (ii)
shall be maintained by Lessee in accordance with its normal maintenance
practices and this Lease to which the Engine is subject, and otherwise the
insurance required hereunder shall be maintained and the Engine shall be used
and operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease the
Engine to Lessee, and Lessee hereby agrees to lease the Engine from Lessor, on
the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Engine was delivered to Lessee, and Lessee
accepted delivery of the Engine, on March 27, 1991.
(b) [Intentionally Left Blank.]
(c) Acceptance of Engine. The Engine leased hereunder was delivered
to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER OF
WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF.
Lessee hereby agrees that it has accepted the Engine for all
purposes of this Lease and Lessee's
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<PAGE> 20
acceptance of the Engine was conclusive evidence that, as between Lessor and
Lessee, the Engine was in all respects satisfactory to Lessee and was in
compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall commence on
the Delivery Date and shall continue until the Expiration Date; provided,
however, that the Term of this Lease may be earlier terminated pursuant to the
provisions hereof.
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the following as Rent
hereunder:
(i) Basic Rent. The Basic Rent, as set forth in Exhibit C
throughout the Basic Term hereof, in consecutive installments, in arrears as set
forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent
Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all Supplemental Rent, which
shall be due and payable ten (10) Business Days after demand unless otherwise
specifically provided. In the event of any failure on the part of Lessee to pay
any Supplemental Rent when due, Lessor shall have all rights, powers and
remedies provided for herein or by law or equity or otherwise in the case of
nonpayment of Basic or Renewal Rent. Lessee's obligation to pay Supplemental
Rent which is due and owing pursuant to the terms hereof shall survive the
expiration or termination of Lessee's obligation to pay Basic Rent or Renewal
Rent hereunder.
(b) Minimum Payments. Notwithstanding any provision in this Lease or
in any other Operative Document to the contrary, under all circumstances and in
any event, (i) the Stipulated Loss Value, together with the payment of
Supplemental Rent and all other Rent then due hereunder, as of any time and as
of the date of any payment thereof shall (both before and after giving effect to
any reductions therefrom) be in an amount at least sufficient to pay in full as
of such time or date the aggregate unpaid principal amount of the Equipment
Notes then outstanding and all accrued and unpaid interest (assuming interest
has been timely paid) thereon and (ii) Basic Rent payable on any Basic Rent
Payment Date shall at least equal the aggregate amount of principal and interest
due and payable on the Equipment Notes on such Basic Rent Payment Date. It is
agreed, however, that no installment of Basic Rent or Stipulated Loss Value
shall be increased or adjusted by
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reason of (A) any attachment or diversion of Rent on account of any Lessor's
Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes
or the other Financing Documents made without the prior written consent of
Lessee or (C) the acceleration of any Equipment Note due to the occurrence of
any "Indenture Event of Default" (as defined in the Indenture) which does not
constitute an Event of Default hereunder. It is further agreed that nothing in
this Lease or any other Operative Document shall be deemed to constitute a
guaranty of the value, utility or useful life of the Aircraft or a guaranty in
respect of interest, principal or any other amounts payable in respect of or
under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on which a
payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in the City of New York or Hartford, Connecticut as Indenture
Trustee may direct by thirty (30) days prior written notice to Lessee, except
for all Excepted Payments. All Excepted Payments, and, upon discharge of the
Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be
paid in such immediately available funds no later than 12:00 p.m. (noon), New
York City time, on the date payable hereunder, to Lessor or to Owner
Participant, as appropriate, in accordance with the payment instructions set
forth in Exhibit C or at such other address as Lessor may direct by thirty (30)
days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a
net lease. Lessee's obligations to pay all Rent and to perform all other
obligations hereunder are absolute and unconditional and shall not be affected
or reduced by any circumstances, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense, or other right which Lessee may have against
Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Engine, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
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limitation, any breach by Lessor of its representations, warranties or covenants
contained herein or in the other Operative Documents; (ii) any defect in the
title, airworthiness, eligibility for registration under the Federal Aviation
Act, condition, design, operation, or fitness for use of, or any damage to or
loss or destruction of, the Engine (subject to the provisions of Section
11(a)(ii) hereof), any interruption or cessation in the use of or possession
thereof by or availability to Lessee for any reason whatsoever, whether arising
out of or related to an act or omission of Lessee, Lessor, Original Head Lessee,
Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any
Person providing services with respect to the Engine or any other Person; (iii)
any Liens with respect to the Engine; (iv) the invalidity or unenforceability or
lack of due authorization or other infirmity of this Lease or any sublease or
any absence of right, power or authority of Lessor, Original Head Lessee, Lessee
or Indenture Trustee to enter into this Lease or the Indenture, as the case may
be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or
against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee
or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening
of any nature whatsoever, whether or not similar to any of the foregoing; it
being the expressed intention of Lessor and Lessee that all Rent payable
hereunder shall be payable in all events, unless the obligation to pay the same
shall be terminated pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement, Lessee
hereby waives, to the extent permitted by applicable Law, any and all rights
which it may now have or which at any time hereafter may be conferred upon it,
by statute or otherwise, to terminate, abate, cancel, quit, reduce, defer,
suspend or surrender this Lease or the Engine or any obligation imposed upon
Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee will not
seek to recover all or any part of any payment of Rent for any reason whatsoever
except manifest error.
If for any reason whatsoever this Lease shall be terminated in whole
or in part by operation of Law, except as specifically provided herein, Lessee
waives all rights (if any) to any diminution in its Rent obligations hereunder
and nonetheless agrees to pay, to Indenture Trustee or
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Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or
Renewal Rent, as the case may be, payment and any Supplemental Rent payment at
the time such payments would have become due and payable in accordance with the
terms hereof had this Lease not been terminated in whole or in part, and so long
as such payments are made and all other terms and conditions hereof are complied
with by Lessee, Lessor and Lessee will deem this Lease to remain in full force
and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall
be liable therefor, on account of any failure of the Original Head Lessee,
Lessor, Indenture Trustee or any other such Person to perform its express
obligations under this Lease and the other Operative Documents, or to enforce
any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties.
THE ENGINE WAS DELIVERED AND IS BEING LEASED BY LESSOR TO
LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE ENGINE
ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF
HAVING LEASED THE ENGINE UNDER THIS LEASE OR BY HAVING ACQUIRED THE ENGINE OR
DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER
OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE,
AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE
OF THE ENGINE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
ENGINE, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE ENGINE, INCLUDING WITHOUT LIMITATION ANY
LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR
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DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS,
OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES
AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION
OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE ENGINE) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE ENGINE OR BY ANY INADEQUACY
THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE ENGINE OR
ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS
OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv)
THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF THE ENGINE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS
SECTION 5(a)(i) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER WITH RESPECT TO THE ENGINE, EXPRESS OR IMPLIED, AND LESSOR
SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES,
INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE
OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT
THAT: (A) Lessor represents and warrants that, (x) on the Delivery Date, Lessor
had, and on the Restatement Date Lessor has, the right to lease the Engine
hereunder and (y) on the Delivery Date the Engine was free of Head Lessor's
Liens and on the Restatement Date the Engine is free of Lessor's Liens and Head
Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume
or suffer to exist any Lessor's Lien on the Engine.
(b) Representations and Warranties of Lessor. Lessor hereby
represents and warrants, as of the Restatement Date that its representations and
warranties set forth in Section 9(b) of the Refunding Agreement were true when
made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor covenants and
agrees that Lessor will not, without the prior written consent of Lessee, amend,
modify, supplement or waive any provision of any Financing Document in such a
way as to materially increase Lessee's obligations hereunder or materially
reduce Lessee's rights hereunder.
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The representations, warranties and covenants of Lessor under
Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and
delivery of this Lease and the delivery of the Engine and the Restatement Date.
(d) Suppliers' Warranties. So long as a Default or an Event of
Default has not occurred and is continuing and provided that the Engine
continues to be maintained, modified and repaired as required hereunder, Lessor
hereby assigns or, if by their terms not assignable, agrees otherwise to make
available to Lessee the right to exercise in Lessee's name such rights as Lessor
may have or may subsequently obtain (but without representation or warranty by
or recourse to Lessor) with respect to any product warranty, service life
policy, trademark, patent or copyright infringement indemnity, or propulsion
system performance guaranty, of the Manufacturer or Manufacturer's subsidiary,
if any, or any subcontractor or vendor with respect thereto under the Purchase
Documents (except those which were given directly to Parent, the Original Head
Lessee or any of their Affiliates and are not directly related to the operator's
use of the Engine), to the extent that the same may be assigned or otherwise
made available to Lessee, and Lessor agrees to exert its reasonable efforts, at
Lessee's expense and upon its request, to enforce such rights as Lessor may have
with respect thereto for the benefit of Lessee; provided, however, that upon and
during the continuance of a Default or an Event of Default, such assignment or
other rights which are otherwise made available to Lessee shall immediately and
automatically without further action be deemed cancelled and, to the extent of
any remaining interest held by Lessee, deemed reassigned to Lessor and all such
rights shall revert to Lessor automatically including all claims thereunder
whether or not perfected and all amounts payable shall be paid to and held by
Lessor. In no event, however, shall Lessee have any right to amend, supplement
or otherwise modify the Purchase Agreement (by change order or otherwise). In
connection with the foregoing, Lessee agrees to be bound by and comply with all
applicable terms, conditions and limitations of the provisions of the Purchase
Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN
THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS
PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY
MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF
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THE ENGINE; provided, that, so long as no Event of Default or Default shall have
occurred and be continuing or would result therefrom and so long as the action
to be taken shall not adversely affect Lessor's title to or other interest in,
or the Lien of the Indenture on, the Engine or this Lease or the insurance
required to be maintained hereunder and Lessee is otherwise in full compliance
with Section 12, and so long as all necessary approvals of the FAA and any other
Governmental Entity having jurisdiction have been obtained, then Lessee, without
the prior written consent of Lessor, may, only to the extent provided below and
subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below:
(1) subject the Engine to a normal interchange,
maintenance, servicing or pooling agreement or similar arrangement with a
Permitted Sublessee, in each case customary in the airline industry of
which Lessee is a part and entered into in the ordinary course of its
business; provided that Lessor has been given an opportunity to review the
interchange, maintenance, servicing, pooling or similar arrangement,
including but not limited to all agreements and other documents relating
thereto and has consented, which consent shall not be unreasonably
withheld, to the placement of the Engine into such interchange,
maintenance, servicing, pooling or similar arrangement and provided,
further that (A) no transfer of the registration of the Engine shall be
effected in connection therewith and (B) (i) no such agreement or
arrangement contemplates, results in or requires the transfer of title to
the Engine, and (ii) if Lessor's title to the Engine shall be divested
under any such agreement or arrangement, such divestiture shall be deemed
to be an Event of Loss with respect to the Engine and not an Event of
Default and Lessee shall comply with Section 11(a) hereof in respect
thereof;
(2) deliver possession of the Engine to the
Manufacturer, or in accordance with the Maintenance Program to an FAA
certified repair station, for testing, service, storage, repair,
maintenance, inspection or overhaul work on the Engine or any part thereof
or for alterations or modifications in or additions to the Engine to the
extent required or permitted by the terms of Section 9 hereof;
(3) transfer possession of the Engine to the United
States of America or any instrumentality or agency thereof pursuant to a
sublease;
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(4) (i) subject the Engine to the Civil Reserve Air
Fleet Program and transfer possession of the Engine to the United States
Government pursuant to the Civil Reserve Air Fleet Program, so long as
Lessee shall promptly notify Lessor upon transferring possession of the
Engine to the United States Government pursuant to the Civil Reserve Air
Fleet Program and provide Lessor with the name and address of the
Contracting Office Representative for the Military Airlift Command of the
United States Air Force to whom notices must be given;
(ii) subject the Engine to (a) a service contract
with the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term, or (b) a
requisition for use by the United States Government not constituting an
Event of Loss;
(5) install the Engine on an airframe owned by Lessee
free and clear of all Liens except (A) Permitted Liens and Liens which
apply only to engines (other than the Engine), appliances, parts,
instruments, appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the airframe as
an entirety) and (B) the rights of participants under normal interchange
agreements which are customary in the airline industry and do not
contemplate, permit, result in or require the transfer of title to the
airframe or the engine installed thereon;
(6) install the Engine on an airframe leased to Lessee
or owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of all Liens
except the rights of the parties to the lease or conditional sale or other
security agreement covering such airframe and except Liens of the type
permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the Lien of any
mortgage which provides that the Engine leased to Lessee hereby shall not
become subject to the Lien thereof or to any rights of any party
thereunder other than Lessee (with respect to Lessee's rights expressly
granted hereunder), notwithstanding the installation of the Engine on any
airframe subject to the Lien of such mortgage, unless and until Lessee
shall become the owner of the Engine and Lessor shall have no further
interest therein, all pursuant to the express terms of this Lease; and (B)
there shall be in effect a written
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agreement of the lessor or secured party of such airframe (which may be
contained in the lease or conditional sale or other security agreement
covering such airframe) substantially similar in effect to the agreement
of Lessor in Section 6(b) below whereby such lessor or secured party
effectively and expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in the Engine
by reason of the Engine being installed on such airframe at any time while
such Engine is subject to this Lease or is owned by Lessor, and a copy of
such agreement shall be provided to Lessor upon written request;
(7) install the Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional sale or
other security agreement under circumstances where neither Section
6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such
installation shall be deemed an Event of Loss with respect to the Engine
and Lessee shall comply with Section 11(a) hereof in respect thereof,
Lessor not intending hereby to waive any right or interest it may have to
or in the Engine under applicable Law until compliance by Lessee with such
Section 11;
(8) enter into a Wet Lease for the aircraft on which the
Engine is installed in the ordinary course of Lessee's business for a
period not extending beyond the Term; provided that if Lessee shall enter
into any Wet Lease for a period of more than six months (including renewal
options) Lessee shall provide to Lessor written notice of such Wet Lease
(such notice to be given at least ten (10) Business Days prior to entering
into such Wet Lease); or
(9) sublease the Engine to any Permitted Sublessee on
the terms and conditions set forth in Section 6(a)(iii) below.
(ii) Certain Limitations on Transfers. With respect to any
transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives
possession by reason of a transfer permitted by Section 6(a) hereof (other
than the transfer of the Engine which is deemed to have been an Event of
Loss) and any Wet Lease shall be expressly subject and
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subordinate to all the terms of this Lease and the Lien of the Indenture
(if it has not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and Lessee
shall remain primarily liable hereunder for the performance of all of the
terms of this Lease to the same extent as if such transfer had not
occurred and no provision of this Lease shall be deemed a waiver of the
Lessor's rights hereunder or under the other Operative Documents nor
discharge or diminish any of Lessee's obligations hereunder or under the
other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the Engine
pursuant to the terms of this Section 6(a) shall be permitted if such Wet
Lease, Permitted Sublease or other relinquishment of possession would
cause the Engine to be "tax-exempt use property" within the meaning of
Section 168(h) of the Code or cease to be "Section 38 property" within the
meaning of Section 48(a) of the Code (as determined after the application
of Section 47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend beyond the
Basic Term or the Renewal Term (if Lessee shall have exercised its option
to renew this Lease in accordance with the terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Engine shall in any way discharge or
diminish any of Lessee's obligations to Lessor or any other Person
hereunder for which obligations Lessee shall remain primarily liable;
(6) The sublessee under any Permitted Sublease, in its
consent thereto, shall confirm that from and after the occurrence and
continuance of an Event of Default and, unless an Event of Default
specified in Section 17(e), (f) or (g) of this Lease has occurred and is
continuing, this Lease being deemed or declared in default, Lessor (and,
so long as the Lien of the Indenture shall not have been discharged,
Indenture Trustee) shall be entitled to enforce directly and in its own
name all representations,
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warranties, indemnities, covenants and agreements under the applicable
Permitted Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I)
the Engine may not be operated or used other than as provided in this
Lease and shall be maintained and operated as required hereunder, (II)
Lessor may avoid or terminate such sublease following an Event of Default
hereunder and (III) to the extent not accomplished by an assignment of the
Permitted Sublease, upon the occurrence of an Event of Default hereunder,
Lessee's rights under such Permitted Sublease shall automatically be
deemed assigned to Lessor; and (B) be a "net lease" in accordance with
industry practice and shall be comparable to, or more restrictive than,
this Lease and under such Permitted Sublease (except a sublease to the
United States Government or a Foreign Air Carrier after the Restricted Use
Period), Lessee as lessor under such Permitted Sublease, must be entitled
to the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled
hereunder and such Permitted Sublease shall contain provisions regarding
such Section 1110 which are substantially the same as the related
provisions of this Lease. In addition, from and after the occurrence and
continuance of an Event of Default, all rent and other amounts payable by
the Permitted Sublessee under such Permitted Sublease shall be paid
directly to Indenture Trustee and, upon discharge of the Lien of the
Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any sublease
pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or
Section 6(a)(i)(9) above:
(1) Lessee may sublease the Engine or the aircraft on
which the Engine is installed to a Permitted Sublessee (each of which
shall constitute a "Permitted Sublease") if (A) in any such case, the
Permitted Sublessee under such sublease is not subject to a proceeding or
final order under applicable bankruptcy, insolvency or reorganization laws
on the date such sublease is entered into, (B) in the event that the
Permitted Sublessee under such sublease is a Foreign Air Carrier (other
than a Foreign Air Carrier principally based in Taiwan), the United States
maintains diplomatic relations with the country in which such proposed
Permitted Sublessee is principally based at the time such sublease is
entered into (or, in the case of a sublease to a proposed Permitted
Sublessee principally based in Taiwan, maintains
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diplomatic relations at least as good as those in effect on the
Restatement Date) and (C) in the event that the Permitted Sublessee under
such sublease is a Foreign Air Carrier, Lessor and the Indenture Trustee
shall have received an opinion of counsel to Lessee, in form and substance
reasonably satisfactory to Owner Participant and the Indenture Trustee, to
the effect that (I) the terms of the proposed sublease will be legal,
valid, binding and (subject to customary exceptions in foreign opinions
generally) enforceable against the proposed Permitted Sublessee in the
country in which the Permitted Sublessee is principally based, (II) there
exist no possessory rights in favor of the Permitted Sublessee under such
sublease under the laws of such Permitted Sublessee's country of domicile
that would, upon bankruptcy or insolvency of or other default by Lessee,
prevent the return or repossession of the Engine in accordance with the
terms of this Lease, (III) (unless Lessee shall have agreed or is required
to provide insurance covering the risk of requisition of use of the Engine
by the government of the country of such Permitted Sublessee's country of
domicile) the laws of such Permitted Sublessee's country of domicile
require fair compensation by the government of such jurisdiction payable
in currency freely convertible into dollars for the loss of use of the
Engine in the event of the requisition by such government of such use,
(IV) the Permitted Sublessee is either not entitled to sovereign immunity,
or has effectively waived such sovereign immunity, with respect to its
rights and obligations under the proposed sublease; (V) the laws of such
Permitted Sublessee's country of domicile would give recognition to
Lessor's title to the Engine, to the registry of the Engine in the name of
the Lessor (or Lessee, as "lessee", or the proposed Permitted Sublessee,
as "sublessee", as appropriate) and to the Lien of the Indenture; (VI) it
is not necessary under the laws of such Permitted Sublessee's country of
domicile, solely as a consequence of such subleasing and without giving
effect to any other activity of Owner Participant, Owner Trustee or
Indenture Trustee or any Affiliate thereof, as the case may be, for the
Owner Trustee, the Owner Participant or the Indenture Trustee to qualify
to do business in such jurisdiction and (VII) if the Owner Participant so
requests, (x) under the laws of such Permitted Sublessee's country of
domicile there is no tort liability of the owner of an aircraft not in
possession thereof (it being agreed that in the event this opinion cannot
be given in a form reasonably satisfactory to Owner Participant, such
opinion shall
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be waived if insurance reasonably satisfactory to Owner Participant is
provided to cover such risk), and (y) such other matters as the Owner
Participant reasonably requests, provided, however, that no sublease shall
extend beyond the expiration of the Basic Term or any Renewal Term then in
effect.
Any Permitted Sublease shall expressly provide that the rights of
any Permitted Sublessee shall be expressly subject and subordinate to all the
terms of this Lease and to the Lien of the Indenture (if it has not been
discharged), including, without limitation, the covenants contained in Sections
6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to
Section 18 hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder or under the other Operative Documents, and such rights shall
continue as if such Permitted Sublease had not occurred. Any Permitted Sublease
shall expressly prohibit any further sub-sublease or assignment or any other
similar transfer of the Engine or rights thereto by the Permitted Sublessee.
Lessee shall provide to the Owner Participant and the Indenture Trustee (i)
written notice of any Permitted Sublease hereunder (such notice to be given not
later than ten Business Days prior to entering into any Permitted Sublease with
any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease
together with an assignment, as security for Lessee's obligations hereunder, of
such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a
consent thereto from such Permitted Sublessee, substantially in the form of
Exhibit F-3 hereto, within ten (10) Business Days following the effective date
of such Permitted Sublease.
(b) [Intentionally Left Blank]
(c) Lawful Insured Operations. Lessee will not permit the Engine to
be serviced, repaired, maintained, used or operated in violation of any Law of
any Governmental Entity having jurisdiction, or contrary to the Manufacturers'
operating manuals or instructions, or in violation of any airworthiness
certificate or limitation, license or registration issued by any such authority
or any manufacturer's specifications, service bulletins or other requirements,
including, without limitation, any
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manufacturer's requirements as may be applicable to keep in full force and
effect each material warranty, product or performance guaranty, service life
policy or the like, in each case, to the extent made mandatory for Part 121
operators similarly situated to Lessee or the Permitted Sublessee if the
aircraft on which the Engine is installed is registered with the FAA, or the
applicable laws of any other jurisdiction in which the aircraft on which the
Engine is installed may then be registered in accordance with Section 11 of the
Refunding Agreement, unless the validity thereof is being contested in good
faith and by appropriate proceedings, but only so long as such proceedings do
not involve any danger of sale, forfeiture or loss of the Engine or impair the
interest of Lessor therein or impair the validity or priority of the Lien of the
Indenture or result in a risk of criminal liability of Lessor, Owner Participant
or Indenture Trustee and are not inconsistent with any insurance required to be
maintained by Lessee hereunder. In the event that such Law or other requirement
requires alteration of the Engine during the Basic Term or then-current Renewal
Term, Lessee shall comply therewith at its sole expense and shall maintain the
same in proper condition for operation under such Laws and other requirements.
Lessee shall not operate in any manner or locate in any place the Engine, or
suffer or permit the Engine to be operated by a Permitted Sublessee or otherwise
in any manner or located by a Permitted Sublessee or otherwise in any place (i)
unless the Engine is covered by insurance or United States Government indemnity
as required by the provisions hereof or (ii) contrary to the terms of such
insurance or United States Government indemnity. Lessee also agrees not to
operate or locate the Engine or suffer or permit the Engine to be operated or
located in any area excluded from coverage by any insurance policy issued
pursuant to the requirements of this Lease or in any war zone unless insured or
indemnified by the United States of America therefor, except in the case of
operation pursuant to a sublease or contract with, or as a result of a
requisition (not constituting an Event of Loss) by, the United States of
America, and then only if Lessee has obtained insurance or an indemnity (in lieu
of such insurance) from the United States of America covering such risks, in the
amounts and otherwise as required by this Lease.
(d) Maintenance. Lessee, at its own cost and expense, shall: (i)
perform or cause to be performed all service, repair, maintenance, overhaul,
inspections, alterations, modifications, and testing (A) in accordance with good
airline industry practice and in such manner to provide complete data and
documentation necessary to
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substantiate certification, (B) as may be necessary and required under, and in
compliance with, applicable Law, including, without limitation, FAA rules,
regulations and other requirements, any other applicable rules, regulations and
requirements by any other applicable Governmental Entity, the Maintenance
Program, airworthiness directives having a compliance date during the Term, and
the service bulletins and other requirements of any manufacturer, including,
without limitation, such requirements as may be applicable to keep in full force
and effect any and all material warranties, product and performance guaranties,
service life policies, indemnities or the like, (C) except during any period
that a Permitted Sublease is in effect, in the same manner and with the same
care, including regard for the status and technical condition of the Engine, as
shall be the case with respect to similar engines owned by Lessee without
discrimination and as if Lessee owned the Engine and was going to use the Engine
in continued regular customer service after the expiration of the Term, and
consistent with good industry practice, and during any period in which a
Permitted Sublease is in effect, in the same manner and with the same care,
including regard for the status and technical condition of the Engine, as shall
be the case with respect to similar engines owned by such Permitted Sublessee
without discrimination and as if the Permitted Sublessee owned the Engine and
was going to use the Engine in continued regular customer service after the
expiration of the Permitted Sublease, and consistent with good industry
practice, provided, however, that in all circumstances the Engine shall be
maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance
standards required by, or substantially equivalent to those required by the
central civil aviation authority of the country of registry, and, to the extent
not inconsistent therewith, the FAA and (D) so as to keep the Engine in as good
a condition as when delivered to Lessee, ordinary wear and tear excepted, and in
good operating condition; (ii) keep the Engine or cause the Engine to be kept in
such condition as is necessary to maintain in good standing the airworthiness of
such Engine at all times under the Federal Aviation Act and any other applicable
law or the applicable laws of any other jurisdiction in which the Engine may be
registered in accordance with Section 11 of the Refunding Agreement (provided
that if any grounding is fleetwide in nature and so long as Lessee or a
Permitted Sublessee is contesting in good faith such grounding, Lessee shall not
be deemed in violation of this maintenance covenant); and (iii) maintain in
English all records, logs and other materials required by, and in a manner
acceptable to, the FAA or any other Governmental Entity having jurisdiction and
as provided
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under the Maintenance Program and Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the interests of
Lessor and Indenture Trustee with respect to the Engine at all times, at its
expense, to be duly recorded under the Federal Aviation Act in the name of
Lessor or any successor or assignee, so long as the applicable parties to the
Refunding Agreement cooperate with Lessee with respect thereto as reasonably
requested by Lessee. Lessee shall cause the Indenture to be duly recorded and
maintained of record as a duly perfected mortgage on the Engine and this Lease
at all times. Lessee agrees at its expense to place such appropriate insignia,
plates and other identification ("Lease Identification") on the Engine showing
title thereto and the Lien of the Indenture as designated by Lessor and as
Lessor may from time to time reasonably request. Unless otherwise requested,
within five (5) Business Days of delivery of the Engine, Lessee shall fasten or
cause to be fastened on each Engine (if not prohibited by applicable Law), a
Lease Identification in the form set forth in Exhibit C hereto or with any other
appropriate information in any other form subsequently designated by Lessor to
Lessee. Except as provided herein, Lessee will not allow the name of any Person
to be placed on the Engine as a designation that would be reasonably interpreted
as a claim of ownership or Lien; provided, however, that Lessee may cause the
Engine to have placed thereon the customary colors and insignia of Lessee or any
Permitted Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor, Owner
Participant and Indenture Trustee such information concerning the location,
condition, use and operation of the Engine as Lessor, Owner Participant or
Indenture Trustee may reasonably request. Lessee shall permit, or cause any
sublessee to permit, any person designated by Lessor, Owner Participant or
Indenture Trustee
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on reasonable prior notice at reasonable times to visit, inspect and survey the
Engine, its condition, use, and operation, and the records maintained in
connection therewith, and to visit and inspect the properties and to discuss the
affairs, finances and accounts of Lessee with the principal officers of Lessee,
provided, that so long as no Default or Event of Default has occurred hereunder
inspections shall be endeavored to be performed during regularly scheduled
maintenance checks of the Engine. Each such inspection or survey shall be
conducted so as to not unreasonably interfere with the business of Lessee or the
maintenance or operation of the Engine. Upon Lessor's, Owner Participant's or
Indenture Trustee's request, Lessee will notify such Person of the next
scheduled maintenance check for the Engine. Lessor, Owner Participant and
Indenture Trustee shall have no duty to make any such inspection and shall not
incur any liability or obligation by reason of not making any such inspection.
Lessor's, Owner Participant's or Indenture Trustee's failure to object to any
condition or procedure observed or observable in the course of an inspection
hereunder shall not be deemed to waive or modify any of the terms of this Lease
with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish Lessor, until
the expiration or other termination of the Term of this Lease, the following:
(i) within sixty (60) days following the end of each quarter
of Lessee's fiscal year, except the last such quarter of such year, commencing
after the Restatement Date, a copy of Lessee's Quarterly Report on Form 10-Q as
filed with the Securities and Exchange Commission or, if Lessee no longer files
such report, an unaudited consolidated balance sheet of Lessee and its
consolidated subsidiaries prepared by it as of the close of the period ended,
together with the related statements of income and cash flows for such period,
and in each case certified by a Responsible Officer of Lessee as having been
prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after the close of
each fiscal year of Lessee, a copy of Lessee's
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Annual Report on Form 10-K as filed with the Securities and Exchange Commission
or, if Lessee no longer files such reports, an audited consolidated balance
sheet, income statement, and cash flow statement of Lessee and its consolidated
subsidiaries, as of the close of such fiscal year, and in each case as certified
by independent public accountants, including their certificate and accompanying
comments, as having been prepared in accordance with GAAP and as fairly
presenting the financial condition and results of operations and changes in
financial position for such period then ended in accordance with such principles
and practices, without qualification as to the scope of the audit or
non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of all
reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934,
as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of insurance
required to be maintained hereunder, a certificate signed by the Approved Broker
of Lessee as to the due compliance with the insurance provisions of Section 12
hereof with respect to the Engine, together with certificates of insurance
evidencing such insurance and the opinion provided for in Section 12(f);
(v) within fifteen (15) days following the end of each
calendar month throughout the Term, an Engine status report, substantially in
the form of Exhibit K hereto, including, without limitation, (A) a summation of
hours and cycles accumulated on the Engine by individual serial number during
such preceding calendar month and (B) the identity of the airframe (including
the "N" number and, at Lessor's request, ownership and lien interests in respect
thereof) on which the Engine was installed as of the end of each such calendar
month, and, if Lessor so requests, the location of any such airframe. The
foregoing shall not be deemed to require reports regarding hours or cycles on
any Parts;
(vi) together with each set of financial statements referred
to in clauses (i) and (ii), a certificate signed by a Responsible Officer of
Lessee, to the effect that such officer has reviewed the relevant terms of this
Lease and has made, or caused to be made under his or her supervision, a review
of the transactions and condition of Lessee during the accounting period covered
by
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such financial statements, and that such review has not disclosed the existence
during such accounting period, nor does such officer have any knowledge of the
existence, as at the date of such certificate, of any condition or event which
constitutes a Default or an Event of Default, or, if such condition or event
which constitutes a Default or an Event of Default existed or exists, specifying
the nature and period of existence thereof and what action Lessee has taken or
is taking or proposes to take with respect thereto;
(vii) as soon as practicable after becoming aware thereof, notice
of damage or destruction to the Engine (or any Part) with a repair or
replacement cost (including labor charges) in excess of $1,000,000;
(viii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
(ix) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in
Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so long as it
shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier, including,
without limitation, its status so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes
imposed upon it, or upon its income or profits, or upon any property belonging
to it, on or prior to the due date thereof, including any extensions which have
been duly obtained or granted; provided, however, that Lessee shall not be
required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Engine or any criminal liability on the part of Lessor, Indenture
Trustee or any Note Holder.
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(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with or merge into or with any other
corporation or other Person, and Lessee shall not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and other assets
(in one or a series of transactions) to any corporation or other Person, unless:
(i) the Person formed by or surviving such consolidation or
merger or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
(the "Successor Entity"): (A) shall be a corporation organized and existing
under the Laws of the United States of America or any State thereof or the
District of Columbia; (B) immediately after giving effect to such transaction,
shall be Lessee or shall have acquired or succeeded to all or substantially all
of such property and other assets (including, without limitation, all or
substantially all of Lessee's property and other assets) as an entirety and,
unless the Owner Participant otherwise agrees, shall have a Net Worth of not
less than Lessee's Net Worth immediately prior to such transaction; (C) shall be
a "citizen of the United States" of America as defined in Section 40102(a)(15)
of the Federal Aviation Act and a Certificated Air Carrier; and (D) shall
execute and deliver to Lessor and Indenture Trustee such recordations and
filings with any Governmental Entity and such other documents as Lessor
determines shall be reasonably necessary or advisable (including, without
limitation, to preserve and protect the interests of the Lessor and the priority
of the Lien of the Indenture (if it has not been discharged)) to evidence, or in
connection with, such consolidation, merger, sale, lease, transfer or other
disposition and an agreement, in form and substance reasonably satisfactory to
Lessor, which is a legal, valid, binding and enforceable assumption by such
Successor Entity of the due and punctual performance and observance of each
covenant and condition of this Lease and the other Operative Documents to which
Lessee is a party and agreement to be bound thereby, and an officer's
certificate to such effect, and to the effect that the other requirements of
this paragraph have been satisfied, and a legal opinion from counsel to such
effect and otherwise in such form and substance reasonably satisfactory to
Lessor; and
(ii) prior to and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing.
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No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each calendar year
and within 60 days of a request by Lessor or Owner Participant, or such shorter
period as may be set forth in any written request by the Internal Revenue
Service for information or documents, Lessee shall furnish in writing to Lessor
or Owner Participant such information and documents (or copies thereof)
regarding the Engine as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its Federal and state income tax returns (or to permit the filing of the Federal
and state income tax returns of any affiliated group of corporations filing a
consolidated return of which Lessor is a member), or to maintain or defend any
claims related thereto and promptly, after reasonable notice, furnish to Lessor
or Owner Participant such information as may be reasonably requested by Lessor
or Owner Participant or the applicable Governmental Entity as may be required to
enable Lessor or Owner Participant to file any reports required to be filed by
it with any Governmental Entity because of its ownership or other interest in
the Engine.
(g) Place of Business. At all times while this Lease is in effect,
Lessee will not, without thirty (30) days prior written notice to Lessor and
Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the Engine only in
commercial passenger operations and related cargo operations. Unless the Owner
Participant otherwise agrees, during the Restricted Use Period, Lessee shall not
use the Engine or permit the Engine to be used either "predominantly outside the
United States" within the meaning of Section 48(a)(2) of the Code, or in such
manner that the percentage of the income, deduction or credit attributable to
the Engine for federal income tax purposes during any taxable year of the Lessor
considered to be from foreign sources exceeds the Maximum Foreign Use
Percentage. Unless Owner Participant otherwise agrees, prior to permitting the
Engine to be operated in any member state of the European Union or other
European country, Lessee shall
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deliver to Lessor (i) a representation and warranty to the effect that Lessee
(or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or
other relevant air traffic control authority over delinquent charges payable by
it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to
Eurocontrol or other relevant air traffic control authority pursuant to which
Lessee (or such Permitted Sublessee) authorizes the addressee to issue to
Lessor, upon Lessor's request from time to time, a statement of account of all
sums due by Lessee (or such Permitted Sublessee) to the authority in respect of
all engines (including, without limitation, the Engine) operated by Lessee (or
such Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would not have
entered into this Amended and Restated Engine Lease Agreement [GPA 1991 AWA-E1]
unless it had available to it the benefits of a lessor under Section 1110 of
Title 11 of the United States Code. Lessee covenants and agrees with Lessor that
to better ensure the availability of such benefits, Lessee shall support any
motion, petition or application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee, whereby Lessor seeks recovery of possession of the
Engine under said Section 1110 and shall not in any way oppose such action by
Lessor unless Lessee shall have complied with the requirements of said Section
1110 to be fulfilled in order to entitle Lessee to continued use and possession
of the Engine hereunder. The acknowledgement, covenant and agreement contained
in this Section 8(i) shall continue in full force and effect and survive the
expiration or other termination of this Lease and are expressly made for the
benefit of and shall be enforceable by Lessor, Owner Participant and, if the
Lien of the Indenture has not been discharged, Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or obtain, and maintain
in full force and effect, each and every consent, license, approval, notice,
registration, filing or other action with any Governmental Entity necessary or
advisable in connection with the operation or use of the Engine or any Part or
the execution, delivery or performance of this Lease or the enforcement thereof
against Lessee.
(k) Security Opinion; Annual Certificate. (i) During such times that
the Engine is recorded under the Federal Aviation Act, Lessee shall furnish to
Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period covered by the
opinion of counsel
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rendered on the Restatement Date, any opinion of counsel
rendered pursuant to Section 11(C) of the Refunding Agreement,
and any opinion of counsel rendered pursuant to this Section
8(k)(i) and (Y) upon any change in Law that would render the
opinion of counsel rendered on the Restatement Date or such
immediately preceding opinion of counsel inaccurate, an
opinion of counsel with respect to Lessee and the FAA
reasonably satisfactory to each addressee of such opinion
(which counsel may be internal legal counsel of Lessee and FAA
counsel) stating, in the opinion of such counsel, that such
action has been taken with respect to the recording, filing,
rerecording and refiling of (i) the appropriate Operative
Documents and any supplements and amendments thereto, (ii) UCC
financing statements and (iii) such other appropriate
documents, as is necessary to maintain the perfection of
Lessor's title to and/or interest in and Indenture Trustee's
security interest in the Engine and the Operative Documents
for such period of time as reflects the then-current
applicable Law, reciting the details of such actions or no
action is necessary to maintain the perfection of such title
and/or security interest; or
(2) at any time that an opinion is not required pursuant to
Section 8(k)(i)(1), annually, a certificate reasonably
satisfactory to each recipient thereof signed by a Responsible
Officer of Lessee certifying that no such action is necessary
to maintain the perfection of such title and/or interest and
security interest.
(ii) During such times that the Engine is recorded under any Laws
other than the Federal Aviation Act, Lessee shall furnish to Lessor and to
Indenture Trustee annually (but in any case, (X) prior to the expiration of the
time period covered by any opinion of counsel rendered pursuant to Section 11(C)
of the Refunding Agreement, and any opinion of counsel rendered pursuant to this
Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such
immediately preceding opinion of counsel inaccurate), an opinion of counsel
reasonably satisfactory to each addressee of such opinion stating, in the
opinion of such counsel, that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i) the appropriate Operative
Documents and any supplements and amendments thereto and (ii) such other
appropriate documents, as is necessary to maintain the perfection of
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Owner Trustee's title to and/or interest in and Indenture Trustee's security
interest in the Engine and the Operative Documents for such period of time as
reflects the then-current applicable Law, reciting the details of such actions.
(l) Letter of Credit. As security for the obligations to Lessor,
Lessee shall provide to Lessor, as named beneficiary thereof, one or more
irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof shall be available
for drawdown thereunder and payable in New York, New York, on demand at any
time, if a Default under Section 17(e), (f) or (g) or an Event of Default has
occurred, which amount may be applied, retained or utilized as provided in the
penultimate paragraph of this Section 8(l);
(ii) be maintained in full force and effect at all times until
ninety-one (91) days after the Expiration Date with a commercial bank acceptable
to Lessor, in its sole and absolute discretion, having a long-term unsecured
debt rating of "A" or better by Standard & Poor's Rating Group (if the issuing
bank's credit rating is lower than such rating, Lessee shall replace such Letter
of Credit issuer within five Business Days of any such reduction in rating with
a commercial bank meeting such rating requirement), provided, that the Letter of
Credit set forth in Exhibit D-2 issued by The Industrial Bank of Japan, Limited
will be acceptable to Lessor for so long as The Industrial Bank of Japan,
Limited maintains a long term unsecured debt rating at least equal to its rating
on the date hereof;
(iii) be expressly designated as transferrable and assignable;
and
(iv) permit partial drawings. If the Letter of Credit is still
in effect at the end of the Term or the Lessor is holding proceeds of the Letter
of Credit that were retained and not applied as provided herein, then Lessor
shall return the Letter of Credit to Lessee or terminate it, and/or return any
retained or unapplied proceeds, ninety-one (91) days following the date of such
expiration or other termination of this Lease so long as no Default or Event of
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Default has occurred or is continuing hereunder or under any Other Lease, upon
payment in full of all amounts then due and owing to Owner Trustee and Owner
Participant under the Operative Documents.
If an Event of Default has occurred or is continuing under this
Lease or an Event of Default has occurred or is continuing under any Other Lease
(as therein defined), in addition to any other rights and remedies Lessor may
have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform Commercial
Code as adopted in New York) or equity and upon exercising its rights under the
Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or, the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts, as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
payment of Rent, Lessee's right to apply the same to such claim shall be limited
to amounts which would (absent such Event of Default) be distributable under the
Indenture at the time such payment is made to Lessor, Owner Participant or any
of their respective Affiliates (and shall not include any amounts distributable
to Indenture Trustee in its individual capacity or to the Note Holders);
provided further, however, that neither the amount so applied at any one time
nor the aggregate amount so applied at different times shall reduce the amount
of any installment or payment of Rent (whether upon the termination of the Lease
or otherwise) payable by Lessee to an amount insufficient to pay in full the
amounts required to be paid on account of the principal of and any interest on
the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be
entitled to any refund or credit with respect to any amounts so applied. Any
amount retained shall be considered the property of Lessor and Lessor may
commingle such amount with its general funds and Lessee, further, hereby
absolutely and irrevocably disclaims, to the maximum extent permitted by
applicable Law, any interest therein.
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<PAGE> 45
Lessee shall not be entitled to any interest or other earnings on such retained
amount and such amount shall not be refundable.
On application of all or any portion of the amounts drawn under the
Letter of Credit or any Other Letters of Credit in accordance with this Section
8(l) or the Other Leases, Lessee shall on demand reinstate the amount of the
Letter of Credit or Other Letters of Credit, as the case may be, to its or their
full Face Amount or provide to Lessor one or more additional Letters of Credit
meeting the requirements of this Section 8(l), so that the Letter of Credit and
each of the Other Letters of Credit at all times equals the original Face Amount
provided for herein. During such times as Lessor shall elect to hold all or part
of the proceeds of the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee
shall not be obligated to reinstate the amount of the Letter of Credit or
Letters of Credit, as the case may be, in respect of the proceeds so held.
Section 9. Replacement of Parts; Alterations, Modifications and
Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense, will
promptly replace, or cause to be replaced, all Parts which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever. In
addition, in the ordinary course of maintenance, service, repair, overhaul or
testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may at its own cost and expense remove any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and
expense such Parts as promptly as possible. All replacement Parts shall be free
and clear of all Liens (except for pooling arrangements to the extent permitted
by paragraph (c) of this Section and Permitted Liens), be in at least the
equivalent or better modification status and service bulletin accomplishment
status, be fully interchangeable as to form, fit and function and shall be in as
good operating condition as, and have a value, remaining useful life and utility
at least equal to, the Parts replaced (assuming such replaced parts were in the
condition and repair in which they were required to be maintained by the terms
hereof).
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All Parts which are at any time removed from the Engine shall remain
the property of Lessor, subject to the Lien of the Indenture if it has not been
discharged, and subject to this Lease no matter where located until such time as
such Parts shall be replaced by parts which have been incorporated or installed
in or attached to the Engine and which meet the requirements for replacement
Parts specified above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to the Engine as above provided, or as
provided in Section 9(c), without further act, (i) title to the removed Part
shall thereupon vest in Lessee, free and clear of all rights of Lessor,
Indenture Trustee, Owner Participant and Note Holders and shall no longer be
deemed a Part hereunder, (ii) title to such replacement Part shall thereupon
vest in Lessor and become subject to the Lien of the Indenture if it has not
been discharged, and (iii) such replacement Part shall become subject to the
Lien of the Indenture (if it has not been discharged) and this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(b) Alterations, Modifications and Additions. Lessee, at its own
cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Engine to the extent made mandatory for
Lessee (or a sublessee) in respect of the Engine or Parts from time to time to
meet the applicable standards of the FAA or under any Law of any Governmental
Entity having jurisdiction or issued by the manufacturer of the Engine or Parts.
In addition, so long as no Default or Event of Default has occurred and is
continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), at its own expense, may from time to time make such alterations and
modifications in and additions to the Engine as Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper
conduct of its business, provided, no such alteration, modification or addition
diminishes the value, remaining useful life or utility, or impairs the condition
or airworthiness, of the Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Engine and Parts were
then of the value, utility and remaining useful life and in the condition and
airworthiness required by the terms of this Lease. Except as otherwise provided
herein, title to all Parts incorporated or installed in or attached or added to
the Engine as the result of such alteration, modification or addition, shall
immediately vest in Lessor and become subject to the Lien of the Indenture (if
it has not been discharged) and this Lease, without the necessity for any
further act of transfer, document or notice.
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Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that
so long as no Default or Event of Default shall have occurred and be continuing
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at
such time during the Term for the Engine, remove any Part of such Engine,
provided, that (i) such Part is in addition to, and not in replacement or
substitution for, any Part originally incorporated or installed in or attached
to, or delivered with, the Engine on the Delivery Date or any Part in
replacement of, or substitution for, any such originally incorporated,
installed, attached or delivered Part, (ii) such Part is not required to be
incorporated or installed in or attached or added to the Engine pursuant to the
terms of Section 6 or this Section 9 or to maintain the insurance required by
Section 12 and (iii) such Part can be removed from the Engine without causing
any material damage thereto and without diminishing or impairing the value,
utility, remaining useful life, condition or airworthiness which the Engine
would have had at such time had such alteration, modification or addition not
occurred. Upon the removal by Lessee of any such Part as provided in the
preceding sentence, title thereto shall, without further act, vest in Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part
shall no longer be deemed part of the Engine (such a part is herein called a
"Removable Part"). Any Part not removed by Lessee as above provided prior to the
return of the Engine to Lessor hereunder, whether pursuant to Section 16,
Section 18 or otherwise, shall remain the property of Lessor.
If any Removable Part is (i) owned by any third party and leased to
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii)
sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
subject to a conditional sale contract or other security interest or (iii)
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) pursuant to a lease which is subject to a security interest in favor
of any third party, then Lessor will not acquire or claim, as against such
lessor, conditional vendor or secured party, any right, title or interest in any
such Removable Part as the result of such Removable Part being installed on the
Engine; provided, however, that (A) Lessor's inability to so acquire or claim is
subject to the express condition that such lessor, conditional vendor, or
secured party shall have agreed in writing (which agreement may be contained in
the lease, conditional sale agreement or security agreement) not to acquire or
claim, as against Lessor, any right, title or interest in the Engine, or any
Part other than its interest in such Removable Part by reason of such Removable
Part being installed thereon, and (B) any Removable Part not
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removed by Lessee upon the termination or expiration of this Lease, at such
time, shall become the property of Lessor and be subject to this Lease, and
provided, further, that (1) if removal of any such Part shall affect the
operation of the Engine in any way whatsoever, Lessee shall replace such Part
with an owned Part of the same value, utility and remaining useful life and (2)
Lessee shall repair any unsightly area of the Engine as a result of such removal
and make all other repairs which are advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) replaces a Part which is not required to be replaced under
Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) may remove the replacement Part so long as it reinstalls
the original Part and such original Part is free and clear of all Liens, other
than Permitted Liens, is in at least the same modification status and service
bulletin accomplishment status, is fully interchangeable as to form, fit and
function, has been overhauled, repaired and inspected by an agency acceptable to
the FAA or other Governmental Entity having jurisdiction, and is in as good
operating condition as, and has a utility, remaining useful life and a value at
least equal to that of such Part when it was removed from the Engine.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Engine, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Engine as provided in Section
9(a) may so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom be subjected by Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) to a normal pooling arrangement
customary in the airline industry of which Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) is a part entered into in the ordinary
course of Lessee's or such Permitted Sublessee's business, provided that Lessor
has been given an opportunity to review the pooling arrangement, including but
not limited to all agreements and other documents relating thereto, and has
consented, which consent shall not be unreasonably withheld, to the placement of
Parts into such pooling arrangement and provided further that the Part replacing
such removed Part shall be incorporated or installed in or attached to the
Engine in accordance with Section 9(a) as promptly as possible, and in any event
within sixty (60) days, after the removal of such removed Part. In addition, any
Replacement Part when incorporated or installed in or attached to the
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Engine in accordance with Section 9(a) may be owned by another Person subject to
such a normal pooling agreement; provided, however, that Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as
promptly thereafter as possible, and in any event within sixty (60) days, either
(i) causes title to such replacement Part to vest with Lessor in accordance with
Section 9(a) (and to be subjected to the Lien of the Indenture if it has not
been discharged) by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) acquiring title thereto for the benefit of and transferring
title to Lessor free and clear of all Liens except Permitted Liens, whereupon
such replacement Part shall become subject to this Lease and the Lien of the
Indenture (if in effect) without the necessity for any further act, document or
notice, or (ii) replaces such replacement Part by incorporating or installing in
or attaching to the Engine a further replacement Part owned by Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all
Liens other than Permitted Liens and by causing title to such further
replacement Part to vest in Lessor as above provided and to be subjected to the
Lien of the Indenture if it has not been discharged, whereupon such replacement
Part shall become subject to this Lease and the Lien of the Indenture (if in
effect) without the necessity for any further act, document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment of Basic Rent
hereunder shall be free and clear of, and without deduction for, any and all
withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such payments
of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the
net amount actually received by Lessor, after such deduction or withholding,
will be equal to all such amounts that would be received by Lessor if no such
deduction or withholding had been required, but only to the extent necessary to
ensure that the holders of the outstanding Equipment Notes receive such amount
as may be required by the Indenture. If Lessee pays any amount to Lessor (or to
any taxing authority for the account of Lessor) as a result of the application
of the preceding sentence with respect to any withholding Tax which is an
excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in
the case of Taxes imposed on the Owner Trustee, the Owner Participant to the
extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant
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would be liable) shall reimburse Lessee for such withholding Tax within 30 days
of written notice accompanied by evidence of payment for such withholding Taxes
(exclusive of interest, penalties and additions to Tax) paid by Lessee provided
that in any circumstance in which the Lessor is required to reimburse the Lessee
for any such withholding Taxes and the Lessee has not received such
reimbursement from Lessor or the Owner Participant, then to the extent of such
shortfall and so long as no Lease Event of Default has occurred and is
continuing, Lessee shall be entitled to obtain reimbursement from Lessor by
reducing the succeeding payments of Rent payable to Lessor (other than any
portion of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder) until the aggregate amount
of reduction is equal to the sum of the amount of such shortfall and interest on
that amount at the Interest Rate from the date reimbursement is required to be
made until the date of such reduction in Rent. Except as provided in Section
10(b), and taking into account any payments received by Lessor pursuant to the
second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify
and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or
imposed, whether levied or imposed upon or with respect to or asserted against
any Indemnitee, Lessee, any Engine or any Part thereof or interest therein, or
otherwise, with respect to any period beginning, or events or circumstances
occurring, on or after the Restatement Date, by any federal, state or local
government or taxing authority in the United States of America or by any foreign
government or any taxing authority or governmental subdivision of a foreign
country or of a territory or possession of the United States (each such
governmental subdivision or taxing authority referred to as a Taxing
Authority"):
(i) upon or with respect to, based upon or measured by (A) any
Engine or any Part thereof, or interest therein, (B) the manufacture,
purchase, ownership, delivery, leasing, acceptance, rejection, assigning,
possession, use, operation, location, settlement of any insurance claim,
sale, mortgaging, pledging, financing, subleasing, rental, retirement,
abandonment, registration, re-registration, deregistration, preparation,
installation, modification, repair, maintenance, replacement,
transportation, storage, transfer of title, return or other disposition of
the Aircraft, the Airframe, any Engine or any Part thereof or interest
therein; or (C) the rentals, receipts, income or earnings arising
therefrom (including without limitation the Rent), or
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(ii) upon or with respect to the Operative Documents
(including the Equipment Notes), any interest in any thereof, or any
future amendment, supplement, waiver or consent thereto requested by
Lessee with respect to any thereof, or the execution, delivery, or
performance of any thereof, or the acquisition or subsequent transfer
thereof or the issuance of the Equipment Notes or any other document
executed and delivered in connection with the consummation or confirmation
of the transactions contemplated by the Operative Documents or any
Indemnitee's interest in any of the foregoing, or the execution,
amendment, supplement, issuance, reissuance, refinancing or delivery of
any of the foregoing, or
(iii) the Trust Indenture Estate or the property, or the
income or other proceeds received with respect to the property, held by
the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or premium
on, or other amounts payable with respect to the Equipment Notes, whether
as originally issued or pursuant to any modification or reissuance, or
(v) otherwise with respect to or in connection with the
transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be subject to
indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, Taxes imposed on, based on,
or measured by, the gross or net income of such Indemnitee or Taxes in
lieu thereof (including minimum taxes, withholding taxes and taxes on or
measured by any item of tax preference) imposed by the federal government
of the United States of America (other than taxes in the nature of sales
or use taxes, license taxes, or property taxes),
(ii) In the case of any Indemnitee, Taxes imposed on, based
on, or measured by the gross or net income, receipts, capital, or net
worth, franchises, excess profits or conduct of business of such
Indemnitee (including minimum taxes, withholding taxes and taxes on or
measured by any items of tax preference), imposed by any state, local or
foreign government or taxing authority (other than Taxes in the
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nature of sales Taxes, use Taxes, license Taxes or property Taxes, and
Covered Income Taxes described in subsection (c) of this Section 10),
(iii) In the case of any Indemnitee, Taxes which arise out of
or are caused by any gross negligence or willful misconduct of such
Indemnitee,
(iv) In the case of any Indemnitee, any Taxes imposed as a
result of a voluntary or involuntary bankruptcy of such Indemnitee or any
sale, transfer of title, transfer or other disposition by such Indemnitee
or a related Indemnitee (for such purpose, Owner Trustee and Owner
Participant are related Indemnitees with respect to each other) of any
Engine or any Part thereof or interest therein, or any interest in the
Rent or part thereof or any interest in the Operative Documents or part
thereof, unless such sale, transfer or disposition occurs in connection
with (A) an Event of Default and the exercise by any Indemnitee of its
remedies under this Lease or the Indenture, as the case may be or (B) the
substitution, pooling or interchange of the Aircraft, the Airframe, any
Engine or any Part pursuant to the terms hereof; provided, however, that
in all cases Owner Participant and Owner Trustee shall consider in good
faith such request as Lessee shall make concerning the appropriate
jurisdiction in which such sale, transfer or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed on a
transferee of such Indemnitee of any interest in the Engine or any Part or
any interest in the Operative Documents to the extent the amount of any
such Taxes exceeds the amount of such Taxes that would have been imposed
had there not been any such transfer, unless such transfer results from
action by or on behalf of such Indemnitee taken in connection with any
Event of Default that has occurred and is continuing or upon the request
of the Lessee,
(vi) Any interest, penalties, fines and additions to tax
imposed on an Indemnitee (other than Taxes that are due and payable with a
return when properly filed) resulting from such Indemnitee's failure to
file returns that are timely and proper, provided such failure was not
attributable to such Indemnitee contesting any claim in accordance with
this Section 10(b) or to a failure by Lessee to satisfy its obligations
related to such return,
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(vii) With respect to an Indemnitee other than the Indenture
Trustee or the Trust Indenture Estate, Taxes which arise out of or are
caused by (i) any act or omission or material misrepresentation of any
Indemnitee where such act or omission is not permitted by the Financing
Documents or the Operative Documents, or (ii) a failure by an Indemnitee
to fulfill its contest obligations, and, in the case of the Indenture
Trustee and the Trust Indenture Estate, Taxes imposed as a result of a
breach of such Indemnitee's representations, warranties, or covenants
contained in Sections 9(a), 12 or 16 of the Refunding Agreement in any
material respect, or from a failure by such Indemnitee to fulfill its
contest obligations,
(viii) So long as no Event of Default shall have occurred and
be continuing, Taxes attributable to the Aircraft related to acts or
events occurring after the later of the termination of the Lease and the
redelivery of the Engine,
(ix) In the case of each Pass-Through Trust, each Pass-Through
Trustee (in its individual capacity and as trustee under the Pass-Through
Trusts), the Subordination Agent and each Liquidity Provider, United
States withholding taxes imposed as a result of the place of organization
or other status of a holder of an interest in a Pass-Through Trust, or
(x) In the case of the Indenture Trustee, each Pass-Through
Trust, each Pass-Through Trustee (in its individual capacity), the
Subordination Agent and each Liquidity Provider, Taxes imposed with
respect to the Equipment Notes as a result of activities of such
Indemnitee unrelated to the transactions contemplated by the Operative
Documents.
(c) Covered Income Tax. For purposes of clause (ii) of subsection
(b) of this Section 10, a Covered Income Tax includes:
(i) in the case of an Indemnitee other than the Indenture
Trustee or the Trust Indenture Estate, any Tax imposed on, based on or
measured by gross or net income, receipts, capital or net worth,
franchises, excess profits or conduct of business (other than taxes which
are in the nature of sales or use taxes, license taxes or property taxes)
imposed on an Indemnitee (A) by any state or local Taxing Authority other
than Taxes imposed by any such state or local jurisdiction in which the
Indemnitee has its principal place of
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business or is subject to such Tax as a result of business transactions or
other presence unrelated to the transactions contemplated by the Financing
Documents or the Operative Documents, unless such Taxes are imposed by
such jurisdiction solely as a result of (x) the operation of the Engine in
such jurisdiction or (y) the transactions contemplated by the Operative
Documents, to the extent such taxes are directly attributable to such
operation of the Engine or to such transactions, and (B) by any foreign
jurisdiction which are imposed as a result of Lessee's or sublessee's
activities in such foreign jurisdiction in connection with the
transactions contemplated by the Financing Documents or the Operative
Documents, provided, however, a Covered Income Tax also includes the
incremental amount of franchise taxes, taxes on doing business, capital
stock taxes or taxes on, based on or measured by gross or net income of
the original Owner Participant attributable to the Lease (excluding,
however, any taxes that would be excluded under any provision other than
clauses (i) and (ii) of subsection (b) of this Section 10) which are
imposed by the "Home State" of a sublessee (the Home State of a sublessee
being the jurisdiction in which such sublessee maintains its principal
operations and maintenance center), or in the absence of a Permitted
Sublessee, the jurisdiction where the Engine is stored, but only to the
extent such incremental taxes result from activities of Lessee or
Permitted Sublessee under the Lease in or with respect to the Home State
or the jurisdiction where the Engine is stored, and taking into account in
calculating such incremental taxes all state tax benefits and savings in
the Home State resulting from activities of Lessee or Permitted Sublessee
under the Lease, disregarding for such purpose any actual or constructive
changes in ownership of the original Owner Participant, provided, however,
that Owner Participant and Lessee agree to negotiate, in good faith, a cap
to Lessee's liability for indemnity payments attributable to taxes
incurred in sublessee's Home State with respect to each Permitted
Sublessee; and
(ii) in the case of the Indenture Trustee or the Trust
Indenture Estate, any Tax based on or measured by gross or net income,
receipts, capital or net worth, franchises, excess profits or conduct of
business (including minimum taxes, withholding taxes, and taxes on or
measured by any item of tax preference) imposed on such Indemnitee by a
Taxing Authority in or of any foreign jurisdiction or a territory or
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possession of the United States, other than any such Tax which would not
have been imposed in the absence of such Indemnitee's (including for
purposes of this definition, all entities with which such Indemnitee is
combined, integrated, or consolidated in such Taxing Authority's
jurisdiction) engaging in business, maintaining an office or other place
of business or otherwise being located in such jurisdiction other than
merely by reason of such Indemnitee's participation in the transactions
contemplated by the Operative Documents.
(d) Reports and Returns. In case any report or return is required to
be made by Lessee with respect to any Taxes which are subject to indemnification
by Lessee under this Section 10, Lessee will either make such report or return
in such manner as will show the ownership of the Aircraft in Owner Trustee or
the interest of Owner Participant or its permitted assigns and send a copy of
such report or return to the Owner Participant or Owner Trustee or will notify
the Owner Participant or Owner Trustee of such requirement and make such report
or return in such manner as shall be reasonably satisfactory to the Owner
Participant or Owner Trustee. If actual notice is given by any taxing authority
to an Indemnitee that a report or return is required to be filed with respect to
any such Taxes, the Indemnitee shall promptly notify Lessee of such required
report or return and Lessee shall either file such report or return in the
manner prescribed in the preceding sentence, or shall use its best efforts to
cause such report or return to be filed by the appropriate entity. Each
Indemnitee agrees to respond to any reasonable request of Lessee for information
not within Lessee's control and within the control of and reasonably available
to such Indemnitee with respect to the filing of any such report or return, but
Lessee agrees to pay any reasonable costs, fees, disbursements or other charges
of independent counsel or independent accountants incurred in connection with
such request.
(e) After-Tax Basis. Lessee further agrees that, with respect to any
payment or indemnity under this Section 10 and under Section 13 hereof, such
payment or indemnity shall include the net amount necessary to hold the
recipient of the payment or indemnity harmless on an after-tax basis from all
Taxes required to be paid or credited by such recipient with respect to such
payment or indemnity under the laws of any Taxing Authority; provided, however,
that in the case of Taxes imposed on the Owner Participant, such Taxes shall be
calculated on the basis of the assumption that Owner Participant shall be
subject to the highest
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federal corporate income tax rate applicable to Owner Participant in the year of
payment and the highest corporate income tax rate in the jurisdiction in which
Owner Participant files a consolidated state income tax return (currently
Virginia).
(f) Tax Benefit. If, by reason of any payment made to or for the
account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13
hereof, such Indemnitee subsequently actually realizes a tax deduction or credit
(including foreign tax credit and any reduction in Taxes) not previously taken
into account in computing the amount of such payment, such Indemnitee shall
promptly pay to Lessee, but only if there shall then be no Lease Event of
Default and if Lessee shall have made all payments then due and owing to such
Indemnitee under the Operative Documents, an amount equal to the sum of (i) the
actual reduction in Taxes, if any, realized by such Indemnitee which is
attributable to such deduction or credit and (ii) the reduction calculated on
the same basis as the gross up in Section 10(e) hereof in Taxes realized by such
Indemnitee as a result of any payment made by such Indemnitee pursuant to this
sentence; provided, however, that such Indemnitee shall not be obligated to make
any payment pursuant to this Section 10 or Section 13 hereof to the extent that
the amount calculated pursuant to (i) above would exceed (A) the amount of all
prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or
Section 13 hereof, net of any amount paid in respect of Taxes required to be
paid by such Indemnitee in respect of the receipt or accrual of such amounts
received by such Indemnitee from Lessee, less (B) the portion of all prior
payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee for any Taxes
which may be subject to indemnification by Lessee hereunder and if such
Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee;
provided that the failure to provide such notice shall not release Lessee from
any of its obligations hereunder except to the extent Lessee's right to contest
such claim is precluded thereby. Any amount payable as an indemnity to any
Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be
paid to such party directly, in immediately available funds, within thirty (30)
days after receipt of a written demand therefor from such Indemnitee or Lessee,
as the case may be, except in the case of a payment to an Indemnitee to the
extent that such Taxes are being contested in good faith pursuant to this
Section 10, in which event the payment of such indemnity shall be made by the
due date for the payment of any Taxes that are
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the subject of such contest taking into account all extensions of the due date
that are available as a result of the contest. In the event an Indemnitee makes
a tax payment with respect to any such Taxes (other than with funds advanced to
such Indemnitee on an interest-free basis by Lessee pursuant to this Section
10), Lessee shall reimburse the amount of such payment and also shall pay to the
Indemnitee interest on the amount of such payment by such Indemnitee at the
Interest Rate from the date of any such payment by such Indemnitee to the date
of such reimbursement by Lessee to the Indemnitee hereunder. In the event an
amount is payable to Lessee under this Section 10, the Indemnitee owing such
amount shall pay interest on such amount at the Interest Rate from the date of
receipt by such Indemnitee of any amount giving rise to such obligation to pay
Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee receives a written
notice of a claim which, if sustained, would require the payment of an indemnity
by Lessee pursuant to this Section 10, such Indemnitee shall promptly notify
Lessee of such claim and, if requested by Lessee in writing, shall, at Lessee's
sole expense, in good faith contest or shall permit Lessee, if desired by Lessee
and such contest may be conducted in whole or in part separately in the name of
Lessee without involving Taxes of such Indemnitee not indemnified hereunder, to
contest in the name of Lessee and/or the Indemnitee, the validity, applicability
or amount of such Taxes by (x) resisting payment thereof if practicable, (y) not
paying the same except under protest, if protest is necessary and proper, and
(z) if payments be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings; provided, however, the
Lessee shall not be permitted to contest in the name of such Indemnitee if such
contest involves Taxes imposed against such Indemnitee that are unrelated to the
transactions contemplated by the Financing Documents or the Operative Documents
or Taxes based on or measured by the gross or net income of the Indemnitee, and
provided, that if the Indemnitee determines in good faith that there is a
material possibility of a material adverse impact upon the Indemnitee with
respect to such contest, such Indemnitee may retain or reassert control of any
contest that Lessee would otherwise be permitted to contest; provided, further,
that the Indemnitee shall not be required to undertake or allow in its name or
on its behalf any contest unless the following conditions are satisfied:
(i) Lessee shall have (a) furnished Indemnitee with a written
opinion of tax counsel selected by Indemnitee and reasonably acceptable to
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Lessee to the effect that a reasonable basis (as defined in ABA Opinion
85-352) exists to contest such claim (which opinion shall be obtained at
Lessee's sole cost and expense), provided however, that in the event the
subject matter of the contest is of a continuing nature and has previously
been decided adversely pursuant to the contest provisions of this Section
10, there has been a change in the law (including, without limitation,
amendments to statutes or regulations, administrative rulings and court
decisions) after such claim shall have been so previously decided and such
Indemnitee shall have received an opinion of tax counsel, to the effect
that, as a result of such change other than a change in statutory law, it
is more likely than not that the position which the Indemnitee or the
Lessee, as the case may be, had asserted in such previous contest would
prevail and, in the case of statutory changes-in-law, it is as likely as
not that the position will prevail, and (b) agreed to pay Indemnitee for
all reasonable costs and expenses which Indemnitee may incur in contesting
such claim (including without limitation, payment on demand of all
out-of-pocket costs, expenses, additions to tax because of underpayment of
estimated taxes, losses, legal and accounting and investigatory fees and
disbursements, penalties, and interests),
(ii) a threshold amount of $50,000 for any individual claim is
at issue,
(iii) there is no substantial risk or danger of the sale, loss
or forfeiture of the Engine,
(iv) Lessee shall have admitted its liability to indemnify
Owner Participant for such claim or set forth in writing why it is not so
liable,
(v) if such contest is to be initiated by the payment of, and
the claiming of a refund for, such Taxes, the Lessee shall have advanced
to such Indemnitee sufficient funds (on an interest free basis) to make
such payments,
(vi) no claim shall be appealed to the U.S. Supreme Court,
(vii) no appeal of a trial court decision shall be undertaken
unless Lessee at its sole cost and expense shall have furnished Indemnitee
with a written opinion of tax counsel selected by Indemnitee and
reasonably acceptable to Lessee to the effect that
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Indemnitee is more likely than not to prevail in such appeal, and
(viii) no Event of Default has occurred and is continuing.
(i) Refund. If any Indemnitee shall obtain a refund of all or any
part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee
shall pay Lessee the amount of such refund together with any interest paid
thereon attributable to the Taxes paid or advanced by Lessee less the amount of
any Taxes payable by such Indemnitee in respect of the receipt of such refund
and interest after giving credit to Lessee for any savings by such Indemnitee in
respect to any such Taxes by reason of deductions, credits, allocations or
allowances in respect of the payment of any such Taxes; provided that such
amount shall not be payable before such time as Lessee shall have made all
payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default under any
of the above indemnification provisions of this Section 10 so long as Lessee or
the Indemnitee shall diligently prosecute such contest in accordance with the
provisions of this Section 10. Notwithstanding the foregoing, if a claim is made
against any Indemnitee for any Taxes which, if successful, would result in the
imposition of Taxes under circumstances which would require Lessee to indemnify
such Indemnitee, the Indemnitee shall be released from its responsibility to
contest such claim or part thereof, if it agrees in writing not to seek
indemnification from Lessee in respect of the claim, or such part thereof to be
contested. In the event an Indemnitee fails to contest, or refuses to permit
Lessee to contest, a claim or part thereof which the Indemnitee has the
obligation to contest or to permit Lessee to contest under this Section 10, then
Lessee shall not be obligated to indemnify the Indemnitee for such claim or such
part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a member
of an affiliated group (within the meaning of Section 1504(a) of the Code) which
files a consolidated Federal income tax return, the term "Indemnitee" shall mean
and include any member of such affiliated group.
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(l) Verification. At Lessee's request, the amount of any indemnity
payment by Lessee pursuant to this Section 10 or any payment by an Indemnitee to
Lessee pursuant to this Section 10 shall be verified and certified by an
independent public accounting firm selected by such Indemnitee and reasonably
satisfactory to Lessee. In order to enable such accountants to verify the
indemnity amount, such Indemnitee shall provide to the accountants (for their
own confidential use) information reasonably necessary for such verification to
which Lessor has access; provided, however, such information shall not be
disclosed to Lessee or any person other than such accountants. The fee of such
firm shall be payable by Lessee unless such verification shall result in an
adjustment in Lessee's favor exceeding 10% of the amount of the indemnity
payment.
(m) Survival. All of the obligations and rights of Lessee and Lessor
under this Section 10 with respect to the Aircraft, the Airframe, the Engines or
any Part thereof shall survive the assignment, or expiration or other
termination, of the Lease with respect to the Aircraft for a period of six (6)
years from the occurrence of such assignment, or expiration or termination,
except that such obligations shall survive the expiration of such six (6) year
period with respect to any claim asserted prior to the expiration of such six
(6) year period but in either case only to the extent such obligation or claim
relates to events which occurred or conditions which existed during the Term.
Such obligations are expressly undertaken by Lessee for the benefit of, and
shall be enforceable by, Lessor. The provisions of this Section 10(m) are
subject to the exclusions of Section 10(b)(viii).
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Engine. Subject to the other
provisions of this Section 11, upon an Event of Loss with respect to the Engine,
Lessee shall forthwith (and, in any event, within five (5) Business Days after
such occurrence) give Lessor written notice of such occurrence and within thirty
(30) days after such occurrence give Lessor written notice of its election,
subject to the terms hereof and of the Indenture, to perform one of the
following two options (it being agreed that if Lessee shall not have given
Lessor notice of such election within thirty (30) days after such occurrence,
Lessee shall be deemed to have elected to perform the option set forth in the
following clause (ii)), provided, that Lessee shall not have the right to select
the option set forth in clause (i) if a Default or an Event of Default shall
have occurred and be
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continuing at the time of such election or at the time of replacement:
(i) within one hundred twenty (120) days (the "Replacement
Period") after the date of the Event of Loss (but in no event later than the
last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as
provided in Section 11(b) hereof, to be subjected to the Lien of the Indenture
if it has not been discharged, and to be leased by Lessee hereunder in
replacement of the Engine, title to a replacement Engine, such replacement
Engine (A) to be free and clear of all Liens (it being understood that, upon
such conveyance, such replacement Engine may be subject to Permitted Liens), (B)
to have a value, utility and remaining useful life, determined in accordance
with the Appraisal Procedure as provided in Section 11(b) hereof, at least equal
to, and to be in at least as good operating condition as, the Engine (assuming
the Engine was maintained in accordance with the requirements of this Agreement,
whether or not it is in fact so maintained), and (C) to be another IAE V2500
Engine of like model and equivalent or better modification status delivered by
the Manufacturer not earlier than June 30, 1988 or, at Lessee's option, an IAE
engine of an improved model and in compliance with Section 11(b); provided that
if Lessee shall not perform its obligation to effect such replacement under this
clause by the end of the Replacement Period, Lessee shall then be deemed to have
elected to comply, and shall comply, with the provisions of clause (ii) of this
Section 11(a); provided, further, that the payment specified therein shall be
deemed to have become due and payable on the Stipulated Loss Value Date
occurring on or immediately preceding the last day of the Replacement Period.
Upon compliance with the foregoing, Lessor will, subject to the rights of any
insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that the Engine is free and clear
of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to
the Engine suffering the Event of Loss. For all purposes hereof, a replacement
Engine shall be deemed part of the property leased hereunder and shall be deemed
the "Engine" as defined herein. No Event of Loss resulting in replacement of the
Engine under this Section 11(a)(i) shall result in any reduction of Rent. In
addition to the foregoing, if Lessor so requests, as a condition to any
substitution of the Engine under this Lease, Lessee shall use its best efforts
to ensure that IAE acknowledges that such substitution shall not affect any
product support or other agreements between or among IAE, Parent, Lessor or
Lessee.
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(ii) On a Stipulated Loss Value Date on or before one hundred
twenty (120) days after the date of the Event of Loss (or, if earlier, with
respect to insurance proceeds, on the date on which insurance proceeds with
respect to the Event of Loss are received by the loss payee) Lessee shall pay to
Lessor in immediately available funds the sum of (A) the Stipulated Loss Value
of the Engine as shown on Exhibit A for such Stipulated Loss Value Date, plus
all Basic Rent or Renewal Rent, as the case may be, payable on each Basic Rent
Payment Date or Renewal Rent Payment Date, respectively, prior to the date of
payment of such Stipulated Loss Value which has not been paid when due, plus, if
such Stipulated Loss Value Date is also a Basic Rent Payment Date or a Renewal
Rent Payment Date, the amount of Basic Rent or Renewal Rent, as the case may be,
payable by Lessee on such Stipulated Loss Value Date, or, if such Stipulated
Loss Value Date occurs after the last day of the Term, plus an amount equal to
the average daily Basic Rent or Renewal Rent, as the case may be, in effect on
the last day of the Term, for each day from and including the last day of the
Term to and excluding such Stipulated Loss Value Date, and (B) all Supplemental
Rent payable, whereupon (1) the obligation of Lessee to pay Basic Rent or
Renewal Rent, as the case may be, hereunder with respect to the Engine for any
period commencing after the date on which such Stipulated Loss Value is paid
shall terminate; provided that Lessee shall remain liable for, and shall pay on
or before the date the Stipulated Loss Value and Supplemental Rent are paid, all
payments of Basic Rent or Renewal Rent, as the case may be, for the Engine due
on or before the date of such payment of Stipulated Loss Value and Supplemental
Rent, (2) the Term shall terminate with respect to such Engine, and (3) Lessor
will, subject to the rights of any insurers, transfer to Lessee, "AS IS, WHERE
IS," without recourse, representation or warranty (except a warranty that such
Engine is free and clear of Lessor's Liens), all of Lessor's right, title and
interest, if any, in and to the Engine suffering the Event of Loss.
(b) Conveyance of Replacement Engine. Upon an Event of Loss with
respect to the Engine, Lessee shall give Lessor prompt written notice thereof
and shall, at its own cost and expense, within sixty (60) days after such
occurrence convey or cause to be conveyed to Lessor as replacement for the
Engine suffering an Event of Loss, title to another IAE Model V2500 engine of
like model and equivalent or better modification status or, at Lessee's option,
an IAE engine of an improved model, in each such case which has a value,
remaining useful life and utility determined in accordance with the Appraisal
Procedure at least equal to such Engine free of all Liens (it being
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understood that, upon such conveyance, such replacement Engine may be subject to
Permitted Liens) and being in as good operating condition as (including no
greater number of cycles or hours than) the Engine being replaced assuming the
Engine being replaced was serviceable and otherwise in the condition and repair
required by the terms hereof immediately prior to the Event of Loss. Prior to or
at the time of any such conveyance, Lessee, at its own cost and expense, will
(i) furnish Lessor with a full warranty bill of sale, in form and substance
reasonably satisfactory to Owner Participant and Indenture Trustee, as
applicable, with respect to such replacement Engine; (ii) cause supplements, in
form and substance reasonably satisfactory to Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged), subjecting such
replacement Engine to this Lease, the Indenture (if in effect) and the Trust
Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly
filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
with such evidence of title to such Replacement Engine and of compliance with
the insurance provisions of Section 12 hereof with respect to such Replacement
Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture
has not been discharged) may reasonably request; (iv) furnish Owner Participant
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
with an opinion of Lessee's counsel addressed to such parties and to Lessor to
the effect that title to such Replacement Engine has been duly conveyed to
Lessor free and clear of all Liens (except Permitted Liens) and it is duly
leased hereunder and subject to the Lien of the Indenture (if it has not been
discharged), the instruments subjecting such Replacement Engine to the Lien of
the Indenture and the Lease, and subjecting to any relevant Assigned Sublease
and Sublease Agreement, as the case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act or any other law then applicable to the
registration of the Aircraft, and no further action, filing or recording of any
document is necessary in order to establish and perfect, in the United States
and, if the Aircraft is registered outside the United States, in the
jurisdiction of registration, the legal title to such Replacement Engine and the
Lien of the Indenture on such Replacement Engine and that Lessor, and Indenture
Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of
Title 11 of the United States Code with respect to such replacement engine to
the same extent as with respect to the Engine prior to such replacement; (v)
furnish a certificate signed by a Responsible Officer of Lessee certifying that,
upon
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consummation of such replacement, no Default or Event of Default will exist
hereunder; (vi) furnish such documents and evidence with respect to Lessee,
Owner Participant or Indenture Trustee (if the Lien of the Indenture has not
been discharged), as such parties or their respective counsel may reasonably
request in order to establish the consummation of the transactions contemplated
by this Section 11(b), the taking of all corporate proceedings in connection
therewith and compliance with the conditions set forth in this Section 11(b), in
each case in form and substance satisfactory to such party; (vii) furnish such
Uniform Commercial Code financing statements covering the Replacement Engine as
may be requested by Lessor or Indenture Trustee (if the Lien of the Indenture
has not been discharged); (viii) furnish Owner Participant with an opinion of
tax counsel mutually satisfactory to Owner Participant and Lessee and which
opinion is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner
Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in
Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the
terms of this Section 11(b), Lessor will, subject to the rights of any insurers,
transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or
warranty (except a warranty that such Engine is free and clear of Lessor's
Liens), all of Lessor's right, title and interest, if any, in the Engine which
suffered the Event of Loss. For all purposes hereof, each such Replacement
Engine shall be deemed an "Engine" as defined herein. No Event of Loss covered
by this Section 11(b) shall result in any reduction in Rent.
(c) Application of Proceeds and Payments. Any payments received at
any time by Lessor or by Lessee from any insurer (including a Governmental
Entity providing an indemnity in lieu thereof) with respect to an Event of Loss
shall be applied in the manner specified in Sections 12(c) and (e) hereof.
Subject to Section 11(e) below, any payments (other than insurance or such
indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Lessor in reduction of Lessee's obligation to pay such
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Stipulated Loss Value and other payments if not already paid by Lessee, or, if
already paid by Lessee, shall (unless a Default or an Event of Default shall
have occurred and be continuing) be applied by Lessor to reimburse Lessee for
its payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a result of an Event of
Loss with respect to the Engine which is being replaced pursuant to Section
11(a)(i) and (b) hereof, all such payments shall be paid over to, or retained
by, Lessee if Lessee shall have fully performed or, concurrently therewith fully
performs, the terms of Sections 11(a)(i) and (b) hereof, and of Section 15
hereof with respect to the Event of Loss for which such payments are made and if
no Default or Event of Default shall have occurred and be continuing.
(d) Requisition for Use by Government with Respect to the Engine.
Subject to Section 11(e) below, in the event of the requisition for use by a
Governmental Entity of the Engine, Lessee will replace such Engine hereunder by
complying with the terms of Section 11(a) to the same extent as if an Event of
Loss had occurred with respect to such Engine, and thereafter any payments
received by Lessor or Lessee from the Governmental Entity with respect to such
requisition shall be paid over to, or retained by, Lessee.
(e) Application in Default. Any amount referred to in clause (i) or
(ii) of Section 11(c) or Section 11(d) which is otherwise payable to Lessee
shall not be paid to Lessee, or, if it has been previously paid to or retained
by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or
retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without limitation,
by reason of this Lease being declared or deemed in default. At such time as
there shall not be continuing any such Event of Default or Default, all such
amounts at the time held by Lessor or Indenture Trustee in excess of the amount,
if any, which
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Lessor or Indenture Trustee has elected for application as provided above, shall
be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee will
carry and maintain in effect, or cause to be carried and maintained in effect,
at its own cost and expense, with Approved Insurers, comprehensive aircraft and
general public liability insurance (including, without limitation, contractual
liability, liability war risk and passenger legal liability products, completed
operation liability covering maintenance of aircraft, but excluding
manufacturer's product liability insurance), and property damage insurance with
respect to the Engine and any airframe on which the Engine is installed (for
purposes of this Section 12, any such airframe together with the Engine which is
installed thereon shall be referred to as, the "Aircraft"), in an amount not
less than three hundred fifty million dollars ($350,000,000), combined single
limit, per occurrence or such higher amount, and of such type and terms, as are
customarily carried by prudent Certificated Air Carriers, similarly situated to
Lessee, operating aircraft of similar size and similar type engines and as
hereinafter provided. Each and any policy of insurance carried in accordance
with this Section 12(a), and each and any policy obtained in substitution or
replacement for any of such policies, (i) shall designate Lessor (in both its
individual and trustee capacity), Owner Participant, Indenture Trustee (in both
its individual and trustee capacity) and the other Indemnitees and their
respective permitted assigns, as additional insureds as their interests may
appear (but without imposing upon any such Person any obligation imposed upon
the insured, including, without limitation, the liability to pay any premiums
for any such policies), (ii) shall expressly provide that, in respect of the
interests of Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees and their respective permitted assigns, in such policies, the
insurance shall not be invalidated as to an insured or additional insured by any
act or omission of Lessee or any other insured or additional insured and shall
insure Lessor, Owner Participant, Indenture Trustee and the other Indemnitees
and their respective permitted assigns, regardless as to any insured or
additional insured of any breach or violation by Lessee or any other insured or
additional insured of any warranty, declaration or condition contained in such
policies, (iii) shall provide that if such insurance is cancelled for any reason
whatsoever, or is changed in any adverse way with respect to the interests of
Lessor, Owner Participant, Indenture Trustee and the other Indemnitees or if
such
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insurance is allowed to lapse for non-payment of premium, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees, and their respective permitted
assigns, until thirty (30) days, in each instance (seven (7) days or such lesser
period of time as is the insurance industry standard for war/allied perils
coverage), after notice to Lessor, Owner Participant and Indenture Trustee from
such insurer or insurers, of such prospective cancellation, change or lapse,
(iv) shall include coverage for any country in or over which the Engine is
located or operated and (v) shall provide that, as against Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees, and their respective
permitted assigns, each insurer shall waive any rights of set-off, counterclaim
or any other deduction, whether by attachment or otherwise, and waives any
rights it may have to be subrogated to any right of any insured against Lessor,
Owner Participant, Indenture Trustee or the other Indemnitees, or their
respective permitted assigns, with respect to the Engine. Each liability policy
shall be primary without right of contribution from any other insurance which
may be carried by Lessor, Owner Participant, Indenture Trustee or the other
Indemnitees, or their respective permitted assigns, and shall expressly provide
that all of the provisions thereof shall operate in the same manner as if there
were a separate policy covering each insured, provided, that such policies shall
not operate to increase the insurer's limit of liability. Lessee shall cause its
insurers to agree that the indemnity and hold harmless provisions of Section 13
are insured as a contractual assumption of liability by Lessee's insurers,
subject to the terms, coverage, conditions, limitations and exclusions of the
policy of insurance. Without limiting the foregoing, the type and amount of the
insurance carried by Lessee hereunder shall be no less in amount and no less
comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and
the other Indemnitees then that carried by Lessee with respect to other IAE
V2500 engines or similar type engines or similar-type aircraft owned or leased
by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own expense,
will maintain in effect, or cause to be carried and maintained in effect, with
Approved Insurers "all-risk" ground and flight aircraft and spares hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the
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consent of Lessee) covering the Engine and/or the Aircraft, as the case may be,
and "all-risk" coverage including transit insurance with respect to the Engine
and Parts while not installed on such Aircraft or an aircraft, which in each
case considering all policy terms, limitations and exclusions is of the type,
terms and amount customarily maintained by prudent Certificated Air Carriers
similarly situated to Lessee and operating similar size aircraft and engines and
as hereinafter provided. Lessee shall also maintain, or cause to be maintained,
war risk and allied perils hull and spares insurance reasonably acceptable to
Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or,
in the case of an emergency, at least two (2) Business Days) prior to permitting
the Engine or the Aircraft to be operated or located outside of the United
States of America, other than in Canada or Mexico, Lessee shall notify Lessor
thereof. If Owner Participant or Indenture Trustee reasonably requests at any
time and if such insurance is then customarily being obtained by or for Persons
leasing or financing similarly sized aircraft operating on similar routes to
operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is
in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay
or reimburse Lessor for political risk, repossession, expropriation,
confiscation and similar insurance as Lessor may arrange or cause to be
arranged; provided that Indenture Trustee shall not be obligated to request such
insurance and shall not be liable for any failure to request such insurance.
Anything herein to the contrary notwithstanding, at all times while the Engine
is subject to this Lease, the insurance required by this Section 12(b) shall be
for an amount on an "agreed value" basis not less than the Stipulated Loss Value
from time to time determined for the Engine. Without limiting the foregoing, the
type and amount of insurance carried by Lessee hereunder shall be no less
comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and
the other Indemnitees than that carried by Lessee with respect to similar-size
aircraft or similar engines owned or leased by Lessee.
Each and any policy of insurance obtained and maintained pursuant to
this Section 12(b), and each and any policy obtained in substitution or
replacement for any such policies, (i) shall designate Lessor as owner of the
Engine, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns
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as additional insureds, as their respective interests may appear (but without
imposing upon Lessor, Owner Participant, Indenture Trustee and their respective
permitted assigns, any obligation imposed upon the insured, including, without
limitation, the liability to pay any premiums for any such policies), (ii) shall
expressly provide that, in respect of the interests of such an additional
insured and its permitted assigns, in such policies, the insurance shall not be
invalidated as to an insured by any act or omission of Lessee or any other
additional insured, and shall insure each such additional insured and its
permitted assigns, regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or another
additional insured, (iii) shall provide that if such insurance is cancelled for
any reason whatsoever, or is changed in any adverse way with respect to the
interests of Lessor, Owner Participant, Indenture Trustee and to the other
Indemnitees and their respective permitted assigns, or if such insurance is
allowed to lapse, such cancellation, change or lapse shall not be effective as
to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their
respective permitted assigns, until thirty (30) days (seven (7) days or such
lesser period of time as is the insurance industry standard for war/allied
perils coverage) after written notice to Lessor, Owner Participant and Indenture
Trustee from such insurer or insurers, as the case may be, of such prospective
cancellation, change or lapse, (iv) shall include coverage for any country in or
over which the Engine or the Aircraft may at any time be located or operated,
(v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee,
the other Indemnitees and their respective permitted assigns, each insurer shall
waive any rights of set-off, counterclaim or any other deduction, whether by
attachment or otherwise, and waives any rights it may have to be subrogated to
any right of any insured against Lessor, Owner Participant, Indenture Trustee
and the other Indemnitees and their respective permitted assigns, with respect
to the Engine, (vi) shall provide that in the event of any damage or loss which
is an Event of Loss hereunder and which results in a payment, such payment shall
be payable directly to Indenture Trustee as sole loss payee, so long as the Lien
of the Indenture shall not have been discharged and thereafter to Lessor, as
sole loss payee, and (vii) shall provide that in the event of any damage or loss
which is not an Event of Loss hereunder and which results in a payment, such
payment shall be payable directly to Indenture Trustee as sole loss payee for
the account of all interests, so long as the Lien of the Indenture shall not
have been discharged and thereafter to Lessor, as sole loss payee for the
account of all interests. The insurance required under this Section
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12(b) may incorporate deductible amounts which shall not exceed one million
dollars ($1,000,000).
Each of Lessor and Owner Participant shall have the right to carry
additional and separate excess or contingent insurance for its own benefit at
its own expense, without, however, thereby limiting Lessee's obligations under
this Section 12, and Lessee shall not carry any such insurance if it would
conflict with or adversely affect other insurance carried by Lessor or Owner
Participant. Lessee shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to Lessee, provided, however, that such insurance does not conflict with
or adversely affect the insurance required hereunder or any excess or contingent
insurance carried by Lessor or Owner Participant. Lessee shall give Lessor
reasonable prior written notice of any insurance to be carried by Lessee in
addition to that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained to cover
"all-risk" ground and flight aircraft, hull and war risks and allied perils
insurance, Lessee shall include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by Lessee with respect to all
other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of Loss. It is
agreed that insurance payments which arise from insurance required to be carried
by Lessee pursuant to this Section 12 and received as the result of the
occurrence of an Event of Loss shall be applied as follows (after reimbursement
of Lessor, Owner Participant and Indenture Trustee for their reasonable
out-of-pocket costs and expenses);
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Indenture Trustee so long as the Lien of the Indenture has not been
discharged and thereafter to Lessor in reduction of Lessee's obligation to pay
such Stipulated Loss Value and any other payments if not already paid by Lessee,
or, if already paid by Lessee, shall (unless a Default or an Event of Default
shall have occurred and be continuing) be applied by Indenture Trustee or
Lessor, as the case may be, to
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reimburse Lessee for its payment of such Stipulated Loss Value and other
payments and the balance, if any, of such payment remaining thereafter shall be
paid over to, or retained by, Lessor; or
(ii) if such payments are received as a result of an Event of
Loss with respect to the Engine which is being replaced pursuant to Section
11(a)(i) or Section 11(b) hereof, all such payments shall be paid over by the
Indenture Trustee or Lessor, as the case may be, to, or retained by, Lessee if
Lessee shall have fully performed or, concurrently therewith fully performs, the
terms of Section 11(a)(i) and (b) hereof and of Section 15 hereof, as the case
may be, with respect to the Event of Loss for which such payments are made and
if no Default or Event of Default shall have occurred and be continuing.
(d) Application of Insurance Proceeds for Other than an Event of
Loss. The insurance payments of any property damage loss to the Engine not
constituting an Event of Loss with respect thereto will be applied in payment
for the actual costs of repairs or for replacement property which Lessee has
incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease
against such documentation evidencing payment by Lessee as Lessor may reasonably
request to reimburse Lessee for such repairs or replacements already paid for by
Lessee, and any balance remaining after compliance with such Sections with
respect to such loss shall be paid to Lessor. Lessee shall be entitled to
receive from the insurer any insurance proceeds not in excess of five hundred
thousand dollars ($500,000) as soon as such funds are paid and shall promptly
receive such additional insurance proceeds from the loss payee upon invoices for
repair work in progress, replacement parts which are ordered or for work
completed as provided above in this Section 12(d). Any amount referred to in
this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at
the time of such payment any Default or Event of Default shall have occurred and
be continuing, but shall be held by Lessor as security for the obligations of
Lessee under this Lease or applied as provided in Section 12(e).
(e) Application in Default. Any amount referred to in clause (ii) of
Section 12(c) or Section 12(d) which is otherwise payable to Lessee shall not be
paid to Lessee, or if it has been previously paid to or retained by Lessee,
shall be paid by Lessee to Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter to Lessor, if at the
time of such payment or retention a Default or an Event of Default shall have
occurred and be continuing. In such case, all such amounts
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shall be paid to and held by Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter held by Lessor as
security for the obligations of Lessee, or, at the option of Indenture Trustee
or Lessor, applied by Indenture Trustee or Lessor toward payment of any of
Lessee's obligations at the time due hereunder, including, without limitation,
by reason of this Lease being declared or deemed declared in default, as
Indenture Trustee or Lessor may elect. At such time as there shall not be
continuing any such Event of Default or Default, all such amounts at the time
held by Indenture Trustee or Lessor in excess of the amount, if any, which
Indenture Trustee or Lessor has elected for application as provided above, shall
be paid to Lessee.
(f) Certificates. On or before the Delivery Date, and thereafter on
any renewal by the Lessee of the insurance required hereby (but in no event less
than once in every twelve (12) month period), Lessee will furnish to Lessor and
Indenture Trustee a certificate executed and delivered by an Approved Insurer or
the Approved Broker, describing in reasonable detail, and in accordance with
customary practice, insurance carried on the Engine and Lessee shall also
furnish an opinion or report by the Approved Insurer or the Approved Broker
certifying that the insurance then maintained on the Engine complies with the
terms of this Lease. Lessee will cause the Approved Broker to agree to advise
Lessor, Owner Participant and Indenture Trustee in writing at least thirty (30)
days (seven (7) days or such lesser period of time as is the insurance industry
standard for war/allied perils coverage) prior to the expiration, non-renewal,
termination or cancellation for any reason (including, without limitation,
failure to pay premium therefor) or material modification of any such insurance.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in effect,
the Permitted Sublessee) may carry primary insurance outside of the aviation
insurance markets in New York, London or Paris, if the relevant primary insurer
shall have obtained reinsurance and such reinsurance (i) is on the same terms as
the original insurance and includes the provisions required by this Agreement;
(ii)
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provides in case of any bankruptcy, insolvency, liquidation, dissolution or
similar proceedings of or affecting the original insurer that the reinsurers'
liability will be to make such payment as would have fallen due under the
relevant policy of reinsurance if the original insurer had (immediately before
such bankruptcy, insolvency, liquidation, dissolution or similar proceedings)
discharged its obligations in full under the original insurance policies in
respect of which the then relevant policy of reinsurance has been effected; and
(iii) contains a "cut-through" clause in the following form (or otherwise,
satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby
mutually agree that in the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided by the Amended and
Restated Engine Lease Agreement [GPA 1991 AWA-E1] dated as of November 26, 1996
and made between Wilmington Trust Company, as Owner Trustee, and America West
Airlines, Inc. such claim is to be paid to the person named as sole loss payee
under the primary insurances, the Reinsurers will in lieu of payment to the
original insured, its successors in interest and assigns pay to the person named
as sole loss payee under the primary insurances effected by the original insured
that portion of any loss due for which the Reinsurers would otherwise be liable
to pay the original insurer (subject to proof of loss), it being understood and
agreed that any such payment by the Reinsurers will (to the extent of such
payment) fully discharge and release the Reinsurers from any and all further
liability in connection therewith."
(h) Storage. During any period that the Engine or the Aircraft is in
storage or otherwise grounded, Lessee may carry or cause to be carried, in lieu
of the insurance required by Sections 12(a) and (b) above, insurance otherwise
conforming with the provisions of said Sections 12(a) and (b) except that the
scope of the risk and the type of insurance, and the amount of the insurance in
the case of the insurance described in Section 12(a) above (but not the amount
of insurance to be carried under Section 12(b) above), shall be the same as from
time to time applicable to similar engines or similar size passenger aircraft
that comprise Lessee's fleet in similar storage or grounding, and in any event
(including, without limitation, at any time when there shall be in existence a
Permitted Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for similar engines as the
engines in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of Default has
occurred and is continuing, any amount held by Lessor or Indenture Trustee, as
the case may be, until
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application by Lessor or Indenture Trustee, as the case may be, pursuant to this
Section 12 shall be invested as provided in Section 21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at its expense
the insurance described in Section 12(a) for three years after the expiration or
termination of the Basic Term or Renewal Term, if Lessee has elected to renew
the Lease in accordance with Section 20, covering each Indemnitee as its
interest may appear and specifically insuring the indemnity contained in Section
13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of the insurance
described in Section 12 above, Lessee may provide a United States governmental
indemnity, to the extent and subject to the terms and conditions specified in
Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and hold
harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e),
within fifteen (15) days after demand from and against any and all claims
(whether or not based on strict liability), damages (whether direct, indirect,
incidental, special or consequential), losses, charges, fees, liabilities,
obligations, demands, suits, judgments, actions and other legal proceedings
(whether civil or criminal), penalties, fines, other sanctions, and any
reasonable costs and expenses, in connection herewith, including, without
limitation, costs and expenses set forth in Section 21(j) hereof and reasonable
attorney's fees and expenses of whatever kind or nature (any and all of which
are hereafter referred to as "Claims") imposed on, or asserted by or against, or
suffered or incurred by, any Indemnitee, from (and including) the Restatement
Date, including, without limitation, injury, death or property damage of
passengers, shippers and others, environmental control, noise and pollution
regulations, which in any way may result from, pertain to, or arise in any
manner out of, or are in any manner related to (1) the Operative Documents, the
Purchase Documents or the Financing Documents, or any of the transactions
contemplated thereby; (2) the Engine or any Part thereof, including, but not
limited to, (A) the importation, exportation, condition, manufacture, design,
purchase, ownership, registration, reregistration, deregistration (other than
any deregistration caused by the failure of the registered owner of the Engine
to be a "citizen of the United States" as defined under the Federal Aviation Act
and the regulations
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thereunder or to file the documentation necessary to continue FAA registration
of the Engine), delivery, non- delivery, assignment, leasing, subleasing,
sub-subleasing, acceptance, rejection, possession, repossession, control,
return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and
Lenders' Liens, but including the Lien of the Indenture), use, performance,
modification, maintenance, overhaul, operation, pooling, interchange, repair,
testing, sale, return or other disposition or application of the Engine or any
Part (including, but not limited to, latent and other defects whether or not
discoverable by Lessee or Lessor, Claims related to any actual or alleged
violation of Law, loss or damage to any property of passengers, shippers or
otherwise or any Claim related to patent, copyright, trademark or other
infringement) either in the air or on the ground, and, including, without
limitation, any interest therein or in the Operative Documents of an Indemnitee
or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens
and Lenders' Liens but including the Lien of the Indenture), or the rentals,
receipts or earnings therefrom (including, without limitation, the Rent and any
other amounts paid or payable with respect thereto); or (B) any defect in the
Engine or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of the Engine or such Part, or otherwise
regardless of when such defect shall be discovered, whether or not the Engine or
such Part is at the time in the possession of Lessee, and regardless of where
the Engine or such Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Engine, any Operative Document, any Purchase Document or any
Financing Document), (ii) the material breach of any express representation,
warranty or covenant made by such Indemnitee herein or in any other Operative
Document, or the Financing Documents (not resulting from a breach by Lessee of
any of its representations, warranties or covenants in the Operative Documents
or in the Financing Documents), (iii) any Taxes, whether or not Lessee is
required to indemnify such Taxes under Section 10 hereof or the Tax
Indemnification Agreement (it being understood that Section 10 hereof and the
Tax Indemnification Agreement exclusively provide
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for Lessee's liability with respect to Taxes), (iv) any Claim which relates
solely to events which occurred prior to (but excluding) the Restatement Date
(other than Claims related to the condition, manufacture or design of the
Engine), (v) an underlying act which occurs after the Engine has been returned
to Lessor in accordance with the terms hereof and the Term of this Lease has
been terminated or has expired and the return is not related to an Event of
Default, (vi) an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents, except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder and
except any Claim which is alleged or does relate to the period prior to such
disposition or (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or are
not required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents (provided, however, in no event
will Lessee be liable for any Claims resulting from, pertaining to or arising
from or related to Lessor's granting or creating a Lessor's Lien or the granting
or creation of a Head Lessor's Lien). Upon full payment of the indemnities
herein, Lessee shall be subrogated to all rights and remedies which such
Indemnitee may have against any third party against whom such Indemnitee has the
right to assert a Claim which arises under any action described in this Section
13 (except Claims under such Indemnitee's own insurance policies or under the
indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13, Lessee
hereby waives and releases any Claim now or hereafter existing against any
Indemnitee, on account of any Claims for or on account of or arising or in any
way connected with injury to or death of personnel of Lessee or loss or damage
to property of Lessee or the loss of use of any property which may result from
or arise in any manner out of or in relation to the importation, exportation,
ownership, purchase, registration, reregistration, deregistration (except as to
Owner Participant or Lessor as
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and to the extent such Indemnitee is responsible under the Refunding Agreement
for Claims related to such deregistration), delivery, non-delivery, assignment,
leasing, subleasing, manufacture, acceptance, rejection, possession, return,
financing, performance, modification, maintenance, condition, use, operation,
pooling, interchange, repair, testing, sale, return or other disposition of the
Engine or any Part thereof, either in the air or on the ground, or which may be
caused by any defect in the Engine or such Part from the material or any article
used therein or from the design or testing thereof, or use thereof or from any
maintenance, service, repair, overhaul, or testing of the Engine or such Part,
claims for infringement, loss of or injury to any person, loss of or damage to
any property or environmental damage, regardless of when such defect may be
discovered, whether or not the Engine or such Part is at the time in the
possession of Lessee, and regardless of the location of the Engine at any such
time except to the extent that such Claim results from (i) the gross negligence
or willful misconduct of such Indemnitee (except any such gross negligence or
willful misconduct as may be attributed to an Indemnitee due to its interest in
the Engine, any Operative Document, any Purchase Document or any Financing
Document), (ii) the material breach of any of its express representations,
warranties or covenants hereunder, under any other Operative Document or
Financing Document (not resulting from a breach by Lessee of any of its
representations, warranties or covenants in the Operative Documents or in the
Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to but excluding the Restatement Date (other than Claims related to the
condition, manufacture or design of the Aircraft) and any Claim concerning
payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act
which occurs after the Aircraft has been returned to Lessor in accordance with
the terms hereof and the Term of this Lease has been terminated or has expired
and the return is not related to an Event of Default, (vi) an underlying act
which occurs after a disposition or other transfer (voluntary or involuntary) by
such Indemnitee of all or any part of its interest in the Aircraft, the
Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents (except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the
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period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
and except any Claim which is alleged or does relate to the period prior to such
disposition), (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or are
not required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head
Lessor's Lien or a Lenders' Lien attributable to such Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense and with
Lessee's cooperation, be entitled to conduct the defense of any Claim against
it; provided, however, that Lessee shall, at the request of any Indemnitee and,
so long as no Event of Default has occurred and is continuing, assume and
conduct promptly and diligently, at its sole cost and expense, the defense of
such Indemnitee against any Claim of a third party with counsel reasonably
acceptable to such Indemnitee; and provided, further, however, that Lessee shall
have the right as well as the obligation to assume such defense to the extent
required under the terms of the applicable insurance policies so long as no
Default or Event of Default has occurred and is continuing. In the event Lessee
shall so assume the defense of any Claim, such Indemnitee shall cooperate with
Lessee in defending such Claim, but any expenses incurred by such Indemnitee in
connection therewith shall either be paid by Lessee to such Indemnitee in
advance, or reasonable security shall be provided by Lessee to such Indemnitee
for such payments. Neither Lessee nor an Indemnitee shall enter into a
settlement or other compromise with respect to any Claim which Lessee or such
Indemnitee is defending hereunder in excess of $100,000 without the prior
written consent of the other, which consent shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any Claims by
a third party hereunder following such Indemnitee's actual knowledge of such
Claims by third parties, but the failure of such Indemnitee to give the notice
required by this Section 13 shall not constitute a release by Lessor or such
Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to
such Indemnitee in respect of any such Claim or otherwise affect the obligations
or liabilities of Lessee to any Indemnitee in respect of any such Claim, except
to the extent that Lessee's ability to control the defense thereof where Lessee
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has the right to control the defense thereof is materially prejudiced as a
result solely of such failure of such Indemnitee to give such notice.
An Indemnitee or Lessee shall supply the other with such information
requested by the other as is reasonably necessary or advisable for the other to
control the defense of a Claim to the extent permitted by this Section.
Nothing in this Section shall be construed as a guaranty by Lessee
of payments due pursuant to any indebtedness incurred with respect to the
purchase of the Engine or of the residual value of the Engine.
Notwithstanding anything herein or in any other Operative Document
to the contrary, with respect to any Claim for which any Indemnitee is entitled
to indemnification under more than one provision of this Lease or any other
Operative Document, such Indemnitee shall be entitled to recovery for such Claim
only pursuant to one such provision as it may select in its sole discretion
(and, for the avoidance of doubt, such Indemnitee shall not be entitled to any
double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue in full
force and effect notwithstanding the expiration or other termination of this
Lease or any of the other Operative Documents and are expressly made for the
benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume, or
suffer to exist any Lien on or with respect to the Engine or any Part thereof,
title thereto, or any interest of Lessor therein or in this Lease, except (i)
the respective rights of Lessor, Lessee, Owner Participant, Indenture Trustee
and any other Indemnitee as herein provided or provided under the other
Operative Documents or the Financing Documents; (ii) Head Lessor's Liens,
Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or
being diligently contested in good faith by appropriate proceedings in
accordance with Section 10 and so long as adequate reserves are maintained with
respect to such Liens and only so long as neither such proceedings nor such
Liens involve any material danger of the sale, forfeiture or loss of any of the
Engine or any Part, or any interest of Lessor or Indenture Trustee therein or
any risk of criminal liability of Lessor or Indenture Trustee; (iv) inchoate
materialmen's, mechanics', workmen's, repairmen's employees', or other like
inchoate Liens arising
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in the ordinary course of business for sums not overdue by more than 45 days or
being diligently contested in good faith and only so long as neither such
proceedings nor any such Liens involve any material danger of the sale,
forfeiture or loss of the Engine or any Part, or any interest of Lessor or
Indenture Trustee therein; (v) the rights of other Persons to the extent
expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens
arising out of any judgment or award against Lessee (or any Permitted Sublessee)
unless the judgment or award shall not, within thirty (30) days after the entry
thereof, have been discharged, vacated, reversed, or execution thereof stayed
pending appeal or shall not have been discharged, vacated or reversed within
thirty (30) days after the expiration of such stay and only so long as such
Liens shall not involve any material danger of the sale, forfeiture or loss of
the Engine or any Part, or any interest of Lessor or Indenture Trustee therein
and provided that the execution of such judgment or award or an attachment
relating thereto shall not have occurred within such thirty (30) day period;
and, (vii) any other Lien with respect to which Lessee (or a Permitted
Sublessee) shall have provided a bond adequate in the reasonable opinion of
Indenture Trustee (if the Lien of the Indenture has not been discharged) and
Owner Participant. Lessee shall promptly, at its own expense, take or cause to
be taken such action as may be necessary to duly discharge any Lien (except for
the Liens referred to in clauses (i) through (vii) of this Section 14) directly
or indirectly created, incurred, assumed, or suffered to exist by Lessee if the
same shall arise at any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease, the
Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust
Supplement, and any other supplement from time to time required by the terms
hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease
Supplement, Indenture Supplement, Trust Supplement and such other supplements to
be duly filed and recorded, and maintained of record, in accordance with the
applicable laws of the government of registry of the Aircraft and the Engine. If
any filing or recording is reasonably necessary to protect the interests of
Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except
it shall be at Lessor's expense if in connection with a change in ownership of
the Engine or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default) and upon request by Lessor cause
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any financing statements and any and all additional instruments and other
documents, so far as permitted by applicable Law, to be kept, filed, and
recorded and to be re-executed, refiled and re-recorded at all times in the
appropriate office pursuant or in relation to any applicable Laws of any
Governmental Entity, to protect and preserve the rights and interests of Lessor
or Indenture Trustee hereunder, under the Indenture and in the Engine, and
Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably
satisfactory to Lessor and Indenture Trustee, of each such filing or refiling
and recordation and rerecordation.
Without limiting the foregoing, Lessee shall do or cause to be done,
at Lessee's cost and expense (except it shall be at Lessor's expense if in
connection with a change in ownership of the Engine or any other transfer or
assignment by Lessor other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), any and all acts and
things within its control which may be required under the terms of the Mortgage
Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Engine, as Lessor may reasonably
request. Lessee shall also do or cause to be done, at its own expense (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Engine or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default), any and all acts and things which may be required under the
terms of any other Law involving any jurisdiction in which Lessee, any Permitted
Sublessee or any wet lessee may operate the Engine, which Lessor may reasonably
request, to protect and preserve the title of the Lessor, this Lease, the
Indenture and Lessor's and Indenture Trustee's interest in the Engine and under
any of the Operative Documents or Financing Documents within any such
jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and duly
execute and deliver to Lessor or Indenture Trustee, as applicable, such further
documents and assurances and take such further actions as Owner Participant or
Indenture Trustee may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Lease and the other
Operative Documents and the Financing Documents and to protect the rights and
remedies created or intended to be created in
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favor of Lessor or Indenture Trustee hereunder and the other Operative Documents
and the Financing Documents including, without limitation, if reasonably
requested by Owner Participant or Indenture Trustee, at the expense of Lessee
(except it shall be at Lessor's expense if in connection with a change in the
ownership of the Engine or any other transfer or assignment by Lessor or
Indenture Trustee other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), the execution and delivery
of supplements or amendments hereto in recordable form, subjecting to this
Lease, the Indenture and the other Financing Documents, any replacement Engine
and the recording or filing of counterparts thereof in accordance with the laws
of any appropriate jurisdiction.
Section 16. Return of Engine and Records.
(a) Return. On any Return Occasion, Lessee, at its own expense and
risk, shall return the Engine to Lessor (or any Person designated by Lessor) in
at least the condition specified in this Section and Exhibit E hereto at any
Lessee system location in the continental United States selected by Lessor, as
Lessor may elect, or such other location as Lessor and Lessee may agree.
(b) Status Upon Return. Upon any Return Occasion hereunder, the
Engine shall be: (i) free and clear of all Liens, except for the Lien of the
Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly
certified as an airworthy engine by the FAA under Part 121 of the regulations
promulgated under the Federal Aviation Act which are in effect on the date of
such Return Occasion; (iii) in full airworthy condition for over water and EROPS
operation according to the FAA standards required to allow the Engine to be
operated under, and in full compliance with, an applicable standard certificate
of airworthiness and Part 121 of the regulations promulgated under the Federal
Aviation Act for such operation, such compliance to be by means of such
mechanical repairs or modifications or such inspections as may be required
thereby, but not by operational restrictions, by logbook entries or other method
of acceptance of such restrictions; (iv) in full compliance with Lessee's
Maintenance Program; (v) in full compliance with the maintenance and operation
provisions of this Lease and all FAA airworthiness directives, mandatory service
bulletins and equivalent requirements which by their terms require compliance on
or before the last day of the Term (without regard to any deferral, waiver,
deviation or exemption granted by the FAA specifically to Lessee delaying such
compliance); (vi) in good and airworthy operating condition, and in the same
condition as when delivered to
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Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding
deferred maintenance items, scheduled or unscheduled, with all systems and
components fully serviceable and operational and with no placards restricting
operation or use, and (vii) with all remaining warranties, indemnities, policies
and guarantees referred to in Section 5(d) made available to Lessor in a manner
and by documents in form and substance reasonably satisfactory to Lessor.
(c) Substitute Engine. In the event any engine not owned by Lessor
shall be redelivered on any Return Occasion, without limiting Lessee's
obligations under the Tax Indemnification Agreement, such engine shall be of the
same model and equivalent modification status as the Engine or, at Lessee's
option, an IAE engine of an improved model suitable for installation and use on
an Airframe without diminishing the value, remaining useful life or utility of
such Airframe, in each such case having a value, remaining useful life and
utility at least equal to (as determined in accordance with the Appraisal
Procedure), and be in an operating condition as good as the Engine, assuming the
Engine was in the condition and repair as required by the terms hereof
immediately prior to such termination and shall conform to the return condition
requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own
expense and concurrently with such delivery, shall cause such engine to become
an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply
with the terms of this Section 16(c) shall be conditioned on Lessor's
transferring to Lessee all of Lessor's right, title and interest in and to any
such Engine at the Return Occasion "AS IS, WHERE IS," without any
representation, warranty or recourse of any kind whatsoever, express or implied,
except a warranty that such Engine is free and clear of Lessor's Liens.
(d) Records and Documents. Upon the return of the Engine, Lessee
shall deliver to Lessor (i) all logs, manuals and data, and inspection,
modification, overhaul and other records, related to the Engine, including,
without limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Engine and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Engine under an FAA approved maintenance
program after the Term or to transition maintenance to another program,
including, without limitation, another registry, or, in the event an Event of
Default shall have occurred, to continue to maintain the Engine under the
Maintenance Program, in each case as Lessor
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may reasonably request, and all documentation with respect to the Engine set
forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and
(ii) all records necessary or required by the FAA to certify and place the
Engine on an FAA or other country's, as the case may be, approved maintenance
program. All of the foregoing shall, at Lessee's expense, be up-to-date and in
the latest revision status as of the last day of the Term, including, without
limitation, all software and other electronically- held materials which have
been supplied by or on behalf of Manufacturer or Original Head Lessee, which
must be updated to the latest revision status as of the last day of the Term
within such software base and all data therein or pertaining thereto shall be
deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Engine,
components, rotables, and assemblies and, as a minimum, extend to include all
activities associated with each of the last completed maintenance checks,
repairs, scheduled inspections and functional tests, and overhauls performed
under Lessee's Maintenance Program. All components and assemblies identified
with safe life limits shall be identified with their service histories,
accumulated cycles or flight hours as applicable and remaining service lives on
a separate listing; such identification shall be sufficient to allow
traceability of such components and assemblies from the date on which such
components and assemblies were manufactured to the date on which such
identification is made, and to measure the service histories, accumulated cycles
or flight hours as applicable and remaining service lives in each engine,
including but not limited to the Engine, in which such components and assemblies
have been used. All components and assemblies which are identified on the
maintenance records by part numbers and serial numbers other than the
manufacturer's shall be provided with interchange or cross reference listing
necessary to establish complete traceability. All documentation, flight, and
maintenance records as specified by United States Federal Aviation Regulations
91.173, 91.174, and each paragraph of regulation 121.380 which normally
accompany the transfer of an engine which has been operating in regulated
commercial air service, shall be delivered to Lessor with the Engine. Any
documents or records required to be delivered hereunder shall be in English.
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(e) Condition of Engine. Upon any Return Occasion, Lessee shall
return such Engine to Lessor in such condition that the Engine shall also comply
with each and every condition and requirement set forth elsewhere in this Lease,
including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion, Lessee shall make
the Engine available to Lessor at the location where the designated check or
checks required hereunder to be performed immediately prior to redelivery is to
be performed for detailed inspection of the documents referred to in paragraph
(d) above and the Engine and Parts structure and parts, at Lessee's expense
(excluding compensation to representatives of Lessor), in order to verify that
the condition of such Engine complies with the requirements set forth above
(such inspection being hereinafter referred to as the "Final Inspection"). The
Final Inspection shall be combined with such check or checks and may include
such other items as reasonably requested by Lessor. Lessee shall give Lessor not
less than thirty (30) days prior written notice of the commencement date of such
Final Inspection. The period allowed for the Final Inspection shall be the same
period during which such checks are being performed and shall have such duration
as to permit the opening of any areas of the Engine which are customarily
necessary or advisable to satisfy Lessor as to compliance with the requirements
of this Section 16 and Exhibit E. The Final Inspection shall commence on the
date so noticed which shall be on or before the expiration of the Term with
respect to the Engine and shall continue on consecutive days until all activity
required above to be conducted has been concluded. To the extent that any
portion of the Final Inspection extends beyond the expiration of the Term,
unless Lessor has terminated the Lease pursuant to Section 18(g) hereof, the
Term with respect to the Engine undergoing the Final Inspection shall be deemed
to have been automatically extended, and all obligations hereunder continued, on
a daily basis until the Final Inspection shall have been concluded and Lessee
shall pay Rent during any such extension in an amount equal to the average daily
Basic Rent or Renewal Rent, as the case may be, paid in respect of the last year
of the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value
during such extension shall equal the Stipulated Loss Value on the last day of
the Basic Term or Renewal Term, as the case may be); provided, however, that
Lessee shall not be required to pay Rent with respect to the Engine during the
period of extension to the extent that Lessor is responsible for the delay in
completion of the Final Inspection. All storage expenses attributable to any
Term extension pursuant to the preceding sentence shall be payable by Lessee,
except
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that Lessee shall not be liable for any storage expenses which are incurred
after the sixtieth (60th) day after the Term to the extent that storage
continues thereafter due to Lessor's delay in completion of the Final
Inspection.
(g) Engine Records and Documents. In order to enable Lessor to
prepare for the Final Inspection of the Engine pursuant to Subsection 16(f)
above, Lessee agrees to make available to Lessor at a maintenance base of Lessee
with adequate facilities for short-term maintenance, where the Final Inspection
is to occur, not later than ten (10) days prior to the commencement of such
Final Inspection, the Engine Records and Documents listed in Exhibit B hereto,
together with such other documentation (including, without limitation, original
airworthiness directive compliance documents and other work documents) regarding
the condition, use, maintenance, or operation as Lessor may reasonably request
or require to substantiate the status of the Engine. Such Records and Documents
shall be sufficient to enable Lessor to trace the service history, accumulated
cycles or flight hours as applicable and remaining service life of the Engine,
including but not limited to a listing of each airframe on which the Engine has
been installed.
(h) Corrections and Subsequent Corrections. To the extent that the
Engine fails upon a Return Occasion to conform to any requirement imposed by
this Lease Lessor may, at its option, (i) continue the Lease in effect in the
manner provided for in Section 16(f) above with regard to automatic extension
until such time as the Engine is brought up to the condition required by this
Section 16, including Exhibit E, or (ii) accept the return of the Engine and
thereafter have any such nonconformance corrected, at such time as Lessor may
deem appropriate but not to commence later than ninety (90) days following the
return of the Engine, at commercial rates then charged by the Person selected by
Lessor to perform such correction. Lessee's obligations to pay such Supplemental
Rent shall survive the Expiration Date or other termination of this Lease.
Nothing set forth in this paragraph shall constitute a limitation on Lessor's or
Owner Participant's ability to recover from Lessee any damages, expenses or
losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's
failure to effect the return of the Engine at the time, in the place and in the
condition as specified in this Section 16 and Exhibit E hereto.
(i) [Intentionally Left Blank].
(j) Exportation of the Engine. Lessee shall, at Lessee's expense,
take such action as Lessor may reasonably
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request to assist Lessor in obtaining any required documents in relation to the
export of the Engine from the United States (including, without limitation, a
valid and subsisting export license).
(k) Service Bulletin and Modification Kits. Lessee shall deliver to
Lessor, at no cost to Lessor, all service bulletin kits furnished without charge
by the manufacturer for installation on the Engine which have not been so
installed together with appropriate instructions for installation. In the event
such uninstalled kits were purchased or manufactured by Lessee, then Lessor
shall be advised of such kits by Lessee and have a right of first refusal to
purchase such kits at Lessee's cost for a period of ninety (90) days after
return.
(l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at
Lessor's request and at Lessee's risk and expense, in addition to other storage
referred to above, arrange for the parking, storage and insurance of the Engine
for a period not exceeding sixty (60) days at such reasonable location as Lessor
requests where Lessee has or can arrange for storage. Lessee shall pay or cause
to be paid all costs and expenses for such parking, storage and insurance.
(m) Resale/Release Cooperation. During the last twelve (12) months
of the Term, with reasonable notice and at reasonable times, Lessee will
cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable
respects, with the efforts of Lessor to sell or lease the Engine after the end
of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Engine and the records
relating thereto to the extent it does not unreasonably interfere with the
operation or maintenance of the Engine or the conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal
Rent or Stipulated Loss Value to Lessor within three (3) Business Days, after
the date on which such
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payment is due, or (ii) any other payment of Supplemental Rent due hereunder
within ten Business Days, after the date on which such payment is due and Lessee
has received written demand therefor by the party entitled thereto; provided
that any failure of Lessee to pay to Lessor or Owner Participant when due any
Excepted Payments (as defined in the Indenture) shall not constitute an Event of
Default unless Lessor delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force and
effect any insurance required under the provisions of Section 12 hereof or shall
operate the Engine outside of the scope or in violation of the terms of the
insurance or United States Government indemnity coverage required to be
maintained with respect to such Engine; or
(c) Any representation or warranty made by Lessee herein or in the
Refunding Agreement or in any certificate furnished by Lessee in connection
herewith or therewith is or was incorrect at the time made in any material
respect and such incorrectness shall not have been cured within thirty (30) days
after the receipt by Lessee of a written notice from Lessor or the Indenture
Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant, condition,
or agreement to be performed or observed by it pursuant to this Lease or the
Refunding Agreement, and such failure shall continue uncured for thirty (30)
days after written notice thereof is given by Lessor or Indenture Trustee to
Lessee; provided, however, that if Lessee shall have undertaken to cure any such
failure which arises under the first or second sentence of Section 6(c), or
Section 6(d), as such provisions of Section 6 relate to maintenance, service,
repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in
attempting to cure such failure, such failure is not cured within said thirty
(30) day period but is curable with future due diligence, there shall exist no
Event of Default under this Section 17 so long as Lessee is proceeding with due
diligence to cure such failure and such failure is remedied not later than one
hundred eighty (180) days after receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a custodian, receiver,
trustee or liquidator of itself or all or any material part of Lessee's property
or Lessee's consolidated property, or Lessee admits in writing its inability to,
or is unable to, or does not, pay its debts generally as they come due, or makes
a general assignment for the benefit of creditors, or Lessee files a voluntary
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petition in bankruptcy or a voluntary petition seeking reorganization in a
proceeding under any bankruptcy or insolvency Laws (as now or hereafter in
effect), or an answer admitting the material allegations of a petition filed
against Lessee in any such proceeding, or Lessee by voluntary petition, answer
or consent seeks relief under the provisions of any other bankruptcy, insolvency
or other similar Law providing for the reorganization or winding-up of
corporations, or provides for an agreement, composition, extension or adjustment
with its creditors, or any corporate action (including, without limitation, any
board of directors or shareholder action) is taken by Lessee in furtherance of
any of the foregoing, whether or not the same is fully effected or accomplished;
or
(f) An order, judgment or decree is entered by any court appointing,
without the consent of Lessee, a custodian, receiver, trustee or liquidator of
Lessee, or of all or any material part of Lessee's property, or Lessee's
consolidated property, or all or any material part of Lessee's property or
Lessee's consolidated property is sequestered, and any such order, judgment or
decree of appointment or sequestration remains in effect, undismissed, unstayed
or unvacated for a period of ninety (90) days after the date of entry thereof or
at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding under the
Federal bankruptcy laws or other insolvency Laws (as now or hereafter in effect)
is filed and is not withdrawn or dismissed within ninety (90) days thereafter or
at any time an order for relief is granted in such proceeding, or if, under the
provisions of any Law providing for reorganization or winding-up of corporations
which may apply to Lessee, any court of competent jurisdiction assumes
jurisdiction over, or custody or control of, Lessee or of all or any material
part of Lessee's property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of ninety (90) days or at any time an order for relief
is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial passenger
Certificated Air Carrier or, except in either case in connection with a labor
dispute, announcement thereof or Lessee's suspension of its business as a
commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
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(i) Lessee's loss or suspension of its United States air carrier
license or certificate under Part 121 of the Federal Aviation Regulations or
certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor may, at its option,
declare by written notice to Lessee this Lease to be in default, provided,
however, that this Lease shall be deemed to be declared in default automatically
without the necessity of such written declaration upon the occurrence of any
Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof;
and at any time thereafter, so long as any outstanding Event of Default shall
not have been remedied, Lessor may do one or more of the following with respect
to the Engine as Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with any mandatory requirements of,
applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written demand of
Lessor and at Lessee's cost and expense, immediately return, and Lessee hereby
agrees that it shall return promptly, the Engine to Lessor in the manner
specified in such notice, in which event such return shall not be delayed for
the purposes of complying with the return conditions specified in Section 16 and
Exhibit E hereof (none of which conditions shall be deemed to affect Lessor's
possession of the Engine) or delayed for any other reason; provided, however,
that Lessee shall remain and be liable to Lessor for amounts provided for herein
or other damages resulting from the Engine not being in the condition required
by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's option,
Lessee shall be required thereafter to take such actions as would be required by
the provisions of this Lease if the Engine were being returned at the end of the
Term hereof with respect to the Engine. In addition, Lessor or Lessor's agent,
at its option and to the extent permitted by applicable Law, may but shall not
be obligated to enter upon the premises where the Engine is located to take
immediate possession of and, at Lessor's option, remove the same by summary
proceedings or otherwise, all without liability accruing to Lessor or Lessor's
agent for or by reason of such entry or taking of possession or removal whether
for the restoration of damage to property, or otherwise, caused by such entry or
taking, except direct damages to the extent caused by Lessor's gross negligence
or willful misconduct.
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(b) With or without taking possession thereof, sell or cause to be
sold, the Engine or any part thereof, or Lessor's interest therein, at private
or public sale, as Lessor in its sole discretion may determine, or otherwise
dispose of, hold, use, operate, or lease to others, or keep idle the Engine, as
Lessor in its sole discretion may determine, all free and clear of any rights of
Lessee or any Permitted Sublessee and except as hereinafter set forth in this
Section 18. Lessor may be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall thereafter
at any time exercise, any of its rights under paragraph (a) or paragraph (b)
above, Lessor, by written notice to Lessee specifying a payment date which shall
be a Stipulated Loss Value Date may demand that Lessee pay to Lessor, and Lessee
shall pay to Lessor, on the Stipulated Loss Value Date specified in such notice,
as liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date specified for payment in such notice), any
unpaid Rent for the Engine to and including the Stipulated Loss Value Date
specified in such notice, plus whichever of the following amounts as Lessor may
specify, in its sole and absolute discretion, in such notice: (i) an amount
equal to the excess, if any, of the sum of the Stipulated Loss Value for the
Engine computed as of the date specified in such notice plus, if such date is a
Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the
Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair
market sale value of the Engine as of the date specified in such notice or (ii)
an amount equal to the excess, if any, of the sum of the Stipulated Loss Value
for the Engine computed as of the date specified in such notice plus, if such
date is a Basic Rent Payment Date or Renewal Rent Payment Date, an amount equal
to the Basic Rent or the Renewal Rent, as the case may be, due on such date,
over the fair market rental value of the Engine for the remainder of the Term as
of the date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above, shall have
sold the Engine, or its interest therein, Lessor, in lieu of exercising its
rights under paragraph (c) above, may, if it shall so elect, demand that Lessee
pay Lessor, and Lessee shall pay to Lessor on such demand, as liquidated damages
for loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent, as the case may be, due for the period commencing after the Stipulated
Loss Value Date immediately prior to the date such sale occurs), any unpaid Rent
due to and including the
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date of sale, plus the amount by which the Stipulated Loss Value of the Engine,
computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such
sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph (b), (c) or (d)
above, by notice to Lessee, Lessor may require Lessee to pay, on the next
Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so
pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in
advance for the period on and after the Stipulated Loss Value Date), any unpaid
Basic Rent or Renewal Rent, as the case may be, for such Engine due and unpaid
for any period prior to and including, and any Basic Rent or Renewal Rent
payable on, the Stipulated Loss Value Date, plus, an amount equal to the
Stipulated Loss Value for the Engine computed as of such Stipulated Loss Value
Date; and upon such payment of liquidated damages and the payment of all other
Rent then due hereunder and the discharge of the Lien of the Indenture pursuant
to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without
recourse or warranty (except as to the absence of Lessor's Liens and the Lien of
the Indenture), all right, title and interest of Lessor in and to the Engine to
Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and
deliver such documents evidencing such transfer and take such further action as
Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to paragraph (b) above, shall
have relet the or Engine under a long term lease, Lessor, in lieu of exercising
its rights under paragraph (c) above with respect to such or Engine, may, if it
shall so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor on
such demand, as liquidated damages for loss of bargain and not as a penalty (in
lieu of the Basic Rent or Renewal Rent, as the case may be, for such Engine due
after the time of reletting) any unpaid Rent for such Engine due up to the date
of reletting, plus the amount, if any, by which the aggregate Basic Rent or
Renewal Rent, as the case may be, for such Engine which would otherwise have
become due over the Basic Term or Renewal Term, as the case may be, discounted
periodically (equal to installment frequency) to present worth as of the date of
reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental
payments to become due under the reletting from the date of such reletting to
the date upon which the Term for the Engine would have expired but for Lessee's
default, discounted periodically (equal to
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installment frequency) to present worth as of the date of the reletting at the
rate of 8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by written notice to
Lessee which cancellation, rescission and/or termination shall be effective upon
dispatch, whereupon Lessee's right to possess and use the Engine shall
immediately cease, however, Lessee shall be and remain liable for damages and
losses suffered by Lessor and all other amounts payable by Lessee hereunder.
(h) Lessor may exercise any other right or remedy which may be
available to it under applicable laws, or may proceed by appropriate court
action or actions, either at law or in equity, to enforce any other remedy or
right Lessor may have hereunder, under the other Operative Documents, at law or
in equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable (without
duplication of the remedies above and of Lessee's obligations under Section 10
and Section 13 hereof and subject to the exclusions set forth therein) for any
and all unpaid Rent before, during or after the exercise of any of the above
mentioned remedies (including without limitation interest on unpaid amounts with
respect to all amounts not paid when due, including, without limitation, any
amounts payable pursuant to the foregoing provisions of this Section 18), and,
except as specified above, until satisfaction of all of Lessee's obligations to
Lessor hereunder and for all legal fees and other costs and expenses incurred by
any Indemnitee by reason of the occurrence of any Event of Default or the
exercise of an Indemnitee's remedies with respect thereto, including all costs
and expenses incurred in connection with the return of the Engine in accordance
with the terms of Section 16 and Exhibit E hereof or in placing the Engine in
the condition and with airworthiness certification as required by such Section
and such Exhibit and costs and expenses related to the Lease, the Refunding
Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor
Agreement or each Liquidity Facility. All liquidated damages payable pursuant to
the foregoing shall bear interest, which shall be payable on the date the
payment of such liquidated damages is due at a rate equal to the Interest Rate
from and including the date due to and excluding the date actually paid.
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In effecting any repossession, Lessor, its representatives and
agents, to the extent permitted by applicable Law, (i) shall have the right to
enter upon any premises where it reasonably believes the Engine or Part to be
located, (ii) shall not be liable, in conversion or otherwise, for the taking of
any personal property of Lessee which is in or attached to the Engine or Part
which is repossessed, (iii) shall not be liable or responsible, in any manner,
for any damage or injury to any of Lessee's property in repossessing and holding
the Engine or Part, except for direct damages caused by Lessor's gross
negligence or willful misconduct, and (iv) shall have the right to maintain
possession of and dispose of the Engine or Part on any premises owned by Lessee
or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole expense, assemble
and make the Engine or Part available at a place designated by Lessor in
accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that, in
the event of the return to or repossession by Lessor of the Engine or Part, or
otherwise upon the occurrence of an Event of Default, any rights in any warranty
(express or implied), service life policy, infringement indemnity, performance
guaranty or the like heretofore made available to Lessee or otherwise held by
Lessee shall without further act, notice or writing be deemed automatically
cancelled and shall be enforceable solely by and for the benefit of, and
assigned to, Lessor. Lessee shall be liable to Lessor (without duplication) for
all expenses, disbursements, costs and fees incurred in (i) repossessing,
storing, preserving, shipping, maintaining, repairing and refurbishing the
Engine or Part to the condition required by Section 16 and Exhibit E hereof and
(ii) preparing the Engine or Part for sale or lease, advertising the sale or
lease of the Engine or Part and selling or releasing the Engine or Part. Lessor
is hereby authorized and instructed, at its option, to make expenditures which
Lessor considers advisable to repair and restore the Engine or Part to the
condition required by Section 16 and Exhibit E hereof, all at Lessee's sole
expense.
For the purpose of this Section 18, the "fair market rental value"
or the "fair market sales value" of the Engine or Part shall be determined
pursuant to the Appraisal Procedure.
At any sale of the Engine or Part pursuant to this Section , Owner
Participant may bid for and purchase such property and Lessee agrees that the
amounts paid therefor
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shall be used in the computations contemplated herein and Lessee shall remain
liable for any deficiency.
No remedy referred to in this Section is intended to be exclusive,
but, to the extent permitted by Law, each shall be cumulative and in addition to
any other remedy referred to above or otherwise available to Lessor at law or in
equity; and, to the extent permitted by Law, the exercise or beginning of
exercise by Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all of such other remedies.
No waiver by Lessor of any Event of Default shall in any way be, or be construed
to be, a waiver of the same Event of Default in the future or any other prior or
future Event of Default. To the extent permitted by Law, Lessee hereby waives
any right it may have to require Lessor to mitigate damages in connection with
the remedies described in Sections 18(c), (d), (e) or (f) above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Engine leased hereunder or otherwise to more effectively carry out Lessor's
rights and remedies and to file said documents for recordation with the FAA,
under the Uniform Commercial Code, and with any other appropriate Governmental
Entity, and otherwise act in Lessee's name and place with respect to the Engine,
provided that an Event of Default has occurred and is continuing and this Lease
has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full force and
effect and survive the expiration or other termination of this Lease and are
expressly made for the benefit of and shall be enforceable by Lessor, Owner
Participant and, if the Lien of the Indenture has not been discharged, Indenture
Trustee.
Section 19. Security for Obligations.
Security for Obligations. In order to secure the Equipment Notes,
Lessor has created, by the Indenture, a security interest in the Trust Indenture
Estate, including, without limitation, this Lease and all Rent and other sums
payable hereunder, except as provided in the Indenture and subject in each case
to Liens permitted hereunder. The Indenture provides, among other things for the
assignment by Lessor to Indenture Trustee of its right, title and interest in,
to and under this Lease, to the extent set forth in the Indenture, for the
creation of a first-mortgage lien on and
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perfected security interest in all of Lessor's right, title and interest in and
to the Engine in favor of Indenture Trustee. Lessee hereby consents to such
assignment and to the creation of such mortgage and security interest and
acknowledges receipt of copies of the Trust Agreement and the Indenture, it
being understood that such consent shall not affect any requirement or the
absence of any requirement for any consent under any other circumstances. Until
the Lien of the Indenture has been discharged, Lessee will furnish to Indenture
Trustee counterparts of all notices and other writings of any kind required to
be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has
been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss
Value and all other amounts payable hereunder (other than Excepted Payments) to
or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and
(b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but
not Owner Participant) (other than Expected Rights) herein as and to the extent
provided herein or in the Indenture and any express reference to Indenture
Trustee in any Section of this Lease shall not give rise to any implication that
Indenture Trustee may not exercise the rights of Lessor in any other Section of
this Lease as and to the extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement which
require or permit action by, the payment of monies to, the consent or approval
of, the furnishing of any instrument or information to, or the performance of
any other obligation to, Indenture Trustee, shall not be effective, and the
Sections hereof containing such provisions shall be read as though there were no
such requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received from
Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to or as directed by Indenture
Trustee shall constitute payment or performance of such obligation to Lessor by
Lessee under this Lease.
Any payment or performance of an obligation of Lessee under this
Lease by a Permitted Sublessee shall constitute payment or performance of such
obligation by Lessee.
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Section 20. Renewal Option.
Renewal Option. Lessee may renew this Lease as provided in the
following clause (i) and subject to the following clause (ii):
(i) Exercise of Renewal Option. Provided that this Lease has
not been previously terminated and that no Default or Event of Default shall
have occurred and be continuing at the time of the giving of irrevocable notice
hereinafter referred to in this clause (i) or at the time of the commencement of
the Renewal Term, Lessee, at its option, may renew this Lease for one Renewal
Term consisting of a period equal to five years. The right to renew this Lease
for such Renewal Term pursuant to this clause (i) shall be exercised upon
irrevocable notice from Lessee received by Lessor of Lessee's election to so
renew this Lease not less than twelve (12) months and not more than twenty-four
(24) months prior to the last day of the Basic Term. The Renewal Rent for the
Renewal Term shall be the "fair market rental value" of the Engine for such
Renewal Term (the "renewal fair market rental value") as determined in
accordance with the Appraisal Procedure. For purposes of this paragraph (i), the
Appraisal Procedure shall be initiated by Lessee no earlier than nine (9) months
prior to the end of the Basic Term. If Lessee shall fail to exercise its option
to extend the term of this Lease for the Renewal Term in accordance with the
provisions of this paragraph, all of Lessee's rights to extend the Term for such
Renewal Term shall expire. Lessee shall pay all reasonable costs and expenses,
including, without limitation, reasonable legal fees and expenses, incurred by
Lessor, Owner Participant and the Indenture Trustee in connection with the
exercise of such option.
(ii) Provisions Applicable During Renewal Term. All provisions
of this Lease, including, without limitation, as to Rent and Stipulated Loss
Value (which shall be, with appropriate adjustments, in no event less than the
greater of 120% of the "fair market sales value" of the Engine as of the first
day of the Renewal Term as determined pursuant to the Appraisal Procedure or the
amount set forth on Exhibit A as of the end of the Basic Term), shall remain in
effect and be applicable during such Renewal Term, except that Lessee shall pay
to the Lessor, semi-annually in arrears as Renewal Rent on each Renewal Rent
Payment Date, the amount for such Renewal Term as determined in accordance with
clause (i) of this Section 20.
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Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision of this
Lease 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. To the extent
permitted by Law, each of Lessor and Lessee hereby waives any provision of Law
which renders any provision hereof prohibited or unenforceable in any respect.
No term or provision of this Lease may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing expressed to be a
supplement or amendment to, or waiver or termination of this Lease signed by an
officer of the party against which the enforcement of the change, waiver,
discharge, or termination is sought. This Lease shall constitute an agreement of
lease, and nothing herein shall be construed as conveying to Lessee any right,
title, or interest in the Engine or any Part except as a lessee only. Without
limiting the foregoing, the parties hereto agree to treat this Agreement as a
lease for United States federal income tax purposes and Lessee will not file a
tax return which is inconsistent with the foregoing and nothing contained herein
shall be construed as an election by Lessor to treat Lessee as having acquired
the Engine for the purpose of the investment credit allowed by Section 38 of the
1954 Code or any similar or successor statute. The headings in this Lease are
for convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE
STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor and Lessee
required or permitted under the terms and provisions hereof shall be in writing
and shall be sent to Lessor or Lessee at their respective addresses set forth in
Exhibit C hereto (or such other addresses as the parties may designate from time
to time in writing). All notices, reports or other documents provided to Lessor
or Lessee shall be provided concurrently to Indenture Trustee
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(until such time as the Lien of the Indenture is discharged) and to Owner
Participant, at such address as Owner Participant and Indenture Trustee,
respectively, may designate from time to time. All notices and instructions
hereunder shall become effective when received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails to make
any payment of Rent required to be made by it hereunder or fails to perform or
comply with any covenant, agreement, or obligation contained herein, Lessor
shall have the right but not the obligation to make such payment or conform or
comply with such agreement, covenant, or obligation, and the amount of such
payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by or on behalf of Indenture Trustee on the
signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no Event of
Default shall have occurred and be continuing and this Lease has not been
declared or deemed to be in default, Lessor shall not take or cause to be taken
any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Engine
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
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Trustee, Note Holder or any other Person lawfully, claiming by or through them,
and provided further, that the foregoing shall not be deemed to have modified
the obligations of Lessee pursuant to Section 4(d) hereof, which obligations
remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as provided in the
Refunding Agreement, there has been no third party as agent involved in this
Lease and each indemnifies the other from liability for fees, commissions, or
other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by Lessor or
Indenture Trustee and are payable to Lessee shall, unless a Default or an Event
of Default shall have occurred and be continuing, be invested as provided below
until paid to Lessee or applied by Lessor or Indenture Trustee to the extent
provided herein. Until paid to Lessee or applied as provided herein or in the
Indenture such monies shall be invested by Lessor or Indenture Trustee from time
to time at the expense of Lessee in Specified Investments, as directed by Lessee
in accordance with the provisions of Section 3.07 of the Indenture if the Lien
of the Indenture shall not have been discharged and thereafter as provided
below. There shall be promptly (but not more frequently than monthly) remitted
to Lessee any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions and other reasonable expenses, if
any, incurred in connection with such investment) unless a Default or an Event
of Default shall have occurred and be continuing. Lessee will promptly pay to
Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture
Trustee harmless from, on demand, the amount of any loss realized as the result
of any such investment (together with any Taxes, fees, commission and other
reasonable expenses, if any, incurred in connection with such investment).
(i) Entire Agreement; Amendment. This Lease (including the Exhibits
hereto), any related letter agreements and the other Operative Documents, the
Financing Documents and the Purchase Documents (including the Exhibits thereto)
and all closing documents delivered in connection with any of the foregoing
embody the entire agreement and understanding among the parties hereto with
respect to the subject matter hereof. This Lease may be changed, waived,
discharged, amended, revised or terminated only by an instrument in writing
signed by the party against which enforcement is sought.
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(j) Expenses. Without limiting Section 13 or 18, Lessee agrees
within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications hereof or thereof, or waivers or consents hereunder or thereunder,
and (iii) any Default or Event of Default or the enforcement of any of Lessor's
rights, remedies or privileges hereunder or at law or in equity, but not
Lessor's legal fees and expenses in connection with the negotiation and
execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of Title 11
of the United States Code is amended, or if it is repealed and another statute
is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease and take
such other action not inconsistent with this Lease as Lessor reasonably deems
necessary so as to afford to Lessor the rights and benefits as such amended or
substituted statute confers upon owners and lessors of aircraft engines
similarly situated to Lessor.
(l) [Intentionally Left Blank].
(m) Submission to Jurisdiction; Service of Process; Waiver of Forum
Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submits for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United States District Court for the Southern District
of New York. Each of Lessee and Lessor represents and warrants that it is not
currently entitled to, and agrees that to the extent that Lessee or Lessor
hereinafter may acquire, any immunity (including, without limitation, sovereign
immunity) from jurisdiction of any court or from any legal process, it hereby,
to the extent permitted by Law, waives such immunity, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not personally subject to
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the jurisdiction of the above-named courts that it is immune from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that this Lease or any of the other Operative Documents or the
subject matter hereof or thereof or any of the transactions contemplated hereby
and thereby may not be enforced in or by such courts. Each of Lessee and Lessor
hereby generally consents to service of process by registered mail, return
receipt requested, addressed to it at its address set forth in Exhibit C, or at
such other office of Lessee or Lessor as from time to time may be designated by
Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable),
Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees
that its submission to jurisdiction and its designation of service of process by
mail set forth above is made for the express benefit of Lessor, Lessee, Owner
Participant, Indenture Trustee, each Note Holder and their successors and
assigns (as applicable). Final (after all appeals) judgment (the enforcement of
which has not been stayed) against either Lessee or Lessor obtained in any suit
originally brought in the court of the State of New York in New York County or
in the United States District of New York shall be conclusive, and, to the
extent permitted by applicable Law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings, against Lessee or Lessor, as the
case may be, or any of their assets in the courts of any country or place where
such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED,
including, without limitation, contract claims, tort claims, breach of duty
claims and other common law and statutory claims. Lessor and Lessee represent
and warrant that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this
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Agreement may be filed as a written consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto agree that all
statements, representations, covenants and agreements made by Lessor (when made
in its capacity as such and not in its individual capacity) contained in this
Agreement, unless expressly otherwise stated, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies that can be exercised and enforced against the Trust Estate. Therefore,
no recourse shall be had with respect to anything contained in this Agreement
(except for any express provisions that Lessor is responsible for in its
individual capacity), against Lessor in its individual capacity or against any
institution or person that becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them; provided that (i) this Section 21(n) shall not
be construed to prohibit any action or proceeding against any party hereto for
its own willful misconduct or grossly negligent conduct for which it would
otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Engine for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 14(d) of the Refunding Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree that the
Original Head Lease, as amended and restated by this Amended and Restated Engine
Lease Agreement [GPA 1991 AWA-E1] (and as otherwise extended, amended, modified,
renewed or supplemented), shall be governed by Article 2-A of the Uniform
Commercial Code of New York.
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<PAGE> 104
IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Lease to be executed by its duly authorized
officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as otherwise
expressly provided herein, but solely as
Owner Trustee
By:_________________________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:_________________________________________
Title:
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<PAGE> 105
The undersigned acknowledges receipt of this original counterpart of
the foregoing Lease on this ____ day of November, 1996 and consent to the terms
hereof.
FLEET NATIONAL BANK, not in its
individual capacity, but solely as
Indenture Trustee
By:_________________________________________
Title:
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<PAGE> 106
TABLE OF CONTENTS
Page
----
Section 1. Definitions........................................... 1
Section 2. Agreement to Lease.................................... 19
Section 3. Delivery and Acceptance; Term......................... 19
(a) Time of Delivery................................ 19
(b) [Intentionally Left Blank.]..................... 19
(c) Acceptance of Engine............................ 19
(d) Term of Lease................................... 20
Section 4. Rent.................................................. 20
(a) Rent............................................ 20
(b) Minimum Payments................................ 20
(c) Date, Place and Method of Payment............... 21
(d) Prohibition Against Setoff,
Counterclaim, Etc............................... 21
Section 5. Representations, Warranties and Covenants............. 23
(a) Warranties and Disclaimer of
Warranties...................................... 23
(b) Representations and Warranties
of Lessor. ..................................... 24
(c) No Amendments to Financing Documents............ 24
(d) Suppliers' Warranties........................... 25
Section 6. Possession and Use.................................... 25
(a) Possession...................................... 25
(b) [Intentionally Left Blank]...................... 32
(c) Lawful Insured Operations....................... 32
(d) Maintenance..................................... 33
(e) Registration and Insignia....................... 35
Section 7. Inspection............................................ 35
Section 8. Additional Covenants of Lessee........................ 36
(a) Financial Information........................... 36
(b) Maintenance of Corporate Existence.............. 38
(c) Maintenance of Status........................... 38
(d) Payment of Taxes................................ 38
(e) Consolidation, Merger, Etc...................... 39
(f) Information..................................... 40
(g) Place of Business............................... 40
(h) Certain Limitations on Use...................... 40
(i) Section 1110.................................... 41
(j) Permits and Licenses............................ 41
(k) Security Opinion; Annual Certificate............ 41
(l) Letter of Credit................................ 43
<PAGE> 107
Page
----
Section 9. Replacement of Parts; Alterations,
Modifications and Additions........................... 45
(a) Replacement of Parts............................ 45
(b) Alterations, Modifications and
Additions....................................... 46
(c) Pooling......................................... 48
Section 10. General Tax Indemnity................................. 49
(a) Indemnity....................................... 49
(b) Exclusions...................................... 51
(c) Covered Income Tax.............................. 53
(d) Reports and Returns............................. 55
(e) After-Tax Basis................................. 55
(f) Tax Benefit..................................... 56
(g) Payment......................................... 56
(h) Contest......................................... 57
(i) Refund.......................................... 59
(j) Diligence....................................... 59
(k) Affiliated Group................................ 59
(l) Verification.................................... 60
(m) Survival........................................ 60
Section 11. Loss, Damage and Requisition.......................... 60
(a) Event of Loss with Respect to
the Engine...................................... 60
(b) Conveyance of Replacement Engine................ 62
(c) Application of Proceeds and Payments............ 64
(d) Requisition for Use by Government
with Respect to the Engine...................... 65
(e) Application in Default.......................... 65
Section 12. Insurance............................................. 66
(a) Public Liability and Property
Damage Insurance................................ 66
(b) Insurance Against Loss or Damage................ 67
(c) Application of Insurance Proceeds
for an Event of Loss............................ 70
(d) Application of Insurance Proceeds for
Other than an Event of Loss..................... 71
(e) Application in Default.......................... 71
(f) Certificates.................................... 72
(g) Reinsurance..................................... 72
(h) Storage......................................... 73
(i) Amounts Held.................................... 73
(j) After the Term.................................. 74
(k) Governmental Indemnity.......................... 74
Section 13. General Indemnity..................................... 74
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<PAGE> 108
Page
----
Section 14. Liens................................................. 79
Section 15. Protection of Title and Further
Assurances............................................ 80
Section 16. Return of Engine and Records.......................... 82
(a) Return.......................................... 82
(b) Status Upon Return.............................. 82
(c) Substitute Engine............................... 83
(d) Records and Documents........................... 83
(e) Condition of Engine............................. 85
(f) Final Inspection................................ 85
(g) Engine Records and Documents.................... 86
(h) Corrections and Subsequent
Corrections..................................... 86
(i) [Intentionally Left Blank]...................... 86
(j) Exportation of the Engine....................... 86
(k) Service Bulletin and Modification
Kits............................................ 87
(l) Storage Upon Return............................. 87
(m) Resale/Release Cooperation...................... 87
Section 17. Events of Default..................................... 87
Section 18. Remedies.............................................. 90
Section 19. Security for Obligations.............................. 95
Section 20. Renewal Option........................................ 97
Renewal Option........................................ 97
Section 21. Miscellaneous......................................... 98
(a) Severability, Amendment, and
Construction.................................. 98
(b) GOVERNING LAW................................... 98
(c) Notices......................................... 98
(d) Lessor's Right to Perform for Lessee............ 99
(e) Counterparts.................................... 99
(f) Quiet Enjoyment................................. 99
(g) Brokers.........................................100
(h) Investment of Funds.............................100
(i) Entire Agreement; Amendment.....................100
(j) Expenses........................................101
(k) Federal Bankruptcy Code.........................101
(l) [Intentionally Left Blank]......................101
(m) Submission to Jurisdiction; Service
of Process; Waiver of Forum Non
Conveniens; Waiver of Jury Trial................101
(n) Limitation on Recourse..........................103
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<PAGE> 109
Page
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(o) Successor Trustee...............................103
(p) Article 2-A of the UCC..........................103
ANNEXES
Annex A - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Engine Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 2
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Permitted Sublessee Assignment Consent
Exhibit G - [Intentionally Left Blank]
Exhibit H - [Intentionally Left Blank]
Exhibit I - [Intentionally Left Blank]
Exhibit J - [Intentionally Left Blank]
Exhibit K - Form of Engine Status Report
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<PAGE> 1
EXHIBIT 4.31
AMENDED AND RESTATED ENGINE LEASE AGREEMENT
THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT dated as of
March 15, 1991 and amended and restated as of November 26, 1996 is entered into
between WILMINGTON TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as Owner Trustee under a Trust
Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as amended, and with its
principal place of business at Rodney Square North, Wilmington, Delaware 19890
(together with its successors and permitted assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors
and permitted assigns, "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease", "Equipment
Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass
Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past
Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company", and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as
<PAGE> 2
defined in the Pass Through Trust Agreement); and the term "Lease Amendment No.
1" shall have the meaning specified in the Refunding Agreement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or indirectly, owns or controls, is controlled
by or is under common control with such specified Person. Control will be deemed
to exist based on (i) ownership of 25% or more of the voting securities of a
Person or (ii) the power to direct or elect or cause the direction or election
of the management and policies of a Person whether by contract or otherwise.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Engine or a Part. Except as provided in Section 18, "fair market sales value" or
"fair market rental value" shall mean the value that would be obtained in an
arm's-length transaction between an informed and willing seller or lessor, as
the case may be, and an informed and willing buyer or lessee, as the case may
be, both under no compulsion to sell and purchase or to lease (and other than a
lessee in possession or a used equipment scrap dealer), as the case may be, as
such value is determined by an appraisal which assumes: (i) that the Engine or
such Part is unencumbered by this Lease (or any sublease) or any of the other
Operative Documents or any of the Financing Documents and the terms thereof;
(ii) that the Engine or such Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that the Engine or such Part meets the return conditions
specified in Section 16 and Exhibit E (whether or not in fact meeting such
conditions) and (iv) that Lessee has removed the Removable Parts entitled to be
removed under Section 9(b) (it being agreed that no such removal is permitted in
connection with an appraisal pursuant to Section 18) and replaced any part which
was removed from the Engine as a result of such Removable Part being installed;
provided, however, that costs of removal from the location of current use and
costs of sale shall not be a consideration in determining such value except in
connection with any determination of "fair market sales value" or "fair market
rental value" pursuant to Section 18; and provided, further, that any
determination of "fair market sales value" or "fair market rental value"
pursuant to Section 18 shall be on an "as is, where is" basis in its actual
condition and location subject to this Lease and any sublease and any and all
Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee
shall, except for any appraisal pursuant to Section 18 in which case only Lessor
shall select such appraiser (which
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<PAGE> 3
appraiser does not have to be acceptable to Lessee), select an independent
nationally-recognized aircraft appraiser, mutually acceptable to each of them,
who shall make the determination as to the "fair market sales value" or "fair
market rental value" of the Engine or such Part for which such appraisal is to
be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable
appraiser within ten (10) days, then each of Lessor and Lessee shall select an
appraiser and such determination shall be made by such appraisers (if either
party shall fail to appoint an appraiser within ten (10) days after notice from
the other party of the selection of its appraiser, then the appraisal made by
the other party's appraiser shall be determinative). If the two appraisers
chosen pursuant to the preceding sentence fail to agree upon a determination of
the "fair market sales value" or "fair market rental value" of the Engine or
such Part within twenty (20) days after their appointment, then such appraisers
shall mutually choose a third appraiser within ten (10) days thereafter,
provided that if such appraisers fail to mutually choose a third appraiser
within said 10-day period, such appointment shall be made by the American
Arbitration Association (or any successor) in New York, New York, and the three
appraisers so chosen shall each make such determination. The appraisal
determined by each of the three appraisers chosen pursuant to the preceding
sentence shall be averaged and the appraisal furthest from the average of the
three appraisals shall be disregarded. The appraisal determined by each of the
two remaining appraisers shall be averaged and such average shall be the
appraised "fair market sales value" or "fair market rental value" of the Engine
or such Part. Lessee shall bear all the fees and expenses of the Appraisal
Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"Basic Rent" for the Engine shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Engine
pursuant to Section 4(a)(i).
"Basic Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If
a Basic Rent Payment Date shall fall on a day which is not a Business Day, any
payment
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<PAGE> 4
due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 2.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Hartford, Connecticut are authorized or required by Law to be closed.
"Certificated Air Carrier" shall mean any corporation (except
the United States Government) domiciled in the United States of America and
holding a Certificate of Convenience and Necessity issued under Section 41102(a)
of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States Government)
domiciled in the United States of America and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is a citizen of the United States
(as defined in Section 40102 of the Federal Aviation Act) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve
Air Fleet Program administered by the United States Government and authorized
under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar
or substitute program of the United States Government.
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether or
not incorporated, which is under common control with Lessee within the meaning
of Section 414(b) or (c) of the Code.
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<PAGE> 5
"Default" shall mean an event or condition which would
constitute an Event of Default with the lapse of time or the giving of notice or
both.
"Delivery Date" shall mean March 27, 1991 being the date the
Engine was delivered to and accepted by the Original Head Lessee as Lessee
hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United
States of America.
"Engine" shall mean (i) the IAE Model V2500-A1 engine listed
by manufacturer's serial number in Lease Supplement No. 1, (ii) Parts or
components thereof, (iii) ancillary equipment or devices furnished therewith
under this Lease (including any separate equipment described on one or more
Lease Supplements hereto), (iv) the Engine Records and Documents and all other
manuals and records with respect to such Engine, and (v) all substitutions,
replacements and renewals of any and all thereof, including but not limited to,
any replacement engine which may from time to time be substituted, pursuant to
Section 6(a) or 11(a), for the Engine leased hereunder; together in each case
with any and all Parts incorporated or installed in or attached thereto or any
and all Parts removed therefrom so long as title thereto after removal from such
Engine shall remain vested in Lessor in accordance with the terms of Section 9
hereof. Except as otherwise set forth herein, at such time as a replacement
engine shall be so substituted and leased hereunder and the replacement Engine
shall have been subjected to the Lien of the Indenture (if the Lien of the
Indenture has not been discharged), such replaced Engine shall cease to be an
Engine hereunder.
"Engine Records and Documents" shall mean the items identified
in Exhibit B hereto, all of which shall be maintained in the English language.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one
or more clauses in Section 17.
"Event of Loss" shall mean any of the following events with
respect to the Engine: (a) loss of such property or the use thereof due to theft
or disappearance for a period in excess of sixty (60) consecutive days, but in
no event later than the last day of the Term;
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<PAGE> 6
(b) destruction or damage of such property that renders repair uneconomic or
such property permanently unfit for normal use by Lessee (or, if a Permitted
Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c)
any loss or disappearance of or damage to or destruction of such property which
results in an insurance settlement with respect to such property on the basis of
an actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any law, rule, regulation,
order or other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of the Engine in the normal
course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted
Sublessee's) business of air transportation of passengers shall have been
prohibited for a period of six (6) consecutive months, unless Lessee (or the
Permitted Sublessee), prior to the expiration of such six-month period, shall
have undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit such normal use of such item of equipment by
Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall
have been so prohibited by any such Governmental Entity for a period of twelve
(12) consecutive months or is continuing beyond the last day of the Term; or (h)
as otherwise provided herein.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 2, on which date the Basic Term of this Lease shall expire.
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"FAA" shall mean the Federal Aviation Administration of the
United States Department of Transportation or any successor agency.
"Federal Aviation Act" shall mean the sections of title 49 of
the United States Code relating to aviation, as amended and in effect from time
to time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal year-end
audited consolidated balance sheet and statements of income and cash flow for
the period then ending, copies of which for the fiscal year ending December 31,
1995, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement,
the Equipment Notes issued under the Indenture, the Intercreditor Agreement,
each Liquidity Facility, each Pass Through Trust Agreement and each supplement
thereto and any certificate delivered or entered into in accordance with the
foregoing, as amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made mandatory
to the Engine by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Engine by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
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<PAGE> 8
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Engine or its
operations.
"GPA Aircraft" shall mean any aircraft which is the subject of
any of the Other Leases.
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and
as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the
Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture) and each Pass Through Trust, each Pass Through
Trustee (in its individual capacity and as trustee under the Pass Through
Trusts), the Subordination Agent and each Liquidity Provider, their respective
successors and permitted assigns and (and, in the case of a permitted assign of
Owner Participant that is a partnership, the partners of such partnership), and
any combination thereof and their respective officers, directors, agents,
servants, employees, subsidiaries, Affiliates and shareholders.
"Indenture" shall mean the Amended and Restated Trust
Indenture and Security Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991,
and amended and restated as of November 26, 1996, as the same may be further
amended, supplemented or modified from time to time, between Indenture Trustee
and Lessor. The term "Indenture" shall also include the Indenture Supplements
entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
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<PAGE> 9
"Interest Rate" shall mean (i) with respect to the portion of
any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture computed on the basis of a 360-day year and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate from
time to time in effect from the date the amount becomes due to the date it is
paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as
the case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any Governmental
Entity; (ii) any treaty, pact, compact or other agreement to which any
Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as originally executed and as amended, supplemented or otherwise
modified from time to time, including, without limitation, by one or more Lease
Supplements, as a whole and not to any particular Section or other subdivision,
and any reference to a "Section " or an "Exhibit" shall refer to a Section or
Exhibit of this Lease, as so amended, supplemented or modified, unless expressly
provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1 and Lease
Supplement No. 2 and each subsequent Lease Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1991
AWA-E2] No. 1 dated March 27, 1991 between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1991
AWA-E2] No. 2, substantially in the
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<PAGE> 10
form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the
Restatement Date for the purpose of confirming the leasing of the Engine
hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Engine or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Engine or the
administration of the Trust Estate or the Trust Indenture Estate pursuant to the
Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or
otherwise, (ii) acts or omissions of Indenture Trustee in its individual
capacity (and not as Indenture Trustee) not contemplated hereunder or under the
other Operative Documents, or acts or omissions of Indenture Trustee in its
individual capacity (and not as Indenture Trustee) which are in violation of any
of the Operative Documents, or (iii) Taxes imposed on or Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
which are excluded from indemnification by Lessee, or (iv) Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
arising out of the voluntary or involuntary transfer by Indenture Trustee in its
individual capacity (and not as Indenture Trustee) of all or any portion of its
interest in the Engine, the Trust Estate, the Trust Indenture Estate or the
Operative Documents (except a Claim resulting from the exercise of remedies
under and in accordance with the Indenture or for a transfer provided for in the
Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals
hereto.
"Lessor" shall have the meaning set forth in the Recitals
hereto.
"Lessor's Lien" shall mean any Lien or disposition of title
affecting the Engine or any Part arising as a result of (i) any claim against
Lessor, Owner Participant, Trust Company or any of their Affiliates not related
to the transactions contemplated by this Lease or the other Operative Documents,
the Financing Documents or the Purchase Documents; (ii) any affirmative act of
Lessor, Owner Participant, Trust Company or any of their Affiliates not
expressly contemplated by this Lease or the other Operative Documents, the
Financing Documents or the Purchase Documents or not permitted without consent
(which consent has not been
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granted) by any party hereto or thereto or that is in violation of any term of
this Lease or the other Operative Documents, the Financing Documents or the
Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company,
Lessor or Owner Participant or any of their Affiliates or the consolidated group
of taxpayers of which any of them is a member which are not to be indemnified
against by Lessee under the Operative Documents, the Purchase Documents or the
Financing Documents or by Original Head Lessee under the Original Head Lease Tax
Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company,
Owner Participant or Lessor or any of their Affiliates arising out of the
transfer of all or any part of their respective interest in the Engine, the
Trust Estate, the Operative Documents or the Financing Documents other than any
transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 (except
Liens resulting from a transfer not permitted by such Section ) or 20 of this
Lease or pursuant to Section 10 of the Refunding Agreement; provided, however,
that there shall be excluded from this definition and Lessor shall not be
required to remove any Lien which would otherwise constitute a Lessor's Lien, if
it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Engine or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge,
lien, charge, encumbrance, lease, exercise of rights, security interest, lease
in the nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft which is applicable to IAE AG V2500 Engines in effect on the date
hereof or as modified with the approval of the FAA without affecting, or any
other FAA approved maintenance program which does not affect, the return
condition standards set forth in Section 16 and Exhibit E or (ii) if the Engine
is subject to a Permitted Sublease to a Foreign Air Carrier any other FAA
approved maintenance program for the Engine which is approved by the aviation
authority of the country of
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registry and complies with the requirements applicable to maintenance of the
Engine contained in the definition of Foreign Air Carrier. The Maintenance
Program shall encompass scheduled maintenance, condition monitored maintenance,
and on-condition maintenance of the Engine, including, but not limited to,
servicing, testing, preventive maintenance, repairs, structural inspections,
structure life improvements, system checks, overhauls, approved modifications,
service bulletins, engineering orders, airworthiness directives, and corrosion
control inspections and treatments. All modifications and supplements to the
Maintenance Program shall be provided to Lessor upon its reasonable request and
Lessor shall be given reasonable access to the Maintenance Program upon its
request.
"Manufacturer" shall mean IAE in its capacity as manufacturer
of the Engine, together with any subcontractor or supplier thereof.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, any sublease, the Tax Indemnification Agreement, the Financing
Documents, that certain letter dated as of the Restatement Date and any
certificate delivered or entered into pursuant to the foregoing, as
amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Engine Lease Agreement
[GPA 1991 AWA-E2], with respect to the Aircraft, dated as of March 15, 1991,
between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect immediately prior to the
Restatement Date, as more particularly described in Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall mean
the Head Lease Tax Indemnification
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Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, and amended and
restated as of the Restatement Date between the Original Head Lessee and Owner
Participant, as amended, supplemented or otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA I, Inc., a
Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as
defined in the Original Head Lease) as in effect immediately prior to the
Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft
Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA
1990 AWA-13] amended and restated as of the Restatement Date between Wilmington
Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as
Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14]
amended and restated as of the Restatement Date between Wilmington Trust Company
as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended
and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as
of the Restatement Date between Wilmington Trust Company as Owner Trustee,
Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated
Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the
Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and
America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E1] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor and America West
Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement
[GPA 1991 AWA-E3] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee, each as amended, supplemented or otherwise modified from time to
time.
"Other Letters of Credit" shall mean any and all letters of
credit pursuant to Section 8(l) of the Other Leases.
"Owner Participant" shall mean _______________________, a
Delaware corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
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<PAGE> 14
"Owner Trustee" shall mean Wilmington Trust Company, as Owner
Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1991 AWA-E2], dated as of March 15, 1991, among Original Head
Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the
"Lender" named therein, as amended by the Letter Agreement dated as of July 29,
1993, as the same may be further amended, supplemented or otherwise modified
from time to time and as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature which may now or from time to time be incorporated or installed
in or attached to or were provided by the Manufacturer with the Engine or so
long as title thereto shall remain vested in Lessor in accordance with the terms
of Section 9 hereof after removal from such Engine. Except as otherwise set
forth herein, at such time as a replacement part shall be substituted for a Part
in accordance with Section 9 hereof, the Part so replaced shall cease to be a
Part hereunder.
"Payment Location" shall have the meaning set forth in Exhibit
C, as the same may be changed from time to time by Lessor as provided in Section
4(c).
"Permitted Lien" shall mean any Lien referred to in clauses
(i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier
or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United
States Government or an agency or instrumentality thereof which bears the full
faith and credit of the United States of America or (c) any other Person
approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company,
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<PAGE> 15
joint venture, trust, estate, unincorporated organization, association,
Governmental Entity, or organization or association of which any of the above is
a member or a participant.
"Purchase Agreement" shall mean the Engine Sale Agreement
dated as of September 28, 1990, among IAE and Original Head Lessee, as the same
may be amended, supplemented or otherwise modified to the extent permitted by
the terms thereof from time to time.
"Purchase Documents" shall mean the Purchase Agreement and any
other agreement, document or certificate delivered or entered into pursuant to
the foregoing, as amended, supplemented or otherwise modified.
"Removable Part" shall have the meaning set forth in Section
9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section
20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
If a Renewal Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Renewal Rent Payment Date shall be made on the next
succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20
following the end of the Basic Term if Lessee shall have exercised its renewal
option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may
be, and Supplemental Rent, collectively.
"Replacement Engine" shall have the meanings specified in
accordance with its description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee, any
of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer
or Controller.
"Restricted Use Period" shall have the meaning specified in
Exhibit C.
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<PAGE> 16
"Return Occasion" shall mean the event that occurs when
possession of the Engine is to be returned from Lessee to Lessor at the end of
the Term of this Lease or upon Lessor taking possession pursuant to Section 18
or for any other reason.
"Shipping Stand" shall mean the cradle designed to hold an
engine which has a suitable shock mounting system to allow the engine to be
transported by truck or other vehicle without damage, listed by part number and
manufacturer's serial number in Lease Supplement No. 1.
"Specified Investments" shall mean (i) direct obligations of
the United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an entity
referred to in clause (iii) above or another financial institution having a net
worth of at least $750,000,000 and having a rating of "B" or better from the
Thompson BankWatch, Inc. is obligated to repurchase any such obligation not
later than ninety (90) days after the purchase of any such obligation; and (v)
money market funds which invest solely in obligations described in clause (i);
provided that if all of the above investments are unavailable, the entire
amounts to be invested may be used to purchase Federal funds from an entity
described in clause (iii) above; and provided further that no investment shall
be eligible as a "Specified Investment" unless the final maturity or date of
return of such investment is on or before the date which is ninety (90) days
from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date
during the Basic Term the amount set forth on Exhibit A hereto and, thereafter,
the amount described in Section 20(ii) (it being understood and agreed that the
amounts set forth in Exhibit A take into account fully the amount and
application of each installment of Basic Rent or Renewal Rent on each Stipulated
Loss Value Date (other than
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a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent
Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is
to be made in respect thereof except as expressly provided herein on a Basic
Rent Payment Date or a Renewal Rent Payment Date). In the event that it is
necessary to determine a separate Stipulated Loss Value for the Engine, such
Stipulated Loss Value shall be based on the ratio that the original cost to
Lessor of the Engine bears to Lessor's Cost (as set forth in the Original Head
Lease) for the Engine.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth, on Exhibit
A hereto.
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any
payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of
an amount equal to average daily Basic Rent or Renewal Rent in connection with
an extension of the Term of this Lease as a result of (a) an incipient Event of
Loss and the operation of Section 11 hereof or (b) the need to correct any
failure of the Engine to satisfy the requirements of Section 16 and Exhibit E
hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due
to the Owner Trustee in respect of fees or expenses as provided in Section 21(j)
hereof; (vi) an amount equal to any payment due to the Indenture Trustee in
respect of fees or expenses as provided in the Indenture and/or Section 21(j)
hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee
in respect of fees or expenses pursuant to the Pass Through Trust Agreement;
(viii) the Pro Rata Share of any payment due to the Subordination Agent in
respect of fees, compensation, costs or expenses pursuant to the Intercreditor
Agreement; (ix) an amount equal to the amount specified in clause (b) of the
fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent
permitted by applicable Law, interest at the Interest Rate calculated: (1) on
any part of any installment of Basic Rent or Renewal Rent, or average daily
Basic Rent referred to in clause (iii) of this definition of "Supplemental
Rent", not paid on the due date thereof for the period for which the same shall
be overdue and (2) on any Supplemental Rent not paid when due hereunder from and
including the due date until the same shall be paid. As used herein, "Pro Rata
Share" means as of any date of determination a fraction the numerator of which
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is the aggregate Principal Amount then outstanding of the Equipment Notes issued
under the Indenture and the denominator of which is the aggregate principal
balance then outstanding of all "equipment notes" issued under the Indentures
(as defined in the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-E2], dated as of
December 12, 1990, and as amended and restated as of November 26, 1996, between
Original Head Lessee and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in
Lease Supplement No. 2 and the Renewal Term, if Lessee extends the Term in
accordance with Section 20, in either case, as extended or deemed extended as a
result of the occurrence of an event described in clause (iii) to the definition
of "Supplemental Rent" in this Lease, for which the Engine is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1991
AWA-E2] dated as of March 15, 1991 as amended by Trust Supplement No. 1, and as
further amended by Trust Supplement No. 2, between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust Agreement"
shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
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"Trust Supplement No. 1" shall mean Trust Agreement Supplement
[GPA 1991 AWA-E2] No. 1 dated the Delivery Date between Lessor and Owner
Participant for the purpose of bringing the Aircraft and the Original Head Lease
into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement
[GPA 1991 AWA-E2] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government
of the United States of America and any board, commission, department, division,
organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees
to furnish the Engine to a third party pursuant to which such Engine (i) shall
be operated solely by regular employees of Lessee possessing all current
certificates and licenses required under the Federal Aviation Act (it is
understood that cabin attendants need not be regular employees of Lessee) and
Lessee otherwise maintains operational control and possession thereof, and (ii)
shall be maintained by Lessee in accordance with its normal maintenance
practices and this Lease to which the Engine is subject, and otherwise the
insurance required hereunder shall be maintained and the Engine shall be used
and operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease
the Engine to Lessee, and Lessee hereby agrees to lease the Engine from Lessor,
on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Engine was delivered to Lessee, and
Lessee accepted delivery of the Engine, on March 27, 1991.
(b) [Intentionally Left Blank.]
(c) Acceptance of Engine. The Engine leased hereunder was
delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER
OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF.
Lessee hereby agrees that it has accepted the Engine for all
purposes of this Lease and Lessee's
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acceptance of the Engine was conclusive evidence that, as between Lessor and
Lessee, the Engine was in all respects satisfactory to Lessee and was in
compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall commence
on the Delivery Date and shall continue until the Expiration Date; provided,
however, that the Term of this Lease may be earlier terminated pursuant to the
provisions hereof.
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the
following as Rent hereunder:
(i) Basic Rent. The Basic Rent, as set forth in Exhibit C
throughout the Basic Term hereof, in consecutive installments, in arrears as set
forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent
Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all
Supplemental Rent, which shall be due and payable ten (10) Business Days after
demand unless otherwise specifically provided. In the event of any failure on
the part of Lessee to pay any Supplemental Rent when due, Lessor shall have all
rights, powers and remedies provided for herein or by law or equity or otherwise
in the case of nonpayment of Basic or Renewal Rent. Lessee's obligation to pay
Supplemental Rent which is due and owing pursuant to the terms hereof shall
survive the expiration or termination of Lessee's obligation to pay Basic Rent
or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any provision in this
Lease or in any other Operative Document to the contrary, under all
circumstances and in any event, (i) the Stipulated Loss Value, together with the
payment of Supplemental Rent and all other Rent then due hereunder, as of any
time and as of the date of any payment thereof shall (both before and after
giving effect to any reductions therefrom) be in an amount at least sufficient
to pay in full as of such time or date the aggregate unpaid principal amount of
the Equipment Notes then outstanding and all accrued and unpaid interest
(assuming interest has been timely paid) thereon and (ii) Basic Rent payable on
any Basic Rent Payment Date shall at least equal the aggregate amount of
principal and interest due and payable on the Equipment Notes on such Basic Rent
Payment Date. It is agreed, however, that no installment of Basic Rent or
Stipulated Loss Value shall be increased or adjusted by
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reason of (A) any attachment or diversion of Rent on account of any Lessor's
Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes
or the other Financing Documents made without the prior written consent of
Lessee or (C) the acceleration of any Equipment Note due to the occurrence of
any "Indenture Event of Default" (as defined in the Indenture) which does not
constitute an Event of Default hereunder. It is further agreed that nothing in
this Lease or any other Operative Document shall be deemed to constitute a
guaranty of the value, utility or useful life of the Aircraft or a guaranty in
respect of interest, principal or any other amounts payable in respect of or
under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on which a
payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in the City of New York or Hartford, Connecticut as Indenture
Trustee may direct by thirty (30) days prior written notice to Lessee, except
for all Excepted Payments. All Excepted Payments, and, upon discharge of the
Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be
paid in such immediately available funds no later than 12:00 p.m. (noon), New
York City time, on the date payable hereunder, to Lessor or to Owner
Participant, as appropriate, in accordance with the payment instructions set
forth in Exhibit C or at such other address as Lessor may direct by thirty (30)
days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This Lease
is a net lease. Lessee's obligations to pay all Rent and to perform all other
obligations hereunder are absolute and unconditional and shall not be affected
or reduced by any circumstances, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense, or other right which Lessee may have against
Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Engine, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
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limitation, any breach by Lessor of its representations, warranties or covenants
contained herein or in the other Operative Documents; (ii) any defect in the
title, airworthiness, eligibility for registration under the Federal Aviation
Act, condition, design, operation, or fitness for use of, or any damage to or
loss or destruction of, the Engine (subject to the provisions of Section
11(a)(ii) hereof), any interruption or cessation in the use of or possession
thereof by or availability to Lessee for any reason whatsoever, whether arising
out of or related to an act or omission of Lessee, Lessor, Original Head Lessee,
Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any
Person providing services with respect to the Engine or any other Person; (iii)
any Liens with respect to the Engine; (iv) the invalidity or unenforceability or
lack of due authorization or other infirmity of this Lease or any sublease or
any absence of right, power or authority of Lessor, Original Head Lessee, Lessee
or Indenture Trustee to enter into this Lease or the Indenture, as the case may
be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or
against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee
or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening
of any nature whatsoever, whether or not similar to any of the foregoing; it
being the expressed intention of Lessor and Lessee that all Rent payable
hereunder shall be payable in all events, unless the obligation to pay the same
shall be terminated pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Engine or any obligation imposed
upon Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law, except as specifically provided herein,
Lessee waives all rights (if any) to any diminution in its Rent obligations
hereunder and nonetheless agrees to pay, to Indenture Trustee or
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Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or
Renewal Rent, as the case may be, payment and any Supplemental Rent payment at
the time such payments would have become due and payable in accordance with the
terms hereof had this Lease not been terminated in whole or in part, and so long
as such payments are made and all other terms and conditions hereof are complied
with by Lessee, Lessor and Lessee will deem this Lease to remain in full force
and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall
be liable therefor, on account of any failure of the Original Head Lessee,
Lessor, Indenture Trustee or any other such Person to perform its express
obligations under this Lease and the other Operative Documents, or to enforce
any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties.
THE ENGINE WAS DELIVERED AND IS BEING LEASED BY LESSOR TO
LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE ENGINE
ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF
HAVING LEASED THE ENGINE UNDER THIS LEASE OR BY HAVING ACQUIRED THE ENGINE OR
DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER
OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE,
AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE
OF THE ENGINE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
ENGINE, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE ENGINE, INCLUDING WITHOUT LIMITATION ANY
LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR
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DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS,
OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES
AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION
OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE ENGINE) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE ENGINE OR BY ANY INADEQUACY
THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE ENGINE OR
ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS
OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv)
THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF THE ENGINE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS
SECTION 5(a)(i) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER WITH RESPECT TO THE ENGINE, EXPRESS OR IMPLIED, AND LESSOR
SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES,
INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE
OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT
THAT: (A) Lessor represents and warrants that, (x) on the Delivery Date, Lessor
had, and on the Restatement Date Lessor has, the right to lease the Engine
hereunder and (y) on the Delivery Date the Engine was free of Head Lessor's
Liens and on the Restatement Date the Engine is free of Lessor's Liens and Head
Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume
or suffer to exist any Lessor's Lien on the Engine.
(b) Representations and Warranties of Lessor. Lessor hereby
represents and warrants, as of the Restatement Date that its representations and
warranties set forth in Section 9(b) of the Refunding Agreement were true when
made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor covenants and
agrees that Lessor will not, without the prior written consent of Lessee, amend,
modify, supplement or waive any provision of any Financing Document in such a
way as to materially increase Lessee's obligations hereunder or materially
reduce Lessee's rights hereunder.
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The representations, warranties and covenants of Lessor under
Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and
delivery of this Lease and the delivery of the Engine and the Restatement Date.
(d) Suppliers' Warranties. So long as a Default or an Event of
Default has not occurred and is continuing and provided that the Engine
continues to be maintained, modified and repaired as required hereunder, Lessor
hereby assigns or, if by their terms not assignable, agrees otherwise to make
available to Lessee the right to exercise in Lessee's name such rights as Lessor
may have or may subsequently obtain (but without representation or warranty by
or recourse to Lessor) with respect to any product warranty, service life
policy, trademark, patent or copyright infringement indemnity, or propulsion
system performance guaranty, of the Manufacturer or Manufacturer's subsidiary,
if any, or any subcontractor or vendor with respect thereto under the Purchase
Documents (except those which were given directly to Parent, the Original Head
Lessee or any of their Affiliates and are not directly related to the operator's
use of the Engine), to the extent that the same may be assigned or otherwise
made available to Lessee, and Lessor agrees to exert its reasonable efforts, at
Lessee's expense and upon its request, to enforce such rights as Lessor may have
with respect thereto for the benefit of Lessee; provided, however, that upon and
during the continuance of a Default or an Event of Default, such assignment or
other rights which are otherwise made available to Lessee shall immediately and
automatically without further action be deemed cancelled and, to the extent of
any remaining interest held by Lessee, deemed reassigned to Lessor and all such
rights shall revert to Lessor automatically including all claims thereunder
whether or not perfected and all amounts payable shall be paid to and held by
Lessor. In no event, however, shall Lessee have any right to amend, supplement
or otherwise modify the Purchase Agreement (by change order or otherwise). In
connection with the foregoing, Lessee agrees to be bound by and comply with all
applicable terms, conditions and limitations of the provisions of the Purchase
Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE
WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST
HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR
OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF
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THE ENGINE; provided, that, so long as no Event of Default or Default shall have
occurred and be continuing or would result therefrom and so long as the action
to be taken shall not adversely affect Lessor's title to or other interest in,
or the Lien of the Indenture on, the Engine or this Lease or the insurance
required to be maintained hereunder and Lessee is otherwise in full compliance
with Section 12, and so long as all necessary approvals of the FAA and any other
Governmental Entity having jurisdiction have been obtained, then Lessee, without
the prior written consent of Lessor, may, only to the extent provided below and
subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below:
(1) subject the Engine to a normal
interchange, maintenance, servicing or pooling agreement or similar
arrangement with a Permitted Sublessee, in each case customary in the
airline industry of which Lessee is a part and entered into in the
ordinary course of its business; provided that Lessor has been given an
opportunity to review the interchange, maintenance, servicing, pooling
or similar arrangement, including but not limited to all agreements and
other documents relating thereto and has consented, which consent shall
not be unreasonably withheld, to the placement of the Engine into such
interchange, maintenance, servicing, pooling or similar arrangement and
provided, further that (A) no transfer of the registration of the
Engine shall be effected in connection therewith and (B) (i) no such
agreement or arrangement contemplates, results in or requires the
transfer of title to the Engine, and (ii) if Lessor's title to the
Engine shall be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to the
Engine and not an Event of Default and Lessee shall comply with Section
11(a) hereof in respect thereof;
(2) deliver possession of the Engine to
the Manufacturer, or in accordance with the Maintenance Program to an
FAA certified repair station, for testing, service, storage, repair,
maintenance, inspection or overhaul work on the Engine or any part
thereof or for alterations or modifications in or additions to the
Engine to the extent required or permitted by the terms of Section 9
hereof;
(3) transfer possession of the Engine
to the United States of America or any instrumentality or agency
thereof pursuant to a sublease;
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(4) (i) subject the Engine to the Civil Reserve Air Fleet
Program and transfer possession of the Engine to the United States
Government pursuant to the Civil Reserve Air Fleet Program, so long as
Lessee shall promptly notify Lessor upon transferring possession of the
Engine to the United States Government pursuant to the Civil Reserve
Air Fleet Program and provide Lessor with the name and address of the
Contracting Office Representative for the Military Airlift Command of
the United States Air Force to whom notices must be given;
(ii) subject the Engine to (a) a service contract
with the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term, or
(b) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install the Engine on an airframe owned by Lessee
free and clear of all Liens except (A) Permitted Liens and Liens which
apply only to engines (other than the Engine), appliances, parts,
instruments, appurtenances, accessories, furnishings and other
equipment (other than Parts) installed on such airframe (but not to the
airframe as an entirety) and (B) the rights of participants under
normal interchange agreements which are customary in the airline
industry and do not contemplate, permit, result in or require the
transfer of title to the airframe or the engine installed thereon;
(6) install the Engine on an airframe leased to Lessee
or owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of all
Liens except the rights of the parties to the lease or conditional sale
or other security agreement covering such airframe and except Liens of
the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the
Lien of any mortgage which provides that the Engine leased to Lessee
hereby shall not become subject to the Lien thereof or to any rights of
any party thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of the
Engine on any airframe subject to the Lien of such mortgage, unless and
until Lessee shall become the owner of the Engine and Lessor shall have
no further interest therein, all pursuant to the express terms of this
Lease; and (B) there shall be in effect a written
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<PAGE> 28
agreement of the lessor or secured party of such airframe (which may be
contained in the lease or conditional sale or other security agreement
covering such airframe) substantially similar in effect to the
agreement of Lessor in Section 6(b) below whereby such lessor or
secured party effectively and expressly agrees that neither it nor its
successors or assigns will acquire or claim any right, title or
interest in the Engine by reason of the Engine being installed on such
airframe at any time while such Engine is subject to this Lease or is
owned by Lessor, and a copy of such agreement shall be provided to
Lessor upon written request;
(7) install the Engine on an airframe
owned by Lessee, leased to Lessee or purchased by Lessee subject to a
conditional sale or other security agreement under circumstances where
neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable;
provided that such installation shall be deemed an Event of Loss with
respect to the Engine and Lessee shall comply with Section 11(a) hereof
in respect thereof, Lessor not intending hereby to waive any right or
interest it may have to or in the Engine under applicable Law until
compliance by Lessee with such Section 11;
(8) enter into a Wet Lease for the
aircraft on which the Engine is installed in the ordinary course of
Lessee's business for a period not extending beyond the Term; provided
that if Lessee shall enter into any Wet Lease for a period of more than
six months (including renewal options) Lessee shall provide to Lessor
written notice of such Wet Lease (such notice to be given at least ten
(10) Business Days prior to entering into such Wet Lease); or
(9) sublease the Engine to any Permitted
Sublessee on the terms and conditions set forth in Section 6(a)(iii)
below.
(ii) Certain Limitations on Transfers. With
respect to any transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that
receives possession by reason of a transfer permitted by Section 6(a)
hereof (other than the transfer of the Engine which is deemed to have
been an Event of Loss) and any Wet Lease shall be expressly subject and
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<PAGE> 29
subordinate to all the terms of this Lease and the Lien of the
Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and
under the other Operative Documents shall continue in full force and
effect and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if
such transfer had not occurred and no provision of this Lease shall be
deemed a waiver of the Lessor's rights hereunder or under the other
Operative Documents nor discharge or diminish any of Lessee's
obligations hereunder or under the other Operative Documents;
(3) During the Restricted Use Period,
no Wet Lease, Permitted Sublease or other relinquishment of possession
of the Engine pursuant to the terms of this Section 6(a) shall be
permitted if such Wet Lease, Permitted Sublease or other relinquishment
of possession would cause the Engine to be "tax-exempt use property"
within the meaning of Section 168(h) of the Code or cease to be
"Section 38 property" within the meaning of Section 48(a) of the Code
(as determined after the application of Section 47(a)(7) of the Code);
(4) The term of any transfer, Wet
Lease, Permitted Sublease or other relinquishment of possession shall
not extend beyond the Basic Term or the Renewal Term (if Lessee shall
have exercised its option to renew this Lease in accordance with the
terms hereof);
(5) No transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession of the Engine shall in
any way discharge or diminish any of Lessee's obligations to Lessor or
any other Person hereunder for which obligations Lessee shall remain
primarily liable;
(6) The sublessee under any Permitted
Sublease, in its consent thereto, shall confirm that from and after the
occurrence and continuance of an Event of Default and, unless an Event
of Default specified in Section 17(e), (f) or (g) of this Lease has
occurred and is continuing, this Lease being deemed or declared in
default, Lessor (and, so long as the Lien of the Indenture shall not
have been discharged, Indenture Trustee) shall be entitled to enforce
directly and in its own name all representations,
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warranties, indemnities, covenants and agreements under the applicable
Permitted Sublease; and
(7) Each Permitted Sublease shall (A)
provide that (I) the Engine may not be operated or used other than as
provided in this Lease and shall be maintained and operated as required
hereunder, (II) Lessor may avoid or terminate such sublease following
an Event of Default hereunder and (III) to the extent not accomplished
by an assignment of the Permitted Sublease, upon the occurrence of an
Event of Default hereunder, Lessee's rights under such Permitted
Sublease shall automatically be deemed assigned to Lessor; and (B) be a
"net lease" in accordance with industry practice and shall be
comparable to, or more restrictive than, this Lease and under such
Permitted Sublease (except a sublease to the United States Government
or a Foreign Air Carrier after the Restricted Use Period), Lessee as
lessor under such Permitted Sublease, must be entitled to the same
benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder
and such Permitted Sublease shall contain provisions regarding such
Section 1110 which are substantially the same as the related provisions
of this Lease. In addition, from and after the occurrence and
continuance of an Event of Default, all rent and other amounts payable
by the Permitted Sublessee under such Permitted Sublease shall be paid
directly to Indenture Trustee and, upon discharge of the Lien of the
Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any
sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by
Law) or Section 6(a)(i)(9) above:
(1) Lessee may sublease the Engine or
the aircraft on which the Engine is installed to a Permitted Sublessee
(each of which shall constitute a "Permitted Sublease") if (A) in any
such case, the Permitted Sublessee under such sublease is not subject
to a proceeding or final order under applicable bankruptcy, insolvency
or reorganization laws on the date such sublease is entered into, (B)
in the event that the Permitted Sublessee under such sublease is a
Foreign Air Carrier (other than a Foreign Air Carrier principally based
in Taiwan), the United States maintains diplomatic relations with the
country in which such proposed Permitted Sublessee is principally based
at the time such sublease is entered into (or, in the case of a
sublease to a proposed Permitted Sublessee principally based in Taiwan,
maintains
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diplomatic relations at least as good as those in effect on the
Restatement Date) and (C) in the event that the Permitted Sublessee
under such sublease is a Foreign Air Carrier, Lessor and the Indenture
Trustee shall have received an opinion of counsel to Lessee, in form
and substance reasonably satisfactory to Owner Participant and the
Indenture Trustee, to the effect that (I) the terms of the proposed
sublease will be legal, valid, binding and (subject to customary
exceptions in foreign opinions generally) enforceable against the
proposed Permitted Sublessee in the country in which the Permitted
Sublessee is principally based, (II) there exist no possessory rights
in favor of the Permitted Sublessee under such sublease under the laws
of such Permitted Sublessee's country of domicile that would, upon
bankruptcy or insolvency of or other default by Lessee, prevent the
return or repossession of the Engine in accordance with the terms of
this Lease, (III) (unless Lessee shall have agreed or is required to
provide insurance covering the risk of requisition of use of the Engine
by the government of the country of such Permitted Sublessee's country
of domicile) the laws of such Permitted Sublessee's country of domicile
require fair compensation by the government of such jurisdiction
payable in currency freely convertible into dollars for the loss of use
of the Engine in the event of the requisition by such government of
such use, (IV) the Permitted Sublessee is either not entitled to
sovereign immunity, or has effectively waived such sovereign immunity,
with respect to its rights and obligations under the proposed sublease;
(V) the laws of such Permitted Sublessee's country of domicile would
give recognition to Lessor's title to the Engine, to the registry of
the Engine in the name of the Lessor (or Lessee, as "lessee", or the
proposed Permitted Sublessee, as "sublessee", as appropriate) and to
the Lien of the Indenture; (VI) it is not necessary under the laws of
such Permitted Sublessee's country of domicile, solely as a consequence
of such subleasing and without giving effect to any other activity of
Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate
thereof, as the case may be, for the Owner Trustee, the Owner
Participant or the Indenture Trustee to qualify to do business in such
jurisdiction and (VII) if the Owner Participant so requests, (x) under
the laws of such Permitted Sublessee's country of domicile there is no
tort liability of the owner of an aircraft not in possession thereof
(it being agreed that in the event this opinion cannot be given in a
form reasonably satisfactory to Owner Participant, such opinion shall
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<PAGE> 32
be waived if insurance reasonably satisfactory to Owner Participant is
provided to cover such risk), and (y) such other matters as the Owner
Participant reasonably requests, provided, however, that no sublease
shall extend beyond the expiration of the Basic Term or any Renewal
Term then in effect.
Any Permitted Sublease shall expressly provide that the rights
of any Permitted Sublessee shall be expressly subject and subordinate to all the
terms of this Lease and to the Lien of the Indenture (if it has not been
discharged), including, without limitation, the covenants contained in Sections
6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to
Section 18 hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder or under the other Operative Documents, and such rights shall
continue as if such Permitted Sublease had not occurred. Any Permitted Sublease
shall expressly prohibit any further sub-sublease or assignment or any other
similar transfer of the Engine or rights thereto by the Permitted Sublessee.
Lessee shall provide to the Owner Participant and the Indenture Trustee (i)
written notice of any Permitted Sublease hereunder (such notice to be given not
later than ten Business Days prior to entering into any Permitted Sublease with
any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease
together with an assignment, as security for Lessee's obligations hereunder, of
such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a
consent thereto from such Permitted Sublessee, substantially in the form of
Exhibit F-3 hereto, within ten (10) Business Days following the effective date
of such Permitted Sublease.
(b) [Intentionally Left Blank]
(c) Lawful Insured Operations. Lessee will not permit the
Engine to be serviced, repaired, maintained, used or operated in violation of
any Law of any Governmental Entity having jurisdiction, or contrary to the
Manufacturers' operating manuals or instructions, or in violation of any
airworthiness certificate or limitation, license or registration issued by any
such authority or any manufacturer's specifications, service bulletins or other
requirements, including, without limitation, any
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manufacturer's requirements as may be applicable to keep in full force and
effect each material warranty, product or performance guaranty, service life
policy or the like, in each case, to the extent made mandatory for Part 121
operators similarly situated to Lessee or the Permitted Sublessee if the
aircraft on which the Engine is installed is registered with the FAA, or the
applicable laws of any other jurisdiction in which the aircraft on which the
Engine is installed may then be registered in accordance with Section 11 of the
Refunding Agreement, unless the validity thereof is being contested in good
faith and by appropriate proceedings, but only so long as such proceedings do
not involve any danger of sale, forfeiture or loss of the Engine or impair the
interest of Lessor therein or impair the validity or priority of the Lien of the
Indenture or result in a risk of criminal liability of Lessor, Owner Participant
or Indenture Trustee and are not inconsistent with any insurance required to be
maintained by Lessee hereunder. In the event that such Law or other requirement
requires alteration of the Engine during the Basic Term or then-current Renewal
Term, Lessee shall comply therewith at its sole expense and shall maintain the
same in proper condition for operation under such Laws and other requirements.
Lessee shall not operate in any manner or locate in any place the Engine, or
suffer or permit the Engine to be operated by a Permitted Sublessee or otherwise
in any manner or located by a Permitted Sublessee or otherwise in any place (i)
unless the Engine is covered by insurance or United States Government indemnity
as required by the provisions hereof or (ii) contrary to the terms of such
insurance or United States Government indemnity. Lessee also agrees not to
operate or locate the Engine or suffer or permit the Engine to be operated or
located in any area excluded from coverage by any insurance policy issued
pursuant to the requirements of this Lease or in any war zone unless insured or
indemnified by the United States of America therefor, except in the case of
operation pursuant to a sublease or contract with, or as a result of a
requisition (not constituting an Event of Loss) by, the United States of
America, and then only if Lessee has obtained insurance or an indemnity (in lieu
of such insurance) from the United States of America covering such risks, in the
amounts and otherwise as required by this Lease.
(d) Maintenance. Lessee, at its own cost and expense, shall:
(i) perform or cause to be performed all service, repair, maintenance, overhaul,
inspections, alterations, modifications, and testing (A) in accordance with good
airline industry practice and in such manner to provide complete data and
documentation necessary to
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substantiate certification, (B) as may be necessary and required under, and in
compliance with, applicable Law, including, without limitation, FAA rules,
regulations and other requirements, any other applicable rules, regulations and
requirements by any other applicable Governmental Entity, the Maintenance
Program, airworthiness directives having a compliance date during the Term, and
the service bulletins and other requirements of any manufacturer, including,
without limitation, such requirements as may be applicable to keep in full force
and effect any and all material warranties, product and performance guaranties,
service life policies, indemnities or the like, (C) except during any period
that a Permitted Sublease is in effect, in the same manner and with the same
care, including regard for the status and technical condition of the Engine, as
shall be the case with respect to similar engines owned by Lessee without
discrimination and as if Lessee owned the Engine and was going to use the Engine
in continued regular customer service after the expiration of the Term, and
consistent with good industry practice, and during any period in which a
Permitted Sublease is in effect, in the same manner and with the same care,
including regard for the status and technical condition of the Engine, as shall
be the case with respect to similar engines owned by such Permitted Sublessee
without discrimination and as if the Permitted Sublessee owned the Engine and
was going to use the Engine in continued regular customer service after the
expiration of the Permitted Sublease, and consistent with good industry
practice, provided, however, that in all circumstances the Engine shall be
maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance
standards required by, or substantially equivalent to those required by the
central civil aviation authority of the country of registry, and, to the extent
not inconsistent therewith, the FAA and (D) so as to keep the Engine in as good
a condition as when delivered to Lessee, ordinary wear and tear excepted, and in
good operating condition; (ii) keep the Engine or cause the Engine to be kept in
such condition as is necessary to maintain in good standing the airworthiness of
such Engine at all times under the Federal Aviation Act and any other applicable
law or the applicable laws of any other jurisdiction in which the Engine may be
registered in accordance with Section 11 of the Refunding Agreement (provided
that if any grounding is fleetwide in nature and so long as Lessee or a
Permitted Sublessee is contesting in good faith such grounding, Lessee shall not
be deemed in violation of this maintenance covenant); and (iii) maintain in
English all records, logs and other materials required by, and in a manner
acceptable to, the FAA or any other Governmental Entity having jurisdiction and
as provided
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under the Maintenance Program and Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the
interests of Lessor and Indenture Trustee with respect to the Engine at all
times, at its expense, to be duly recorded under the Federal Aviation Act in the
name of Lessor or any successor or assignee, so long as the applicable parties
to the Refunding Agreement cooperate with Lessee with respect thereto as
reasonably requested by Lessee. Lessee shall cause the Indenture to be duly
recorded and maintained of record as a duly perfected mortgage on the Engine and
this Lease at all times. Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") on the Engine
showing title thereto and the Lien of the Indenture as designated by Lessor and
as Lessor may from time to time reasonably request. Unless otherwise requested,
within five (5) Business Days of delivery of the Engine, Lessee shall fasten or
cause to be fastened on each Engine (if not prohibited by applicable Law), a
Lease Identification in the form set forth in Exhibit C hereto or with any other
appropriate information in any other form subsequently designated by Lessor to
Lessee. Except as provided herein, Lessee will not allow the name of any Person
to be placed on the Engine as a designation that would be reasonably interpreted
as a claim of ownership or Lien; provided, however, that Lessee may cause the
Engine to have placed thereon the customary colors and insignia of Lessee or any
Permitted Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor,
Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Engine as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause any sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee
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<PAGE> 36
on reasonable prior notice at reasonable times to visit, inspect and survey the
Engine, its condition, use, and operation, and the records maintained in
connection therewith, and to visit and inspect the properties and to discuss the
affairs, finances and accounts of Lessee with the principal officers of Lessee,
provided, that so long as no Default or Event of Default has occurred hereunder
inspections shall be endeavored to be performed during regularly scheduled
maintenance checks of the Engine. Each such inspection or survey shall be
conducted so as to not unreasonably interfere with the business of Lessee or the
maintenance or operation of the Engine. Upon Lessor's, Owner Participant's or
Indenture Trustee's request, Lessee will notify such Person of the next
scheduled maintenance check for the Engine. Lessor, Owner Participant and
Indenture Trustee shall have no duty to make any such inspection and shall not
incur any liability or obligation by reason of not making any such inspection.
Lessor's, Owner Participant's or Indenture Trustee's failure to object to any
condition or procedure observed or observable in the course of an inspection
hereunder shall not be deemed to waive or modify any of the terms of this Lease
with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish
Lessor, until the expiration or other termination of the Term of this Lease,
the following:
(i) within sixty (60) days following the end
of each quarter of Lessee's fiscal year, except the last such quarter of such
year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report
on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee
no longer files such report, an unaudited consolidated balance sheet of Lessee
and its consolidated subsidiaries prepared by it as of the close of the period
ended, together with the related statements of income and cash flows for such
period, and in each case certified by a Responsible Officer of Lessee as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after
the close of each fiscal year of Lessee, a copy of Lessee's
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Annual Report on Form 10-K as filed with the Securities and Exchange Commission
or, if Lessee no longer files such reports, an audited consolidated balance
sheet, income statement, and cash flow statement of Lessee and its consolidated
subsidiaries, as of the close of such fiscal year, and in each case as certified
by independent public accountants, including their certificate and accompanying
comments, as having been prepared in accordance with GAAP and as fairly
presenting the financial condition and results of operations and changes in
financial position for such period then ended in accordance with such principles
and practices, without qualification as to the scope of the audit or
non-conformity with GAAP;
(iii) promptly upon their becoming available,
copies of all reports on Form 8-K filed by Lessee under the Securities Exchange
Act of 1934, as amended, and each other statement, report or circular (other
than the exhibits thereto and any registration statements on Form S-8 or its
equivalent) generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each
policy of insurance required to be maintained hereunder, a certificate signed by
the Approved Broker of Lessee as to the due compliance with the insurance
provisions of Section 12 hereof with respect to the Engine, together with
certificates of insurance evidencing such insurance and the opinion provided for
in Section 12(f);
(v) within fifteen (15) days following the
end of each calendar month throughout the Term, an Engine status report,
substantially in the form of Exhibit K hereto, including, without limitation,
(A) a summation of hours and cycles accumulated on the Engine by individual
serial number during such preceding calendar month and (B) the identity of the
airframe (including the "N" number and, at Lessor's request, ownership and lien
interests in respect thereof) on which the Engine was installed as of the end of
each such calendar month, and, if Lessor so requests, the location of any such
airframe. The foregoing shall not be deemed to require reports regarding hours
or cycles on any Parts;
(vi) together with each set of financial
statements referred to in clauses (i) and (ii), a certificate signed by a
Responsible Officer of Lessee, to the effect that such officer has reviewed the
relevant terms of this Lease and has made, or caused to be made under his or her
supervision, a review of the transactions and condition of Lessee during the
accounting period covered by
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such financial statements, and that such review has not disclosed the existence
during such accounting period, nor does such officer have any knowledge of the
existence, as at the date of such certificate, of any condition or event which
constitutes a Default or an Event of Default, or, if such condition or event
which constitutes a Default or an Event of Default existed or exists, specifying
the nature and period of existence thereof and what action Lessee has taken or
is taking or proposes to take with respect thereto;
(vii) as soon as practicable after becoming aware thereof,
notice of damage or destruction to the Engine (or any Part) with a repair or
replacement cost (including labor charges) in excess of $1,000,000;
(viii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
(ix) from time to time such other information as Lessor
may reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in
Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so long
as it shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier, including,
without limitation, its status so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all
Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Engine or any criminal liability on the part of Lessor, Indenture
Trustee or any Note Holder.
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(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with or merge into or with any other
corporation or other Person, and Lessee shall not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and other assets
(in one or a series of transactions) to any corporation or other Person, unless:
(i) the Person formed by or surviving such
consolidation or merger or the Person which acquires by conveyance, transfer,
lease or other disposition all or substantially all of such property and other
assets or stock (the "Successor Entity"): (A) shall be a corporation organized
and existing under the Laws of the United States of America or any State thereof
or the District of Columbia; (B) immediately after giving effect to such
transaction, shall be Lessee or shall have acquired or succeeded to all or
substantially all of such property and other assets (including, without
limitation, all or substantially all of Lessee's property and other assets) as
an entirety and, unless the Owner Participant otherwise agrees, shall have a Net
Worth of not less than Lessee's Net Worth immediately prior to such transaction;
(C) shall be a "citizen of the United States" of America as defined in Section
40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D)
shall execute and deliver to Lessor and Indenture Trustee such recordations and
filings with any Governmental Entity and such other documents as Lessor
determines shall be reasonably necessary or advisable (including, without
limitation, to preserve and protect the interests of the Lessor and the priority
of the Lien of the Indenture (if it has not been discharged)) to evidence, or in
connection with, such consolidation, merger, sale, lease, transfer or other
disposition and an agreement, in form and substance reasonably satisfactory to
Lessor, which is a legal, valid, binding and enforceable assumption by such
Successor Entity of the due and punctual performance and observance of each
covenant and condition of this Lease and the other Operative Documents to which
Lessee is a party and agreement to be bound thereby, and an officer's
certificate to such effect, and to the effect that the other requirements of
this paragraph have been satisfied, and a legal opinion from counsel to such
effect and otherwise in such form and substance reasonably satisfactory to
Lessor; and
(ii) prior to and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing.
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No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each calendar
year and within 60 days of a request by Lessor or Owner Participant, or such
shorter period as may be set forth in any written request by the Internal
Revenue Service for information or documents, Lessee shall furnish in writing to
Lessor or Owner Participant such information and documents (or copies thereof)
regarding the Engine as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its Federal and state income tax returns (or to permit the filing of the Federal
and state income tax returns of any affiliated group of corporations filing a
consolidated return of which Lessor is a member), or to maintain or defend any
claims related thereto and promptly, after reasonable notice, furnish to Lessor
or Owner Participant such information as may be reasonably requested by Lessor
or Owner Participant or the applicable Governmental Entity as may be required to
enable Lessor or Owner Participant to file any reports required to be filed by
it with any Governmental Entity because of its ownership or other interest in
the Engine.
(g) Place of Business. At all times while this Lease is in
effect, Lessee will not, without thirty (30) days prior written notice to Lessor
and Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the Engine
only in commercial passenger operations and related cargo operations. Unless the
Owner Participant otherwise agrees, during the Restricted Use Period, Lessee
shall not use the Engine or permit the Engine to be used either "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code,
or in such manner that the percentage of the income, deduction or credit
attributable to the Engine for federal income tax purposes during any taxable
year of the Lessor considered to be from foreign sources exceeds the Maximum
Foreign Use Percentage. Unless Owner Participant otherwise agrees, prior to
permitting the Engine to be operated in any member state of the European Union
or other European country, Lessee shall
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deliver to Lessor (i) a representation and warranty to the effect that Lessee
(or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or
other relevant air traffic control authority over delinquent charges payable by
it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to
Eurocontrol or other relevant air traffic control authority pursuant to which
Lessee (or such Permitted Sublessee) authorizes the addressee to issue to
Lessor, upon Lessor's request from time to time, a statement of account of all
sums due by Lessee (or such Permitted Sublessee) to the authority in respect of
all engines (including, without limitation, the Engine) operated by Lessee (or
such Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would not
have entered into this Amended and Restated Engine Lease Agreement [GPA 1991
AWA-E2] unless it had available to it the benefits of a lessor under Section
1110 of Title 11 of the United States Code. Lessee covenants and agrees with
Lessor that to better ensure the availability of such benefits, Lessee shall
support any motion, petition or application filed by Lessor with any bankruptcy
court having jurisdiction over Lessee, whereby Lessor seeks recovery of
possession of the Engine under said Section 1110 and shall not in any way oppose
such action by Lessor unless Lessee shall have complied with the requirements of
said Section 1110 to be fulfilled in order to entitle Lessee to continued use
and possession of the Engine hereunder. The acknowledgement, covenant and
agreement contained in this Section 8(i) shall continue in full force and effect
and survive the expiration or other termination of this Lease and are expressly
made for the benefit of and shall be enforceable by Lessor, Owner Participant
and, if the Lien of the Indenture has not been discharged, Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or obtain, and
maintain in full force and effect, each and every consent, license, approval,
notice, registration, filing or other action with any Governmental Entity
necessary or advisable in connection with the operation or use of the Engine or
any Part or the execution, delivery or performance of this Lease or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During
such times that the Engine is recorded under the Federal Aviation Act, Lessee
shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period
covered by the opinion of counsel
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rendered on the Restatement Date, any opinion of
counsel rendered pursuant to Section 11(C) of the
Refunding Agreement, and any opinion of counsel
rendered pursuant to this Section 8(k)(i) and (Y)
upon any change in Law that would render the opinion
of counsel rendered on the Restatement Date or such
immediately preceding opinion of counsel inaccurate,
an opinion of counsel with respect to Lessee and the
FAA reasonably satisfactory to each addressee of such
opinion (which counsel may be internal legal counsel
of Lessee and FAA counsel) stating, in the opinion of
such counsel, that such action has been taken with
respect to the recording, filing, re-recording and
refiling of (i) the appropriate Operative Documents
and any supplements and amendments thereto, (ii) UCC
financing statements and (iii) such other appropriate
documents, as is necessary to maintain the perfection
of Lessor's title to and/or interest in and Indenture
Trustee's security interest in the Engine and the
Operative Documents for such period of time as
reflects the then-current applicable Law, reciting
the details of such actions or no action is necessary
to maintain the perfection of such title and/or
security interest; or
(2) at any time that an opinion is not required pursuant
to Section 8(k)(i)(1), annually, a certificate
reasonably satisfactory to each recipient thereof
signed by a Responsible Officer of Lessee certifying
that no such action is necessary to maintain the
perfection of such title and/or interest and security
interest.
(ii) During such times that the Engine is recorded under any
Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to
Indenture Trustee annually (but in any case, (X) prior to the expiration of the
time period covered by any opinion of counsel rendered pursuant to Section 11(C)
of the Refunding Agreement, and any opinion of counsel rendered pursuant to this
Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such
immediately preceding opinion of counsel inaccurate), an opinion of counsel
reasonably satisfactory to each addressee of such opinion stating, in the
opinion of such counsel, that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i) the appropriate Operative
Documents and any supplements and amendments thereto and (ii) such other
appropriate documents, as is necessary to maintain the perfection of
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Owner Trustee's title to and/or interest in and Indenture Trustee's security
interest in the Engine and the Operative Documents for such period of time as
reflects the then-current applicable Law, reciting the details of such actions.
(l) Letter of Credit. As security for the obligations to
Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or
more irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof
shall be available for drawdown thereunder and payable in New York, New York, on
demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of
Default has occurred, which amount may be applied, retained or utilized as
provided in the penultimate paragraph of this Section 8(l);
(ii) be maintained in full force and effect
at all times until ninety-one (91) days after the Expiration Date with a
commercial bank acceptable to Lessor, in its sole and absolute discretion,
having a long-term unsecured debt rating of "A" or better by Standard & Poor's
Rating Group (if the issuing bank's credit rating is lower than such rating,
Lessee shall replace such Letter of Credit issuer within five Business Days of
any such reduction in rating with a commercial bank meeting such rating
requirement), provided, that the Letter of Credit set forth in Exhibit D-2
issued by The Industrial Bank of Japan, Limited will be acceptable to Lessor for
so long as The Industrial Bank of Japan, Limited maintains a long term unsecured
debt rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferrable
and assignable; and
(iv) permit partial drawings. If the Letter
of Credit is still in effect at the end of the Term or the Lessor is holding
proceeds of the Letter of Credit that were retained and not applied as provided
herein, then Lessor shall return the Letter of Credit to Lessee or terminate it,
and/or return any retained or unapplied proceeds, ninety-one (91) days following
the date of such expiration or other termination of this Lease so long as no
Default or Event of
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Default has occurred or is continuing hereunder or under any Other Lease, upon
payment in full of all amounts then due and owing to Owner Trustee and Owner
Participant under the Operative Documents.
If an Event of Default has occurred or is continuing under
this Lease or an Event of Default has occurred or is continuing under any Other
Lease (as therein defined), in addition to any other rights and remedies Lessor
may have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform Commercial
Code as adopted in New York) or equity and upon exercising its rights under the
Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or, the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts, as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
payment of Rent, Lessee's right to apply the same to such claim shall be limited
to amounts which would (absent such Event of Default) be distributable under the
Indenture at the time such payment is made to Lessor, Owner Participant or any
of their respective Affiliates (and shall not include any amounts distributable
to Indenture Trustee in its individual capacity or to the Note Holders);
provided further, however, that neither the amount so applied at any one time
nor the aggregate amount so applied at different times shall reduce the amount
of any installment or payment of Rent (whether upon the termination of the Lease
or otherwise) payable by Lessee to an amount insufficient to pay in full the
amounts required to be paid on account of the principal of and any interest on
the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be
entitled to any refund or credit with respect to any amounts so applied. Any
amount retained shall be considered the property of Lessor and Lessor may
commingle such amount with its general funds and Lessee, further, hereby
absolutely and irrevocably disclaims, to the maximum extent permitted by
applicable Law, any interest therein.
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Lessee shall not be entitled to any interest or other earnings on such retained
amount and such amount shall not be refundable.
On application of all or any portion of the amounts drawn
under the Letter of Credit or any Other Letters of Credit in accordance with
this Section 8(l) or the Other Leases, Lessee shall on demand reinstate the
amount of the Letter of Credit or Other Letters of Credit, as the case may be,
to its or their full Face Amount or provide to Lessor one or more additional
Letters of Credit meeting the requirements of this Section 8(l), so that the
Letter of Credit and each of the Other Letters of Credit at all times equals the
original Face Amount provided for herein. During such times as Lessor shall
elect to hold all or part of the proceeds of the Letter of Credit or Other
Letters of Credit as security for Lessee's obligations to Lessor under the Lease
and the Other Leases, Lessee shall not be obligated to reinstate the amount of
the Letter of Credit or Letters of Credit, as the case may be, in respect of the
proceeds so held.
Section 9. Replacement of Parts; Alterations, Modifications
and Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense,
will promptly replace, or cause to be replaced, all Parts which may from time to
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever.
In addition, in the ordinary course of maintenance, service, repair, overhaul or
testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may at its own cost and expense remove any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and
expense such Parts as promptly as possible. All replacement Parts shall be free
and clear of all Liens (except for pooling arrangements to the extent permitted
by paragraph (c) of this Section and Permitted Liens), be in at least the
equivalent or better modification status and service bulletin accomplishment
status, be fully interchangeable as to form, fit and function and shall be in as
good operating condition as, and have a value, remaining useful life and utility
at least equal to, the Parts replaced (assuming such replaced parts were in the
condition and repair in which they were required to be maintained by the terms
hereof).
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All Parts which are at any time removed from the Engine shall
remain the property of Lessor, subject to the Lien of the Indenture if it has
not been discharged, and subject to this Lease no matter where located until
such time as such Parts shall be replaced by parts which have been incorporated
or installed in or attached to the Engine and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Engine as above
provided, or as provided in Section 9(c), without further act, (i) title to the
removed Part shall thereupon vest in Lessee, free and clear of all rights of
Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no
longer be deemed a Part hereunder, (ii) title to such replacement Part shall
thereupon vest in Lessor and become subject to the Lien of the Indenture if it
has not been discharged, and (iii) such replacement Part shall become subject to
the Lien of the Indenture (if it has not been discharged) and this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(b) Alterations, Modifications and Additions. Lessee, at its
own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Engine to the extent made mandatory for
Lessee (or a sublessee) in respect of the Engine or Parts from time to time to
meet the applicable standards of the FAA or under any Law of any Governmental
Entity having jurisdiction or issued by the manufacturer of the Engine or Parts.
In addition, so long as no Default or Event of Default has occurred and is
continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), at its own expense, may from time to time make such alterations and
modifications in and additions to the Engine as Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper
conduct of its business, provided, no such alteration, modification or addition
diminishes the value, remaining useful life or utility, or impairs the condition
or airworthiness, of the Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Engine and Parts were
then of the value, utility and remaining useful life and in the condition and
airworthiness required by the terms of this Lease. Except as otherwise provided
herein, title to all Parts incorporated or installed in or attached or added to
the Engine as the result of such alteration, modification or addition, shall
immediately vest in Lessor and become subject to the Lien of the Indenture (if
it has not been discharged) and this Lease, without the necessity for any
further act of transfer, document or notice.
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Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that
so long as no Default or Event of Default shall have occurred and be continuing
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at
such time during the Term for the Engine, remove any Part of such Engine,
provided, that (i) such Part is in addition to, and not in replacement or
substitution for, any Part originally incorporated or installed in or attached
to, or delivered with, the Engine on the Delivery Date or any Part in
replacement of, or substitution for, any such originally incorporated,
installed, attached or delivered Part, (ii) such Part is not required to be
incorporated or installed in or attached or added to the Engine pursuant to the
terms of Section 6 or this Section 9 or to maintain the insurance required by
Section 12 and (iii) such Part can be removed from the Engine without causing
any material damage thereto and without diminishing or impairing the value,
utility, remaining useful life, condition or airworthiness which the Engine
would have had at such time had such alteration, modification or addition not
occurred. Upon the removal by Lessee of any such Part as provided in the
preceding sentence, title thereto shall, without further act, vest in Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part
shall no longer be deemed part of the Engine (such a part is herein called a
"Removable Part"). Any Part not removed by Lessee as above provided prior to the
return of the Engine to Lessor hereunder, whether pursuant to Section 16,
Section 18 or otherwise, shall remain the property of Lessor.
If any Removable Part is (i) owned by any third party and
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) subject to a conditional sale contract or other security
interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) pursuant to a lease which is subject to a security interest
in favor of any third party, then Lessor will not acquire or claim, as against
such lessor, conditional vendor or secured party, any right, title or interest
in any such Removable Part as the result of such Removable Part being installed
on the Engine; provided, however, that (A) Lessor's inability to so acquire or
claim is subject to the express condition that such lessor, conditional vendor,
or secured party shall have agreed in writing (which agreement may be contained
in the lease, conditional sale agreement or security agreement) not to acquire
or claim, as against Lessor, any right, title or interest in the Engine, or any
Part other than its interest in such Removable Part by reason of such Removable
Part being installed thereon, and (B) any Removable Part not
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removed by Lessee upon the termination or expiration of this Lease, at such
time, shall become the property of Lessor and be subject to this Lease, and
provided, further, that (1) if removal of any such Part shall affect the
operation of the Engine in any way whatsoever, Lessee shall replace such Part
with an owned Part of the same value, utility and remaining useful life and (2)
Lessee shall repair any unsightly area of the Engine as a result of such removal
and make all other repairs which are advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) replaces a Part which is not required to be replaced
under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may remove the replacement Part so long as it
reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to form,
fit and function, has been overhauled, repaired and inspected by an agency
acceptable to the FAA or other Governmental Entity having jurisdiction, and is
in as good operating condition as, and has a utility, remaining useful life and
a value at least equal to that of such Part when it was removed from the Engine.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Engine, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Engine as provided in
Section 9(a) may so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom be subjected by Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling
arrangement customary in the airline industry of which Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into
in the ordinary course of Lessee's or such Permitted Sublessee's business,
provided that Lessor has been given an opportunity to review the pooling
arrangement, including but not limited to all agreements and other documents
relating thereto, and has consented, which consent shall not be unreasonably
withheld, to the placement of Parts into such pooling arrangement and provided
further that the Part replacing such removed Part shall be incorporated or
installed in or attached to the Engine in accordance with Section 9(a) as
promptly as possible, and in any event within sixty (60) days, after the removal
of such removed Part. In addition, any Replacement Part when incorporated or
installed in or attached to the
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Engine in accordance with Section 9(a) may be owned by another Person subject to
such a normal pooling agreement; provided, however, that Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as
promptly thereafter as possible, and in any event within sixty (60) days, either
(i) causes title to such replacement Part to vest with Lessor in accordance with
Section 9(a) (and to be subjected to the Lien of the Indenture if it has not
been discharged) by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) acquiring title thereto for the benefit of and transferring
title to Lessor free and clear of all Liens except Permitted Liens, whereupon
such replacement Part shall become subject to this Lease and the Lien of the
Indenture (if in effect) without the necessity for any further act, document or
notice, or (ii) replaces such replacement Part by incorporating or installing in
or attaching to the Engine a further replacement Part owned by Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all
Liens other than Permitted Liens and by causing title to such further
replacement Part to vest in Lessor as above provided and to be subjected to the
Lien of the Indenture if it has not been discharged, whereupon such replacement
Part shall become subject to this Lease and the Lien of the Indenture (if in
effect) without the necessity for any further act, document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment of Basic Rent
hereunder shall be free and clear of, and without deduction for, any and all
withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such payments
of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the
net amount actually received by Lessor, after such deduction or withholding,
will be equal to all such amounts that would be received by Lessor if no such
deduction or withholding had been required, but only to the extent necessary to
ensure that the holders of the outstanding Equipment Notes receive such amount
as may be required by the Indenture. If Lessee pays any amount to Lessor (or to
any taxing authority for the account of Lessor) as a result of the application
of the preceding sentence with respect to any withholding Tax which is an
excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in
the case of Taxes imposed on the Owner Trustee, the Owner Participant to the
extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant
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would be liable) shall reimburse Lessee for such withholding Tax within 30 days
of written notice accompanied by evidence of payment for such withholding Taxes
(exclusive of interest, penalties and additions to Tax) paid by Lessee provided
that in any circumstance in which the Lessor is required to reimburse the Lessee
for any such withholding Taxes and the Lessee has not received such
reimbursement from Lessor or the Owner Participant, then to the extent of such
shortfall and so long as no Lease Event of Default has occurred and is
continuing, Lessee shall be entitled to obtain reimbursement from Lessor by
reducing the succeeding payments of Rent payable to Lessor (other than any
portion of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder) until the aggregate amount
of reduction is equal to the sum of the amount of such shortfall and interest on
that amount at the Interest Rate from the date reimbursement is required to be
made until the date of such reduction in Rent. Except as provided in Section
10(b), and taking into account any payments received by Lessor pursuant to the
second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify
and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or
imposed, whether levied or imposed upon or with respect to or asserted against
any Indemnitee, Lessee, any Engine or any Part thereof or interest therein, or
otherwise, with respect to any period beginning, or events or circumstances
occurring, on or after the Restatement Date, by any federal, state or local
government or taxing authority in the United States of America or by any foreign
government or any taxing authority or governmental subdivision of a foreign
country or of a territory or possession of the United States (each such
governmental subdivision or taxing authority referred to as a Taxing
Authority"):
(i) upon or with respect to, based upon or measured
by (A) any Engine or any Part thereof, or interest therein, (B) the
manufacture, purchase, ownership, delivery, leasing, acceptance,
rejection, assigning, possession, use, operation, location, settlement
of any insurance claim, sale, mortgaging, pledging, financing,
subleasing, rental, retirement, abandonment, registration,
re-registration, deregistration, preparation, installation,
modification, repair, maintenance, replacement, transportation,
storage, transfer of title, return or other disposition of the
Aircraft, the Airframe, any Engine or any Part thereof or interest
therein; or (C) the rentals, receipts, income or earnings arising
therefrom (including without limitation the Rent), or
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(ii) upon or with respect to the Operative Documents
(including the Equipment Notes), any interest in any thereof, or any
future amendment, supplement, waiver or consent thereto requested by
Lessee with respect to any thereof, or the execution, delivery, or
performance of any thereof, or the acquisition or subsequent transfer
thereof or the issuance of the Equipment Notes or any other document
executed and delivered in connection with the consummation or
confirmation of the transactions contemplated by the Operative
Documents or any Indemnitee's interest in any of the foregoing, or the
execution, amendment, supplement, issuance, reissuance, refinancing or
delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property, or
the income or other proceeds received with respect to the property,
held by the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or
premium on, or other amounts payable with respect to the Equipment
Notes, whether as originally issued or pursuant to any modification or
reissuance, or
(v) otherwise with respect to or in connection with
the transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be
subject to indemnification under subsection (a) of this
Section 10:
(i) In the case of any Indemnitee, Taxes imposed on,
based on, or measured by, the gross or net income of such Indemnitee or
Taxes in lieu thereof (including minimum taxes, withholding taxes and
taxes on or measured by any item of tax preference) imposed by the
federal government of the United States of America (other than taxes in
the nature of sales or use taxes, license taxes, or property taxes),
(ii) In the case of any Indemnitee, Taxes imposed on,
based on, or measured by the gross or net income, receipts, capital, or
net worth, franchises, excess profits or conduct of business of such
Indemnitee (including minimum taxes, withholding taxes and taxes on or
measured by any items of tax preference), imposed by any state, local
or foreign government or taxing authority (other than Taxes in the
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nature of sales Taxes, use Taxes, license Taxes or property Taxes, and
Covered Income Taxes described in subsection (c) of this Section 10),
(iii) In the case of any Indemnitee, Taxes which
arise out of or are caused by any gross negligence or willful
misconduct of such Indemnitee,
(iv) In the case of any Indemnitee, any Taxes imposed
as a result of a voluntary or involuntary bankruptcy of such Indemnitee
or any sale, transfer of title, transfer or other disposition by such
Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and
Owner Participant are related Indemnitees with respect to each other)
of any Engine or any Part thereof or interest therein, or any interest
in the Rent or part thereof or any interest in the Operative Documents
or part thereof, unless such sale, transfer or disposition occurs in
connection with (A) an Event of Default and the exercise by any
Indemnitee of its remedies under this Lease or the Indenture, as the
case may be or (B) the substitution, pooling or interchange of the
Aircraft, the Airframe, any Engine or any Part pursuant to the terms
hereof; provided, however, that in all cases Owner Participant and
Owner Trustee shall consider in good faith such request as Lessee shall
make concerning the appropriate jurisdiction in which such sale,
transfer or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed on a
transferee of such Indemnitee of any interest in the Engine or any Part
or any interest in the Operative Documents to the extent the amount of
any such Taxes exceeds the amount of such Taxes that would have been
imposed had there not been any such transfer, unless such transfer
results from action by or on behalf of such Indemnitee taken in
connection with any Event of Default that has occurred and is
continuing or upon the request of the Lessee,
(vi) Any interest, penalties, fines and additions to
tax imposed on an Indemnitee (other than Taxes that are due and payable
with a return when properly filed) resulting from such Indemnitee's
failure to file returns that are timely and proper, provided such
failure was not attributable to such Indemnitee contesting any claim in
accordance with this Section 10(b) or to a failure by Lessee to satisfy
its obligations related to such return,
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(vii) With respect to an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, Taxes which arise out
of or are caused by (i) any act or omission or material
misrepresentation of any Indemnitee where such act or omission is not
permitted by the Financing Documents or the Operative Documents, or
(ii) a failure by an Indemnitee to fulfill its contest obligations,
and, in the case of the Indenture Trustee and the Trust Indenture
Estate, Taxes imposed as a result of a breach of such Indemnitee's
representations, warranties, or covenants contained in Sections 9(a),
12 or 16 of the Refunding Agreement in any material respect, or from a
failure by such Indemnitee to fulfill its contest obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft related
to acts or events occurring after the later of the termination of the
Lease and the redelivery of the Engine,
(ix) In the case of each Pass-Through Trust, each
Pass-Through Trustee (in its individual capacity and as trustee under
the Pass-Through Trusts), the Subordination Agent and each Liquidity
Provider, United States withholding taxes imposed as a result of the
place of organization or other status of a holder of an interest in a
Pass-Through Trust, or
(x) In the case of the Indenture Trustee, each
Pass-Through Trust, each Pass-Through Trustee (in its individual
capacity), the Subordination Agent and each Liquidity Provider, Taxes
imposed with respect to the Equipment Notes as a result of activities
of such Indemnitee unrelated to the transactions contemplated by the
Operative Documents.
(c) Covered Income Tax. For purposes of clause (ii) of
subsection (b) of this Section 10, a Covered Income Tax includes:
(i) in the case of an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, any Tax imposed on,
based on or measured by gross or net income, receipts, capital or net
worth, franchises, excess profits or conduct of business (other than
taxes which are in the nature of sales or use taxes, license taxes or
property taxes) imposed on an Indemnitee (A) by any state or local
Taxing Authority other than Taxes imposed by any such state or local
jurisdiction in which the Indemnitee has its principal place of
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<PAGE> 54
business or is subject to such Tax as a result of business transactions
or other presence unrelated to the transactions contemplated by the
Financing Documents or the Operative Documents, unless such Taxes are
imposed by such jurisdiction solely as a result of (x) the operation of
the Engine in such jurisdiction or (y) the transactions contemplated by
the Operative Documents, to the extent such taxes are directly
attributable to such operation of the Engine or to such transactions,
and (B) by any foreign jurisdiction which are imposed as a result of
Lessee's or sublessee's activities in such foreign jurisdiction in
connection with the transactions contemplated by the Financing
Documents or the Operative Documents, provided, however, a Covered
Income Tax also includes the incremental amount of franchise taxes,
taxes on doing business, capital stock taxes or taxes on, based on or
measured by gross or net income of the original Owner Participant
attributable to the Lease (excluding, however, any taxes that would be
excluded under any provision other than clauses (i) and (ii) of
subsection (b) of this Section 10) which are imposed by the "Home
State" of a sublessee (the Home State of a sublessee being the
jurisdiction in which such sublessee maintains its principal operations
and maintenance center), or in the absence of a Permitted Sublessee,
the jurisdiction where the Engine is stored, but only to the extent
such incremental taxes result from activities of Lessee or Permitted
Sublessee under the Lease in or with respect to the Home State or the
jurisdiction where the Engine is stored, and taking into account in
calculating such incremental taxes all state tax benefits and savings
in the Home State resulting from activities of Lessee or Permitted
Sublessee under the Lease, disregarding for such purpose any actual or
constructive changes in ownership of the original Owner Participant,
provided, however, that Owner Participant and Lessee agree to
negotiate, in good faith, a cap to Lessee's liability for indemnity
payments attributable to taxes incurred in sublessee's Home State with
respect to each Permitted Sublessee; and
(ii) in the case of the Indenture Trustee or the
Trust Indenture Estate, any Tax based on or measured by gross or net
income, receipts, capital or net worth, franchises, excess profits or
conduct of business (including minimum taxes, withholding taxes, and
taxes on or measured by any item of tax preference) imposed on such
Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a
territory or
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possession of the United States, other than any such Tax which would
not have been imposed in the absence of such Indemnitee's (including
for purposes of this definition, all entities with which such
Indemnitee is combined, integrated, or consolidated in such Taxing
Authority's jurisdiction) engaging in business, maintaining an office
or other place of business or otherwise being located in such
jurisdiction other than merely by reason of such Indemnitee's
participation in the transactions contemplated by the Operative
Documents.
(d) Reports and Returns. In case any report or return is
required to be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to the Owner Participant or Owner Trustee
or will notify the Owner Participant or Owner Trustee of such requirement and
make such report or return in such manner as shall be reasonably satisfactory to
the Owner Participant or Owner Trustee. If actual notice is given by any taxing
authority to an Indemnitee that a report or return is required to be filed with
respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such
required report or return and Lessee shall either file such report or return in
the manner prescribed in the preceding sentence, or shall use its best efforts
to cause such report or return to be filed by the appropriate entity. Each
Indemnitee agrees to respond to any reasonable request of Lessee for information
not within Lessee's control and within the control of and reasonably available
to such Indemnitee with respect to the filing of any such report or return, but
Lessee agrees to pay any reasonable costs, fees, disbursements or other charges
of independent counsel or independent accountants incurred in connection with
such request.
(e) After-Tax Basis. Lessee further agrees that, with respect
to any payment or indemnity under this Section 10 and under Section 13 hereof,
such payment or indemnity shall include the net amount necessary to hold the
recipient of the payment or indemnity harmless on an after-tax basis from all
Taxes required to be paid or credited by such recipient with respect to such
payment or indemnity under the laws of any Taxing Authority; provided, however,
that in the case of Taxes imposed on the Owner Participant, such Taxes shall be
calculated on the basis of the assumption that Owner Participant shall be
subject to the highest
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<PAGE> 56
federal corporate income tax rate applicable to Owner Participant in the year of
payment and the highest corporate income tax rate in the jurisdiction in which
Owner Participant files a consolidated state income tax return (currently
Virginia).
(f) Tax Benefit. If, by reason of any payment made to or for
the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13
hereof, such Indemnitee subsequently actually realizes a tax deduction or credit
(including foreign tax credit and any reduction in Taxes) not previously taken
into account in computing the amount of such payment, such Indemnitee shall
promptly pay to Lessee, but only if there shall then be no Lease Event of
Default and if Lessee shall have made all payments then due and owing to such
Indemnitee under the Operative Documents, an amount equal to the sum of (i) the
actual reduction in Taxes, if any, realized by such Indemnitee which is
attributable to such deduction or credit and (ii) the reduction calculated on
the same basis as the gross up in Section 10(e) hereof in Taxes realized by such
Indemnitee as a result of any payment made by such Indemnitee pursuant to this
sentence; provided, however, that such Indemnitee shall not be obligated to make
any payment pursuant to this Section 10 or Section 13 hereof to the extent that
the amount calculated pursuant to (i) above would exceed (A) the amount of all
prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or
Section 13 hereof, net of any amount paid in respect of Taxes required to be
paid by such Indemnitee in respect of the receipt or accrual of such amounts
received by such Indemnitee from Lessee, less (B) the portion of all prior
payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee for any
Taxes which may be subject to indemnification by Lessee hereunder and if such
Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee;
provided that the failure to provide such notice shall not release Lessee from
any of its obligations hereunder except to the extent Lessee's right to contest
such claim is precluded thereby. Any amount payable as an indemnity to any
Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be
paid to such party directly, in immediately available funds, within thirty (30)
days after receipt of a written demand therefor from such Indemnitee or Lessee,
as the case may be, except in the case of a payment to an Indemnitee to the
extent that such Taxes are being contested in good faith pursuant to this
Section 10, in which event the payment of such indemnity shall be made by the
due date for the payment of any Taxes that are
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the subject of such contest taking into account all extensions of the due date
that are available as a result of the contest. In the event an Indemnitee makes
a tax payment with respect to any such Taxes (other than with funds advanced to
such Indemnitee on an interest-free basis by Lessee pursuant to this Section
10), Lessee shall reimburse the amount of such payment and also shall pay to the
Indemnitee interest on the amount of such payment by such Indemnitee at the
Interest Rate from the date of any such payment by such Indemnitee to the date
of such reimbursement by Lessee to the Indemnitee hereunder. In the event an
amount is payable to Lessee under this Section 10, the Indemnitee owing such
amount shall pay interest on such amount at the Interest Rate from the date of
receipt by such Indemnitee of any amount giving rise to such obligation to pay
Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee receives a
written notice of a claim which, if sustained, would require the payment of an
indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly
notify Lessee of such claim and, if requested by Lessee in writing, shall, at
Lessee's sole expense, in good faith contest or shall permit Lessee, if desired
by Lessee and such contest may be conducted in whole or in part separately in
the name of Lessee without involving Taxes of such Indemnitee not indemnified
hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity,
applicability or amount of such Taxes by (x) resisting payment thereof if
practicable, (y) not paying the same except under protest, if protest is
necessary and proper, and (z) if payments be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings;
provided, however, the Lessee shall not be permitted to contest in the name of
such Indemnitee if such contest involves Taxes imposed against such Indemnitee
that are unrelated to the transactions contemplated by the Financing Documents
or the Operative Documents or Taxes based on or measured by the gross or net
income of the Indemnitee, and provided, that if the Indemnitee determines in
good faith that there is a material possibility of a material adverse impact
upon the Indemnitee with respect to such contest, such Indemnitee may retain or
reassert control of any contest that Lessee would otherwise be permitted to
contest; provided, further, that the Indemnitee shall not be required to
undertake or allow in its name or on its behalf any contest unless the following
conditions are satisfied:
(i) Lessee shall have (a) furnished Indemnitee
with a written opinion of tax counsel selected by Indemnitee and
reasonably acceptable to
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Lessee to the effect that a reasonable basis (as defined in ABA Opinion
85-352) exists to contest such claim (which opinion shall be obtained
at Lessee's sole cost and expense), provided however, that in the event
the subject matter of the contest is of a continuing nature and has
previously been decided adversely pursuant to the contest provisions of
this Section 10, there has been a change in the law (including, without
limitation, amendments to statutes or regulations, administrative
rulings and court decisions) after such claim shall have been so
previously decided and such Indemnitee shall have received an opinion
of tax counsel, to the effect that, as a result of such change other
than a change in statutory law, it is more likely than not that the
position which the Indemnitee or the Lessee, as the case may be, had
asserted in such previous contest would prevail and, in the case of
statutory changes-in-law, it is as likely as not that the position will
prevail, and (b) agreed to pay Indemnitee for all reasonable costs and
expenses which Indemnitee may incur in contesting such claim (including
without limitation, payment on demand of all out-of-pocket costs,
expenses, additions to tax because of underpayment of estimated taxes,
losses, legal and accounting and investigatory fees and disbursements,
penalties, and interests),
(ii) a threshold amount of $50,000 for any
individual claim is at issue,
(iii) there is no substantial risk or danger of the
sale, loss or forfeiture of the Engine,
(iv) Lessee shall have admitted its liability
to indemnify Owner Participant for such claim or set
forth in writing why it is not so liable,
(v) if such contest is to be initiated by the payment
of, and the claiming of a refund for, such Taxes, the Lessee shall have
advanced to such Indemnitee sufficient funds (on an interest free
basis) to make such payments,
(vi) no claim shall be appealed to the U.S.
Supreme Court,
(vii) no appeal of a trial court decision shall be
undertaken unless Lessee at its sole cost and expense shall have
furnished Indemnitee with a written opinion of tax counsel selected by
Indemnitee and reasonably acceptable to Lessee to the effect that
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Indemnitee is more likely than not to prevail in such appeal, and
(viii) no Event of Default has occurred and is
continuing.
(i) Refund. If any Indemnitee shall obtain a refund of all or
any part of any Taxes paid by Lessee or from an advance by Lessee, such
Indemnitee shall pay Lessee the amount of such refund together with any interest
paid thereon attributable to the Taxes paid or advanced by Lessee less the
amount of any Taxes payable by such Indemnitee in respect of the receipt of such
refund and interest after giving credit to Lessee for any savings by such
Indemnitee in respect to any such Taxes by reason of deductions, credits,
allocations or allowances in respect of the payment of any such Taxes; provided
that such amount shall not be payable before such time as Lessee shall have made
all payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default
under any of the above indemnification provisions of this Section 10 so long as
Lessee or the Indemnitee shall diligently prosecute such contest in accordance
with the provisions of this Section 10. Notwithstanding the foregoing, if a
claim is made against any Indemnitee for any Taxes which, if successful, would
result in the imposition of Taxes under circumstances which would require Lessee
to indemnify such Indemnitee, the Indemnitee shall be released from its
responsibility to contest such claim or part thereof, if it agrees in writing
not to seek indemnification from Lessee in respect of the claim, or such part
thereof to be contested. In the event an Indemnitee fails to contest, or refuses
to permit Lessee to contest, a claim or part thereof which the Indemnitee has
the obligation to contest or to permit Lessee to contest under this Section 10,
then Lessee shall not be obligated to indemnify the Indemnitee for such claim or
such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a
member of an affiliated group (within the meaning of Section 1504(a) of the
Code) which files a consolidated Federal income tax return, the term
"Indemnitee" shall mean and include any member of such affiliated group.
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(l) Verification. At Lessee's request, the amount of any
indemnity payment by Lessee pursuant to this Section 10 or any payment by an
Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified
by an independent public accounting firm selected by such Indemnitee and
reasonably satisfactory to Lessee. In order to enable such accountants to verify
the indemnity amount, such Indemnitee shall provide to the accountants (for
their own confidential use) information reasonably necessary for such
verification to which Lessor has access; provided, however, such information
shall not be disclosed to Lessee or any person other than such accountants. The
fee of such firm shall be payable by Lessee unless such verification shall
result in an adjustment in Lessee's favor exceeding 10% of the amount of the
indemnity payment.
(m) Survival. All of the obligations and rights of Lessee and
Lessor under this Section 10 with respect to the Aircraft, the Airframe, the
Engines or any Part thereof shall survive the assignment, or expiration or other
termination, of the Lease with respect to the Aircraft for a period of six (6)
years from the occurrence of such assignment, or expiration or termination,
except that such obligations shall survive the expiration of such six (6) year
period with respect to any claim asserted prior to the expiration of such six
(6) year period but in either case only to the extent such obligation or claim
relates to events which occurred or conditions which existed during the Term.
Such obligations are expressly undertaken by Lessee for the benefit of, and
shall be enforceable by, Lessor. The provisions of this Section 10(m) are
subject to the exclusions of Section 10(b)(viii).
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Engine. Subject to the
other provisions of this Section 11, upon an Event of Loss with respect to the
Engine, Lessee shall forthwith (and, in any event, within five (5) Business Days
after such occurrence) give Lessor written notice of such occurrence and within
thirty (30) days after such occurrence give Lessor written notice of its
election, subject to the terms hereof and of the Indenture, to perform one of
the following two options (it being agreed that if Lessee shall not have given
Lessor notice of such election within thirty (30) days after such occurrence,
Lessee shall be deemed to have elected to perform the option set forth in the
following clause (ii)), provided, that Lessee shall not have the right to select
the option set forth in clause (i) if a Default or an Event of Default shall
have occurred and be
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continuing at the time of such election or at the time of replacement:
(i) within one hundred twenty (120) days
(the "Replacement Period") after the date of the Event of Loss (but in no event
later than the last day of the Term) Lessee shall convey, or cause to be
conveyed to Lessor as provided in Section 11(b) hereof, to be subjected to the
Lien of the Indenture if it has not been discharged, and to be leased by Lessee
hereunder in replacement of the Engine, title to a replacement Engine, such
replacement Engine (A) to be free and clear of all Liens (it being understood
that, upon such conveyance, such replacement Engine may be subject to Permitted
Liens), (B) to have a value, utility and remaining useful life, determined in
accordance with the Appraisal Procedure as provided in Section 11(b) hereof, at
least equal to, and to be in at least as good operating condition as, the Engine
(assuming the Engine was maintained in accordance with the requirements of this
Agreement, whether or not it is in fact so maintained), and (C) to be another
IAE V2500 Engine of like model and equivalent or better modification status
delivered by the Manufacturer not earlier than June 30, 1988 or, at Lessee's
option, an IAE engine of an improved model and in compliance with Section 11(b);
provided that if Lessee shall not perform its obligation to effect such
replacement under this clause by the end of the Replacement Period, Lessee shall
then be deemed to have elected to comply, and shall comply, with the provisions
of clause (ii) of this Section 11(a); provided, further, that the payment
specified therein shall be deemed to have become due and payable on the
Stipulated Loss Value Date occurring on or immediately preceding the last day of
the Replacement Period. Upon compliance with the foregoing, Lessor will, subject
to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without
recourse, representation or warranty (except a warranty that the Engine is free
and clear of Lessor's Liens), all of Lessor's right, title and interest, if any,
in and to the Engine suffering the Event of Loss. For all purposes hereof, a
replacement Engine shall be deemed part of the property leased hereunder and
shall be deemed the "Engine" as defined herein. No Event of Loss resulting in
replacement of the Engine under this Section 11(a)(i) shall result in any
reduction of Rent. In addition to the foregoing, if Lessor so requests, as a
condition to any substitution of the Engine under this Lease, Lessee shall use
its best efforts to ensure that IAE acknowledges that such substitution shall
not affect any product support or other agreements between or among IAE, Parent,
Lessor or Lessee.
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(ii) On a Stipulated Loss Value Date on or
before one hundred twenty (120) days after the date of the Event of Loss (or, if
earlier, with respect to insurance proceeds, on the date on which insurance
proceeds with respect to the Event of Loss are received by the loss payee)
Lessee shall pay to Lessor in immediately available funds the sum of (A) the
Stipulated Loss Value of the Engine as shown on Exhibit A for such Stipulated
Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be,
payable on each Basic Rent Payment Date or Renewal Rent Payment Date,
respectively, prior to the date of payment of such Stipulated Loss Value which
has not been paid when due, plus, if such Stipulated Loss Value Date is also a
Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent
or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss
Value Date, or, if such Stipulated Loss Value Date occurs after the last day of
the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent,
as the case may be, in effect on the last day of the Term, for each day from and
including the last day of the Term to and excluding such Stipulated Loss Value
Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of
Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with
respect to the Engine for any period commencing after the date on which such
Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain
liable for, and shall pay on or before the date the Stipulated Loss Value and
Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the
case may be, for the Engine due on or before the date of such payment of
Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with
respect to such Engine, and (3) Lessor will, subject to the rights of any
insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that such Engine is free and clear
of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to
the Engine suffering the Event of Loss.
(b) Conveyance of Replacement Engine. Upon an Event of Loss
with respect to the Engine, Lessee shall give Lessor prompt written notice
thereof and shall, at its own cost and expense, within sixty (60) days after
such occurrence convey or cause to be conveyed to Lessor as replacement for the
Engine suffering an Event of Loss, title to another IAE Model V2500 engine of
like model and equivalent or better modification status or, at Lessee's option,
an IAE engine of an improved model, in each such case which has a value,
remaining useful life and utility determined in accordance with the Appraisal
Procedure at least equal to such Engine free of all Liens (it being
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understood that, upon such conveyance, such replacement Engine may be subject to
Permitted Liens) and being in as good operating condition as (including no
greater number of cycles or hours than) the Engine being replaced assuming the
Engine being replaced was serviceable and otherwise in the condition and repair
required by the terms hereof immediately prior to the Event of Loss. Prior to or
at the time of any such conveyance, Lessee, at its own cost and expense, will
(i) furnish Lessor with a full warranty bill of sale, in form and substance
reasonably satisfactory to Owner Participant and Indenture Trustee, as
applicable, with respect to such replacement Engine; (ii) cause supplements, in
form and substance reasonably satisfactory to Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged), subjecting such
replacement Engine to this Lease, the Indenture (if in effect) and the Trust
Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly
filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
with such evidence of title to such Replacement Engine and of compliance with
the insurance provisions of Section 12 hereof with respect to such Replacement
Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture
has not been discharged) may reasonably request; (iv) furnish Owner Participant
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
with an opinion of Lessee's counsel addressed to such parties and to Lessor to
the effect that title to such Replacement Engine has been duly conveyed to
Lessor free and clear of all Liens (except Permitted Liens) and it is duly
leased hereunder and subject to the Lien of the Indenture (if it has not been
discharged), the instruments subjecting such Replacement Engine to the Lien of
the Indenture and the Lease, and subjecting to any relevant Assigned Sublease
and Sublease Agreement, as the case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act or any other law then applicable to the
registration of the Aircraft, and no further action, filing or recording of any
document is necessary in order to establish and perfect, in the United States
and, if the Aircraft is registered outside the United States, in the
jurisdiction of registration, the legal title to such Replacement Engine and the
Lien of the Indenture on such Replacement Engine and that Lessor, and Indenture
Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of
Title 11 of the United States Code with respect to such replacement engine to
the same extent as with respect to the Engine prior to such replacement; (v)
furnish a certificate signed by a Responsible Officer of Lessee certifying that,
upon
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consummation of such replacement, no Default or Event of Default will exist
hereunder; (vi) furnish such documents and evidence with respect to Lessee,
Owner Participant or Indenture Trustee (if the Lien of the Indenture has not
been discharged), as such parties or their respective counsel may reasonably
request in order to establish the consummation of the transactions contemplated
by this Section 11(b), the taking of all corporate proceedings in connection
therewith and compliance with the conditions set forth in this Section 11(b), in
each case in form and substance satisfactory to such party; (vii) furnish such
Uniform Commercial Code financing statements covering the Replacement Engine as
may be requested by Lessor or Indenture Trustee (if the Lien of the Indenture
has not been discharged); (viii) furnish Owner Participant with an opinion of
tax counsel mutually satisfactory to Owner Participant and Lessee and which
opinion is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner
Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in
Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the
terms of this Section 11(b), Lessor will, subject to the rights of any insurers,
transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or
warranty (except a warranty that such Engine is free and clear of Lessor's
Liens), all of Lessor's right, title and interest, if any, in the Engine which
suffered the Event of Loss. For all purposes hereof, each such Replacement
Engine shall be deemed an "Engine" as defined herein. No Event of Loss covered
by this Section 11(b) shall result in any reduction in Rent.
(c) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer (including a
Governmental Entity providing an indemnity in lieu thereof) with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(e) below, any payments (other than insurance or
such indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and other
payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this
Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such
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Stipulated Loss Value and other payments if not already paid by Lessee, or, if
already paid by Lessee, shall (unless a Default or an Event of Default shall
have occurred and be continuing) be applied by Lessor to reimburse Lessee for
its payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a result of
an Event of Loss with respect to the Engine which is being replaced pursuant to
Section 11(a)(i) and (b) hereof, all such payments shall be paid over to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Sections 11(a)(i) and (b) hereof, and of
Section 15 hereof with respect to the Event of Loss for which such payments are
made and if no Default or Event of Default shall have occurred and be
continuing.
(d) Requisition for Use by Government with Respect to the
Engine. Subject to Section 11(e) below, in the event of the requisition for use
by a Governmental Entity of the Engine, Lessee will replace such Engine
hereunder by complying with the terms of Section 11(a) to the same extent as if
an Event of Loss had occurred with respect to such Engine, and thereafter any
payments received by Lessor or Lessee from the Governmental Entity with respect
to such requisition shall be paid over to, or retained by, Lessee.
(e) Application in Default. Any amount referred to in clause
(i) or (ii) of Section 11(c) or Section 11(d) which is otherwise payable to
Lessee shall not be paid to Lessee, or, if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such
payment or retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without limitation,
by reason of this Lease being declared or deemed in default. At such time as
there shall not be continuing any such Event of Default or Default, all such
amounts at the time held by Lessor or Indenture Trustee in excess of the amount,
if any, which
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Lessor or Indenture Trustee has elected for application as provided above, shall
be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability
products, completed operation liability covering maintenance of aircraft, but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Engine and any airframe on which the Engine is
installed (for purposes of this Section 12, any such airframe together with the
Engine which is installed thereon shall be referred to as, the "Aircraft"), in
an amount not less than three hundred fifty million dollars ($350,000,000),
combined single limit, per occurrence or such higher amount, and of such type
and terms, as are customarily carried by prudent Certificated Air Carriers,
similarly situated to Lessee, operating aircraft of similar size and similar
type engines and as hereinafter provided. Each and any policy of insurance
carried in accordance with this Section 12(a), and each and any policy obtained
in substitution or replacement for any of such policies, (i) shall designate
Lessor (in both its individual and trustee capacity), Owner Participant,
Indenture Trustee (in both its individual and trustee capacity) and the other
Indemnitees and their respective permitted assigns, as additional insureds as
their interests may appear (but without imposing upon any such Person any
obligation imposed upon the insured, including, without limitation, the
liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, in such policies, the insurance shall not be invalidated as to an
insured or additional insured by any act or omission of Lessee or any other
insured or additional insured and shall insure Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, regardless as to any insured or additional insured of any breach or
violation by Lessee or any other insured or additional insured of any warranty,
declaration or condition contained in such policies, (iii) shall provide that if
such insurance is cancelled for any reason whatsoever, or is changed in any
adverse way with respect to the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees or if such
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insurance is allowed to lapse for non-payment of premium, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees, and their respective permitted
assigns, until thirty (30) days, in each instance (seven (7) days or such lesser
period of time as is the insurance industry standard for war/allied perils
coverage), after notice to Lessor, Owner Participant and Indenture Trustee from
such insurer or insurers, of such prospective cancellation, change or lapse,
(iv) shall include coverage for any country in or over which the Engine is
located or operated and (v) shall provide that, as against Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees, and their respective
permitted assigns, each insurer shall waive any rights of set-off, counterclaim
or any other deduction, whether by attachment or otherwise, and waives any
rights it may have to be subrogated to any right of any insured against Lessor,
Owner Participant, Indenture Trustee or the other Indemnitees, or their
respective permitted assigns, with respect to the Engine. Each liability policy
shall be primary without right of contribution from any other insurance which
may be carried by Lessor, Owner Participant, Indenture Trustee or the other
Indemnitees, or their respective permitted assigns, and shall expressly provide
that all of the provisions thereof shall operate in the same manner as if there
were a separate policy covering each insured, provided, that such policies shall
not operate to increase the insurer's limit of liability. Lessee shall cause its
insurers to agree that the indemnity and hold harmless provisions of Section 13
are insured as a contractual assumption of liability by Lessee's insurers,
subject to the terms, coverage, conditions, limitations and exclusions of the
policy of insurance. Without limiting the foregoing, the type and amount of the
insurance carried by Lessee hereunder shall be no less in amount and no less
comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and
the other Indemnitees then that carried by Lessee with respect to other IAE
V2500 engines or similar type engines or similar-type aircraft owned or leased
by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own
expense, will maintain in effect, or cause to be carried and maintained in
effect, with Approved Insurers "all-risk" ground and flight aircraft and spares
hull insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the
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consent of Lessee) covering the Engine and/or the Aircraft, as the case may be,
and "all-risk" coverage including transit insurance with respect to the Engine
and Parts while not installed on such Aircraft or an aircraft, which in each
case considering all policy terms, limitations and exclusions is of the type,
terms and amount customarily maintained by prudent Certificated Air Carriers
similarly situated to Lessee and operating similar size aircraft and engines and
as hereinafter provided. Lessee shall also maintain, or cause to be maintained,
war risk and allied perils hull and spares insurance reasonably acceptable to
Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or,
in the case of an emergency, at least two (2) Business Days) prior to permitting
the Engine or the Aircraft to be operated or located outside of the United
States of America, other than in Canada or Mexico, Lessee shall notify Lessor
thereof. If Owner Participant or Indenture Trustee reasonably requests at any
time and if such insurance is then customarily being obtained by or for Persons
leasing or financing similarly sized aircraft operating on similar routes to
operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is
in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay
or reimburse Lessor for political risk, repossession, expropriation,
confiscation and similar insurance as Lessor may arrange or cause to be
arranged; provided that Indenture Trustee shall not be obligated to request such
insurance and shall not be liable for any failure to request such insurance.
Anything herein to the contrary notwithstanding, at all times while the Engine
is subject to this Lease, the insurance required by this Section 12(b) shall be
for an amount on an "agreed value" basis not less than the Stipulated Loss Value
from time to time determined for the Engine. Without limiting the foregoing, the
type and amount of insurance carried by Lessee hereunder shall be no less
comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and
the other Indemnitees than that carried by Lessee with respect to similar-size
aircraft or similar engines owned or leased by Lessee.
Each and any policy of insurance obtained and maintained
pursuant to this Section 12(b), and each and any policy obtained in substitution
or replacement for any such policies, (i) shall designate Lessor as owner of the
Engine, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns
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as additional insureds, as their respective interests may appear (but without
imposing upon Lessor, Owner Participant, Indenture Trustee and their respective
permitted assigns, any obligation imposed upon the insured, including, without
limitation, the liability to pay any premiums for any such policies), (ii) shall
expressly provide that, in respect of the interests of such an additional
insured and its permitted assigns, in such policies, the insurance shall not be
invalidated as to an insured by any act or omission of Lessee or any other
additional insured, and shall insure each such additional insured and its
permitted assigns, regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or another
additional insured, (iii) shall provide that if such insurance is cancelled for
any reason whatsoever, or is changed in any adverse way with respect to the
interests of Lessor, Owner Participant, Indenture Trustee and to the other
Indemnitees and their respective permitted assigns, or if such insurance is
allowed to lapse, such cancellation, change or lapse shall not be effective as
to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their
respective permitted assigns, until thirty (30) days (seven (7) days or such
lesser period of time as is the insurance industry standard for war/allied
perils coverage) after written notice to Lessor, Owner Participant and Indenture
Trustee from such insurer or insurers, as the case may be, of such prospective
cancellation, change or lapse, (iv) shall include coverage for any country in or
over which the Engine or the Aircraft may at any time be located or operated,
(v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee,
the other Indemnitees and their respective permitted assigns, each insurer shall
waive any rights of set-off, counterclaim or any other deduction, whether by
attachment or otherwise, and waives any rights it may have to be subrogated to
any right of any insured against Lessor, Owner Participant, Indenture Trustee
and the other Indemnitees and their respective permitted assigns, with respect
to the Engine, (vi) shall provide that in the event of any damage or loss which
is an Event of Loss hereunder and which results in a payment, such payment shall
be payable directly to Indenture Trustee as sole loss payee, so long as the Lien
of the Indenture shall not have been discharged and thereafter to Lessor, as
sole loss payee, and (vii) shall provide that in the event of any damage or loss
which is not an Event of Loss hereunder and which results in a payment, such
payment shall be payable directly to Indenture Trustee as sole loss payee for
the account of all interests, so long as the Lien of the Indenture shall not
have been discharged and thereafter to Lessor, as sole loss payee for the
account of all interests. The insurance required under this Section
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12(b) may incorporate deductible amounts which shall not exceed one million
dollars ($1,000,000).
Each of Lessor and Owner Participant shall have the right to
carry additional and separate excess or contingent insurance for its own benefit
at its own expense, without, however, thereby limiting Lessee's obligations
under this Section 12, and Lessee shall not carry any such insurance if it would
conflict with or adversely affect other insurance carried by Lessor or Owner
Participant. Lessee shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to Lessee, provided, however, that such insurance does not conflict with
or adversely affect the insurance required hereunder or any excess or contingent
insurance carried by Lessor or Owner Participant. Lessee shall give Lessor
reasonable prior written notice of any insurance to be carried by Lessee in
addition to that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained to cover
"all-risk" ground and flight aircraft, hull and war risks and allied perils
insurance, Lessee shall include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by Lessee with respect to all
other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of Loss. It
is agreed that insurance payments which arise from insurance required to be
carried by Lessee pursuant to this Section 12 and received as the result of the
occurrence of an Event of Loss shall be applied as follows (after reimbursement
of Lessor, Owner Participant and Indenture Trustee for their reasonable
out-of-pocket costs and expenses);
(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and other
payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this
Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture
has not been discharged and thereafter to Lessor in reduction of Lessee's
obligation to pay such Stipulated Loss Value and any other payments if not
already paid by Lessee, or, if already paid by Lessee, shall (unless a Default
or an Event of Default shall have occurred and be continuing) be applied by
Indenture Trustee or Lessor, as the case may be, to
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reimburse Lessee for its payment of such Stipulated Loss Value and other
payments and the balance, if any, of such payment remaining thereafter shall be
paid over to, or retained by, Lessor; or
(ii) if such payments are received as a
result of an Event of Loss with respect to the Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid over by the Indenture Trustee or Lessor, as the case may be, to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Section 11(a)(i) and (b) hereof and of
Section 15 hereof, as the case may be, with respect to the Event of Loss for
which such payments are made and if no Default or Event of Default shall have
occurred and be continuing.
(d) Application of Insurance Proceeds for Other than an Event
of Loss. The insurance payments of any property damage loss to the Engine not
constituting an Event of Loss with respect thereto will be applied in payment
for the actual costs of repairs or for replacement property which Lessee has
incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease
against such documentation evidencing payment by Lessee as Lessor may reasonably
request to reimburse Lessee for such repairs or replacements already paid for by
Lessee, and any balance remaining after compliance with such Sections with
respect to such loss shall be paid to Lessor. Lessee shall be entitled to
receive from the insurer any insurance proceeds not in excess of five hundred
thousand dollars ($500,000) as soon as such funds are paid and shall promptly
receive such additional insurance proceeds from the loss payee upon invoices for
repair work in progress, replacement parts which are ordered or for work
completed as provided above in this Section 12(d). Any amount referred to in
this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at
the time of such payment any Default or Event of Default shall have occurred and
be continuing, but shall be held by Lessor as security for the obligations of
Lessee under this Lease or applied as provided in Section 12(e).
(e) Application in Default. Any amount referred to in clause
(ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee
shall not be paid to Lessee, or if it has been previously paid to or retained by
Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter to Lessor, if at the
time of such payment or retention a Default or an Event of Default shall have
occurred and be continuing. In such case, all such amounts
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shall be paid to and held by Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter held by Lessor as
security for the obligations of Lessee, or, at the option of Indenture Trustee
or Lessor, applied by Indenture Trustee or Lessor toward payment of any of
Lessee's obligations at the time due hereunder, including, without limitation,
by reason of this Lease being declared or deemed declared in default, as
Indenture Trustee or Lessor may elect. At such time as there shall not be
continuing any such Event of Default or Default, all such amounts at the time
held by Indenture Trustee or Lessor in excess of the amount, if any, which
Indenture Trustee or Lessor has elected for application as provided above, shall
be paid to Lessee.
(f) Certificates. On or before the Delivery Date, and
thereafter on any renewal by the Lessee of the insurance required hereby (but in
no event less than once in every twelve (12) month period), Lessee will furnish
to Lessor and Indenture Trustee a certificate executed and delivered by an
Approved Insurer or the Approved Broker, describing in reasonable detail, and in
accordance with customary practice, insurance carried on the Engine and Lessee
shall also furnish an opinion or report by the Approved Insurer or the Approved
Broker certifying that the insurance then maintained on the Engine complies with
the terms of this Lease. Lessee will cause the Approved Broker to agree to
advise Lessor, Owner Participant and Indenture Trustee in writing at least
thirty (30) days (seven (7) days or such lesser period of time as is the
insurance industry standard for war/allied perils coverage) prior to the
expiration, non-renewal, termination or cancellation for any reason (including,
without limitation, failure to pay premium therefor) or material modification of
any such insurance.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in
effect, the Permitted Sublessee) may carry primary insurance outside of the
aviation insurance markets in New York, London or Paris, if the relevant primary
insurer shall have obtained reinsurance and such reinsurance (i) is on the same
terms as the original insurance and includes the provisions required by this
Agreement; (ii)
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provides in case of any bankruptcy, insolvency, liquidation, dissolution or
similar proceedings of or affecting the original insurer that the reinsurers'
liability will be to make such payment as would have fallen due under the
relevant policy of reinsurance if the original insurer had (immediately before
such bankruptcy, insolvency, liquidation, dissolution or similar proceedings)
discharged its obligations in full under the original insurance policies in
respect of which the then relevant policy of reinsurance has been effected; and
(iii) contains a "cut-through" clause in the following form (or otherwise,
satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby
mutually agree that in the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided by the Amended and
Restated Engine Lease Agreement [GPA 1991 AWA-E2] dated as of November 26, 1996
and made between Wilmington Trust Company, as Owner Trustee, and America West
Airlines, Inc. such claim is to be paid to the person named as sole loss payee
under the primary insurances, the Reinsurers will in lieu of payment to the
original insured, its successors in interest and assigns pay to the person named
as sole loss payee under the primary insurances effected by the original insured
that portion of any loss due for which the Rein- surers would otherwise be
liable to pay the original insurer (subject to proof of loss), it being
understood and agreed that any such payment by the Reinsurers will (to the
extent of such payment) fully discharge and release the Reinsurers from any and
all further liability in connection therewith."
(h) Storage. During any period that the Engine or the Aircraft
is in storage or otherwise grounded, Lessee may carry or cause to be carried, in
lieu of the insurance required by Sections 12(a) and (b) above, insurance
otherwise conforming with the provisions of said Sections 12(a) and (b) except
that the scope of the risk and the type of insurance, and the amount of the
insurance in the case of the insurance described in Section 12(a) above (but not
the amount of insurance to be carried under Section 12(b) above), shall be the
same as from time to time applicable to similar engines or similar size
passenger aircraft that comprise Lessee's fleet in similar storage or grounding,
and in any event (including, without limitation, at any time when there shall be
in existence a Permitted Sublease), the same as from time to time customarily
carried by similarly-situated, prudent Certificated Air Carriers for similar
engines as the engines in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of Default
has occurred and is continuing, any amount held by Lessor or Indenture Trustee,
as the case may be, until
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application by Lessor or Indenture Trustee, as the case may be, pursuant to this
Section 12 shall be invested as provided in Section 21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at its
expense the insurance described in Section 12(a) for three years after the
expiration or termination of the Basic Term or Renewal Term, if Lessee has
elected to renew the Lease in accordance with Section 20, covering each
Indemnitee as its interest may appear and specifically insuring the indemnity
contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of the
insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the extent and subject to the terms and conditions
specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and hold
harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e),
within fifteen (15) days after demand from and against any and all claims
(whether or not based on strict liability), damages (whether direct, indirect,
incidental, special or consequential), losses, charges, fees, liabilities,
obligations, demands, suits, judgments, actions and other legal proceedings
(whether civil or criminal), penalties, fines, other sanctions, and any
reasonable costs and expenses, in connection herewith, including, without
limitation, costs and expenses set forth in Section 21(j) hereof and reasonable
attorney's fees and expenses of whatever kind or nature (any and all of which
are hereafter referred to as "Claims") imposed on, or asserted by or against, or
suffered or incurred by, any Indemnitee, from (and including) the Restatement
Date, including, without limitation, injury, death or property damage of
passengers, shippers and others, environmental control, noise and pollution
regulations, which in any way may result from, pertain to, or arise in any
manner out of, or are in any manner related to (1) the Operative Documents, the
Purchase Documents or the Financing Documents, or any of the transactions
contemplated thereby; (2) the Engine or any Part thereof, including, but not
limited to, (A) the importation, exportation, condition, manufacture, design,
purchase, ownership, registration, reregistration, deregistration (other than
any deregistra- tion caused by the failure of the registered owner of the Engine
to be a "citizen of the United States" as defined under the Federal Aviation Act
and the regulations
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thereunder or to file the documentation necessary to continue FAA registration
of the Engine), delivery, non- delivery, assignment, leasing, subleasing,
sub-subleasing, acceptance, rejection, possession, repossession, control,
return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and
Lenders' Liens, but including the Lien of the Indenture), use, performance,
modification, maintenance, overhaul, operation, pooling, interchange, repair,
testing, sale, return or other disposition or application of the Engine or any
Part (including, but not limited to, latent and other defects whether or not
discoverable by Lessee or Lessor, Claims related to any actual or alleged
violation of Law, loss or damage to any property of passengers, shippers or
otherwise or any Claim related to patent, copyright, trademark or other
infringement) either in the air or on the ground, and, including, without
limitation, any interest therein or in the Operative Documents of an Indemnitee
or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens
and Lenders' Liens but including the Lien of the Indenture), or the rentals,
receipts or earnings therefrom (including, without limitation, the Rent and any
other amounts paid or payable with respect thereto); or (B) any defect in the
Engine or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of the Engine or such Part, or otherwise
regardless of when such defect shall be discovered, whether or not the Engine or
such Part is at the time in the possession of Lessee, and regardless of where
the Engine or such Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Engine, any Operative Document, any Purchase Document or any
Financing Document), (ii) the material breach of any express representation,
warranty or covenant made by such Indemnitee herein or in any other Operative
Document, or the Financing Documents (not resulting from a breach by Lessee of
any of its representations, warranties or covenants in the Operative Documents
or in the Financing Documents), (iii) any Taxes, whether or not Lessee is
required to indemnify such Taxes under Section 10 hereof or the Tax
Indemnification Agreement (it being understood that Section 10 hereof and the
Tax Indemnification Agreement exclusively provide
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for Lessee's liability with respect to Taxes), (iv) any Claim which relates
solely to events which occurred prior to (but excluding) the Restatement Date
(other than Claims related to the condition, manufacture or design of the
Engine), (v) an underlying act which occurs after the Engine has been returned
to Lessor in accordance with the terms hereof and the Term of this Lease has
been terminated or has expired and the return is not related to an Event of
Default, (vi) an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents, except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder and
except any Claim which is alleged or does relate to the period prior to such
disposition or (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or are
not required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents (provided, however, in no event
will Lessee be liable for any Claims resulting from, pertaining to or arising
from or related to Lessor's granting or creating a Lessor's Lien or the granting
or creation of a Head Lessor's Lien). Upon full payment of the indemnities
herein, Lessee shall be subro- gated to all rights and remedies which such
Indemnitee may have against any third party against whom such Indemnitee has the
right to assert a Claim which arises under any action described in this Section
13 (except Claims under such Indemnitee's own insurance policies or under the
indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may result
from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as
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and to the extent such Indemnitee is responsible under the Refunding Agreement
for Claims related to such deregistration), delivery, non-delivery, assignment,
leasing, subleasing, manufacture, acceptance, rejection, possession, return,
financing, performance, modification, maintenance, condition, use, operation,
pooling, interchange, repair, testing, sale, return or other disposition of the
Engine or any Part thereof, either in the air or on the ground, or which may be
caused by any defect in the Engine or such Part from the material or any article
used therein or from the design or testing thereof, or use thereof or from any
maintenance, service, repair, overhaul, or testing of the Engine or such Part,
claims for infringement, loss of or injury to any person, loss of or damage to
any property or environmental damage, regardless of when such defect may be
discovered, whether or not the Engine or such Part is at the time in the
possession of Lessee, and regardless of the location of the Engine at any such
time except to the extent that such Claim results from (i) the gross negligence
or willful misconduct of such Indemnitee (except any such gross negligence or
willful misconduct as may be attributed to an Indemnitee due to its interest in
the Engine, any Operative Document, any Purchase Document or any Financing
Document), (ii) the material breach of any of its express representations,
warranties or covenants hereunder, under any other Operative Document or
Financing Document (not resulting from a breach by Lessee of any of its
representations, warranties or covenants in the Operative Documents or in the
Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to but excluding the Restatement Date (other than Claims related to the
condition, manufacture or design of the Aircraft) and any Claim concerning
payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act
which occurs after the Aircraft has been returned to Lessor in accordance with
the terms hereof and the Term of this Lease has been terminated or has expired
and the return is not related to an Event of Default, (vi) an underlying act
which occurs after a disposition or other transfer (voluntary or involuntary) by
such Indemnitee of all or any part of its interest in the Aircraft, the
Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents (except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the
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period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
and except any Claim which is alleged or does relate to the period prior to such
disposition), (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or are
not required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head
Lessor's Lien or a Lenders' Lien attributable to such Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense and
with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and, so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter
into a settlement or other compromise with respect to any Claim which Lessee or
such Indemnitee is defending hereunder in excess of $100,000 without the prior
written consent of the other, which consent shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense thereof
where Lessee
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has the right to control the defense thereof is materially prejudiced as a
result solely of such failure of such Indemnitee to give such notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section .
Nothing in this Section shall be construed as a guaranty by
Lessee of payments due pursuant to any indebtedness incurred with respect to the
purchase of the Engine or of the residual value of the Engine.
Notwithstanding anything herein or in any other Operative
Document to the contrary, with respect to any Claim for which any Indemnitee is
entitled to indemnification under more than one provision of this Lease or any
other Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue in
full force and effect notwithstanding the expiration or other termination of
this Lease or any of the other Operative Documents and are expressly made for
the benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume,
or suffer to exist any Lien on or with respect to the Engine or any Part
thereof, title thereto, or any interest of Lessor therein or in this Lease,
except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture
Trustee and any other Indemnitee as herein provided or provided under the other
Operative Documents or the Financing Documents; (ii) Head Lessor's Liens,
Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or
being diligently contested in good faith by appropriate proceedings in
accordance with Section 10 and so long as adequate reserves are maintained with
respect to such Liens and only so long as neither such proceedings nor such
Liens involve any material danger of the sale, forfeiture or loss of any of the
Engine or any Part, or any interest of Lessor or Indenture Trustee therein or
any risk of criminal liability of Lessor or Indenture Trustee; (iv) inchoate
materialmen's, mechanics', workmen's, repairmen's employees', or other like
inchoate Liens arising
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in the ordinary course of business for sums not overdue by more than 45 days or
being diligently contested in good faith and only so long as neither such
proceedings nor any such Liens involve any material danger of the sale,
forfeiture or loss of the Engine or any Part, or any interest of Lessor or
Indenture Trustee therein; (v) the rights of other Persons to the extent
expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens
arising out of any judgment or award against Lessee (or any Permitted Sublessee)
unless the judgment or award shall not, within thirty (30) days after the entry
thereof, have been discharged, vacated, reversed, or execution thereof stayed
pending appeal or shall not have been discharged, vacated or reversed within
thirty (30) days after the expiration of such stay and only so long as such
Liens shall not involve any material danger of the sale, forfeiture or loss of
the Engine or any Part, or any interest of Lessor or Indenture Trustee therein
and provided that the execution of such judgment or award or an attachment
relating thereto shall not have occurred within such thirty (30) day period;
and, (vii) any other Lien with respect to which Lessee (or a Permitted
Sublessee) shall have provided a bond adequate in the reasonable opinion of
Indenture Trustee (if the Lien of the Indenture has not been discharged) and
Owner Participant. Lessee shall promptly, at its own expense, take or cause to
be taken such action as may be necessary to duly discharge any Lien (except for
the Liens referred to in clauses (i) through (vii) of this Section 14) directly
or indirectly created, incurred, assumed, or suffered to exist by Lessee if the
same shall arise at any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease, the
Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust
Supplement, and any other supplement from time to time required by the terms
hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease
Supplement, Indenture Supplement, Trust Supplement and such other supplements to
be duly filed and recorded, and maintained of record, in accordance with the
applicable laws of the government of registry of the Aircraft and the Engine. If
any filing or recording is reasonably necessary to protect the interests of
Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except
it shall be at Lessor's expense if in connection with a change in ownership of
the Engine or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default) and upon request by Lessor cause
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any financing statements and any and all additional instruments and other
documents, so far as permitted by applicable Law, to be kept, filed, and
recorded and to be re-executed, refiled and re-recorded at all times in the
appropriate office pursuant or in relation to any applicable Laws of any
Governmental Entity, to protect and preserve the rights and interests of Lessor
or Indenture Trustee hereunder, under the Indenture and in the Engine, and
Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably
satisfactory to Lessor and Indenture Trustee, of each such filing or refiling
and recordation and re-recordation.
Without limiting the foregoing, Lessee shall do or cause to be
done, at Lessee's cost and expense (except it shall be at Lessor's expense if in
connection with a change in ownership of the Engine or any other transfer or
assignment by Lessor other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), any and all acts and
things within its control which may be required under the terms of the Mortgage
Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Engine, as Lessor may reasonably
request. Lessee shall also do or cause to be done, at its own expense (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Engine or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default), any and all acts and things which may be required under the
terms of any other Law involving any jurisdiction in which Lessee, any Permitted
Sublessee or any wet lessee may operate the Engine, which Lessor may reasonably
request, to protect and preserve the title of the Lessor, this Lease, the
Indenture and Lessor's and Indenture Trustee's interest in the Engine and under
any of the Operative Documents or Financing Documents within any such
jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and
duly execute and deliver to Lessor or Indenture Trustee, as applicable, such
further documents and assurances and take such further actions as Owner
Participant or Indenture Trustee may from time to time reasonably request in
order to more effectively carry out the intent and purpose of this Lease and the
other Operative Documents and the Financing Documents and to protect the rights
and remedies created or intended to be created in
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favor of Lessor or Indenture Trustee hereunder and the other Operative Documents
and the Financing Documents including, without limitation, if reasonably
requested by Owner Participant or Indenture Trustee, at the expense of Lessee
(except it shall be at Lessor's expense if in connection with a change in the
ownership of the Engine or any other transfer or assignment by Lessor or
Indenture Trustee other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), the execution and delivery
of supplements or amendments hereto in recordable form, subjecting to this
Lease, the Indenture and the other Financing Documents, any replacement Engine
and the recording or filing of counterparts thereof in accordance with the laws
of any appropriate jurisdiction.
Section 16. Return of Engine and Records.
(a) Return. On any Return Occasion, Lessee, at its own expense
and risk, shall return the Engine to Lessor (or any Person designated by Lessor)
in at least the condition specified in this Section and Exhibit E hereto at any
Lessee system location in the continental United States selected by Lessor, as
Lessor may elect, or such other location as Lessor and Lessee may agree.
(b) Status Upon Return. Upon any Return Occasion hereunder,
the Engine shall be: (i) free and clear of all Liens, except for the Lien of the
Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly
certified as an airworthy engine by the FAA under Part 121 of the regulations
promulgated under the Federal Aviation Act which are in effect on the date of
such Return Occasion; (iii) in full airworthy condition for over water and EROPS
operation according to the FAA standards required to allow the Engine to be
operated under, and in full compliance with, an applicable standard certificate
of airworthiness and Part 121 of the regulations promulgated under the Federal
Aviation Act for such operation, such compliance to be by means of such
mechanical repairs or modifications or such inspections as may be required
thereby, but not by operational restrictions, by logbook entries or other method
of acceptance of such restrictions; (iv) in full compliance with Lessee's
Maintenance Program; (v) in full compliance with the maintenance and operation
provisions of this Lease and all FAA airworthiness directives, mandatory service
bulletins and equivalent requirements which by their terms require compliance on
or before the last day of the Term (without regard to any deferral, waiver,
deviation or exemption granted by the FAA specifically to Lessee delaying such
compliance); (vi) in good and airworthy operating condition, and in the same
condition as when delivered to
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Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding
deferred maintenance items, scheduled or unscheduled, with all systems and
components fully serviceable and operational and with no placards restricting
operation or use, and (vii) with all remaining warranties, indemnities, policies
and guarantees referred to in Section 5(d) made available to Lessor in a manner
and by documents in form and substance reasonably satisfactory to Lessor.
(c) Substitute Engine. In the event any engine not owned by
Lessor shall be redelivered on any Return Occasion, without limiting Lessee's
obligations under the Tax Indemnification Agreement, such engine shall be of the
same model and equivalent modification status as the Engine or, at Lessee's
option, an IAE engine of an improved model suitable for installation and use on
an Airframe without diminishing the value, remaining useful life or utility of
such Airframe, in each such case having a value, remaining useful life and
utility at least equal to (as determined in accordance with the Appraisal
Procedure), and be in an operating condition as good as the Engine, assuming the
Engine was in the condition and repair as required by the terms hereof
immediately prior to such termination and shall conform to the return condition
requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own
expense and concurrently with such delivery, shall cause such engine to become
an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply
with the terms of this Section 16(c) shall be conditioned on Lessor's
transferring to Lessee all of Lessor's right, title and interest in and to any
such Engine at the Return Occasion "AS IS, WHERE IS," without any
representation, warranty or recourse of any kind whatsoever, express or implied,
except a warranty that such Engine is free and clear of Lessor's Liens.
(d) Records and Documents. Upon the return of the Engine,
Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection,
modification, overhaul and other records, related to the Engine, including,
without limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Engine and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Engine under an FAA approved maintenance
program after the Term or to transition maintenance to another program,
including, without limitation, another registry, or, in the event an Event of
Default shall have occurred, to continue to maintain the Engine under the
Maintenance Program, in each case as Lessor
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may reasonably request, and all documentation with respect to the Engine set
forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and
(ii) all records necessary or required by the FAA to certify and place the
Engine on an FAA or other country's, as the case may be, approved maintenance
program. All of the foregoing shall, at Lessee's expense, be up-to-date and in
the latest revision status as of the last day of the Term, including, without
limitation, all software and other electronically-held materials which have
been supplied by or on behalf of Manufacturer or Original Head Lessee, which
must be updated to the latest revision status as of the last day of the Term
within such software base and all data therein or pertaining thereto shall be
deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Engine,
components, rotables, and assemblies and, as a minimum, extend to include all
activities associated with each of the last completed maintenance checks,
repairs, scheduled inspections and functional tests, and overhauls performed
under Lessee's Maintenance Program. All components and assemblies identified
with safe life limits shall be identified with their service histories,
accumulated cycles or flight hours as applicable and remaining service lives on
a separate listing; such identification shall be sufficient to allow
traceability of such components and assemblies from the date on which such
components and assemblies were manufactured to the date on which such
identification is made, and to measure the service histories, accumulated cycles
or flight hours as applicable and remaining service lives in each engine,
including but not limited to the Engine, in which such components and assemblies
have been used. All components and assemblies which are identified on the
maintenance records by part numbers and serial numbers other than the
manufacturer's shall be provided with interchange or cross reference listing
necessary to establish complete traceability. All documentation, flight, and
maintenance records as specified by United States Federal Aviation Regulations
91.173, 91.174, and each paragraph of regulation 121.380 which normally
accompany the transfer of an engine which has been operating in regulated
commercial air service, shall be delivered to Lessor with the Engine. Any
documents or records required to be delivered hereunder shall be in English.
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(e) Condition of Engine. Upon any Return Occasion, Lessee
shall return such Engine to Lessor in such condition that the Engine shall also
comply with each and every condition and requirement set forth elsewhere in this
Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion, Lessee shall
make the Engine available to Lessor at the location where the designated check
or checks required hereunder to be performed immediately prior to redelivery is
to be performed for detailed inspection of the documents referred to in
paragraph (d) above and the Engine and Parts structure and parts, at Lessee's
expense (excluding compensation to representatives of Lessor), in order to
verify that the condition of such Engine complies with the requirements set
forth above (such inspection being hereinafter referred to as the "Final
Inspection"). The Final Inspection shall be combined with such check or checks
and may include such other items as reasonably requested by Lessor. Lessee shall
give Lessor not less than thirty (30) days prior written notice of the
commencement date of such Final Inspection. The period allowed for the Final
Inspection shall be the same period during which such checks are being performed
and shall have such duration as to permit the opening of any areas of the Engine
which are customarily necessary or advisable to satisfy Lessor as to compliance
with the requirements of this Section 16 and Exhibit E. The Final Inspection
shall commence on the date so noticed which shall be on or before the expiration
of the Term with respect to the Engine and shall continue on consecutive days
until all activity required above to be conducted has been concluded. To the
extent that any portion of the Final Inspection extends beyond the expiration of
the Term, unless Lessor has terminated the Lease pursuant to Section 18(g)
hereof, the Term with respect to the Engine undergoing the Final Inspection
shall be deemed to have been automatically extended, and all obligations
hereunder continued, on a daily basis until the Final Inspection shall have been
concluded and Lessee shall pay Rent during any such extension in an amount equal
to the average daily Basic Rent or Renewal Rent, as the case may be, paid in
respect of the last year of the Basic Term or Renewal Term, as the case may be
(and Stipulated Loss Value during such extension shall equal the Stipulated Loss
Value on the last day of the Basic Term or Renewal Term, as the case may be);
provided, however, that Lessee shall not be required to pay Rent with respect to
the Engine during the period of extension to the extent that Lessor is
responsible for the delay in completion of the Final Inspection. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee, except
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that Lessee shall not be liable for any storage expenses which are incurred
after the sixtieth (60th) day after the Term to the extent that storage
continues thereafter due to Lessor's delay in completion of the Final
Inspection.
(g) Engine Records and Documents. In order to enable Lessor to
prepare for the Final Inspection of the Engine pursuant to Subsection 16(f)
above, Lessee agrees to make available to Lessor at a maintenance base of Lessee
with adequate facilities for short-term maintenance, where the Final Inspection
is to occur, not later than ten (10) days prior to the commencement of such
Final Inspection, the Engine Records and Documents listed in Exhibit B hereto,
together with such other documentation (including, without limitation, original
airworthiness directive compliance documents and other work documents) regarding
the condition, use, maintenance, or operation as Lessor may reasonably request
or require to substantiate the status of the Engine. Such Records and Documents
shall be sufficient to enable Lessor to trace the service history, accumulated
cycles or flight hours as applicable and remaining service life of the Engine,
including but not limited to a listing of each airframe on which the Engine has
been installed.
(h) Corrections and Subsequent Corrections. To the extent that
the Engine fails upon a Return Occasion to conform to any requirement imposed by
this Lease Lessor may, at its option, (i) continue the Lease in effect in the
manner provided for in Section 16(f) above with regard to automatic extension
until such time as the Engine is brought up to the condition required by this
Section 16, including Exhibit E, or (ii) accept the return of the Engine and
thereafter have any such nonconformance corrected, at such time as Lessor may
deem appropriate but not to commence later than ninety (90) days following the
return of the Engine, at commercial rates then charged by the Person selected by
Lessor to perform such correction. Lessee's obligations to pay such Supplemental
Rent shall survive the Expiration Date or other termination of this Lease.
Nothing set forth in this paragraph shall constitute a limitation on Lessor's or
Owner Participant's ability to recover from Lessee any damages, expenses or
losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's
failure to effect the return of the Engine at the time, in the place and in the
condition as specified in this Section 16 and Exhibit E hereto.
(i) [Intentionally Left Blank].
(j) Exportation of the Engine. Lessee shall, at Lessee's
expense, take such action as Lessor may reasonably
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request to assist Lessor in obtaining any required documents in relation to the
export of the Engine from the United States (including, without limitation, a
valid and subsisting export license).
(k) Service Bulletin and Modification Kits. Lessee shall
deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished
without charge by the manufacturer for installation on the Engine which have not
been so installed together with appropriate instructions for installation. In
the event such uninstalled kits were purchased or manufactured by Lessee, then
Lessor shall be advised of such kits by Lessee and have a right of first refusal
to purchase such kits at Lessee's cost for a period of ninety (90) days after
return.
(l) Storage Upon Return. Upon any Return Occasion, Lessee
shall, at Lessor's request and at Lessee's risk and expense, in addition to
other storage referred to above, arrange for the parking, storage and insurance
of the Engine for a period not exceeding sixty (60) days at such reasonable
location as Lessor requests where Lessee has or can arrange for storage. Lessee
shall pay or cause to be paid all costs and expenses for such parking, storage
and insurance.
(m) Resale/Release Cooperation. During the last twelve (12)
months of the Term, with reasonable notice and at reasonable times, Lessee will
cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable
respects, with the efforts of Lessor to sell or lease the Engine after the end
of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Engine and the records
relating thereto to the extent it does not unreasonably interfere with the
operation or maintenance of the Engine or the conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic Rent,
Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days,
after the date on which such
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payment is due, or (ii) any other payment of Supplemental Rent due hereunder
within ten Business Days, after the date on which such payment is due and Lessee
has received written demand therefor by the party entitled thereto; provided
that any failure of Lessee to pay to Lessor or Owner Participant when due any
Excepted Payments (as defined in the Indenture) shall not constitute an Event of
Default unless Lessor delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force and
effect any insurance required under the provisions of Section 12 hereof or shall
operate the Engine outside of the scope or in violation of the terms of the
insurance or United States Government indemnity coverage required to be
maintained with respect to such Engine; or
(c) Any representation or warranty made by Lessee herein or in
the Refunding Agreement or in any certificate furnished by Lessee in connection
herewith or therewith is or was incorrect at the time made in any material
respect and such incorrectness shall not have been cured within thirty (30) days
after the receipt by Lessee of a written notice from Lessor or the Indenture
Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant,
condition, or agreement to be performed or observed by it pursuant to this Lease
or the Refunding Agreement, and such failure shall continue uncured for thirty
(30) days after written notice thereof is given by Lessor or Indenture Trustee
to Lessee; provided, however, that if Lessee shall have undertaken to cure any
such failure which arises under the first or second sentence of Section 6(c), or
Section 6(d), as such provisions of Section 6 relate to maintenance, service,
repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in
attempting to cure such failure, such failure is not cured within said thirty
(30) day period but is curable with future due diligence, there shall exist no
Event of Default under this Section 17 so long as Lessee is proceeding with due
diligence to cure such failure and such failure is remedied not later than one
hundred eighty (180) days after receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a custodian,
receiver, trustee or liquidator of itself or all or any material part of
Lessee's property or Lessee's consolidated property, or Lessee admits in writing
its inability to, or is unable to, or does not, pay its debts generally as they
come due, or makes a general assignment for the benefit of creditors, or Lessee
files a voluntary
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petition in bankruptcy or a voluntary petition seeking reorganization in a
proceeding under any bankruptcy or insolvency Laws (as now or hereafter in
effect), or an answer admitting the material allegations of a petition filed
against Lessee in any such proceeding, or Lessee by voluntary petition, answer
or consent seeks relief under the provisions of any other bankruptcy, insolvency
or other similar Law providing for the reorganization or winding-up of
corporations, or provides for an agreement, composition, extension or adjustment
with its creditors, or any corporate action (including, without limitation, any
board of directors or shareholder action) is taken by Lessee in furtherance of
any of the foregoing, whether or not the same is fully effected or accomplished;
or
(f) An order, judgment or decree is entered by any court
appointing, without the consent of Lessee, a custodian, receiver, trustee or
liquidator of Lessee, or of all or any material part of Lessee's property, or
Lessee's consolidated property, or all or any material part of Lessee's property
or Lessee's consolidated property is sequestered, and any such order, judgment
or decree of appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of ninety (90) days after the date of entry
thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding
under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter
in effect) is filed and is not withdrawn or dismissed within ninety (90) days
thereafter or at any time an order for relief is granted in such proceeding, or
if, under the provisions of any Law providing for reorganization or winding-up
of corporations which may apply to Lessee, any court of competent jurisdiction
assumes jurisdiction over, or custody or control of, Lessee or of all or any
material part of Lessee's property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of ninety (90) days or at any time an order for relief
is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial passenger
Certificated Air Carrier or, except in either case in connection with a labor
dispute, announcement thereof or Lessee's suspension of its business as a
commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
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(i) Lessee's loss or suspension of its United States air
carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor may, at its option,
declare by written notice to Lessee this Lease to be in default, provided,
however, that this Lease shall be deemed to be declared in default automatically
without the necessity of such written declaration upon the occurrence of any
Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof;
and at any time thereafter, so long as any outstanding Event of Default shall
not have been remedied, Lessor may do one or more of the following with respect
to the Engine as Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with any mandatory requirements of,
applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's cost and expense, immediately return, and
Lessee hereby agrees that it shall return promptly, the Engine to Lessor in the
manner specified in such notice, in which event such return shall not be delayed
for the purposes of complying with the return conditions specified in Section 16
and Exhibit E hereof (none of which conditions shall be deemed to affect
Lessor's possession of the Engine) or delayed for any other reason; provided,
however, that Lessee shall remain and be liable to Lessor for amounts provided
for herein or other damages resulting from the Engine not being in the condition
required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's
option, Lessee shall be required thereafter to take such actions as would be
required by the provisions of this Lease if the Engine were being returned at
the end of the Term hereof with respect to the Engine. In addition, Lessor or
Lessor's agent, at its option and to the extent permitted by applicable Law, may
but shall not be obligated to enter upon the premises where the Engine is
located to take immediate possession of and, at Lessor's option, remove the same
by summary proceedings or otherwise, all without liability accruing to Lessor or
Lessor's agent for or by reason of such entry or taking of possession or removal
whether for the restoration of damage to property, or otherwise, caused by such
entry or taking, except direct damages to the extent caused by Lessor's gross
negligence or willful misconduct.
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(b) With or without taking possession thereof, sell or cause
to be sold, the Engine or any part thereof, or Lessor's interest therein, at
private or public sale, as Lessor in its sole discretion may determine, or
otherwise dispose of, hold, use, operate, or lease to others, or keep idle the
Engine, as Lessor in its sole discretion may determine, all free and clear of
any rights of Lessee or any Permitted Sublessee and except as hereinafter set
forth in this Section 18. Lessor may be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date specified for payment
in such notice), any unpaid Rent for the Engine to and including the Stipulated
Loss Value Date specified in such notice, plus whichever of the following
amounts as Lessor may specify, in its sole and absolute discretion, in such
notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated
Loss Value for the Engine computed as of the date specified in such notice plus,
if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an
amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such
date, over the fair market sale value of the Engine as of the date specified in
such notice or (ii) an amount equal to the excess, if any, of the sum of the
Stipulated Loss Value for the Engine computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or Renewal Rent Payment
Date, an amount equal to the Basic Rent or the Renewal Rent, as the case may be,
due on such date, over the fair market rental value of the Engine for the
remainder of the Term as of the date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above,
shall have sold the Engine, or its interest therein, Lessor, in lieu of
exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date immediately prior to the date such sale
occurs), any unpaid Rent due to and including the
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date of sale, plus the amount by which the Stipulated Loss Value of the Engine,
computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such
sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph (b), (c)
or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next
Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so
pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in
advance for the period on and after the Stipulated Loss Value Date), any unpaid
Basic Rent or Renewal Rent, as the case may be, for such Engine due and unpaid
for any period prior to and including, and any Basic Rent or Renewal Rent
payable on, the Stipulated Loss Value Date, plus, an amount equal to the
Stipulated Loss Value for the Engine computed as of such Stipulated Loss Value
Date; and upon such payment of liquidated damages and the payment of all other
Rent then due hereunder and the discharge of the Lien of the Indenture pursuant
to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without
recourse or warranty (except as to the absence of Lessor's Liens and the Lien of
the Indenture), all right, title and interest of Lessor in and to the Engine to
Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and
deliver such documents evidencing such transfer and take such further action as
Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to paragraph (b) above,
shall have relet the or Engine under a long term lease, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to such or Engine,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
Lessor on such demand, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such
Engine due after the time of reletting) any unpaid Rent for such Engine due up
to the date of reletting, plus the amount, if any, by which the aggregate Basic
Rent or Renewal Rent, as the case may be, for such Engine which would otherwise
have become due over the Basic Term or Renewal Term, as the case may be,
discounted periodically (equal to installment frequency) to present worth as of
the date of reletting at the rate of 8.50% per annum, exceeds the aggregate
basic rental payments to become due under the reletting from the date of such
reletting to the date upon which the Term for the Engine would have expired but
for Lessee's default, discounted periodically (equal to
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installment frequency) to present worth as of the date of the reletting at the
rate of 8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by written
notice to Lessee which cancellation, rescission and/or termination shall be
effective upon dispatch, whereupon Lessee's right to possess and use the Engine
shall immediately cease, however, Lessee shall be and remain liable for damages
and losses suffered by Lessor and all other amounts payable by Lessee hereunder.
(h) Lessor may exercise any other right or remedy which may be
available to it under applicable laws, or may proceed by appropriate court
action or actions, either at law or in equity, to enforce any other remedy or
right Lessor may have hereunder, under the other Operative Documents, at law or
in equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable (without
duplication of the remedies above and of Lessee's obligations under Section 10
and Section 13 hereof and subject to the exclusions set forth therein) for any
and all unpaid Rent before, during or after the exercise of any of the above
mentioned remedies (including without limitation interest on unpaid amounts with
respect to all amounts not paid when due, including, without limitation, any
amounts payable pursuant to the foregoing provisions of this Section 18), and,
except as specified above, until satisfaction of all of Lessee's obligations to
Lessor hereunder and for all legal fees and other costs and expenses incurred by
any Indemnitee by reason of the occurrence of any Event of Default or the
exercise of an Indemnitee's remedies with respect thereto, including all costs
and expenses incurred in connection with the return of the Engine in accordance
with the terms of Section 16 and Exhibit E hereof or in placing the Engine in
the condition and with airworthiness certification as required by such Section
and such Exhibit and costs and expenses related to the Lease, the Refunding
Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor
Agreement or each Liquidity Facility. All liquidated damages payable pursuant to
the foregoing shall bear interest, which shall be payable on the date the
payment of such liquidated damages is due at a rate equal to the Interest Rate
from and including the date due to and excluding the date actually paid.
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In effecting any repossession, Lessor, its representatives and
agents, to the extent permitted by applicable Law, (i) shall have the right to
enter upon any premises where it reasonably believes the Engine or Part to be
located, (ii) shall not be liable, in conversion or otherwise, for the taking of
any personal property of Lessee which is in or attached to the Engine or Part
which is repossessed, (iii) shall not be liable or responsible, in any manner,
for any damage or injury to any of Lessee's property in repossessing and holding
the Engine or Part, except for direct damages caused by Lessor's gross
negligence or willful misconduct, and (iv) shall have the right to maintain
possession of and dispose of the Engine or Part on any premises owned by Lessee
or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole expense,
assemble and make the Engine or Part available at a place designated by Lessor
in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that,
in the event of the return to or repossession by Lessor of the Engine or Part,
or otherwise upon the occurrence of an Event of Default, any rights in any
warranty (express or implied), service life policy, infringement indemnity,
performance guaranty or the like heretofore made available to Lessee or
otherwise held by Lessee shall without further act, notice or writing be deemed
automatically cancelled and shall be enforceable solely by and for the benefit
of, and assigned to, Lessor. Lessee shall be liable to Lessor (without
duplication) for all expenses, disbursements, costs and fees incurred in (i)
repossessing, storing, preserving, shipping, maintaining, repairing and
refurbishing the Engine or Part to the condition required by Section 16 and
Exhibit E hereof and (ii) preparing the Engine or Part for sale or lease,
advertising the sale or lease of the Engine or Part and selling or releasing the
Engine or Part. Lessor is hereby authorized and instructed, at its option, to
make expenditures which Lessor considers advisable to repair and restore the
Engine or Part to the condition required by Section 16 and Exhibit E hereof, all
at Lessee's sole expense.
For the purpose of this Section 18, the "fair market rental
value" or the "fair market sales value" of the Engine or Part shall be
determined pursuant to the Appraisal Procedure.
At any sale of the Engine or Part pursuant to this Section ,
Owner Participant may bid for and purchase such property and Lessee agrees that
the amounts paid therefor
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shall be used in the computations contemplated herein and Lessee shall remain
liable for any deficiency.
No remedy referred to in this Section is intended to be
exclusive, but, to the extent permitted by Law, each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d), (e) or (f)
above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Engine leased hereunder or otherwise to more effectively carry out Lessor's
rights and remedies and to file said documents for recordation with the FAA,
under the Uniform Commercial Code, and with any other appropriate Governmental
Entity, and otherwise act in Lessee's name and place with respect to the Engine,
provided that an Event of Default has occurred and is continuing and this Lease
has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full force
and effect and survive the expiration or other termination of this Lease and are
expressly made for the benefit of and shall be enforceable by Lessor, Owner
Participant and, if the Lien of the Indenture has not been discharged, Indenture
Trustee.
Section 19. Security for Obligations.
Security for Obligations. In order to secure the Equipment
Notes, Lessor has created, by the Indenture, a security interest in the Trust
Indenture Estate, including, without limitation, this Lease and all Rent and
other sums payable hereunder, except as provided in the Indenture and subject in
each case to Liens permitted hereunder. The Indenture provides, among other
things for the assignment by Lessor to Indenture Trustee of its right, title and
interest in, to and under this Lease, to the extent set forth in the Indenture,
for the creation of a first-mortgage lien on and
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perfected security interest in all of Lessor's right, title and interest in and
to the Engine in favor of Indenture Trustee. Lessee hereby consents to such
assignment and to the creation of such mortgage and security interest and
acknowledges receipt of copies of the Trust Agreement and the Indenture, it
being understood that such consent shall not affect any requirement or the
absence of any requirement for any consent under any other circumstances. Until
the Lien of the Indenture has been discharged, Lessee will furnish to Indenture
Trustee counterparts of all notices and other writings of any kind required to
be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has
been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss
Value and all other amounts payable hereunder (other than Excepted Payments) to
or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and
(b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but
not Owner Participant) (other than Expected Rights) herein as and to the extent
provided herein or in the Indenture and any express reference to Indenture
Trustee in any Section of this Lease shall not give rise to any implication that
Indenture Trustee may not exercise the rights of Lessor in any other Section of
this Lease as and to the extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement which
require or permit action by, the payment of monies to, the consent or approval
of, the furnishing of any instrument or information to, or the performance of
any other obligation to, Indenture Trustee, shall not be effective, and the
Sections hereof containing such provisions shall be read as though there were no
such requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received from
Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee under
this Lease by a Permitted Sublessee shall constitute payment or performance of
such obligation by Lessee.
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Section 20. Renewal Option.
Renewal Option. Lessee may renew this Lease as provided in the
following clause (i) and subject to the following clause (ii):
(i) Exercise of Renewal Option. Provided
that this Lease has not been previously terminated and that no Default or Event
of Default shall have occurred and be continuing at the time of the giving of
irrevocable notice hereinafter referred to in this clause (i) or at the time of
the commencement of the Renewal Term, Lessee, at its option, may renew this
Lease for one Renewal Term consisting of a period equal to five years. The right
to renew this Lease for such Renewal Term pursuant to this clause (i) shall be
exercised upon irrevocable notice from Lessee received by Lessor of Lessee's
election to so renew this Lease not less than twelve (12) months and not more
than twenty-four (24) months prior to the last day of the Basic Term. The
Renewal Rent for the Renewal Term shall be the "fair market rental value" of the
Engine for such Renewal Term (the "renewal fair market rental value") as
determined in accordance with the Appraisal Procedure. For purposes of this
paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier
than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to
exercise its option to extend the term of this Lease for the Renewal Term in
accordance with the provisions of this paragraph, all of Lessee's rights to
extend the Term for such Renewal Term shall expire. Lessee shall pay all
reasonable costs and expenses, including, without limitation, reasonable legal
fees and expenses, incurred by Lessor, Owner Participant and the Indenture
Trustee in connection with the exercise of such option.
(ii) Provisions Applicable During Renewal
Term. All provisions of this Lease, including, without limitation, as to Rent
and Stipulated Loss Value (which shall be, with appropriate adjustments, in no
event less than the greater of 120% of the "fair market sales value" of the
Engine as of the first day of the Renewal Term as determined pursuant to the
Appraisal Procedure or the amount set forth on Exhibit A as of the end of the
Basic Term), shall remain in effect and be applicable during such Renewal Term,
except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal
Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as
determined in accordance with clause (i) of this Section 20.
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Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision
of this Lease 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. To the extent
permitted by Law, each of Lessor and Lessee hereby waives any provision of Law
which renders any provision hereof prohibited or unenforceable in any respect.
No term or provision of this Lease may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing expressed to be a
supplement or amendment to, or waiver or termination of this Lease signed by an
officer of the party against which the enforcement of the change, waiver,
discharge, or termination is sought. This Lease shall constitute an agreement of
lease, and nothing herein shall be construed as conveying to Lessee any right,
title, or interest in the Engine or any Part except as a lessee only. Without
limiting the foregoing, the parties hereto agree to treat this Agreement as a
lease for United States federal income tax purposes and Lessee will not file a
tax return which is inconsistent with the foregoing and nothing contained herein
shall be construed as an election by Lessor to treat Lessee as having acquired
the Engine for the purpose of the investment credit allowed by Section 38 of the
1954 Code or any similar or successor statute. The headings in this Lease are
for convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED
IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor and
Lessee required or permitted under the terms and provisions hereof shall be in
writing and shall be sent to Lessor or Lessee at their respective addresses set
forth in Exhibit C hereto (or such other addresses as the parties may designate
from time to time in writing). All notices, reports or other documents provided
to Lessor or Lessee shall be provided concurrently to Indenture Trustee
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(until such time as the Lien of the Indenture is discharged) and to Owner
Participant, at such address as Owner Participant and Indenture Trustee,
respectively, may designate from time to time. All notices and instructions
hereunder shall become effective when received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any covenant, agreement, or obligation contained herein, Lessor
shall have the right but not the obligation to make such payment or conform or
comply with such agreement, covenant, or obligation, and the amount of such
payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by or on behalf of Indenture Trustee on
the signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing and this Lease has not
been declared or deemed to be in default, Lessor shall not take or cause to be
taken any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Engine
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
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Trustee, Note Holder or any other Person lawfully, claiming by or through them,
and provided further, that the foregoing shall not be deemed to have modified
the obligations of Lessee pursuant to Section 4(d) hereof, which obligations
remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as provided
in the Refunding Agreement, there has been no third party as agent involved in
this Lease and each indemnifies the other from liability for fees, commissions,
or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by Lessor
or Indenture Trustee and are payable to Lessee shall, unless a Default or an
Event of Default shall have occurred and be continuing, be invested as provided
below until paid to Lessee or applied by Lessor or Indenture Trustee to the
extent provided herein. Until paid to Lessee or applied as provided herein or in
the Indenture such monies shall be invested by Lessor or Indenture Trustee from
time to time at the expense of Lessee in Specified Investments, as directed by
Lessee in accordance with the provisions of Section 3.07 of the Indenture if the
Lien of the Indenture shall not have been discharged and thereafter as provided
below. There shall be promptly (but not more frequently than monthly) remitted
to Lessee any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions and other reasonable expenses, if
any, incurred in connection with such investment) unless a Default or an Event
of Default shall have occurred and be continuing. Lessee will promptly pay to
Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture
Trustee harmless from, on demand, the amount of any loss realized as the result
of any such investment (together with any Taxes, fees, commission and other
reasonable expenses, if any, incurred in connection with such investment).
(i) Entire Agreement; Amendment. This Lease (including the
Exhibits hereto), any related letter agreements and the other Operative
Documents, the Financing Documents and the Purchase Documents (including the
Exhibits thereto) and all closing documents delivered in connection with any of
the foregoing embody the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof. This Lease may be changed,
waived, discharged, amended, revised or terminated only by an instrument in
writing signed by the party against which enforcement is sought.
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(j) Expenses. Without limiting Section 13 or 18, Lessee agrees
within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications hereof or thereof, or waivers or consents hereunder or thereunder,
and (iii) any Default or Event of Default or the enforcement of any of Lessor's
rights, remedies or privileges hereunder or at law or in equity, but not
Lessor's legal fees and expenses in connection with the negotiation and
execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
and take such other action not inconsistent with this Lease as Lessor reasonably
deems necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of aircraft
engines similarly situated to Lessor.
(l) [Intentionally Left Blank].
(m) Submission to Jurisdiction; Service of Process; Waiver of
Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submits for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United States District Court for the Southern District
of New York. Each of Lessee and Lessor represents and warrants that it is not
currently entitled to, and agrees that to the extent that Lessee or Lessor
hereinafter may acquire, any immunity (including, without limitation, sovereign
immunity) from jurisdiction of any court or from any legal process, it hereby,
to the extent permitted by Law, waives such immunity, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not personally subject to
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the jurisdiction of the above-named courts that it is immune from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that this Lease or any of the other Operative Documents or the
subject matter hereof or thereof or any of the transactions contemplated hereby
and thereby may not be enforced in or by such courts. Each of Lessee and Lessor
hereby generally consents to service of process by registered mail, return
receipt requested, addressed to it at its address set forth in Exhibit C, or at
such other office of Lessee or Lessor as from time to time may be designated by
Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable),
Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees
that its submission to jurisdiction and its designation of service of process by
mail set forth above is made for the express benefit of Lessor, Lessee, Owner
Participant, Indenture Trustee, each Note Holder and their successors and
assigns (as applicable). Final (after all appeals) judgment (the enforcement of
which has not been stayed) against either Lessee or Lessor obtained in any suit
originally brought in the court of the State of New York in New York County or
in the United States District of New York shall be conclusive, and, to the
extent permitted by applicable Law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings, against Lessee or Lessor, as the
case may be, or any of their assets in the courts of any country or place where
such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED,
including, without limitation, contract claims, tort claims, breach of duty
claims and other common law and statutory claims. Lessor and Lessee represent
and warrant that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this
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Agreement may be filed as a written consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto agree that all
statements, representations, covenants and agreements made by Lessor (when made
in its capacity as such and not in its individual capacity) contained in this
Agreement, unless expressly otherwise stated, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies that can be exercised and enforced against the Trust Estate. Therefore,
no recourse shall be had with respect to anything contained in this Agreement
(except for any express provisions that Lessor is responsible for in its
individual capacity), against Lessor in its individual capacity or against any
institution or person that becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them; provided that (i) this Section 21(n) shall not
be construed to prohibit any action or proceeding against any party hereto for
its own willful misconduct or grossly negligent conduct for which it would
otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Engine for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 14(d) of the Refunding Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree that the
Original Head Lease, as amended and restated by this Amended and Restated Engine
Lease Agreement [GPA 1991 AWA-E2] (and as otherwise extended, amended, modified,
renewed or supplemented), shall be governed by Article 2-A of the Uniform
Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Lease to be executed by its duly authorized
officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as otherwise
expressly provided herein, but solely
as Owner Trustee
By:______________________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:______________________________________
Title:
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<PAGE> 105
The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease on this ____ day of November, 1996 and
consent to the terms hereof.
FLEET NATIONAL BANK, not in its
individual capacity, but solely as
Indenture Trustee
By:_________________________________________
Title:
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TABLE OF CONTENTS
<TABLE>
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Section 1. Definitions...................................................... 1
Section 2. Agreement to Lease............................................... 19
Section 3. Delivery and Acceptance; Term.................................... 19
(a) Time of Delivery......................................... 19
(b) [Intentionally Left Blank.].............................. 19
(c) Acceptance of Engine..................................... 19
(d) Term of Lease............................................ 20
Section 4. Rent............................................................. 20
(a) Rent..................................................... 20
(b) Minimum Payments......................................... 20
(c) Date, Place and Method of Payment........................ 21
(d) Prohibition Against Setoff,
Counterclaim, Etc........................................ 21
Section 5. Representations, Warranties and Covenants........................ 23
(a) Warranties and Disclaimer of
Warranties............................................... 23
(b) Representations and Warranties
of Lessor. .............................................. 24
(c) No Amendments to Financing Documents..................... 24
(d) Suppliers' Warranties.................................... 25
Section 6. Possession and Use............................................... 25
(a) Possession............................................... 25
(b) [Intentionally Left Blank]............................... 32
(c) Lawful Insured Operations................................ 32
(d) Maintenance.............................................. 33
(e) Registration and Insignia................................ 35
Section 7. Inspection....................................................... 35
Section 8. Additional Covenants of Lessee................................... 36
(a) Financial Information.................................... 36
(b) Maintenance of Corporate Existence....................... 38
(c) Maintenance of Status.................................... 38
(d) Payment of Taxes......................................... 38
(e) Consolidation, Merger, Etc............................... 39
(f) Information.............................................. 40
(g) Place of Business........................................ 40
(h) Certain Limitations on Use............................... 40
(i) Section 1110............................................. 41
(j) Permits and Licenses..................................... 41
(k) Security Opinion; Annual Certificate..................... 41
(l) Letter of Credit......................................... 43
</TABLE>
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Section 9. Replacement of Parts; Alterations,
Modifications and Additions...................................... 45
(a) Replacement of Parts..................................... 45
(b) Alterations, Modifications and
Additions................................................ 46
(c) Pooling.................................................. 48
Section 10.General Tax Indemnity............................................ 49
(a) Indemnity................................................ 49
(b) Exclusions............................................... 51
(c) Covered Income Tax....................................... 53
(d) Reports and Returns...................................... 55
(e) After-Tax Basis.......................................... 55
(f) Tax Benefit.............................................. 56
(g) Payment.................................................. 56
(h) Contest.................................................. 57
(i) Refund................................................... 59
(j) Diligence................................................ 59
(k) Affiliated Group......................................... 59
(l) Verification............................................. 60
(m) Survival................................................. 60
Section 11.Loss, Damage and Requisition..................................... 60
(a) Event of Loss with Respect to
the Engine............................................... 60
(b) Conveyance of Replacement Engine......................... 62
(c) Application of Proceeds and Payments..................... 64
(d) Requisition for Use by Government
with Respect to the Engine............................... 65
(e) Application in Default................................... 65
Section 12.Insurance........................................................ 66
(a) Public Liability and Property
Damage Insurance......................................... 66
(b) Insurance Against Loss or Damage......................... 67
(c) Application of Insurance Proceeds
for an Event of Loss..................................... 70
(d) Application of Insurance Proceeds for
Other than an Event of Loss.............................. 71
(e) Application in Default................................... 71
(f) Certificates............................................. 72
(g) Reinsurance.............................................. 72
(h) Storage.................................................. 73
(i) Amounts Held............................................. 73
(j) After the Term........................................... 74
(k) Governmental Indemnity................................... 74
Section 13.General Indemnity................................................ 74
</TABLE>
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<TABLE>
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Section 14.Liens............................................................. 79
Section 15.Protection of Title and Further
Assurances........................................................ 80
Section 16.Return of Engine and Records...................................... 82
(a) Return.................................................... 82
(b) Status Upon Return........................................ 82
(c) Substitute Engine......................................... 83
(d) Records and Documents..................................... 83
(e) Condition of Engine....................................... 85
(f) Final Inspection.......................................... 85
(g) Engine Records and Documents.............................. 86
(h) Corrections and Subsequent
Corrections............................................... 86
(i) [Intentionally Left Blank]................................ 86
(j) Exportation of the Engine................................. 86
(k) Service Bulletin and Modification
Kits...................................................... 87
(l) Storage Upon Return....................................... 87
(m) Resale/Release Cooperation................................ 87
Section 17.Events of Default................................................. 87
Section 18.Remedies.......................................................... 90
Section 19.Security for Obligations.......................................... 95
Section 20.Renewal Option.................................................... 97
Renewal Option.................................................... 97
Section 21.Miscellaneous..................................................... 98
(a) Severability, Amendment, and Construction................. 98
(b) GOVERNING LAW............................................. 98
(c) Notices................................................... 98
(d) Lessor's Right to Perform for Lessee...................... 99
(e) Counterparts.............................................. 99
(f) Quiet Enjoyment........................................... 99
(g) Brokers...................................................100
(h) Investment of Funds.......................................100
(i) Entire Agreement; Amendment...............................100
(j) Expenses..................................................101
(k) Federal Bankruptcy Code...................................101
(l) [Intentionally Left Blank]................................101
(m) Submission to Jurisdiction; Service
of Process; Waiver of Forum Non
Conveniens; Waiver of Jury Trial..........................101
(n) Limitation on Recourse....................................103
(o) Successor Trustee.........................................103
</TABLE>
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<TABLE>
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(p) Article 2-A of the UCC...................................103
</TABLE>
ANNEXES
Annex A - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Engine Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 2
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Permitted Sublessee Assignment Consent
Exhibit G - [Intentionally Left Blank]
Exhibit H - [Intentionally Left Blank]
Exhibit I - [Intentionally Left Blank]
Exhibit J - [Intentionally Left Blank]
Exhibit K - Form of Engine Status Report
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<PAGE> 1
EXHIBIT 4.32
AMENDED AND RESTATED ENGINE LEASE AGREEMENT
THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT dated as of
March 15, 1991 and amended and restated as of November 26, 1996 is entered into
between WILMINGTON TRUST COMPANY, not in its individual capacity except as
otherwise expressly provided herein, but solely as Owner Trustee under a Trust
Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as amended, and with its
principal place of business at Rodney Square North, Wilmington, Delaware 19890
(together with its successors and permitted assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation, with its chief executive office at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034 (together with its successors
and permitted assigns, "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease", "Equipment
Notes", "Excepted Payments", "Indenture Supplement", "Note Holder", "Pass
Through Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past
Due Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company", and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as
<PAGE> 2
defined in the Pass Through Trust Agreement); and the term "Lease Amendment No.
1" shall have the meaning specified in the Refunding Agreement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or indirectly, owns or controls, is controlled
by or is under common control with such specified Person. Control will be deemed
to exist based on (i) ownership of 25% or more of the voting securities of a
Person or (ii) the power to direct or elect or cause the direction or election
of the management and policies of a Person whether by contract or otherwise.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Engine or a Part. Except as provided in Section 18, "fair market sales value" or
"fair market rental value" shall mean the value that would be obtained in an
arm's-length transaction between an informed and willing seller or lessor, as
the case may be, and an informed and willing buyer or lessee, as the case may
be, both under no compulsion to sell and purchase or to lease (and other than a
lessee in possession or a used equipment scrap dealer), as the case may be, as
such value is determined by an appraisal which assumes: (i) that the Engine or
such Part is unencumbered by this Lease (or any sublease) or any of the other
Operative Documents or any of the Financing Documents and the terms thereof;
(ii) that the Engine or such Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that the Engine or such Part meets the return conditions
specified in Section 16 and Exhibit E (whether or not in fact meeting such
conditions) and (iv) that Lessee has removed the Removable Parts entitled to be
removed under Section 9(b) (it being agreed that no such removal is permitted in
connection with an appraisal pursuant to Section 18) and replaced any part which
was removed from the Engine as a result of such Removable Part being installed;
provided, however, that costs of removal from the location of current use and
costs of sale shall not be a consideration in determining such value except in
connection with any determination of "fair market sales value" or "fair market
rental value" pursuant to Section 18; and provided, further, that any
determination of "fair market sales value" or "fair market rental value"
pursuant to Section 18 shall be on an "as is, where is" basis in its actual
condition and location subject to this Lease and any sublease and any and all
Liens thereon (other than a Lessor's Lien or Lenders' Lien). Lessor and Lessee
shall, except for any appraisal pursuant to Section 18 in which case only Lessor
shall select such appraiser (which
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appraiser does not have to be acceptable to Lessee), select an independent
nationally-recognized aircraft appraiser, mutually acceptable to each of them,
who shall make the determination as to the "fair market sales value" or "fair
market rental value" of the Engine or such Part for which such appraisal is to
be conducted. If Lessor and Lessee fail to agree upon a mutually acceptable
appraiser within ten (10) days, then each of Lessor and Lessee shall select an
appraiser and such determination shall be made by such appraisers (if either
party shall fail to appoint an appraiser within ten (10) days after notice from
the other party of the selection of its appraiser, then the appraisal made by
the other party's appraiser shall be determinative). If the two appraisers
chosen pursuant to the preceding sentence fail to agree upon a determination of
the "fair market sales value" or "fair market rental value" of the Engine or
such Part within twenty (20) days after their appointment, then such appraisers
shall mutually choose a third appraiser within ten (10) days thereafter,
provided that if such appraisers fail to mutually choose a third appraiser
within said 10-day period, such appointment shall be made by the American
Arbitration Association (or any successor) in New York, New York, and the three
appraisers so chosen shall each make such determination. The appraisal
determined by each of the three appraisers chosen pursuant to the preceding
sentence shall be averaged and the appraisal furthest from the average of the
three appraisals shall be disregarded. The appraisal determined by each of the
two remaining appraisers shall be averaged and such average shall be the
appraised "fair market sales value" or "fair market rental value" of the Engine
or such Part. Lessee shall bear all the fees and expenses of the Appraisal
Procedure.
"Approved Broker" shall mean any reputable insurance broker of
recognized responsibility and standing experienced in aircraft insurance.
"Approved Insurers" shall mean any reputable and creditworthy
insurance company of recognized responsibility and standing experienced in
aircraft insurance.
"Basic Rent" for the Engine shall mean the Basic Rent
specified in Exhibit C and payable throughout the Basic Term for the Engine
pursuant to Section 4(a)(i).
"Basic Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Basic Rent becomes payable. If
a Basic Rent Payment Date shall fall on a day which is not a Business Day, any
payment
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<PAGE> 4
due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
"Basic Term" shall mean the period specified in Lease
Supplement No. 2.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Hartford, Connecticut are authorized or required by Law to be closed.
"Certificated Air Carrier" shall mean any corporation (except
the United States Government) domiciled in the United States of America and
holding a Certificate of Convenience and Necessity issued under Section 41102(a)
of the Federal Aviation Act by the Department of Transportation or any
predecessor or successor agency thereto, or, in the event such Certificates
shall no longer be issued, any corporation (except the United States Government)
domiciled in the United States of America and legally engaged in the business of
transporting for hire passengers or cargo by air predominantly to, from or
between points within the United States of America, and, in either event,
operating commercial jet aircraft, which also is a citizen of the United States
(as defined in Section 40102 of the Federal Aviation Act) holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
chapter 447 of the Federal Aviation Act for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
"Civil Reserve Air Fleet Program" shall mean the Civil Reserve
Air Fleet Program administered by the United States Government and authorized
under 10 U.S.C. Section 9511, et seq., as amended, or any substantially similar
or substitute program of the United States Government.
"Claims" shall have the meaning specified in Section 13.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether or
not incorporated, which is under common control with Lessee within the meaning
of Section 414(b) or (c) of the Code.
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<PAGE> 5
"Default" shall mean an event or condition which would
constitute an Event of Default with the lapse of time or the giving of notice or
both.
"Delivery Date" shall mean March 27, 1991 being the date the
Engine was delivered to and accepted by the Original Head Lessee as Lessee
hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the
United States of America.
"Engine" shall mean (i) the IAE Model V2500-A1 engine listed
by manufacturer's serial number in Lease Supplement No. 1, (ii) Parts or
components thereof, (iii) ancillary equipment or devices furnished therewith
under this Lease (including any separate equipment described on one or more
Lease Supplements hereto), (iv) the Engine Records and Documents and all other
manuals and records with respect to such Engine, and (v) all substitutions,
replacements and renewals of any and all thereof, including but not limited to,
any replacement engine which may from time to time be substituted, pursuant to
Section 6(a) or 11(a), for the Engine leased hereunder; together in each case
with any and all Parts incorporated or installed in or attached thereto or any
and all Parts removed therefrom so long as title thereto after removal from such
Engine shall remain vested in Lessor in accordance with the terms of Section 9
hereof. Except as otherwise set forth herein, at such time as a replacement
engine shall be so substituted and leased hereunder and the replacement Engine
shall have been subjected to the Lien of the Indenture (if the Lien of the
Indenture has not been discharged), such replaced Engine shall cease to be an
Engine hereunder.
"Engine Records and Documents" shall mean the items identified
in Exhibit B hereto, all of which shall be maintained in the English language.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one
or more clauses in Section 17.
"Event of Loss" shall mean any of the following events with
respect to the Engine: (a) loss of such property or the use thereof due to theft
or disappearance for a period in excess of sixty (60) consecutive days, but in
no event later than the last day of the Term;
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(b) destruction or damage of such property that renders repair uneconomic or
such property permanently unfit for normal use by Lessee (or, if a Permitted
Sublease is in effect, the Permitted Sublessee) for any reason whatsoever; (c)
any loss or disappearance of or damage to or destruction of such property which
results in an insurance settlement with respect to such property on the basis of
an actual or constructive total loss; (d) the condemnation, confiscation,
appropriation, seizure or requisition of title to any such property by any
Governmental Entity which results in the loss of title by Lessor for ten (10)
days or more but excluding requisition for use or hire which does not involve
requisition of title; (e) the condemnation, confiscation, appropriation, seizure
or requisition of the use of any such property by any Governmental Entity (other
than a requisition for use by the federal government of the United States or any
instrumentality or agency thereof bearing the full faith and credit of the
United States of America), which in any such case shall have resulted in the
loss of possession thereof by Lessee for a period in excess of the earlier of
ninety (90) consecutive days or the last day of the Term (or for such shorter
period ending on the date which is the next Business Day after the date of
receipt of an insurance settlement with respect to such property on the basis of
a total loss); (f) the requisition for use of such property by the federal
government of the United States or any agency or instrumentality thereof bearing
the full faith and credit of the United States of America, which purports to or
does continue beyond the Term; (g) as a result of any law, rule, regulation,
order or other action by the FAA, the Department of Transportation or any other
Governmental Entity having jurisdiction, the use of the Engine in the normal
course of Lessee's (or, if a Permitted Sublease is in effect, the Permitted
Sublessee's) business of air transportation of passengers shall have been
prohibited for a period of six (6) consecutive months, unless Lessee (or the
Permitted Sublessee), prior to the expiration of such six-month period, shall
have undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit such normal use of such item of equipment by
Lessee (or the Permitted Sublessee), or, in any event, if such normal use shall
have been so prohibited by any such Governmental Entity for a period of twelve
(12) consecutive months or is continuing beyond the last day of the Term; or (h)
as otherwise provided herein.
"Expiration Date" shall mean the date specified in Lease
Supplement No. 2, on which date the Basic Term of this Lease shall expire.
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"FAA" shall mean the Federal Aviation Administration of the
United States Department of Transportation or any successor agency.
"Federal Aviation Act" shall mean the sections of title 49 of
the United States Code relating to aviation, as amended and in effect from time
to time, or any similar legislation of the United States of America enacted in
substitution or replacement thereof.
"Financials" shall mean Lessee's most recent fiscal year-end
audited consolidated balance sheet and statements of income and cash flow for
the period then ending, copies of which for the fiscal year ending December 31,
1995, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the Refunding Agreement,
the Equipment Notes issued under the Indenture, the Intercreditor Agreement,
each Liquidity Facility, each Pass Through Trust Agreement and each supplement
thereto and any certificate delivered or entered into in accordance with the
foregoing, as amended, supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in
Exhibit F-1, as amended, supplemented or otherwise modified from time to time,
whose principal place of business and legal domicile at the time of entering
into the applicable sublease is located in a country listed on Exhibit F-2, as
amended, supplemented or otherwise modified from time to time, and not
prohibited by the terms of the insurance then in effect, with which the United
States has diplomatic or, such as in the case of Taiwan, similar relations, in
each case which is obligated under the applicable sublease to perform all
maintenance required by applicable foreign governmental standards made mandatory
to the Engine by such jurisdiction and, to the extent not inconsistent
therewith, all FAA-airworthiness directives and other requirements made
mandatory to the Engine by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
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<PAGE> 8
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Engine or its
operations.
"GPA Aircraft" shall mean any aircraft which is the subject of
any of the Other Leases.
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Lessor (in its individual capacity and
as trustee under the Trust Agreement), the Trust Estate, Owner Participant, the
Trust Indenture Estate, Indenture Trustee (in its individual capacity and as
trustee under the Indenture) and each Pass Through Trust, each Pass Through
Trustee (in its individual capacity and as trustee under the Pass Through
Trusts), the Subordination Agent and each Liquidity Provider, their respective
successors and permitted assigns and (and, in the case of a permitted assign of
Owner Participant that is a partnership, the partners of such partnership), and
any combination thereof and their respective officers, directors, agents,
servants, employees, subsidiaries, Affiliates and shareholders.
"Indenture" shall mean the Amended and Restated Trust
Indenture and Security Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991,
and amended and restated as of November 26, 1996, as the same may be further
amended, supplemented or modified from time to time, between Indenture Trustee
and Lessor. The term "Indenture" shall also include the Indenture Supplements
entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company
serving as Indenture Trustee under the Indenture, and its successors and
assigns.
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"Interest Rate" shall mean (i) with respect to the portion of
any payment of Rent that may be required by the Indenture to be paid to the
holders of any outstanding Equipment Notes issued thereunder, a per annum rate
of interest equal to the Past Due Rate applicable thereto under and as defined
in the Indenture computed on the basis of a 360-day year and twelve 30-day
months and (ii) with respect to any other amount, a per annum rate of interest
equal to the sum of the rate of interest publicly announced by Citibank, N.A.,
at its principal office in New York City, as its prime or similar base rate from
time to time in effect from the date the amount becomes due to the date it is
paid in full, plus 2%, computed on the basis of a year of 365 or 366 days, as
the case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any Governmental
Entity; (ii) any treaty, pact, compact or other agreement to which any
Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretations of the application of any Law described in (i) or
(ii) above; and (iv) except where expressly excluded herein, any amendment or
revision of any Law described in (i), (ii), or (iii) above.
"Lease Agreement," "this Lease Agreement," "this Lease," "this
Agreement," "herein," "hereunder," "hereby," "hereof" or other like words shall
mean this Lease as originally executed and as amended, supplemented or otherwise
modified from time to time, including, without limitation, by one or more Lease
Supplements, as a whole and not to any particular Section or other subdivision,
and any reference to a "Section " or an "Exhibit" shall refer to a Section or
Exhibit of this Lease, as so amended, supplemented or modified, unless expressly
provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1 and Lease
Supplement No. 2 and each subsequent Lease Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1991
AWA-E3] No. 1 dated March 27, 1991 between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1991
AWA-E3] No. 2, substantially in the
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<PAGE> 10
form of Exhibit D-1 hereto, entered into between Lessor and Lessee on the
Restatement Date for the purpose of confirming the leasing of the Engine
hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Engine or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Engine or the
administration of the Trust Estate or the Trust Indenture Estate pursuant to the
Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code or
otherwise, (ii) acts or omissions of Indenture Trustee in its individual
capacity (and not as Indenture Trustee) not contemplated hereunder or under the
other Operative Documents, or acts or omissions of Indenture Trustee in its
individual capacity (and not as Indenture Trustee) which are in violation of any
of the Operative Documents, or (iii) Taxes imposed on or Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
which are excluded from indemnification by Lessee, or (iv) Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
arising out of the voluntary or involuntary transfer by Indenture Trustee in its
individual capacity (and not as Indenture Trustee) of all or any portion of its
interest in the Engine, the Trust Estate, the Trust Indenture Estate or the
Operative Documents (except a Claim resulting from the exercise of remedies
under and in accordance with the Indenture or for a transfer provided for in the
Operative Documents).
"Lessee" shall have the meaning set forth in the Recitals
hereto.
"Lessor" shall have the meaning set forth in the Recitals
hereto.
"Lessor's Lien" shall mean any Lien or disposition of title
affecting the Engine or any Part arising as a result of (i) any claim against
Lessor, Owner Participant, Trust Company or any of their Affiliates not related
to the transactions contemplated by this Lease or the other Operative Documents,
the Financing Documents or the Purchase Documents; (ii) any affirmative act of
Lessor, Owner Participant, Trust Company or any of their Affiliates not
expressly contemplated by this Lease or the other Operative Documents, the
Financing Documents or the Purchase Documents or not permitted without consent
(which consent has not been
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granted) by any party hereto or thereto or that is in violation of any term of
this Lease or the other Operative Documents, the Financing Documents or the
Purchase Documents; (iii) Taxes imposed against the Trust Estate, Trust Company,
Lessor or Owner Participant or any of their Affiliates or the consolidated group
of taxpayers of which any of them is a member which are not to be indemnified
against by Lessee under the Operative Documents, the Purchase Documents or the
Financing Documents or by Original Head Lessee under the Original Head Lease Tax
Indemnification Agreement; (iv) claims against the Trust Estate, Trust Company,
Owner Participant or Lessor or any of their Affiliates arising out of the
transfer of all or any part of their respective interest in the Engine, the
Trust Estate, the Operative Documents or the Financing Documents other than any
transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 (except
Liens resulting from a transfer not permitted by such Section ) or 20 of this
Lease or pursuant to Section 10 of the Refunding Agreement; provided, however,
that there shall be excluded from this definition and Lessor shall not be
required to remove any Lien which would otherwise constitute a Lessor's Lien, if
it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Engine or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge,
lien, charge, encumbrance, lease, exercise of rights, security interest, lease
in the nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft which is applicable to IAE AG V2500 Engines in effect on the date
hereof or as modified with the approval of the FAA without affecting, or any
other FAA approved maintenance program which does not affect, the return
condition standards set forth in Section 16 and Exhibit E or (ii) if the Engine
is subject to a Permitted Sublease to a Foreign Air Carrier any other FAA
approved maintenance program for the Engine which is approved by the aviation
authority of the country of
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<PAGE> 12
registry and complies with the requirements applicable to maintenance of the
Engine contained in the definition of Foreign Air Carrier. The Maintenance
Program shall encompass scheduled maintenance, condition monitored maintenance,
and on-condition maintenance of the Engine, including, but not limited to,
servicing, testing, preventive maintenance, repairs, structural inspections,
structure life improvements, system checks, overhauls, approved modifications,
service bulletins, engineering orders, airworthiness directives, and corrosion
control inspections and treatments. All modifications and supplements to the
Maintenance Program shall be provided to Lessor upon its reasonable request and
Lessor shall be given reasonable access to the Maintenance Program upon its
request.
"Manufacturer" shall mean IAE in its capacity as manufacturer
of the Engine, together with any subcontractor or supplier thereof.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such
Person's stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease
Supplement, any sublease, the Tax Indemnification Agreement, the Financing
Documents, that certain letter dated as of the Restatement Date and any
certificate delivered or entered into pursuant to the foregoing, as
amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Engine Lease Agreement
[GPA 1991 AWA-E3], with respect to the Aircraft, dated as of March 15, 1991,
between Lessor, as lessor, and the Original Head Lessee, as lessee, as amended,
supplemented or otherwise modified and as in effect immediately prior to the
Restatement Date, as more particularly described in Annex I attached hereto.
"Original Head Lease Tax Indemnification Agreement" shall mean
the Head Lease Tax Indemnification
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Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, and amended and
restated as of the Restatement Date between the Original Head Lessee and Owner
Participant, as amended, supplemented or otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA I, Inc., a
Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as
defined in the Original Head Lease) as in effect immediately prior to the
Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft
Lease Agreement [GPA 1989 BN-12] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement [GPA
1990 AWA-13] amended and restated as of the Restatement Date between Wilmington
Trust Company as Owner Trustee, Lessor, and America West Airlines, Inc. as
Lessee, the Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-14]
amended and restated as of the Restatement Date between Wilmington Trust Company
as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee, the Amended
and Restated Aircraft Lease Agreement [GPA 1990 AWA-15] amended and restated as
of the Restatement Date between Wilmington Trust Company as Owner Trustee,
Lessor, and America West Airlines, Inc. as Lessee, the Amended and Restated
Aircraft Lease Agreement [GPA 1990 AWA-16] amended and restated as of the
Restatement Date between Wilmington Trust Company as Owner Trustee, Lessor, and
America West Airlines, Inc. as Lessee, the Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E1] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor and America West
Airlines, Inc. as Lessee, and the Amended and Restated Engine Lease Agreement
[GPA 1991 AWA-E2] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee, each as amended, supplemented or otherwise modified from time to
time.
"Other Letters of Credit" shall mean any and all letters of
credit pursuant to Section 8(l) of the Other Leases.
"Owner Participant" shall mean ____________________________, a
Delaware corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
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<PAGE> 14
"Owner Trustee" shall mean Wilmington Trust Company, as Owner
Trustee under the Trust Agreement, and its successors and assigns.
"Parent" shall mean GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1991 AWA-E3], dated as of March 15, 1991, among Original Head
Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the
"Lender" named therein, as amended by the Letter Agreement dated as of July 29,
1993, as the same may be further amended, supplemented or otherwise modified
from time to time and as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature which may now or from time to time be incorporated or installed
in or attached to or were provided by the Manufacturer with the Engine or so
long as title thereto shall remain vested in Lessor in accordance with the terms
of Section 9 hereof after removal from such Engine. Except as otherwise set
forth herein, at such time as a replacement part shall be substituted for a Part
in accordance with Section 9 hereof, the Part so replaced shall cease to be a
Part hereunder.
"Payment Location" shall have the meaning set forth in Exhibit
C, as the same may be changed from time to time by Lessor as provided in Section
4(c).
"Permitted Lien" shall mean any Lien referred to in clauses
(i) through (vii) of the first sentence of Section 14 hereof.
"Permitted Sublease" shall have the meaning specified in
Section 6(a)(iii)(1).
"Permitted Sublessee" shall mean a Certificated Air Carrier
or, after the Restricted Use Period, (a) any Foreign Air Carrier, (b) the United
States Government or an agency or instrumentality thereof which bears the full
faith and credit of the United States of America or (c) any other Person
approved in writing by the Owner Participant and the Indenture Trustee.
"Person" shall mean and include any individual person,
corporation, partnership, firm, joint stock company,
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<PAGE> 15
joint venture, trust, estate, unincorporated organization, association,
Governmental Entity, or organization or association of which any of the above is
a member or a participant.
"Purchase Agreement" shall mean the Engine Sale Agreement
dated as of September 28, 1990, among IAE and Original Head Lessee, as the same
may be amended, supplemented or otherwise modified to the extent permitted by
the terms thereof from time to time.
"Purchase Documents" shall mean the Purchase Agreement and any
other agreement, document or certificate delivered or entered into pursuant to
the foregoing, as amended, supplemented or otherwise modified.
"Removable Part" shall have the meaning set forth in Section
9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section
20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
If a Renewal Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Renewal Rent Payment Date shall be made on the next
succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20
following the end of the Basic Term if Lessee shall have exercised its renewal
option in accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may
be, and Supplemental Rent, collectively.
"Replacement Engine" shall have the meanings specified in
accordance with its description in Section 11.
"Replacement Period" shall have the meaning specified in
Section 11.
"Responsible Officer" shall mean, with respect to Lessee, any
of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer
or Controller.
"Restricted Use Period" shall have the meaning specified in
Exhibit C.
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"Return Occasion" shall mean the event that occurs when
possession of the Engine is to be returned from Lessee to Lessor at the end of
the Term of this Lease or upon Lessor taking possession pursuant to Section 18
or for any other reason.
"Shipping Stand" shall mean the cradle designed to hold an
engine which has a suitable shock mounting system to allow the engine to be
transported by truck or other vehicle without damage, listed by part number and
manufacturer's serial number in Lease Supplement No. 1.
"Specified Investments" shall mean (i) direct obligations of
the United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank incorporated
under the laws of the United States or one of the States thereof (but not
exceeding $10,000,000 in principal amount or deposits at any given time for any
one bank) having a combined capital surplus and undivided income of at least
$750,000,000 and having a rating of "B" or better from Thompson BankWatch, Inc.;
(iv) repurchase agreements (but not exceeding $10,000,000 in principal amount or
deposits at any given time for any one bank) with any financial institution
having combined capital and fully collateralized by an obligation of the type
described in clauses (i) through (iii) as collateral pursuant to which an entity
referred to in clause (iii) above or another financial institution having a net
worth of at least $750,000,000 and having a rating of "B" or better from the
Thompson BankWatch, Inc. is obligated to repurchase any such obligation not
later than ninety (90) days after the purchase of any such obligation; and (v)
money market funds which invest solely in obligations described in clause (i);
provided that if all of the above investments are unavailable, the entire
amounts to be invested may be used to purchase Federal funds from an entity
described in clause (iii) above; and provided further that no investment shall
be eligible as a "Specified Investment" unless the final maturity or date of
return of such investment is on or before the date which is ninety (90) days
from the date of purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date
during the Basic Term the amount set forth on Exhibit A hereto and, thereafter,
the amount described in Section 20(ii) (it being understood and agreed that the
amounts set forth in Exhibit A take into account fully the amount and
application of each installment of Basic Rent or Renewal Rent on each Stipulated
Loss Value Date (other than
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a Stipulated Loss Value Date that is a Basic Rent Payment Date or Renewal Rent
Payment Date) so that no additional credit of such Basic Rent or Renewal Rent is
to be made in respect thereof except as expressly provided herein on a Basic
Rent Payment Date or a Renewal Rent Payment Date). In the event that it is
necessary to determine a separate Stipulated Loss Value for the Engine, such
Stipulated Loss Value shall be based on the ratio that the original cost to
Lessor of the Engine bears to Lessor's Cost (as set forth in the Original Head
Lease) for the Engine.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth, on Exhibit
A hereto.
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii) any
payment of indemnity required by Section 10 or 13 hereof; (iii) any payment of
an amount equal to average daily Basic Rent or Renewal Rent in connection with
an extension of the Term of this Lease as a result of (a) an incipient Event of
Loss and the operation of Section 11 hereof or (b) the need to correct any
failure of the Engine to satisfy the requirements of Section 16 and Exhibit E
hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any payment due
to the Owner Trustee in respect of fees or expenses as provided in Section 21(j)
hereof; (vi) an amount equal to any payment due to the Indenture Trustee in
respect of fees or expenses as provided in the Indenture and/or Section 21(j)
hereof; (vii) the Pro Rata Share of any payment due to any Pass Through Trustee
in respect of fees or expenses pursuant to the Pass Through Trust Agreement;
(viii) the Pro Rata Share of any payment due to the Subordination Agent in
respect of fees, compensation, costs or expenses pursuant to the Intercreditor
Agreement; (ix) an amount equal to the amount specified in clause (b) of the
fourth paragraph of Section 2.02 of the Indenture; and (x) to the extent
permitted by applicable Law, interest at the Interest Rate calculated: (1) on
any part of any installment of Basic Rent or Renewal Rent, or average daily
Basic Rent referred to in clause (iii) of this definition of "Supplemental
Rent", not paid on the due date thereof for the period for which the same shall
be overdue and (2) on any Supplemental Rent not paid when due hereunder from and
including the due date until the same shall be paid. As used herein, "Pro Rata
Share" means as of any date of determination a fraction the numerator of which
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is the aggregate Principal Amount then outstanding of the Equipment Notes issued
under the Indenture and the denominator of which is the aggregate principal
balance then outstanding of all "equipment notes" issued under the Indentures
(as defined in the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1990 AWA-E3], dated as of
December 12, 1990, and as amended and restated as of November 26, 1996, between
Original Head Lessee and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Taxes" shall mean any and all fees (including, without
limitation, license and registration fees), taxes (including, without
limitation, sales, personal property (tangible and intangible), transfer, fuel,
leasing, use, occupational, value added, excess profits, excise, gross receipts,
franchise, stamp, and income taxes), levies, imposts, withholdings, assessments,
or other taxes, duties or charges of any nature whatsoever, together with any
penalties, fines, additions to tax charges or interest thereon or computed with
reference thereto.
"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in
Lease Supplement No. 2 and the Renewal Term, if Lessee extends the Term in
accordance with Section 20, in either case, as extended or deemed extended as a
result of the occurrence of an event described in clause (iii) to the definition
of "Supplemental Rent" in this Lease, for which the Engine is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1991
AWA-E3] dated as of March 15, 1991 as amended by Trust Supplement No. 1, and as
further amended by Trust Supplement No. 2, between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust Agreement"
shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
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"Trust Supplement No. 1" shall mean Trust Agreement Supplement
[GPA 1991 AWA-E3] No. 1 dated the Delivery Date between Lessor and Owner
Participant for the purpose of bringing the Aircraft and the Original Head Lease
into the Trust Estate.
"Trust Supplement No. 2" shall mean Trust Agreement Supplement
[GPA 1991 AWA-E3] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government
of the United States of America and any board, commission, department, division,
organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees
to furnish the Engine to a third party pursuant to which such Engine (i) shall
be operated solely by regular employees of Lessee possessing all current
certificates and licenses required under the Federal Aviation Act (it is
understood that cabin attendants need not be regular employees of Lessee) and
Lessee otherwise maintains operational control and possession thereof, and (ii)
shall be maintained by Lessee in accordance with its normal maintenance
practices and this Lease to which the Engine is subject, and otherwise the
insurance required hereunder shall be maintained and the Engine shall be used
and operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease
the Engine to Lessee, and Lessee hereby agrees to lease the Engine from Lessor,
on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Engine was delivered to Lessee, and
Lessee accepted delivery of the Engine, on March 27, 1991.
(b) [Intentionally Left Blank.]
(c) Acceptance of Engine. The Engine leased hereunder was
delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND EVERY DISCLAIMER
OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a) AND (b) HEREOF.
Lessee hereby agrees that it has accepted the Engine for all
purposes of this Lease and Lessee's
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<PAGE> 20
acceptance of the Engine was conclusive evidence that, as between Lessor and
Lessee, the Engine was in all respects satisfactory to Lessee and was in
compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall commence
on the Delivery Date and shall continue until the Expiration Date; provided,
however, that the Term of this Lease may be earlier terminated pursuant to the
provisions hereof.
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the
following as Rent hereunder:
(i) Basic Rent. The Basic Rent, as set forth in Exhibit C
throughout the Basic Term hereof, in consecutive installments, in arrears as set
forth on Schedule I attached to Exhibit C, due and payable on each Basic Rent
Payment Date to the Lessor; and
(ii) Supplemental Rent. Any and all Supplemental Rent,
which shall be due and payable ten (10) Business Days after demand unless
otherwise specifically provided. In the event of any failure on the part of
Lessee to pay any Supplemental Rent when due, Lessor shall have all rights,
powers and remedies provided for herein or by law or equity or otherwise in the
case of nonpayment of Basic or Renewal Rent. Lessee's obligation to pay
Supplemental Rent which is due and owing pursuant to the terms hereof shall
survive the expiration or termination of Lessee's obligation to pay Basic Rent
or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any provision in this
Lease or in any other Operative Document to the contrary, under all
circumstances and in any event, (i) the Stipulated Loss Value, together with the
payment of Supplemental Rent and all other Rent then due hereunder, as of any
time and as of the date of any payment thereof shall (both before and after
giving effect to any reductions therefrom) be in an amount at least sufficient
to pay in full as of such time or date the aggregate unpaid principal amount of
the Equipment Notes then outstanding and all accrued and unpaid interest
(assuming interest has been timely paid) thereon and (ii) Basic Rent payable on
any Basic Rent Payment Date shall at least equal the aggregate amount of
principal and interest due and payable on the Equipment Notes on such Basic Rent
Payment Date. It is agreed, however, that no installment of Basic Rent or
Stipulated Loss Value shall be increased or adjusted by
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reason of (A) any attachment or diversion of Rent on account of any Lessor's
Lien or Lenders' Lien, (B) any modification of the terms of the Equipment Notes
or the other Financing Documents made without the prior written consent of
Lessee or (C) the acceleration of any Equipment Note due to the occurrence of
any "Indenture Event of Default" (as defined in the Indenture) which does not
constitute an Event of Default hereunder. It is further agreed that nothing in
this Lease or any other Operative Document shall be deemed to constitute a
guaranty of the value, utility or useful life of the Aircraft or a guaranty in
respect of interest, principal or any other amounts payable in respect of or
under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on which a
payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in the City of New York or Hartford, Connecticut as Indenture
Trustee may direct by thirty (30) days prior written notice to Lessee, except
for all Excepted Payments. All Excepted Payments, and, upon discharge of the
Lien of the Indenture, all payments of Rent thereafter made hereunder, shall be
paid in such immediately available funds no later than 12:00 p.m. (noon), New
York City time, on the date payable hereunder, to Lessor or to Owner
Participant, as appropriate, in accordance with the payment instructions set
forth in Exhibit C or at such other address as Lessor may direct by thirty (30)
days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This Lease
is a net lease. Lessee's obligations to pay all Rent and to perform all other
obligations hereunder are absolute and unconditional and shall not be affected
or reduced by any circumstances, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense, or other right which Lessee may have against
Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Engine, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
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<PAGE> 22
limitation, any breach by Lessor of its representations, warranties or covenants
contained herein or in the other Operative Documents; (ii) any defect in the
title, airworthiness, eligibility for registration under the Federal Aviation
Act, condition, design, operation, or fitness for use of, or any damage to or
loss or destruction of, the Engine (subject to the provisions of Section
11(a)(ii) hereof), any interruption or cessation in the use of or possession
thereof by or availability to Lessee for any reason whatsoever, whether arising
out of or related to an act or omission of Lessee, Lessor, Original Head Lessee,
Owner Participant, Indenture Trustee, any Note Holder, any Manufacturer, any
Person providing services with respect to the Engine or any other Person; (iii)
any Liens with respect to the Engine; (iv) the invalidity or unenforceability or
lack of due authorization or other infirmity of this Lease or any sublease or
any absence of right, power or authority of Lessor, Original Head Lessee, Lessee
or Indenture Trustee to enter into this Lease or the Indenture, as the case may
be; (v) any insolvency, bankruptcy, reorganization, or similar proceedings by or
against Lessor, Original Head Lessee, Lessee, any sublessee, Indenture Trustee
or any Note Holder; (vi) any Taxes or (vii) any other circumstance or happening
of any nature whatsoever, whether or not similar to any of the foregoing; it
being the expressed intention of Lessor and Lessee that all Rent payable
hereunder shall be payable in all events, unless the obligation to pay the same
shall be terminated pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Engine or any obligation imposed
upon Lessee hereunder or under the other Operative Documents (including, without
limitation, payment of Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law, except as specifically provided herein,
Lessee waives all rights (if any) to any diminution in its Rent obligations
hereunder and nonetheless agrees to pay, to Indenture Trustee or
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<PAGE> 23
Lessor as provided in Section 4(c) hereof an amount equal to each Basic Rent or
Renewal Rent, as the case may be, payment and any Supplemental Rent payment at
the time such payments would have become due and payable in accordance with the
terms hereof had this Lease not been terminated in whole or in part, and so long
as such payments are made and all other terms and conditions hereof are complied
with by Lessee, Lessor and Lessee will deem this Lease to remain in full force
and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall
be liable therefor, on account of any failure of the Original Head Lessee,
Lessor, Indenture Trustee or any other such Person to perform its express
obligations under this Lease and the other Operative Documents, or to enforce
any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties.
THE ENGINE WAS DELIVERED AND IS BEING LEASED
BY LESSOR TO LESSEE "AS IS" AND "WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK
THE ENGINE ON SUCH BASIS. LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE,
BY VIRTUE OF HAVING LEASED THE ENGINE UNDER THIS LEASE OR BY HAVING ACQUIRED THE
ENGINE OR DONE OR FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY
STATUS UNDER OR IN RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER
PARTICIPANT HAS MADE, AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY
SPECIFICALLY DISCLAIMS, ANY GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE (EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A
PARTICULAR OR ANY PURPOSE OF THE ENGINE, OR AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP OF THE ENGINE, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS
WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE ENGINE, INCLUDING WITHOUT
LIMITATION ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM
NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE OR
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DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS,
OR OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES
AND DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION
OR WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE ENGINE) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE ENGINE OR BY ANY INADEQUACY
THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE ENGINE OR
ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS
OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR (iv)
THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF THE ENGINE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS
SECTION 5(a)(i) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER WITH RESPECT TO THE ENGINE, EXPRESS OR IMPLIED, AND LESSOR
SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR GUARANTEES,
INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE
OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR OR ANY USE, EXCEPT
THAT: (A) Lessor represents and warrants that, (x) on the Delivery Date, Lessor
had, and on the Restatement Date Lessor has, the right to lease the Engine
hereunder and (y) on the Delivery Date the Engine was free of Head Lessor's
Liens and on the Restatement Date the Engine is free of Lessor's Liens and Head
Lessor's Liens and (B) Lessor covenants that it shall not create, incur, assume
or suffer to exist any Lessor's Lien on the Engine.
(b) Representations and Warranties of Lessor. Lessor hereby
represents and warrants, as of the Restatement Date that its representations and
warranties set forth in Section 9(b) of the Refunding Agreement were true when
made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor covenants and
agrees that Lessor will not, without the prior written consent of Lessee, amend,
modify, supplement or waive any provision of any Financing Document in such a
way as to materially increase Lessee's obligations hereunder or materially
reduce Lessee's rights hereunder.
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<PAGE> 25
The representations, warranties and covenants of Lessor under
Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and
delivery of this Lease and the delivery of the Engine and the Restatement Date.
(d) Suppliers' Warranties. So long as a Default or an Event of
Default has not occurred and is continuing and provided that the Engine
continues to be maintained, modified and repaired as required hereunder, Lessor
hereby assigns or, if by their terms not assignable, agrees otherwise to make
available to Lessee the right to exercise in Lessee's name such rights as Lessor
may have or may subsequently obtain (but without representation or warranty by
or recourse to Lessor) with respect to any product warranty, service life
policy, trademark, patent or copyright infringement indemnity, or propulsion
system performance guaranty, of the Manufacturer or Manufacturer's subsidiary,
if any, or any subcontractor or vendor with respect thereto under the Purchase
Documents (except those which were given directly to Parent, the Original Head
Lessee or any of their Affiliates and are not directly related to the operator's
use of the Engine), to the extent that the same may be assigned or otherwise
made available to Lessee, and Lessor agrees to exert its reasonable efforts, at
Lessee's expense and upon its request, to enforce such rights as Lessor may have
with respect thereto for the benefit of Lessee; provided, however, that upon and
during the continuance of a Default or an Event of Default, such assignment or
other rights which are otherwise made available to Lessee shall immediately and
automatically without further action be deemed cancelled and, to the extent of
any remaining interest held by Lessee, deemed reassigned to Lessor and all such
rights shall revert to Lessor automatically including all claims thereunder
whether or not perfected and all amounts payable shall be paid to and held by
Lessor. In no event, however, shall Lessee have any right to amend, supplement
or otherwise modify the Purchase Agreement (by change order or otherwise). In
connection with the foregoing, Lessee agrees to be bound by and comply with all
applicable terms, conditions and limitations of the provisions of the Purchase
Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE
WILL NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST
HEREIN (EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR
OTHERWISE IN ANY MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF
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THE ENGINE; provided, that, so long as no Event of Default or Default shall have
occurred and be continuing or would result therefrom and so long as the action
to be taken shall not adversely affect Lessor's title to or other interest in,
or the Lien of the Indenture on, the Engine or this Lease or the insurance
required to be maintained hereunder and Lessee is otherwise in full compliance
with Section 12, and so long as all necessary approvals of the FAA and any other
Governmental Entity having jurisdiction have been obtained, then Lessee, without
the prior written consent of Lessor, may, only to the extent provided below and
subject to the limitations of Sections 6(a)(ii) and 6(a)(iii) below:
(1) subject the Engine to a normal
interchange, maintenance, servicing or pooling agreement or similar
arrangement with a Permitted Sublessee, in each case customary in the
airline industry of which Lessee is a part and entered into in the
ordinary course of its business; provided that Lessor has been given an
opportunity to review the interchange, maintenance, servicing, pooling
or similar arrangement, including but not limited to all agreements and
other documents relating thereto and has consented, which consent shall
not be unreasonably withheld, to the placement of the Engine into such
interchange, maintenance, servicing, pooling or similar arrangement and
provided, further that (A) no transfer of the registration of the
Engine shall be effected in connection therewith and (B) (i) no such
agreement or arrangement contemplates, results in or requires the
transfer of title to the Engine, and (ii) if Lessor's title to the
Engine shall be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to the
Engine and not an Event of Default and Lessee shall comply with Section
11(a) hereof in respect thereof;
(2) deliver possession of the Engine to
the Manufacturer, or in accordance with the Maintenance Program to an
FAA certified repair station, for testing, service, storage, repair,
maintenance, inspection or overhaul work on the Engine or any part
thereof or for alterations or modifications in or additions to the
Engine to the extent required or permitted by the terms of Section 9
hereof;
(3) transfer possession of the Engine
to the United States of America or any instrumentality
or agency thereof pursuant to a sublease;
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<PAGE> 27
(4) (i) subject the Engine to the Civil Reserve Air Fleet
Program and transfer possession of the Engine to the United States
Government pursuant to the Civil Reserve Air Fleet Program, so long as
Lessee shall promptly notify Lessor upon transferring possession of the
Engine to the United States Government pursuant to the Civil Reserve
Air Fleet Program and provide Lessor with the name and address of the
Contracting Office Representative for the Military Airlift Command of
the United States Air Force to whom notices must be given;
(ii) subject the Engine to (a) a service contract with the
United States Government, a copy of which shall be provided to Lessor,
providing for possession to be held by the United States Government for
a period not extending beyond the end of the Term, or (b) a requisition
for use by the United States Government not constituting an Event of
Loss;
(5) install the Engine on an airframe owned by Lessee free
and clear of all Liens except (A) Permitted Liens and Liens which apply
only to engines (other than the Engine), appliances, parts,
instruments, appurtenances, accessories, furnishings and other
equipment (other than Parts) installed on such airframe (but not to the
airframe as an entirety) and (B) the rights of participants under
normal interchange agreements which are customary in the airline
industry and do not contemplate, permit, result in or require the
transfer of title to the airframe or the engine installed thereon;
(6) install the Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of all
Liens except the rights of the parties to the lease or conditional sale
or other security agreement covering such airframe and except Liens of
the type permitted by clauses (A) and (B) of Section 6(a)(i)(5) and the
Lien of any mortgage which provides that the Engine leased to Lessee
hereby shall not become subject to the Lien thereof or to any rights of
any party thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of the
Engine on any airframe subject to the Lien of such mortgage, unless and
until Lessee shall become the owner of the Engine and Lessor shall have
no further interest therein, all pursuant to the express terms of this
Lease; and (B) there shall be in effect a written
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<PAGE> 28
agreement of the lessor or secured party of such airframe (which may be
contained in the lease or conditional sale or other security agreement
covering such airframe) substantially similar in effect to the
agreement of Lessor in Section 6(b) below whereby such lessor or
secured party effectively and expressly agrees that neither it nor its
successors or assigns will acquire or claim any right, title or
interest in the Engine by reason of the Engine being installed on such
airframe at any time while such Engine is subject to this Lease or is
owned by Lessor, and a copy of such agreement shall be provided to
Lessor upon written request;
(7) install the Engine on an airframe
owned by Lessee, leased to Lessee or purchased by Lessee subject to a
conditional sale or other security agreement under circumstances where
neither Section 6(a)(i)(5) or Section 6(a)(i)(6) is applicable;
provided that such installation shall be deemed an Event of Loss with
respect to the Engine and Lessee shall comply with Section 11(a) hereof
in respect thereof, Lessor not intending hereby to waive any right or
interest it may have to or in the Engine under applicable Law until
compliance by Lessee with such Section 11;
(8) enter into a Wet Lease for the
aircraft on which the Engine is installed in the ordinary course of
Lessee's business for a period not extending beyond the Term; provided
that if Lessee shall enter into any Wet Lease for a period of more than
six months (including renewal options) Lessee shall provide to Lessor
written notice of such Wet Lease (such notice to be given at least ten
(10) Business Days prior to entering into such Wet Lease); or
(9) sublease the Engine to any Permitted Sublessee on
the terms and conditions set forth in Section 6(a)(iii) below.
(ii) Certain Limitations on Transfers. With
respect to any transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that
receives possession by reason of a transfer permitted by Section 6(a)
hereof (other than the transfer of the Engine which is deemed to have
been an Event of Loss) and any Wet Lease shall be expressly subject and
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subordinate to all the terms of this Lease and the Lien of the
Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and
under the other Operative Documents shall continue in full force and
effect and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if
such transfer had not occurred and no provision of this Lease shall be
deemed a waiver of the Lessor's rights hereunder or under the other
Operative Documents nor discharge or diminish any of Lessee's
obligations hereunder or under the other Operative Documents;
(3) During the Restricted Use Period,
no Wet Lease, Permitted Sublease or other relinquishment of possession
of the Engine pursuant to the terms of this Section 6(a) shall be
permitted if such Wet Lease, Permitted Sublease or other relinquishment
of possession would cause the Engine to be "tax-exempt use property"
within the meaning of Section 168(h) of the Code or cease to be
"Section 38 property" within the meaning of Section 48(a) of the Code
(as determined after the application of Section 47(a)(7) of the Code);
(4) The term of any transfer, Wet
Lease, Permitted Sublease or other relinquishment of possession shall
not extend beyond the Basic Term or the Renewal Term (if Lessee shall
have exercised its option to renew this Lease in accordance with the
terms hereof);
(5) No transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession of the Engine shall in
any way discharge or diminish any of Lessee's obligations to Lessor or
any other Person hereunder for which obligations Lessee shall remain
primarily liable;
(6) The sublessee under any Permitted
Sublease, in its consent thereto, shall confirm that from and after the
occurrence and continuance of an Event of Default and, unless an Event
of Default specified in Section 17(e), (f) or (g) of this Lease has
occurred and is continuing, this Lease being deemed or declared in
default, Lessor (and, so long as the Lien of the Indenture shall not
have been discharged, Indenture Trustee) shall be entitled to enforce
directly and in its own name all representations,
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warranties, indemnities, covenants and agreements under the applicable
Permitted Sublease; and
(7) Each Permitted Sublease shall (A)
provide that (I) the Engine may not be operated or used other than as
provided in this Lease and shall be maintained and operated as required
hereunder, (II) Lessor may avoid or terminate such sublease following
an Event of Default hereunder and (III) to the extent not accomplished
by an assignment of the Permitted Sublease, upon the occurrence of an
Event of Default hereunder, Lessee's rights under such Permitted
Sublease shall automatically be deemed assigned to Lessor; and (B) be a
"net lease" in accordance with industry practice and shall be
comparable to, or more restrictive than, this Lease and under such
Permitted Sublease (except a sublease to the United States Government
or a Foreign Air Carrier after the Restricted Use Period), Lessee as
lessor under such Permitted Sublease, must be entitled to the same
benefits under 11 U.S.C. Section 1110 as Lessor is entitled hereunder
and such Permitted Sublease shall contain provisions regarding such
Section 1110 which are substantially the same as the related provisions
of this Lease. In addition, from and after the occurrence and
continuance of an Event of Default, all rent and other amounts payable
by the Permitted Sublessee under such Permitted Sublease shall be paid
directly to Indenture Trustee and, upon discharge of the Lien of the
Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any sublease
pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by Law) or
Section 6(a)(i)(9) above:
(1) Lessee may sublease the Engine or
the aircraft on which the Engine is installed to a Permitted Sublessee
(each of which shall constitute a "Permitted Sublease") if (A) in any
such case, the Permitted Sublessee under such sublease is not subject
to a proceeding or final order under applicable bankruptcy, insolvency
or reorganization laws on the date such sublease is entered into, (B)
in the event that the Permitted Sublessee under such sublease is a
Foreign Air Carrier (other than a Foreign Air Carrier principally based
in Taiwan), the United States maintains diplomatic relations with the
country in which such proposed Permitted Sublessee is principally based
at the time such sublease is entered into (or, in the case of a
sublease to a proposed Permitted Sublessee principally based in Taiwan,
maintains
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<PAGE> 31
diplomatic relations at least as good as those in effect on the
Restatement Date) and (C) in the event that the Permitted Sublessee
under such sublease is a Foreign Air Carrier, Lessor and the Indenture
Trustee shall have received an opinion of counsel to Lessee, in form
and substance reasonably satisfactory to Owner Participant and the
Indenture Trustee, to the effect that (I) the terms of the proposed
sublease will be legal, valid, binding and (subject to customary
exceptions in foreign opinions generally) enforceable against the
proposed Permitted Sublessee in the country in which the Permitted
Sublessee is principally based, (II) there exist no possessory rights
in favor of the Permitted Sublessee under such sublease under the laws
of such Permitted Sublessee's country of domicile that would, upon
bankruptcy or insolvency of or other default by Lessee, prevent the
return or repossession of the Engine in accordance with the terms of
this Lease, (III) (unless Lessee shall have agreed or is required to
provide insurance covering the risk of requisition of use of the Engine
by the government of the country of such Permitted Sublessee's country
of domicile) the laws of such Permitted Sublessee's country of domicile
require fair compensation by the government of such jurisdiction
payable in currency freely convertible into dollars for the loss of use
of the Engine in the event of the requisition by such government of
such use, (IV) the Permitted Sublessee is either not entitled to
sovereign immunity, or has effectively waived such sovereign immunity,
with respect to its rights and obligations under the proposed sublease;
(V) the laws of such Permitted Sublessee's country of domicile would
give recognition to Lessor's title to the Engine, to the registry of
the Engine in the name of the Lessor (or Lessee, as "lessee", or the
proposed Permitted Sublessee, as "sublessee", as appropriate) and to
the Lien of the Indenture; (VI) it is not necessary under the laws of
such Permitted Sublessee's country of domicile, solely as a consequence
of such subleasing and without giving effect to any other activity of
Owner Participant, Owner Trustee or Indenture Trustee or any Affiliate
thereof, as the case may be, for the Owner Trustee, the Owner
Participant or the Indenture Trustee to qualify to do business in such
jurisdiction and (VII) if the Owner Participant so requests, (x) under
the laws of such Permitted Sublessee's country of domicile there is no
tort liability of the owner of an aircraft not in possession thereof
(it being agreed that in the event this opinion cannot be given in a
form reasonably satisfactory to Owner Participant, such opinion shall
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be waived if insurance reasonably satisfactory to Owner Participant is
provided to cover such risk), and (y) such other matters as the Owner
Participant reasonably requests, provided, however, that no sublease
shall extend beyond the expiration of the Basic Term or any Renewal
Term then in effect.
Any Permitted Sublease shall expressly provide that the rights
of any Permitted Sublessee shall be expressly subject and subordinate to all the
terms of this Lease and to the Lien of the Indenture (if it has not been
discharged), including, without limitation, the covenants contained in Sections
6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to
Section 18 hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder or under the other Operative Documents, and such rights shall
continue as if such Permitted Sublease had not occurred. Any Permitted Sublease
shall expressly prohibit any further sub-sublease or assignment or any other
similar transfer of the Engine or rights thereto by the Permitted Sublessee.
Lessee shall provide to the Owner Participant and the Indenture Trustee (i)
written notice of any Permitted Sublease hereunder (such notice to be given not
later than ten Business Days prior to entering into any Permitted Sublease with
any proposed Permitted Sublessee), and (ii) a copy of each Permitted Sublease
together with an assignment, as security for Lessee's obligations hereunder, of
such Permitted Sublease, and if Lessor or the Indenture Trustee so requests, a
consent thereto from such Permitted Sublessee, substantially in the form of
Exhibit F-3 hereto, within ten (10) Business Days following the effective date
of such Permitted Sublease.
(b) [Intentionally Left Blank]
(c) Lawful Insured Operations. Lessee will not permit the
Engine to be serviced, repaired, maintained, used or operated in violation of
any Law of any Governmental Entity having jurisdiction, or contrary to the
Manufacturers' operating manuals or instructions, or in violation of any
airworthiness certificate or limitation, license or registration issued by any
such authority or any manufacturer's specifications, service bulletins or other
requirements, including, without limitation, any
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manufacturer's requirements as may be applicable to keep in full force and
effect each material warranty, product or performance guaranty, service life
policy or the like, in each case, to the extent made mandatory for Part 121
operators similarly situated to Lessee or the Permitted Sublessee if the
aircraft on which the Engine is installed is registered with the FAA, or the
applicable laws of any other jurisdiction in which the aircraft on which the
Engine is installed may then be registered in accordance with Section 11 of the
Refunding Agreement, unless the validity thereof is being contested in good
faith and by appropriate proceedings, but only so long as such proceedings do
not involve any danger of sale, forfeiture or loss of the Engine or impair the
interest of Lessor therein or impair the validity or priority of the Lien of the
Indenture or result in a risk of criminal liability of Lessor, Owner Participant
or Indenture Trustee and are not inconsistent with any insurance required to be
maintained by Lessee hereunder. In the event that such Law or other requirement
requires alteration of the Engine during the Basic Term or then-current Renewal
Term, Lessee shall comply therewith at its sole expense and shall maintain the
same in proper condition for operation under such Laws and other requirements.
Lessee shall not operate in any manner or locate in any place the Engine, or
suffer or permit the Engine to be operated by a Permitted Sublessee or otherwise
in any manner or located by a Permitted Sublessee or otherwise in any place (i)
unless the Engine is covered by insurance or United States Government indemnity
as required by the provisions hereof or (ii) contrary to the terms of such
insurance or United States Government indemnity. Lessee also agrees not to
operate or locate the Engine or suffer or permit the Engine to be operated or
located in any area excluded from coverage by any insurance policy issued
pursuant to the requirements of this Lease or in any war zone unless insured or
indemnified by the United States of America therefor, except in the case of
operation pursuant to a sublease or contract with, or as a result of a
requisition (not constituting an Event of Loss) by, the United States of
America, and then only if Lessee has obtained insurance or an indemnity (in lieu
of such insurance) from the United States of America covering such risks, in the
amounts and otherwise as required by this Lease.
(d) Maintenance. Lessee, at its own cost and expense, shall:
(i) perform or cause to be performed all service, repair, maintenance, overhaul,
inspections, alterations, modifications, and testing (A) in accordance with good
airline industry practice and in such manner to provide complete data and
documentation necessary to
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substantiate certification, (B) as may be necessary and required under, and in
compliance with, applicable Law, including, without limitation, FAA rules,
regulations and other requirements, any other applicable rules, regulations and
requirements by any other applicable Governmental Entity, the Maintenance
Program, airworthiness directives having a compliance date during the Term, and
the service bulletins and other requirements of any manufacturer, including,
without limitation, such requirements as may be applicable to keep in full force
and effect any and all material warranties, product and performance guaranties,
service life policies, indemnities or the like, (C) except during any period
that a Permitted Sublease is in effect, in the same manner and with the same
care, including regard for the status and technical condition of the Engine, as
shall be the case with respect to similar engines owned by Lessee without
discrimination and as if Lessee owned the Engine and was going to use the Engine
in continued regular customer service after the expiration of the Term, and
consistent with good industry practice, and during any period in which a
Permitted Sublease is in effect, in the same manner and with the same care,
including regard for the status and technical condition of the Engine, as shall
be the case with respect to similar engines owned by such Permitted Sublessee
without discrimination and as if the Permitted Sublessee owned the Engine and
was going to use the Engine in continued regular customer service after the
expiration of the Permitted Sublease, and consistent with good industry
practice, provided, however, that in all circumstances the Engine shall be
maintained by Lessee (or any Permitted Sublessee) in accordance with maintenance
standards required by, or substantially equivalent to those required by the
central civil aviation authority of the country of registry, and, to the extent
not inconsistent therewith, the FAA and (D) so as to keep the Engine in as good
a condition as when delivered to Lessee, ordinary wear and tear excepted, and in
good operating condition; (ii) keep the Engine or cause the Engine to be kept in
such condition as is necessary to maintain in good standing the airworthiness of
such Engine at all times under the Federal Aviation Act and any other applicable
law or the applicable laws of any other jurisdiction in which the Engine may be
registered in accordance with Section 11 of the Refunding Agreement (provided
that if any grounding is fleetwide in nature and so long as Lessee or a
Permitted Sublessee is contesting in good faith such grounding, Lessee shall not
be deemed in violation of this maintenance covenant); and (iii) maintain in
English all records, logs and other materials required by, and in a manner
acceptable to, the FAA or any other Governmental Entity having jurisdiction and
as provided
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under the Maintenance Program and Lessee's recordkeeping policies.
(e) Registration and Insignia. Lessee shall cause the
interests of Lessor and Indenture Trustee with respect to the Engine at all
times, at its expense, to be duly recorded under the Federal Aviation Act in the
name of Lessor or any successor or assignee, so long as the applicable parties
to the Refunding Agreement cooperate with Lessee with respect thereto as
reasonably requested by Lessee. Lessee shall cause the Indenture to be duly
recorded and maintained of record as a duly perfected mortgage on the Engine and
this Lease at all times. Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") on the Engine
showing title thereto and the Lien of the Indenture as designated by Lessor and
as Lessor may from time to time reasonably request. Unless otherwise requested,
within five (5) Business Days of delivery of the Engine, Lessee shall fasten or
cause to be fastened on each Engine (if not prohibited by applicable Law), a
Lease Identification in the form set forth in Exhibit C hereto or with any other
appropriate information in any other form subsequently designated by Lessor to
Lessee. Except as provided herein, Lessee will not allow the name of any Person
to be placed on the Engine as a designation that would be reasonably interpreted
as a claim of ownership or Lien; provided, however, that Lessee may cause the
Engine to have placed thereon the customary colors and insignia of Lessee or any
Permitted Sublessee under a Permitted Sublease.
Section 7. Inspection.
During the Term of this Lease, Lessee shall furnish to Lessor,
Owner Participant and Indenture Trustee such information concerning the
location, condition, use and operation of the Engine as Lessor, Owner
Participant or Indenture Trustee may reasonably request. Lessee shall permit, or
cause any sublessee to permit, any person designated by Lessor, Owner
Participant or Indenture Trustee
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on reasonable prior notice at reasonable times to visit, inspect and survey the
Engine, its condition, use, and operation, and the records maintained in
connection therewith, and to visit and inspect the properties and to discuss the
affairs, finances and accounts of Lessee with the principal officers of Lessee,
provided, that so long as no Default or Event of Default has occurred hereunder
inspections shall be endeavored to be performed during regularly scheduled
maintenance checks of the Engine. Each such inspection or survey shall be
conducted so as to not unreasonably interfere with the business of Lessee or the
maintenance or operation of the Engine. Upon Lessor's, Owner Participant's or
Indenture Trustee's request, Lessee will notify such Person of the next
scheduled maintenance check for the Engine. Lessor, Owner Participant and
Indenture Trustee shall have no duty to make any such inspection and shall not
incur any liability or obligation by reason of not making any such inspection.
Lessor's, Owner Participant's or Indenture Trustee's failure to object to any
condition or procedure observed or observable in the course of an inspection
hereunder shall not be deemed to waive or modify any of the terms of this Lease
with respect to such condition or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish Lessor,
until the expiration or other termination of the Term of this Lease, the
following:
(i) within sixty (60) days following the end
of each quarter of Lessee's fiscal year, except the last such quarter of such
year, commencing after the Restatement Date, a copy of Lessee's Quarterly Report
on Form 10-Q as filed with the Securities and Exchange Commission or, if Lessee
no longer files such report, an unaudited consolidated balance sheet of Lessee
and its consolidated subsidiaries prepared by it as of the close of the period
ended, together with the related statements of income and cash flows for such
period, and in each case certified by a Responsible Officer of Lessee as having
been prepared in accordance with GAAP and as fairly presenting the financial
condition and results of operations and changes in financial position for such
period then ended in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) within one hundred five (105) days after
the close of each fiscal year of Lessee, a copy of Lessee's
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Annual Report on Form 10-K as filed with the Securities and Exchange Commission
or, if Lessee no longer files such reports, an audited consolidated balance
sheet, income statement, and cash flow statement of Lessee and its consolidated
subsidiaries, as of the close of such fiscal year, and in each case as certified
by independent public accountants, including their certificate and accompanying
comments, as having been prepared in accordance with GAAP and as fairly
presenting the financial condition and results of operations and changes in
financial position for such period then ended in accordance with such principles
and practices, without qualification as to the scope of the audit or
non-conformity with GAAP;
(iii) promptly upon their becoming available, copies of all
reports on Form 8-K filed by Lessee under the Securities Exchange Act of 1934,
as amended, and each other statement, report or circular (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) prior to the expiration date of each policy of insurance
required to be maintained hereunder, a certificate signed by the Approved Broker
of Lessee as to the due compliance with the insurance provisions of Section 12
hereof with respect to the Engine, together with certificates of insurance
evidencing such insurance and the opinion provided for in Section 12(f);
(v) within fifteen (15) days following the end of each
calendar month throughout the Term, an Engine status report, substantially in
the form of Exhibit K hereto, including, without limitation, (A) a summation of
hours and cycles accumulated on the Engine by individual serial number during
such preceding calendar month and (B) the identity of the airframe (including
the "N" number and, at Lessor's request, ownership and lien interests in respect
thereof) on which the Engine was installed as of the end of each such calendar
month, and, if Lessor so requests, the location of any such airframe. The
foregoing shall not be deemed to require reports regarding hours or cycles on
any Parts;
(vi) together with each set of financial statements referred
to in clauses (i) and (ii), a certificate signed by a Responsible Officer of
Lessee, to the effect that such officer has reviewed the relevant terms of this
Lease and has made, or caused to be made under his or her supervision, a review
of the transactions and condition of Lessee during the accounting period covered
by
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such financial statements, and that such review has not disclosed the existence
during such accounting period, nor does such officer have any knowledge of the
existence, as at the date of such certificate, of any condition or event which
constitutes a Default or an Event of Default, or, if such condition or event
which constitutes a Default or an Event of Default existed or exists, specifying
the nature and period of existence thereof and what action Lessee has taken or
is taking or proposes to take with respect thereto;
(vii) as soon as practicable after becoming aware thereof,
notice of damage or destruction to the Engine (or any Part) with a repair or
replacement cost (including labor charges) in excess of $1,000,000;
(viii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
(ix) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in
Section 8(e) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence and its rights, privileges, licenses and
franchises material to Lessee's ability to perform its obligations hereunder in
each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain so long
as it shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier, including,
without limitation, its status so as to fall within the purview of 11 U.S.C.
Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all
Taxes imposed upon it, or upon its income or profits, or upon any property
belonging to it, on or prior to the due date thereof, including any extensions
which have been duly obtained or granted; provided, however, that Lessee shall
not be required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate reserves
so long as there is no material possibility that either failure to pay such
Taxes or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Engine or any criminal liability on the part of Lessor, Indenture
Trustee or any Note Holder.
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(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with or merge into or with any other
corporation or other Person, and Lessee shall not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and other assets
(in one or a series of transactions) to any corporation or other Person, unless:
(i) the Person formed by or surviving such
consolidation or merger or the Person which acquires by conveyance, transfer,
lease or other disposition all or substantially all of such property and other
assets or stock (the "Successor Entity"): (A) shall be a corporation organized
and existing under the Laws of the United States of America or any State thereof
or the District of Columbia; (B) immediately after giving effect to such
transaction, shall be Lessee or shall have acquired or succeeded to all or
substantially all of such property and other assets (including, without
limitation, all or substantially all of Lessee's property and other assets) as
an entirety and, unless the Owner Participant otherwise agrees, shall have a Net
Worth of not less than Lessee's Net Worth immediately prior to such transaction;
(C) shall be a "citizen of the United States" of America as defined in Section
40102(a)(15) of the Federal Aviation Act and a Certificated Air Carrier; and (D)
shall execute and deliver to Lessor and Indenture Trustee such recordations and
filings with any Governmental Entity and such other documents as Lessor
determines shall be reasonably necessary or advisable (including, without
limitation, to preserve and protect the interests of the Lessor and the priority
of the Lien of the Indenture (if it has not been discharged)) to evidence, or in
connection with, such consolidation, merger, sale, lease, transfer or other
disposition and an agreement, in form and substance reasonably satisfactory to
Lessor, which is a legal, valid, binding and enforceable assumption by such
Successor Entity of the due and punctual performance and observance of each
covenant and condition of this Lease and the other Operative Documents to which
Lessee is a party and agreement to be bound thereby, and an officer's
certificate to such effect, and to the effect that the other requirements of
this paragraph have been satisfied, and a legal opinion from counsel to such
effect and otherwise in such form and substance reasonably satisfactory to
Lessor; and
(ii) prior to and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing.
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No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each calendar
year and within 60 days of a request by Lessor or Owner Participant, or such
shorter period as may be set forth in any written request by the Internal
Revenue Service for information or documents, Lessee shall furnish in writing to
Lessor or Owner Participant such information and documents (or copies thereof)
regarding the Engine as may be reasonably requested by Lessor or Owner
Participant or the Internal Revenue Service in order to permit Lessor to file
its Federal and state income tax returns (or to permit the filing of the Federal
and state income tax returns of any affiliated group of corporations filing a
consolidated return of which Lessor is a member), or to maintain or defend any
claims related thereto and promptly, after reasonable notice, furnish to Lessor
or Owner Participant such information as may be reasonably requested by Lessor
or Owner Participant or the applicable Governmental Entity as may be required to
enable Lessor or Owner Participant to file any reports required to be filed by
it with any Governmental Entity because of its ownership or other interest in
the Engine.
(g) Place of Business. At all times while this Lease is in
effect, Lessee will not, without thirty (30) days prior written notice to Lessor
and Indenture Trustee (so long as the Lien of the Indenture shall not have been
discharged), change its chief executive office (as such term is defined under
Article 9 of the Uniform Commercial Code as adopted in Arizona) or location of
its books and records, from 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or such subsequent location of which Lessee shall have so notified Lessor
and, if applicable, Indenture Trustee.
(h) Certain Limitations on Use. Lessee shall use the Engine
only in commercial passenger operations and related cargo operations. Unless the
Owner Participant otherwise agrees, during the Restricted Use Period, Lessee
shall not use the Engine or permit the Engine to be used either "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code,
or in such manner that the percentage of the income, deduction or credit
attributable to the Engine for federal income tax purposes during any taxable
year of the Lessor considered to be from foreign sources exceeds the Maximum
Foreign Use Percentage. Unless Owner Participant otherwise agrees, prior to
permitting the Engine to be operated in any member state of the European Union
or other European country, Lessee shall
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deliver to Lessor (i) a representation and warranty to the effect that Lessee
(or any Permitted Sublessee) has no knowledge of any dispute with Eurocontrol or
other relevant air traffic control authority over delinquent charges payable by
it and (ii) a letter from Lessee (or any Permitted Sublessee) addressed to
Eurocontrol or other relevant air traffic control authority pursuant to which
Lessee (or such Permitted Sublessee) authorizes the addressee to issue to
Lessor, upon Lessor's request from time to time, a statement of account of all
sums due by Lessee (or such Permitted Sublessee) to the authority in respect of
all engines (including, without limitation, the Engine) operated by Lessee (or
such Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would not
have entered into this Amended and Restated Engine Lease Agreement [GPA 1991
AWA-E3] unless it had available to it the benefits of a lessor under Section
1110 of Title 11 of the United States Code. Lessee covenants and agrees with
Lessor that to better ensure the availability of such benefits, Lessee shall
support any motion, petition or application filed by Lessor with any bankruptcy
court having jurisdiction over Lessee, whereby Lessor seeks recovery of
possession of the Engine under said Section 1110 and shall not in any way oppose
such action by Lessor unless Lessee shall have complied with the requirements of
said Section 1110 to be fulfilled in order to entitle Lessee to continued use
and possession of the Engine hereunder. The acknowledgement, covenant and
agreement contained in this Section 8(i) shall continue in full force and effect
and survive the expiration or other termination of this Lease and are expressly
made for the benefit of and shall be enforceable by Lessor, Owner Participant
and, if the Lien of the Indenture has not been discharged, Indenture Trustee.
(j) Permits and Licenses. Lessee shall make or obtain, and
maintain in full force and effect, each and every consent, license, approval,
notice, registration, filing or other action with any Governmental Entity
necessary or advisable in connection with the operation or use of the Engine or
any Part or the execution, delivery or performance of this Lease or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During such
times that the Engine is recorded under the Federal Aviation Act, Lessee shall
furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time
period covered by the opinion of counsel
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rendered on the Restatement Date, any opinion of
counsel rendered pursuant to Section 11(C) of the
Refunding Agreement, and any opinion of counsel
rendered pursuant to this Section 8(k)(i) and (Y)
upon any change in Law that would render the opinion
of counsel rendered on the Restatement Date or such
immediately preceding opinion of counsel inaccurate,
an opinion of counsel with respect to Lessee and the
FAA reasonably satisfactory to each addressee of such
opinion (which counsel may be internal legal counsel
of Lessee and FAA counsel) stating, in the opinion of
such counsel, that such action has been taken with
respect to the recording, filing, rerecording and
refiling of (i) the appropriate Operative Documents
and any supplements and amendments thereto, (ii) UCC
financing statements and (iii) such other appropriate
documents, as is necessary to maintain the perfection
of Lessor's title to and/or interest in and Indenture
Trustee's security interest in the Engine and the
Operative Documents for such period of time as
reflects the then-current applicable Law, reciting
the details of such actions or no action is necessary
to maintain the perfection of such title and/or
security interest; or
(2) at any time that an opinion is not required pursuant
to Section 8(k)(i)(1), annually, a certificate
reasonably satisfactory to each recipient thereof
signed by a Responsible Officer of Lessee certifying
that no such action is necessary to maintain the
perfection of such title and/or interest and security
interest.
(ii) During such times that the Engine is recorded under any
Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor and to
Indenture Trustee annually (but in any case, (X) prior to the expiration of the
time period covered by any opinion of counsel rendered pursuant to Section 11(C)
of the Refunding Agreement, and any opinion of counsel rendered pursuant to this
Section 8(k)(ii) and (Y) promptly upon any change in Law that would render such
immediately preceding opinion of counsel inaccurate), an opinion of counsel
reasonably satisfactory to each addressee of such opinion stating, in the
opinion of such counsel, that such action has been taken with respect to the
recording, filing, re-recording and refiling of (i) the appropriate Operative
Documents and any supplements and amendments thereto and (ii) such other
appropriate documents, as is necessary to maintain the perfection of
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Owner Trustee's title to and/or interest in and Indenture Trustee's security
interest in the Engine and the Operative Documents for such period of time as
reflects the then-current applicable Law, reciting the details of such actions.
(l) Letter of Credit. As security for the obligations to
Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or
more irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof
shall be available for drawdown thereunder and payable in New York, New York, on
demand at any time, if a Default under Section 17(e), (f) or (g) or an Event of
Default has occurred, which amount may be applied, retained or utilized as
provided in the penultimate paragraph of this Section 8(l);
(ii) be maintained in full force and effect
at all times until ninety-one (91) days after the Expiration Date with a
commercial bank acceptable to Lessor, in its sole and absolute discretion,
having a long-term unsecured debt rating of "A" or better by Standard & Poor's
Rating Group (if the issuing bank's credit rating is lower than such rating,
Lessee shall replace such Letter of Credit issuer within five Business Days of
any such reduction in rating with a commercial bank meeting such rating
requirement), provided, that the Letter of Credit set forth in Exhibit D-2
issued by The Industrial Bank of Japan, Limited will be acceptable to Lessor for
so long as The Industrial Bank of Japan, Limited maintains a long term unsecured
debt rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferrable and
assignable; and
(iv) permit partial drawings. If the Letter of
Credit is still in effect at the end of the Term or the Lessor is holding
proceeds of the Letter of Credit that were retained and not applied as provided
herein, then Lessor shall return the Letter of Credit to Lessee or terminate it,
and/or return any retained or unapplied proceeds, ninety-one (91) days following
the date of such expiration or other termination of this Lease so long as no
Default or Event of
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Default has occurred or is continuing hereunder or under any Other Lease, upon
payment in full of all amounts then due and owing to Owner Trustee and Owner
Participant under the Operative Documents.
If an Event of Default has occurred or is continuing under
this Lease or an Event of Default has occurred or is continuing under any Other
Lease (as therein defined), in addition to any other rights and remedies Lessor
may have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform Commercial
Code as adopted in New York) or equity and upon exercising its rights under the
Letter of Credit and any Other Letters of Credit, Lessor shall be entitled, in
each case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or, the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts, as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
payment of Rent, Lessee's right to apply the same to such claim shall be limited
to amounts which would (absent such Event of Default) be distributable under the
Indenture at the time such payment is made to Lessor, Owner Participant or any
of their respective Affiliates (and shall not include any amounts distributable
to Indenture Trustee in its individual capacity or to the Note Holders);
provided further, however, that neither the amount so applied at any one time
nor the aggregate amount so applied at different times shall reduce the amount
of any installment or payment of Rent (whether upon the termination of the Lease
or otherwise) payable by Lessee to an amount insufficient to pay in full the
amounts required to be paid on account of the principal of and any interest on
the Equipment Notes or otherwise owing to a Note Holder. Lessee shall not be
entitled to any refund or credit with respect to any amounts so applied. Any
amount retained shall be considered the property of Lessor and Lessor may
commingle such amount with its general funds and Lessee, further, hereby
absolutely and irrevocably disclaims, to the maximum extent permitted by
applicable Law, any interest therein.
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Lessee shall not be entitled to any interest or other earnings on such retained
amount and such amount shall not be refundable.
On application of all or any portion of the amounts drawn
under the Letter of Credit or any Other Letters of Credit in accordance with
this Section 8(l) or the Other Leases, Lessee shall on demand reinstate the
amount of the Letter of Credit or Other Letters of Credit, as the case may be,
to its or their full Face Amount or provide to Lessor one or more additional
Letters of Credit meeting the requirements of this Section 8(l), so that the
Letter of Credit and each of the Other Letters of Credit at all times equals the
original Face Amount provided for herein. During such times as Lessor shall
elect to hold all or part of the proceeds of the Letter of Credit or Other
Letters of Credit as security for Lessee's obligations to Lessor under the Lease
and the Other Leases, Lessee shall not be obligated to reinstate the amount of
the Letter of Credit or Letters of Credit, as the case may be, in respect of the
proceeds so held.
Section 9. Replacement of Parts; Alterations, Modifications
and Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense,
will promptly replace, or cause to be replaced, all Parts which may from time to
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever.
In addition, in the ordinary course of maintenance, service, repair, overhaul or
testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may at its own cost and expense remove any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and
expense such Parts as promptly as possible. All replacement Parts shall be free
and clear of all Liens (except for pooling arrangements to the extent permitted
by paragraph (c) of this Section and Permitted Liens), be in at least the
equivalent or better modification status and service bulletin accomplishment
status, be fully interchangeable as to form, fit and function and shall be in as
good operating condition as, and have a value, remaining useful life and utility
at least equal to, the Parts replaced (assuming such replaced parts were in the
condition and repair in which they were required to be maintained by the terms
hereof).
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All Parts which are at any time removed from the Engine shall
remain the property of Lessor, subject to the Lien of the Indenture if it has
not been discharged, and subject to this Lease no matter where located until
such time as such Parts shall be replaced by parts which have been incorporated
or installed in or attached to the Engine and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Engine as above
provided, or as provided in Section 9(c), without further act, (i) title to the
removed Part shall thereupon vest in Lessee, free and clear of all rights of
Lessor, Indenture Trustee, Owner Participant and Note Holders and shall no
longer be deemed a Part hereunder, (ii) title to such replacement Part shall
thereupon vest in Lessor and become subject to the Lien of the Indenture if it
has not been discharged, and (iii) such replacement Part shall become subject to
the Lien of the Indenture (if it has not been discharged) and this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(b) Alterations, Modifications and Additions. Lessee, at its
own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Engine to the extent made mandatory for
Lessee (or a sublessee) in respect of the Engine or Parts from time to time to
meet the applicable standards of the FAA or under any Law of any Governmental
Entity having jurisdiction or issued by the manufacturer of the Engine or Parts.
In addition, so long as no Default or Event of Default has occurred and is
continuing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), at its own expense, may from time to time make such alterations and
modifications in and additions to the Engine as Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) may deem desirable in the proper
conduct of its business, provided, no such alteration, modification or addition
diminishes the value, remaining useful life or utility, or impairs the condition
or airworthiness, of the Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Engine and Parts were
then of the value, utility and remaining useful life and in the condition and
airworthiness required by the terms of this Lease. Except as otherwise provided
herein, title to all Parts incorporated or installed in or attached or added to
the Engine as the result of such alteration, modification or addition, shall
immediately vest in Lessor and become subject to the Lien of the Indenture (if
it has not been discharged) and this Lease, without the necessity for any
further act of transfer, document or notice.
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<PAGE> 47
Notwithstanding the foregoing sentence of this Section 9(b), Lessor agrees that
so long as no Default or Event of Default shall have occurred and be continuing
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) may, at
such time during the Term for the Engine, remove any Part of such Engine,
provided, that (i) such Part is in addition to, and not in replacement or
substitution for, any Part originally incorporated or installed in or attached
to, or delivered with, the Engine on the Delivery Date or any Part in
replacement of, or substitution for, any such originally incorporated,
installed, attached or delivered Part, (ii) such Part is not required to be
incorporated or installed in or attached or added to the Engine pursuant to the
terms of Section 6 or this Section 9 or to maintain the insurance required by
Section 12 and (iii) such Part can be removed from the Engine without causing
any material damage thereto and without diminishing or impairing the value,
utility, remaining useful life, condition or airworthiness which the Engine
would have had at such time had such alteration, modification or addition not
occurred. Upon the removal by Lessee of any such Part as provided in the
preceding sentence, title thereto shall, without further act, vest in Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part
shall no longer be deemed part of the Engine (such a part is herein called a
"Removable Part"). Any Part not removed by Lessee as above provided prior to the
return of the Engine to Lessor hereunder, whether pursuant to Section 16,
Section 18 or otherwise, shall remain the property of Lessor.
If any Removable Part is (i) owned by any third party and
leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee), (ii) sold to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) subject to a conditional sale contract or other security
interest or (iii) leased to Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) pursuant to a lease which is subject to a security interest
in favor of any third party, then Lessor will not acquire or claim, as against
such lessor, conditional vendor or secured party, any right, title or interest
in any such Removable Part as the result of such Removable Part being installed
on the Engine; provided, however, that (A) Lessor's inability to so acquire or
claim is subject to the express condition that such lessor, conditional vendor,
or secured party shall have agreed in writing (which agreement may be contained
in the lease, conditional sale agreement or security agreement) not to acquire
or claim, as against Lessor, any right, title or interest in the Engine, or any
Part other than its interest in such Removable Part by reason of such Removable
Part being installed thereon, and (B) any Removable Part not
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removed by Lessee upon the termination or expiration of this Lease, at such
time, shall become the property of Lessor and be subject to this Lease, and
provided, further, that (1) if removal of any such Part shall affect the
operation of the Engine in any way whatsoever, Lessee shall replace such Part
with an owned Part of the same value, utility and remaining useful life and (2)
Lessee shall repair any unsightly area of the Engine as a result of such removal
and make all other repairs which are advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) replaces a Part which is not required to be replaced
under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may remove the replacement Part so long as it
reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to form,
fit and function, has been overhauled, repaired and inspected by an agency
acceptable to the FAA or other Governmental Entity having jurisdiction, and is
in as good operating condition as, and has a utility, remaining useful life and
a value at least equal to that of such Part when it was removed from the Engine.
In no event shall Lessor bear any liability or cost for any
alteration, modification, or addition, or for any grounding or suspension of
certification of the Engine, or for any loss of revenue arising therefrom.
(c) Pooling. Any Part removed from the Engine as provided in
Section 9(a) may so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom be subjected by Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) to a normal pooling
arrangement customary in the airline industry of which Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) is a part entered into
in the ordinary course of Lessee's or such Permitted Sublessee's business,
provided that Lessor has been given an opportunity to review the pooling
arrangement, including but not limited to all agreements and other documents
relating thereto, and has consented, which consent shall not be unreasonably
withheld, to the placement of Parts into such pooling arrangement and provided
further that the Part replacing such removed Part shall be incorporated or
installed in or attached to the Engine in accordance with Section 9(a) as
promptly as possible, and in any event within sixty (60) days, after the removal
of such removed Part. In addition, any Replacement Part when incorporated or
installed in or attached to the
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<PAGE> 49
Engine in accordance with Section 9(a) may be owned by another Person subject to
such a normal pooling agreement; provided, however, that Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee), at its own expense, as
promptly thereafter as possible, and in any event within sixty (60) days, either
(i) causes title to such replacement Part to vest with Lessor in accordance with
Section 9(a) (and to be subjected to the Lien of the Indenture if it has not
been discharged) by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) acquiring title thereto for the benefit of and transferring
title to Lessor free and clear of all Liens except Permitted Liens, whereupon
such replacement Part shall become subject to this Lease and the Lien of the
Indenture (if in effect) without the necessity for any further act, document or
notice, or (ii) replaces such replacement Part by incorporating or installing in
or attaching to the Engine a further replacement Part owned by Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee) free and clear of all
Liens other than Permitted Liens and by causing title to such further
replacement Part to vest in Lessor as above provided and to be subjected to the
Lien of the Indenture if it has not been discharged, whereupon such replacement
Part shall become subject to this Lease and the Lien of the Indenture (if in
effect) without the necessity for any further act, document or notice.
Section 10. General Tax Indemnity.
(a) Indemnity. Lessee agrees that each payment of Basic Rent
hereunder shall be free and clear of, and without deduction for, any and all
withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such payments
of Basic Rent, Lessee shall pay an additional amount of Basic Rent such that the
net amount actually received by Lessor, after such deduction or withholding,
will be equal to all such amounts that would be received by Lessor if no such
deduction or withholding had been required, but only to the extent necessary to
ensure that the holders of the outstanding Equipment Notes receive such amount
as may be required by the Indenture. If Lessee pays any amount to Lessor (or to
any taxing authority for the account of Lessor) as a result of the application
of the preceding sentence with respect to any withholding Tax which is an
excluded tax in respect of Lessor pursuant to Section 10(b), then Lessor (or, in
the case of Taxes imposed on the Owner Trustee, the Owner Participant to the
extent such Tax would give rise to a Lessor's Lien for which the Owner
Participant
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would be liable) shall reimburse Lessee for such withholding Tax within 30 days
of written notice accompanied by evidence of payment for such withholding Taxes
(exclusive of interest, penalties and additions to Tax) paid by Lessee provided
that in any circumstance in which the Lessor is required to reimburse the Lessee
for any such withholding Taxes and the Lessee has not received such
reimbursement from Lessor or the Owner Participant, then to the extent of such
shortfall and so long as no Lease Event of Default has occurred and is
continuing, Lessee shall be entitled to obtain reimbursement from Lessor by
reducing the succeeding payments of Rent payable to Lessor (other than any
portion of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder) until the aggregate amount
of reduction is equal to the sum of the amount of such shortfall and interest on
that amount at the Interest Rate from the date reimbursement is required to be
made until the date of such reduction in Rent. Except as provided in Section
10(b), and taking into account any payments received by Lessor pursuant to the
second sentence of this Section 10(a), Lessee agrees to pay, and to indemnify
and hold each Indemnitee harmless from, any and all Taxes, howsoever levied or
imposed, whether levied or imposed upon or with respect to or asserted against
any Indemnitee, Lessee, any Engine or any Part thereof or interest therein, or
otherwise, with respect to any period beginning, or events or circumstances
occurring, on or after the Restatement Date, by any federal, state or local
government or taxing authority in the United States of America or by any foreign
government or any taxing authority or governmental subdivision of a foreign
country or of a territory or possession of the United States (each such
governmental subdivision or taxing authority referred to as a Taxing
Authority"):
(i) upon or with respect to, based upon or measured
by (A) any Engine or any Part thereof, or interest therein, (B) the
manufacture, purchase, ownership, delivery, leasing, acceptance,
rejection, assigning, possession, use, operation, location, settlement
of any insurance claim, sale, mortgaging, pledging, financing,
subleasing, rental, retirement, abandonment, registration,
re-registration, deregistration, preparation, installation,
modification, repair, maintenance, replacement, transportation,
storage, transfer of title, return or other disposition of the
Aircraft, the Airframe, any Engine or any Part thereof or interest
therein; or (C) the rentals, receipts, income or earnings arising
therefrom (including without limitation the Rent), or
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(ii) upon or with respect to the Operative Documents
(including the Equipment Notes), any interest in any thereof, or any
future amendment, supplement, waiver or consent thereto requested by
Lessee with respect to any thereof, or the execution, delivery, or
performance of any thereof, or the acquisition or subsequent transfer
thereof or the issuance of the Equipment Notes or any other document
executed and delivered in connection with the consummation or
confirmation of the transactions contemplated by the Operative
Documents or any Indemnitee's interest in any of the foregoing, or the
execution, amendment, supplement, issuance, reissuance, refinancing or
delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property, or
the income or other proceeds received with respect to the property,
held by the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or
premium on, or other amounts payable with respect to the Equipment
Notes, whether as originally issued or pursuant to any modification or
reissuance, or
(v) otherwise with respect to or in connection with
the transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be
subject to indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, Taxes imposed on,
based on, or measured by, the gross or net income of such Indemnitee or
Taxes in lieu thereof (including minimum taxes, withholding taxes and
taxes on or measured by any item of tax preference) imposed by the
federal government of the United States of America (other than taxes in
the nature of sales or use taxes, license taxes, or property taxes),
(ii) In the case of any Indemnitee, Taxes imposed on,
based on, or measured by the gross or net income, receipts, capital, or
net worth, franchises, excess profits or conduct of business of such
Indemnitee (including minimum taxes, withholding taxes and taxes on or
measured by any items of tax preference), imposed by any state, local
or foreign government or taxing authority (other than Taxes in the
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nature of sales Taxes, use Taxes, license Taxes or property Taxes, and
Covered Income Taxes described in subsection (c) of this Section 10),
(iii) In the case of any Indemnitee, Taxes which
arise out of or are caused by any gross negligence or willful
misconduct of such Indemnitee,
(iv) In the case of any Indemnitee, any Taxes imposed
as a result of a voluntary or involuntary bankruptcy of such Indemnitee
or any sale, transfer of title, transfer or other disposition by such
Indemnitee or a related Indemnitee (for such purpose, Owner Trustee and
Owner Participant are related Indemnitees with respect to each other)
of any Engine or any Part thereof or interest therein, or any interest
in the Rent or part thereof or any interest in the Operative Documents
or part thereof, unless such sale, transfer or disposition occurs in
connection with (A) an Event of Default and the exercise by any
Indemnitee of its remedies under this Lease or the Indenture, as the
case may be or (B) the substitution, pooling or interchange of the
Aircraft, the Airframe, any Engine or any Part pursuant to the terms
hereof; provided, however, that in all cases Owner Participant and
Owner Trustee shall consider in good faith such request as Lessee shall
make concerning the appropriate jurisdiction in which such sale,
transfer or disposition shall be made,
(v) In the case of any Indemnitee, Taxes imposed on a
transferee of such Indemnitee of any interest in the Engine or any Part
or any interest in the Operative Documents to the extent the amount of
any such Taxes exceeds the amount of such Taxes that would have been
imposed had there not been any such transfer, unless such transfer
results from action by or on behalf of such Indemnitee taken in
connection with any Event of Default that has occurred and is
continuing or upon the request of the Lessee,
(vi) Any interest, penalties, fines and additions to
tax imposed on an Indemnitee (other than Taxes that are due and payable
with a return when properly filed) resulting from such Indemnitee's
failure to file returns that are timely and proper, provided such
failure was not attributable to such Indemnitee contesting any claim in
accordance with this Section 10(b) or to a failure by Lessee to satisfy
its obligations related to such return,
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(vii) With respect to an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, Taxes which arise out
of or are caused by (i) any act or omission or material
misrepresentation of any Indemnitee where such act or omission is not
permitted by the Financing Documents or the Operative Documents, or
(ii) a failure by an Indemnitee to fulfill its contest obligations,
and, in the case of the Indenture Trustee and the Trust Indenture
Estate, Taxes imposed as a result of a breach of such Indemnitee's
representations, warranties, or covenants contained in Sections 9(a),
12 or 16 of the Refunding Agreement in any material respect, or from a
failure by such Indemnitee to fulfill its contest obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft related
to acts or events occurring after the later of the termination of the
Lease and the redelivery of the Engine,
(ix) In the case of each Pass-Through Trust, each
Pass-Through Trustee (in its individual capacity and as trustee under
the Pass-Through Trusts), the Subordination Agent and each Liquidity
Provider, United States withholding taxes imposed as a result of the
place of organization or other status of a holder of an interest in a
Pass-Through Trust, or
(x) In the case of the Indenture Trustee, each
Pass-Through Trust, each Pass-Through Trustee (in its individual
capacity), the Subordination Agent and each Liquidity Provider, Taxes
imposed with respect to the Equipment Notes as a result of activities
of such Indemnitee unrelated to the transactions contemplated by the
Operative Documents.
(c) Covered Income Tax. For purposes of clause (ii) of
subsection (b) of this Section 10, a Covered Income Tax includes:
(i) in the case of an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, any Tax imposed on,
based on or measured by gross or net income, receipts, capital or net
worth, franchises, excess profits or conduct of business (other than
taxes which are in the nature of sales or use taxes, license taxes or
property taxes) imposed on an Indemnitee (A) by any state or local
Taxing Authority other than Taxes imposed by any such state or local
jurisdiction in which the Indemnitee has its principal place of
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business or is subject to such Tax as a result of business transactions
or other presence unrelated to the transactions contemplated by the
Financing Documents or the Operative Documents, unless such Taxes are
imposed by such jurisdiction solely as a result of (x) the operation of
the Engine in such jurisdiction or (y) the transactions contemplated by
the Operative Documents, to the extent such taxes are directly
attributable to such operation of the Engine or to such transactions,
and (B) by any foreign jurisdiction which are imposed as a result of
Lessee's or sublessee's activities in such foreign jurisdiction in
connection with the transactions contemplated by the Financing
Documents or the Operative Documents, provided, however, a Covered
Income Tax also includes the incremental amount of franchise taxes,
taxes on doing business, capital stock taxes or taxes on, based on or
measured by gross or net income of the original Owner Participant
attributable to the Lease (excluding, however, any taxes that would be
excluded under any provision other than clauses (i) and (ii) of
subsection (b) of this Section 10) which are imposed by the "Home
State" of a sublessee (the Home State of a sublessee being the
jurisdiction in which such sublessee maintains its principal operations
and maintenance center), or in the absence of a Permitted Sublessee,
the jurisdiction where the Engine is stored, but only to the extent
such incremental taxes result from activities of Lessee or Permitted
Sublessee under the Lease in or with respect to the Home State or the
jurisdiction where the Engine is stored, and taking into account in
calculating such incremental taxes all state tax benefits and savings
in the Home State resulting from activities of Lessee or Permitted
Sublessee under the Lease, disregarding for such purpose any actual or
constructive changes in ownership of the original Owner Participant,
provided, however, that Owner Participant and Lessee agree to
negotiate, in good faith, a cap to Lessee's liability for indemnity
payments attributable to taxes incurred in sublessee's Home State with
respect to each Permitted Sublessee; and
(ii) in the case of the Indenture Trustee or the
Trust Indenture Estate, any Tax based on or measured by gross or net
income, receipts, capital or net worth, franchises, excess profits or
conduct of business (including minimum taxes, withholding taxes, and
taxes on or measured by any item of tax preference) imposed on such
Indemnitee by a Taxing Authority in or of any foreign jurisdiction or a
territory or
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possession of the United States, other than any such Tax which would
not have been imposed in the absence of such Indemnitee's (including
for purposes of this definition, all entities with which such
Indemnitee is combined, integrated, or consolidated in such Taxing
Authority's jurisdiction) engaging in business, maintaining an office
or other place of business or otherwise being located in such
jurisdiction other than merely by reason of such Indemnitee's
participation in the transactions contemplated by the Operative
Documents.
(d) Reports and Returns. In case any report or return is
required to be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to the Owner Participant or Owner Trustee
or will notify the Owner Participant or Owner Trustee of such requirement and
make such report or return in such manner as shall be reasonably satisfactory to
the Owner Participant or Owner Trustee. If actual notice is given by any taxing
authority to an Indemnitee that a report or return is required to be filed with
respect to any such Taxes, the Indemnitee shall promptly notify Lessee of such
required report or return and Lessee shall either file such report or return in
the manner prescribed in the preceding sentence, or shall use its best efforts
to cause such report or return to be filed by the appropriate entity. Each
Indemnitee agrees to respond to any reasonable request of Lessee for information
not within Lessee's control and within the control of and reasonably available
to such Indemnitee with respect to the filing of any such report or return, but
Lessee agrees to pay any reasonable costs, fees, disbursements or other charges
of independent counsel or independent accountants incurred in connection with
such request.
(e) After-Tax Basis. Lessee further agrees that, with respect
to any payment or indemnity under this Section 10 and under Section 13 hereof,
such payment or indemnity shall include the net amount necessary to hold the
recipient of the payment or indemnity harmless on an after-tax basis from all
Taxes required to be paid or credited by such recipient with respect to such
payment or indemnity under the laws of any Taxing Authority; provided, however,
that in the case of Taxes imposed on the Owner Participant, such Taxes shall be
calculated on the basis of the assumption that Owner Participant shall be
subject to the highest
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federal corporate income tax rate applicable to Owner Participant in the year of
payment and the highest corporate income tax rate in the jurisdiction in which
Owner Participant files a consolidated state income tax return (currently
Virginia).
(f) Tax Benefit. If, by reason of any payment made to or for
the account of an Indemnitee by Lessee pursuant to this Section 10 or Section 13
hereof, such Indemnitee subsequently actually realizes a tax deduction or credit
(including foreign tax credit and any reduction in Taxes) not previously taken
into account in computing the amount of such payment, such Indemnitee shall
promptly pay to Lessee, but only if there shall then be no Lease Event of
Default and if Lessee shall have made all payments then due and owing to such
Indemnitee under the Operative Documents, an amount equal to the sum of (i) the
actual reduction in Taxes, if any, realized by such Indemnitee which is
attributable to such deduction or credit and (ii) the reduction calculated on
the same basis as the gross up in Section 10(e) hereof in Taxes realized by such
Indemnitee as a result of any payment made by such Indemnitee pursuant to this
sentence; provided, however, that such Indemnitee shall not be obligated to make
any payment pursuant to this Section 10 or Section 13 hereof to the extent that
the amount calculated pursuant to (i) above would exceed (A) the amount of all
prior payments by Lessee to such Indemnitee, pursuant to this Section 10 or
Section 13 hereof, net of any amount paid in respect of Taxes required to be
paid by such Indemnitee in respect of the receipt or accrual of such amounts
received by such Indemnitee from Lessee, less (B) the portion of all prior
payments computed pursuant to (i) above by such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee for any
Taxes which may be subject to indemnification by Lessee hereunder and if such
Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee;
provided that the failure to provide such notice shall not release Lessee from
any of its obligations hereunder except to the extent Lessee's right to contest
such claim is precluded thereby. Any amount payable as an indemnity to any
Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be
paid to such party directly, in immediately available funds, within thirty (30)
days after receipt of a written demand therefor from such Indemnitee or Lessee,
as the case may be, except in the case of a payment to an Indemnitee to the
extent that such Taxes are being contested in good faith pursuant to this
Section 10, in which event the payment of such indemnity shall be made by the
due date for the payment of any Taxes that are
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the subject of such contest taking into account all extensions of the due date
that are available as a result of the contest. In the event an Indemnitee makes
a tax payment with respect to any such Taxes (other than with funds advanced to
such Indemnitee on an interest-free basis by Lessee pursuant to this Section
10), Lessee shall reimburse the amount of such payment and also shall pay to the
Indemnitee interest on the amount of such payment by such Indemnitee at the
Interest Rate from the date of any such payment by such Indemnitee to the date
of such reimbursement by Lessee to the Indemnitee hereunder. In the event an
amount is payable to Lessee under this Section 10, the Indemnitee owing such
amount shall pay interest on such amount at the Interest Rate from the date of
receipt by such Indemnitee of any amount giving rise to such obligation to pay
Lessee until the date of payment to Lessee.
(h) Contest. In the event that an Indemnitee receives a
written notice of a claim which, if sustained, would require the payment of an
indemnity by Lessee pursuant to this Section 10, such Indemnitee shall promptly
notify Lessee of such claim and, if requested by Lessee in writing, shall, at
Lessee's sole expense, in good faith contest or shall permit Lessee, if desired
by Lessee and such contest may be conducted in whole or in part separately in
the name of Lessee without involving Taxes of such Indemnitee not indemnified
hereunder, to contest in the name of Lessee and/or the Indemnitee, the validity,
applicability or amount of such Taxes by (x) resisting payment thereof if
practicable, (y) not paying the same except under protest, if protest is
necessary and proper, and (z) if payments be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings;
provided, however, the Lessee shall not be permitted to contest in the name of
such Indemnitee if such contest involves Taxes imposed against such Indemnitee
that are unrelated to the transactions contemplated by the Financing Documents
or the Operative Documents or Taxes based on or measured by the gross or net
income of the Indemnitee, and provided, that if the Indemnitee determines in
good faith that there is a material possibility of a material adverse impact
upon the Indemnitee with respect to such contest, such Indemnitee may retain or
reassert control of any contest that Lessee would otherwise be permitted to
contest; provided, further, that the Indemnitee shall not be required to
undertake or allow in its name or on its behalf any contest unless the following
conditions are satisfied:
(i) Lessee shall have (a) furnished Indemnitee
with a written opinion of tax counsel selected by Indemnitee and
reasonably acceptable to
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Lessee to the effect that a reasonable basis (as defined in ABA Opinion
85-352) exists to contest such claim (which opinion shall be obtained
at Lessee's sole cost and expense), provided however, that in the event
the subject matter of the contest is of a continuing nature and has
previously been decided adversely pursuant to the contest provisions of
this Section 10, there has been a change in the law (including, without
limitation, amendments to statutes or regulations, administrative
rulings and court decisions) after such claim shall have been so
previously decided and such Indemnitee shall have received an opinion
of tax counsel, to the effect that, as a result of such change other
than a change in statutory law, it is more likely than not that the
position which the Indemnitee or the Lessee, as the case may be, had
asserted in such previous contest would prevail and, in the case of
statutory changes-in-law, it is as likely as not that the position will
prevail, and (b) agreed to pay Indemnitee for all reasonable costs and
expenses which Indemnitee may incur in contesting such claim (including
without limitation, payment on demand of all out-of-pocket costs,
expenses, additions to tax because of underpayment of estimated taxes,
losses, legal and accounting and investigatory fees and disbursements,
penalties, and interests),
(ii) a threshold amount of $50,000 for any
individual claim is at issue,
(iii) there is no substantial risk or danger
of the sale, loss or forfeiture of the Engine,
(iv) Lessee shall have admitted its liability
to indemnify Owner Participant for such claim or set
forth in writing why it is not so liable,
(v) if such contest is to be initiated by the payment
of, and the claiming of a refund for, such Taxes, the Lessee shall have
advanced to such Indemnitee sufficient funds (on an interest free
basis) to make such payments,
(vi) no claim shall be appealed to the U.S.
Supreme Court,
(vii) no appeal of a trial court decision shall be
undertaken unless Lessee at its sole cost and expense shall have
furnished Indemnitee with a written opinion of tax counsel selected by
Indemnitee and reasonably acceptable to Lessee to the effect that
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Indemnitee is more likely than not to prevail in such appeal, and
(viii) no Event of Default has occurred and is
continuing.
(i) Refund. If any Indemnitee shall obtain a refund of all or
any part of any Taxes paid by Lessee or from an advance by Lessee, such
Indemnitee shall pay Lessee the amount of such refund together with any interest
paid thereon attributable to the Taxes paid or advanced by Lessee less the
amount of any Taxes payable by such Indemnitee in respect of the receipt of such
refund and interest after giving credit to Lessee for any savings by such
Indemnitee in respect to any such Taxes by reason of deductions, credits,
allocations or allowances in respect of the payment of any such Taxes; provided
that such amount shall not be payable before such time as Lessee shall have made
all payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default
under any of the above indemnification provisions of this Section 10 so long as
Lessee or the Indemnitee shall diligently prosecute such contest in accordance
with the provisions of this Section 10. Notwithstanding the foregoing, if a
claim is made against any Indemnitee for any Taxes which, if successful, would
result in the imposition of Taxes under circumstances which would require Lessee
to indemnify such Indemnitee, the Indemnitee shall be released from its
responsibility to contest such claim or part thereof, if it agrees in writing
not to seek indemnification from Lessee in respect of the claim, or such part
thereof to be contested. In the event an Indemnitee fails to contest, or refuses
to permit Lessee to contest, a claim or part thereof which the Indemnitee has
the obligation to contest or to permit Lessee to contest under this Section 10,
then Lessee shall not be obligated to indemnify the Indemnitee for such claim or
such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a
member of an affiliated group (within the meaning of Section 1504(a) of the
Code) which files a consolidated Federal income tax return, the term
"Indemnitee" shall mean and include any member of such affiliated group.
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(l) Verification. At Lessee's request, the amount of any
indemnity payment by Lessee pursuant to this Section 10 or any payment by an
Indemnitee to Lessee pursuant to this Section 10 shall be verified and certified
by an independent public accounting firm selected by such Indemnitee and
reasonably satisfactory to Lessee. In order to enable such accountants to verify
the indemnity amount, such Indemnitee shall provide to the accountants (for
their own confidential use) information reasonably necessary for such
verification to which Lessor has access; provided, however, such information
shall not be disclosed to Lessee or any person other than such accountants. The
fee of such firm shall be payable by Lessee unless such verification shall
result in an adjustment in Lessee's favor exceeding 10% of the amount of the
indemnity payment.
(m) Survival. All of the obligations and rights of Lessee and
Lessor under this Section 10 with respect to the Aircraft, the Airframe, the
Engines or any Part thereof shall survive the assignment, or expiration or other
termination, of the Lease with respect to the Aircraft for a period of six (6)
years from the occurrence of such assignment, or expiration or termination,
except that such obligations shall survive the expiration of such six (6) year
period with respect to any claim asserted prior to the expiration of such six
(6) year period but in either case only to the extent such obligation or claim
relates to events which occurred or conditions which existed during the Term.
Such obligations are expressly undertaken by Lessee for the benefit of, and
shall be enforceable by, Lessor. The provisions of this Section 10(m) are
subject to the exclusions of Section 10(b)(viii).
Section 11. Loss, Damage and Requisition.
(a) Event of Loss with Respect to the Engine. Subject to the
other provisions of this Section 11, upon an Event of Loss with respect to the
Engine, Lessee shall forthwith (and, in any event, within five (5) Business Days
after such occurrence) give Lessor written notice of such occurrence and within
thirty (30) days after such occurrence give Lessor written notice of its
election, subject to the terms hereof and of the Indenture, to perform one of
the following two options (it being agreed that if Lessee shall not have given
Lessor notice of such election within thirty (30) days after such occurrence,
Lessee shall be deemed to have elected to perform the option set forth in the
following clause (ii)), provided, that Lessee shall not have the right to select
the option set forth in clause (i) if a Default or an Event of Default shall
have occurred and be
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continuing at the time of such election or at the time of replacement:
(i) within one hundred twenty (120) days
(the "Replacement Period") after the date of the Event of Loss (but in no event
later than the last day of the Term) Lessee shall convey, or cause to be
conveyed to Lessor as provided in Section 11(b) hereof, to be subjected to the
Lien of the Indenture if it has not been discharged, and to be leased by Lessee
hereunder in replacement of the Engine, title to a replacement Engine, such
replacement Engine (A) to be free and clear of all Liens (it being understood
that, upon such conveyance, such replacement Engine may be subject to Permitted
Liens), (B) to have a value, utility and remaining useful life, determined in
accordance with the Appraisal Procedure as provided in Section 11(b) hereof, at
least equal to, and to be in at least as good operating condition as, the Engine
(assuming the Engine was maintained in accordance with the requirements of this
Agreement, whether or not it is in fact so maintained), and (C) to be another
IAE V2500 Engine of like model and equivalent or better modification status
delivered by the Manufacturer not earlier than June 30, 1988 or, at Lessee's
option, an IAE engine of an improved model and in compliance with Section 11(b);
provided that if Lessee shall not perform its obligation to effect such
replacement under this clause by the end of the Replacement Period, Lessee shall
then be deemed to have elected to comply, and shall comply, with the provisions
of clause (ii) of this Section 11(a); provided, further, that the payment
specified therein shall be deemed to have become due and payable on the
Stipulated Loss Value Date occurring on or immediately preceding the last day of
the Replacement Period. Upon compliance with the foregoing, Lessor will, subject
to the rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without
recourse, representation or warranty (except a warranty that the Engine is free
and clear of Lessor's Liens), all of Lessor's right, title and interest, if any,
in and to the Engine suffering the Event of Loss. For all purposes hereof, a
replacement Engine shall be deemed part of the property leased hereunder and
shall be deemed the "Engine" as defined herein. No Event of Loss resulting in
replacement of the Engine under this Section 11(a)(i) shall result in any
reduction of Rent. In addition to the foregoing, if Lessor so requests, as a
condition to any substitution of the Engine under this Lease, Lessee shall use
its best efforts to ensure that IAE acknowledges that such substitution shall
not affect any product support or other agreements between or among IAE, Parent,
Lessor or Lessee.
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(ii) On a Stipulated Loss Value Date on or
before one hundred twenty (120) days after the date of the Event of Loss (or, if
earlier, with respect to insurance proceeds, on the date on which insurance
proceeds with respect to the Event of Loss are received by the loss payee)
Lessee shall pay to Lessor in immediately available funds the sum of (A) the
Stipulated Loss Value of the Engine as shown on Exhibit A for such Stipulated
Loss Value Date, plus all Basic Rent or Renewal Rent, as the case may be,
payable on each Basic Rent Payment Date or Renewal Rent Payment Date,
respectively, prior to the date of payment of such Stipulated Loss Value which
has not been paid when due, plus, if such Stipulated Loss Value Date is also a
Basic Rent Payment Date or a Renewal Rent Payment Date, the amount of Basic Rent
or Renewal Rent, as the case may be, payable by Lessee on such Stipulated Loss
Value Date, or, if such Stipulated Loss Value Date occurs after the last day of
the Term, plus an amount equal to the average daily Basic Rent or Renewal Rent,
as the case may be, in effect on the last day of the Term, for each day from and
including the last day of the Term to and excluding such Stipulated Loss Value
Date, and (B) all Supplemental Rent payable, whereupon (1) the obligation of
Lessee to pay Basic Rent or Renewal Rent, as the case may be, hereunder with
respect to the Engine for any period commencing after the date on which such
Stipulated Loss Value is paid shall terminate; provided that Lessee shall remain
liable for, and shall pay on or before the date the Stipulated Loss Value and
Supplemental Rent are paid, all payments of Basic Rent or Renewal Rent, as the
case may be, for the Engine due on or before the date of such payment of
Stipulated Loss Value and Supplemental Rent, (2) the Term shall terminate with
respect to such Engine, and (3) Lessor will, subject to the rights of any
insurers, transfer to Lessee, "AS IS, WHERE IS," without recourse,
representation or warranty (except a warranty that such Engine is free and clear
of Lessor's Liens), all of Lessor's right, title and interest, if any, in and to
the Engine suffering the Event of Loss.
(b) Conveyance of Replacement Engine. Upon an Event of Loss
with respect to the Engine, Lessee shall give Lessor prompt written notice
thereof and shall, at its own cost and expense, within sixty (60) days after
such occurrence convey or cause to be conveyed to Lessor as replacement for the
Engine suffering an Event of Loss, title to another IAE Model V2500 engine of
like model and equivalent or better modification status or, at Lessee's option,
an IAE engine of an improved model, in each such case which has a value,
remaining useful life and utility determined in accordance with the Appraisal
Procedure at least equal to such Engine free of all Liens (it being
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understood that, upon such conveyance, such replacement Engine may be subject to
Permitted Liens) and being in as good operating condition as (including no
greater number of cycles or hours than) the Engine being replaced assuming the
Engine being replaced was serviceable and otherwise in the condition and repair
required by the terms hereof immediately prior to the Event of Loss. Prior to or
at the time of any such conveyance, Lessee, at its own cost and expense, will
(i) furnish Lessor with a full warranty bill of sale, in form and substance
reasonably satisfactory to Owner Participant and Indenture Trustee, as
applicable, with respect to such replacement Engine; (ii) cause supplements, in
form and substance reasonably satisfactory to Owner Participant and Indenture
Trustee (if the Lien of the Indenture has not been discharged), subjecting such
replacement Engine to this Lease, the Indenture (if in effect) and the Trust
Agreement (if in effect), to be duly executed by Lessee, if applicable, and duly
filed for recordation pursuant to the Federal Aviation Act; (iii) furnish Lessor
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
with such evidence of title to such Replacement Engine and of compliance with
the insurance provisions of Section 12 hereof with respect to such Replacement
Engine as Owner Participant or Indenture Trustee (if the Lien of the Indenture
has not been discharged) may reasonably request; (iv) furnish Owner Participant
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
with an opinion of Lessee's counsel addressed to such parties and to Lessor to
the effect that title to such Replacement Engine has been duly conveyed to
Lessor free and clear of all Liens (except Permitted Liens) and it is duly
leased hereunder and subject to the Lien of the Indenture (if it has not been
discharged), the instruments subjecting such Replacement Engine to the Lien of
the Indenture and the Lease, and subjecting to any relevant Assigned Sublease
and Sublease Agreement, as the case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act or any other law then applicable to the
registration of the Aircraft, and no further action, filing or recording of any
document is necessary in order to establish and perfect, in the United States
and, if the Aircraft is registered outside the United States, in the
jurisdiction of registration, the legal title to such Replacement Engine and the
Lien of the Indenture on such Replacement Engine and that Lessor, and Indenture
Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of
Title 11 of the United States Code with respect to such replacement engine to
the same extent as with respect to the Engine prior to such replacement; (v)
furnish a certificate signed by a Responsible Officer of Lessee certifying that,
upon
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consummation of such replacement, no Default or Event of Default will exist
hereunder; (vi) furnish such documents and evidence with respect to Lessee,
Owner Participant or Indenture Trustee (if the Lien of the Indenture has not
been discharged), as such parties or their respective counsel may reasonably
request in order to establish the consummation of the transactions contemplated
by this Section 11(b), the taking of all corporate proceedings in connection
therewith and compliance with the conditions set forth in this Section 11(b), in
each case in form and substance satisfactory to such party; (vii) furnish such
Uniform Commercial Code financing statements covering the Replacement Engine as
may be requested by Lessor or Indenture Trustee (if the Lien of the Indenture
has not been discharged); (viii) furnish Owner Participant with an opinion of
tax counsel mutually satisfactory to Owner Participant and Lessee and which
opinion is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish Owner
Trustee and Indenture Trustee with the opinion of counsel to Lessee specified in
Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the
terms of this Section 11(b), Lessor will, subject to the rights of any insurers,
transfer to Lessee, "AS IS, WHERE IS" without recourse, representation or
warranty (except a warranty that such Engine is free and clear of Lessor's
Liens), all of Lessor's right, title and interest, if any, in the Engine which
suffered the Event of Loss. For all purposes hereof, each such Replacement
Engine shall be deemed an "Engine" as defined herein. No Event of Loss covered
by this Section 11(b) shall result in any reduction in Rent.
(c) Application of Proceeds and Payments. Any payments
received at any time by Lessor or by Lessee from any insurer (including a
Governmental Entity providing an indemnity in lieu thereof) with respect to an
Event of Loss shall be applied in the manner specified in Sections 12(c) and (e)
hereof. Subject to Section 11(e) below, any payments (other than insurance or
such indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and other
payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this
Lease shall be paid to Lessor in reduction of Lessee's obligation to pay such
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Stipulated Loss Value and other payments if not already paid by Lessee, or, if
already paid by Lessee, shall (unless a Default or an Event of Default shall
have occurred and be continuing) be applied by Lessor to reimburse Lessee for
its payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained by,
Lessor; or
(ii) if such payments are received as a result of
an Event of Loss with respect to the Engine which is being replaced pursuant to
Section 11(a)(i) and (b) hereof, all such payments shall be paid over to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Sections 11(a)(i) and (b) hereof, and of
Section 15 hereof with respect to the Event of Loss for which such payments are
made and if no Default or Event of Default shall have occurred and be
continuing.
(d) Requisition for Use by Government with Respect to the
Engine. Subject to Section 11(e) below, in the event of the requisition for use
by a Governmental Entity of the Engine, Lessee will replace such Engine
hereunder by complying with the terms of Section 11(a) to the same extent as if
an Event of Loss had occurred with respect to such Engine, and thereafter any
payments received by Lessor or Lessee from the Governmental Entity with respect
to such requisition shall be paid over to, or retained by, Lessee.
(e) Application in Default. Any amount referred to in clause
(i) or (ii) of Section 11(c) or Section 11(d) which is otherwise payable to
Lessee shall not be paid to Lessee, or, if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Lessor, if at the time of such
payment or retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without limitation,
by reason of this Lease being declared or deemed in default. At such time as
there shall not be continuing any such Event of Default or Default, all such
amounts at the time held by Lessor or Indenture Trustee in excess of the amount,
if any, which
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Lessor or Indenture Trustee has elected for application as provided above, shall
be paid to Lessee.
Section 12. Insurance.
(a) Public Liability and Property Damage Insurance. Lessee
will carry and maintain in effect, or cause to be carried and maintained in
effect, at its own cost and expense, with Approved Insurers, comprehensive
aircraft and general public liability insurance (including, without limitation,
contractual liability, liability war risk and passenger legal liability
products, completed operation liability covering maintenance of aircraft, but
excluding manufacturer's product liability insurance), and property damage
insurance with respect to the Engine and any airframe on which the Engine is
installed (for purposes of this Section 12, any such airframe together with the
Engine which is installed thereon shall be referred to as, the "Aircraft"), in
an amount not less than three hundred fifty million dollars ($350,000,000),
combined single limit, per occurrence or such higher amount, and of such type
and terms, as are customarily carried by prudent Certificated Air Carriers,
similarly situated to Lessee, operating aircraft of similar size and similar
type engines and as hereinafter provided. Each and any policy of insurance
carried in accordance with this Section 12(a), and each and any policy obtained
in substitution or replacement for any of such policies, (i) shall designate
Lessor (in both its individual and trustee capacity), Owner Participant,
Indenture Trustee (in both its individual and trustee capacity) and the other
Indemnitees and their respective permitted assigns, as additional insureds as
their interests may appear (but without imposing upon any such Person any
obligation imposed upon the insured, including, without limitation, the
liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, in such policies, the insurance shall not be invalidated as to an
insured or additional insured by any act or omission of Lessee or any other
insured or additional insured and shall insure Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees and their respective permitted
assigns, regardless as to any insured or additional insured of any breach or
violation by Lessee or any other insured or additional insured of any warranty,
declaration or condition contained in such policies, (iii) shall provide that if
such insurance is cancelled for any reason whatsoever, or is changed in any
adverse way with respect to the interests of Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees or if such
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insurance is allowed to lapse for non-payment of premium, such cancellation,
change or lapse shall not be effective as to Lessor, Owner Participant,
Indenture Trustee and the other Indemnitees, and their respective permitted
assigns, until thirty (30) days, in each instance (seven (7) days or such lesser
period of time as is the insurance industry standard for war/allied perils
coverage), after notice to Lessor, Owner Participant and Indenture Trustee from
such insurer or insurers, of such prospective cancellation, change or lapse,
(iv) shall include coverage for any country in or over which the Engine is
located or operated and (v) shall provide that, as against Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees, and their respective
permitted assigns, each insurer shall waive any rights of set-off, counterclaim
or any other deduction, whether by attachment or otherwise, and waives any
rights it may have to be subrogated to any right of any insured against Lessor,
Owner Participant, Indenture Trustee or the other Indemnitees, or their
respective permitted assigns, with respect to the Engine. Each liability policy
shall be primary without right of contribution from any other insurance which
may be carried by Lessor, Owner Participant, Indenture Trustee or the other
Indemnitees, or their respective permitted assigns, and shall expressly provide
that all of the provisions thereof shall operate in the same manner as if there
were a separate policy covering each insured, provided, that such policies shall
not operate to increase the insurer's limit of liability. Lessee shall cause its
insurers to agree that the indemnity and hold harmless provisions of Section 13
are insured as a contractual assumption of liability by Lessee's insurers,
subject to the terms, coverage, conditions, limitations and exclusions of the
policy of insurance. Without limiting the foregoing, the type and amount of the
insurance carried by Lessee hereunder shall be no less in amount and no less
comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and
the other Indemnitees then that carried by Lessee with respect to other IAE
V2500 engines or similar type engines or similar-type aircraft owned or leased
by Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its own
expense, will maintain in effect, or cause to be carried and maintained in
effect, with Approved Insurers "all-risk" ground and flight aircraft and spares
hull insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person on
board such Aircraft acting without the
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consent of Lessee) covering the Engine and/or the Aircraft, as the case may be,
and "all-risk" coverage including transit insurance with respect to the Engine
and Parts while not installed on such Aircraft or an aircraft, which in each
case considering all policy terms, limitations and exclusions is of the type,
terms and amount customarily maintained by prudent Certificated Air Carriers
similarly situated to Lessee and operating similar size aircraft and engines and
as hereinafter provided. Lessee shall also maintain, or cause to be maintained,
war risk and allied perils hull and spares insurance reasonably acceptable to
Lessor with Approved Insurers. In addition, at least ten (10) Business Days (or,
in the case of an emergency, at least two (2) Business Days) prior to permitting
the Engine or the Aircraft to be operated or located outside of the United
States of America, other than in Canada or Mexico, Lessee shall notify Lessor
thereof. If Owner Participant or Indenture Trustee reasonably requests at any
time and if such insurance is then customarily being obtained by or for Persons
leasing or financing similarly sized aircraft operating on similar routes to
operators located in the jurisdiction of Lessee's or, if a Permitted Sublease is
in effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay
or reimburse Lessor for political risk, repossession, expropriation,
confiscation and similar insurance as Lessor may arrange or cause to be
arranged; provided that Indenture Trustee shall not be obligated to request such
insurance and shall not be liable for any failure to request such insurance.
Anything herein to the contrary notwithstanding, at all times while the Engine
is subject to this Lease, the insurance required by this Section 12(b) shall be
for an amount on an "agreed value" basis not less than the Stipulated Loss Value
from time to time determined for the Engine. Without limiting the foregoing, the
type and amount of insurance carried by Lessee hereunder shall be no less
comprehensive or favorable to Lessor, Owner Participant, Indenture Trustee and
the other Indemnitees than that carried by Lessee with respect to similar-size
aircraft or similar engines owned or leased by Lessee.
Each and any policy of insurance obtained and maintained
pursuant to this Section 12(b), and each and any policy obtained in substitution
or replacement for any such policies, (i) shall designate Lessor as owner of the
Engine, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns
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as additional insureds, as their respective interests may appear (but without
imposing upon Lessor, Owner Participant, Indenture Trustee and their respective
permitted assigns, any obligation imposed upon the insured, including, without
limitation, the liability to pay any premiums for any such policies), (ii) shall
expressly provide that, in respect of the interests of such an additional
insured and its permitted assigns, in such policies, the insurance shall not be
invalidated as to an insured by any act or omission of Lessee or any other
additional insured, and shall insure each such additional insured and its
permitted assigns, regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or another
additional insured, (iii) shall provide that if such insurance is cancelled for
any reason whatsoever, or is changed in any adverse way with respect to the
interests of Lessor, Owner Participant, Indenture Trustee and to the other
Indemnitees and their respective permitted assigns, or if such insurance is
allowed to lapse, such cancellation, change or lapse shall not be effective as
to Lessor, Owner Participant, Indenture Trustee, the other Indemnitees or their
respective permitted assigns, until thirty (30) days (seven (7) days or such
lesser period of time as is the insurance industry standard for war/allied
perils coverage) after written notice to Lessor, Owner Participant and Indenture
Trustee from such insurer or insurers, as the case may be, of such prospective
cancellation, change or lapse, (iv) shall include coverage for any country in or
over which the Engine or the Aircraft may at any time be located or operated,
(v) shall provide that, as against Lessor, Owner Participant, Indenture Trustee,
the other Indemnitees and their respective permitted assigns, each insurer shall
waive any rights of set-off, counterclaim or any other deduction, whether by
attachment or otherwise, and waives any rights it may have to be subrogated to
any right of any insured against Lessor, Owner Participant, Indenture Trustee
and the other Indemnitees and their respective permitted assigns, with respect
to the Engine, (vi) shall provide that in the event of any damage or loss which
is an Event of Loss hereunder and which results in a payment, such payment shall
be payable directly to Indenture Trustee as sole loss payee, so long as the Lien
of the Indenture shall not have been discharged and thereafter to Lessor, as
sole loss payee, and (vii) shall provide that in the event of any damage or loss
which is not an Event of Loss hereunder and which results in a payment, such
payment shall be payable directly to Indenture Trustee as sole loss payee for
the account of all interests, so long as the Lien of the Indenture shall not
have been discharged and thereafter to Lessor, as sole loss payee for the
account of all interests. The insurance required under this Section
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12(b) may incorporate deductible amounts which shall not exceed one million
dollars ($1,000,000).
Each of Lessor and Owner Participant shall have the right to
carry additional and separate excess or contingent insurance for its own benefit
at its own expense, without, however, thereby limiting Lessee's obligations
under this Section 12, and Lessee shall not carry any such insurance if it would
conflict with or adversely affect other insurance carried by Lessor or Owner
Participant. Lessee shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to Lessee, provided, however, that such insurance does not conflict with
or adversely affect the insurance required hereunder or any excess or contingent
insurance carried by Lessor or Owner Participant. Lessee shall give Lessor
reasonable prior written notice of any insurance to be carried by Lessee in
addition to that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained to cover
"all-risk" ground and flight aircraft, hull and war risks and allied perils
insurance, Lessee shall include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by Lessee with respect to all
other aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of Loss. It
is agreed that insurance payments which arise from insurance required to be
carried by Lessee pursuant to this Section 12 and received as the result of the
occurrence of an Event of Loss shall be applied as follows (after reimbursement
of Lessor, Owner Participant and Indenture Trustee for their reasonable
out-of-pocket costs and expenses);
(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and other
payments required to be paid by Lessee pursuant to Section 11(a)(ii) of this
Lease shall be paid to Indenture Trustee so long as the Lien of the Indenture
has not been discharged and thereafter to Lessor in reduction of Lessee's
obligation to pay such Stipulated Loss Value and any other payments if not
already paid by Lessee, or, if already paid by Lessee, shall (unless a Default
or an Event of Default shall have occurred and be continuing) be applied by
Indenture Trustee or Lessor, as the case may be, to
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reimburse Lessee for its payment of such Stipulated Loss Value and other
payments and the balance, if any, of such payment remaining thereafter shall be
paid over to, or retained by, Lessor; or
(ii) if such payments are received as a
result of an Event of Loss with respect to the Engine which is being replaced
pursuant to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be
paid over by the Indenture Trustee or Lessor, as the case may be, to, or
retained by, Lessee if Lessee shall have fully performed or, concurrently
therewith fully performs, the terms of Section 11(a)(i) and (b) hereof and of
Section 15 hereof, as the case may be, with respect to the Event of Loss for
which such payments are made and if no Default or Event of Default shall have
occurred and be continuing.
(d) Application of Insurance Proceeds for Other than an Event
of Loss. The insurance payments of any property damage loss to the Engine not
constituting an Event of Loss with respect thereto will be applied in payment
for the actual costs of repairs or for replacement property which Lessee has
incurred in accordance with the terms of Section 9, 11 or 12(c) of this Lease
against such documentation evidencing payment by Lessee as Lessor may reasonably
request to reimburse Lessee for such repairs or replacements already paid for by
Lessee, and any balance remaining after compliance with such Sections with
respect to such loss shall be paid to Lessor. Lessee shall be entitled to
receive from the insurer any insurance proceeds not in excess of five hundred
thousand dollars ($500,000) as soon as such funds are paid and shall promptly
receive such additional insurance proceeds from the loss payee upon invoices for
repair work in progress, replacement parts which are ordered or for work
completed as provided above in this Section 12(d). Any amount referred to in
this Section 12(d) which is payable to Lessee shall not be paid to Lessee if at
the time of such payment any Default or Event of Default shall have occurred and
be continuing, but shall be held by Lessor as security for the obligations of
Lessee under this Lease or applied as provided in Section 12(e).
(e) Application in Default. Any amount referred to in clause
(ii) of Section 12(c) or Section 12(d) which is otherwise payable to Lessee
shall not be paid to Lessee, or if it has been previously paid to or retained by
Lessee, shall be paid by Lessee to Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter to Lessor, if at the
time of such payment or retention a Default or an Event of Default shall have
occurred and be continuing. In such case, all such amounts
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shall be paid to and held by Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter held by Lessor as
security for the obligations of Lessee, or, at the option of Indenture Trustee
or Lessor, applied by Indenture Trustee or Lessor toward payment of any of
Lessee's obligations at the time due hereunder, including, without limitation,
by reason of this Lease being declared or deemed declared in default, as
Indenture Trustee or Lessor may elect. At such time as there shall not be
continuing any such Event of Default or Default, all such amounts at the time
held by Indenture Trustee or Lessor in excess of the amount, if any, which
Indenture Trustee or Lessor has elected for application as provided above, shall
be paid to Lessee.
(f) Certificates. On or before the Delivery Date, and
thereafter on any renewal by the Lessee of the insurance required hereby (but in
no event less than once in every twelve (12) month period), Lessee will furnish
to Lessor and Indenture Trustee a certificate executed and delivered by an
Approved Insurer or the Approved Broker, describing in reasonable detail, and in
accordance with customary practice, insurance carried on the Engine and Lessee
shall also furnish an opinion or report by the Approved Insurer or the Approved
Broker certifying that the insurance then maintained on the Engine complies with
the terms of this Lease. Lessee will cause the Approved Broker to agree to
advise Lessor, Owner Participant and Indenture Trustee in writing at least
thirty (30) days (seven (7) days or such lesser period of time as is the
insurance industry standard for war/allied perils coverage) prior to the
expiration, non-renewal, termination or cancellation for any reason (including,
without limitation, failure to pay premium therefor) or material modification of
any such insurance.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in
effect, the Permitted Sublessee) may carry primary insurance outside of the
aviation insurance markets in New York, London or Paris, if the relevant primary
insurer shall have obtained reinsurance and such reinsurance (i) is on the same
terms as the original insurance and includes the provisions required by this
Agreement; (ii)
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provides in case of any bankruptcy, insolvency, liquidation, dissolution or
similar proceedings of or affecting the original insurer that the reinsurers'
liability will be to make such payment as would have fallen due under the
relevant policy of reinsurance if the original insurer had (immediately before
such bankruptcy, insolvency, liquidation, dissolution or similar proceedings)
discharged its obligations in full under the original insurance policies in
respect of which the then relevant policy of reinsurance has been effected; and
(iii) contains a "cut-through" clause in the following form (or otherwise,
satisfactory to Owner Participant): "The Reinsurers and the Reinsured hereby
mutually agree that in the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided by the Amended and
Restated Engine Lease Agreement [GPA 1991 AWA-E3] dated as of November 26, 1996
and made between Wilmington Trust Company, as Owner Trustee, and America West
Airlines, Inc. such claim is to be paid to the person named as sole loss payee
under the primary insurances, the Reinsurers will in lieu of payment to the
original insured, its successors in interest and assigns pay to the person named
as sole loss payee under the primary insurances effected by the original insured
that portion of any loss due for which the Reinsurers would otherwise be
liable to pay the original insurer (subject to proof of loss), it being
understood and agreed that any such payment by the Reinsurers will (to the
extent of such payment) fully discharge and release the Reinsurers from any and
all further liability in connection therewith."
(h) Storage. During any period that the Engine or the Aircraft
is in storage or otherwise grounded, Lessee may carry or cause to be carried, in
lieu of the insurance required by Sections 12(a) and (b) above, insurance
otherwise conforming with the provisions of said Sections 12(a) and (b) except
that the scope of the risk and the type of insurance, and the amount of the
insurance in the case of the insurance described in Section 12(a) above (but not
the amount of insurance to be carried under Section 12(b) above), shall be the
same as from time to time applicable to similar engines or similar size
passenger aircraft that comprise Lessee's fleet in similar storage or grounding,
and in any event (including, without limitation, at any time when there shall be
in existence a Permitted Sublease), the same as from time to time customarily
carried by similarly-situated, prudent Certificated Air Carriers for similar
engines as the engines in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of Default
has occurred and is continuing, any amount held by Lessor or Indenture Trustee,
as the case may be, until
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application by Lessor or Indenture Trustee, as the case may be, pursuant to this
Section 12 shall be invested as provided in Section 21(h) hereof.
(j) After the Term. Lessee shall continue to maintain at its
expense the insurance described in Section 12(a) for three years after the
expiration or termination of the Basic Term or Renewal Term, if Lessee has
elected to renew the Lease in accordance with Section 20, covering each
Indemnitee as its interest may appear and specifically insuring the indemnity
contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of the
insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the extent and subject to the terms and conditions
specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and hold
harmless each Indemnitee on a net after-tax basis, as provided in Section 10(e),
within fifteen (15) days after demand from and against any and all claims
(whether or not based on strict liability), damages (whether direct, indirect,
incidental, special or consequential), losses, charges, fees, liabilities,
obligations, demands, suits, judgments, actions and other legal proceedings
(whether civil or criminal), penalties, fines, other sanctions, and any
reasonable costs and expenses, in connection herewith, including, without
limitation, costs and expenses set forth in Section 21(j) hereof and reasonable
attorney's fees and expenses of whatever kind or nature (any and all of which
are hereafter referred to as "Claims") imposed on, or asserted by or against, or
suffered or incurred by, any Indemnitee, from (and including) the Restatement
Date, including, without limitation, injury, death or property damage of
passengers, shippers and others, environmental control, noise and pollution
regulations, which in any way may result from, pertain to, or arise in any
manner out of, or are in any manner related to (1) the Operative Documents, the
Purchase Documents or the Financing Documents, or any of the transactions
contemplated thereby; (2) the Engine or any Part thereof, including, but not
limited to, (A) the importation, exportation, condition, manufacture, design,
purchase, ownership, registration, reregistration, deregistration (other than
any deregistration caused by the failure of the registered owner of the Engine
to be a "citizen of the United States" as defined under the Federal Aviation Act
and the regulations
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thereunder or to file the documentation necessary to continue FAA registration
of the Engine), delivery, non-delivery, assignment, leasing, subleasing,
sub-subleasing, acceptance, rejection, possession, repossession, control,
return, financing, Liens (excluding Lessor's Liens, Head Lessor's Liens and
Lenders' Liens, but including the Lien of the Indenture), use, performance,
modification, maintenance, overhaul, operation, pooling, interchange, repair,
testing, sale, return or other disposition or application of the Engine or any
Part (including, but not limited to, latent and other defects whether or not
discoverable by Lessee or Lessor, Claims related to any actual or alleged
violation of Law, loss or damage to any property of passengers, shippers or
otherwise or any Claim related to patent, copyright, trademark or other
infringement) either in the air or on the ground, and, including, without
limitation, any interest therein or in the Operative Documents of an Indemnitee
or imposition of a Lien thereon (excluding Lessor's Liens, Head Lessor's Liens
and Lenders' Liens but including the Lien of the Indenture), or the rentals,
receipts or earnings therefrom (including, without limitation, the Rent and any
other amounts paid or payable with respect thereto); or (B) any defect in the
Engine or any Part thereof arising from the material or any article used
therein, whether from the design, testing or use thereof from any maintenance,
service, repair, overhaul or testing of the Engine or such Part, or otherwise
regardless of when such defect shall be discovered, whether or not the Engine or
such Part is at the time in the possession of Lessee, and regardless of where
the Engine or such Part may then be located; or (3) the breach of any
representation, warranty or covenant made by Lessee hereunder or under any of
the other Operative Documents or any Default or Event of Default; provided,
however, that the indemnity provided for in this Section 13 shall not apply to
any portion of a Claim of an Indemnitee to the extent it results from: (i) the
gross negligence or willful misconduct of such Indemnitee or any of its
directors, officers, employees, servants or agents (except any such gross
negligence or willful misconduct as may be attributed to an Indemnitee due to
its interest in the Engine, any Operative Document, any Purchase Document or any
Financing Document), (ii) the material breach of any express representation,
warranty or covenant made by such Indemnitee herein or in any other Operative
Document, or the Financing Documents (not resulting from a breach by Lessee of
any of its representations, warranties or covenants in the Operative Documents
or in the Financing Documents), (iii) any Taxes, whether or not Lessee is
required to indemnify such Taxes under Section 10 hereof or the Tax
Indemnification Agreement (it being understood that Section 10 hereof and the
Tax Indemnification Agreement exclusively provide
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for Lessee's liability with respect to Taxes), (iv) any Claim which relates
solely to events which occurred prior to (but excluding) the Restatement Date
(other than Claims related to the condition, manufacture or design of the
Engine), (v) an underlying act which occurs after the Engine has been returned
to Lessor in accordance with the terms hereof and the Term of this Lease has
been terminated or has expired and the return is not related to an Event of
Default, (vi) an underlying act which occurs after a disposition or other
transfer (voluntary or involuntary) by such Indemnitee of all or any part of its
interest in the Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents, except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the period
while an Event of Default has occurred and is continuing and prior to the time
such Indemnitee has received payment of all amounts owing to it hereunder and
except any Claim which is alleged or does relate to the period prior to such
disposition or (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or are
not required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents (provided, however, in no event
will Lessee be liable for any Claims resulting from, pertaining to or arising
from or related to Lessor's granting or creating a Lessor's Lien or the granting
or creation of a Head Lessor's Lien). Upon full payment of the indemnities
herein, Lessee shall be subrogated to all rights and remedies which such
Indemnitee may have against any third party against whom such Indemnitee has the
right to assert a Claim which arises under any action described in this Section
13 (except Claims under such Indemnitee's own insurance policies or under the
indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may result
from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as
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and to the extent such Indemnitee is responsible under the Refunding Agreement
for Claims related to such deregistration), delivery, non-delivery, assignment,
leasing, subleasing, manufacture, acceptance, rejection, possession, return,
financing, performance, modification, maintenance, condition, use, operation,
pooling, interchange, repair, testing, sale, return or other disposition of the
Engine or any Part thereof, either in the air or on the ground, or which may be
caused by any defect in the Engine or such Part from the material or any article
used therein or from the design or testing thereof, or use thereof or from any
maintenance, service, repair, overhaul, or testing of the Engine or such Part,
claims for infringement, loss of or injury to any person, loss of or damage to
any property or environmental damage, regardless of when such defect may be
discovered, whether or not the Engine or such Part is at the time in the
possession of Lessee, and regardless of the location of the Engine at any such
time except to the extent that such Claim results from (i) the gross negligence
or willful misconduct of such Indemnitee (except any such gross negligence or
willful misconduct as may be attributed to an Indemnitee due to its interest in
the Engine, any Operative Document, any Purchase Document or any Financing
Document), (ii) the material breach of any of its express representations,
warranties or covenants hereunder, under any other Operative Document or
Financing Document (not resulting from a breach by Lessee of any of its
representations, warranties or covenants in the Operative Documents or in the
Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to but excluding the Restatement Date (other than Claims related to the
condition, manufacture or design of the Aircraft) and any Claim concerning
payment for or the ownership of Buyer Furnished Equipment, (v) an underlying act
which occurs after the Aircraft has been returned to Lessor in accordance with
the terms hereof and the Term of this Lease has been terminated or has expired
and the return is not related to an Event of Default, (vi) an underlying act
which occurs after a disposition or other transfer (voluntary or involuntary) by
such Indemnitee of all or any part of its interest in the Aircraft, the
Airframe, any Engine, or any Part, or in the Financing Documents, the Purchase
Documents or the Operative Documents (except as contemplated under or pursuant
to the Operative Documents, the Financing Documents or the Purchase Documents
and except as resulting from the exercise of its remedies during the
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period while an Event of Default has occurred and is continuing and prior to the
time such Indemnitee has received payment of all amounts owing to it hereunder
and except any Claim which is alleged or does relate to the period prior to such
disposition), (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or are
not required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head
Lessor's Lien or a Lenders' Lien attributable to such Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense and
with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and, so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so long
as no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall cooperate
with Lessee in defending such Claim, but any expenses incurred by such
Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall enter
into a settlement or other compromise with respect to any Claim which Lessee or
such Indemnitee is defending hereunder in excess of $100,000 without the prior
written consent of the other, which consent shall not be unreasonably withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense thereof
where Lessee
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has the right to control the defense thereof is materially prejudiced as a
result solely of such failure of such Indemnitee to give such notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section .
Nothing in this Section shall be construed as a guaranty by
Lessee of payments due pursuant to any indebtedness incurred with respect to the
purchase of the Engine or of the residual value of the Engine.
Notwithstanding anything herein or in any other Operative
Document to the contrary, with respect to any Claim for which any Indemnitee is
entitled to indemnification under more than one provision of this Lease or any
other Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue in
full force and effect notwithstanding the expiration or other termination of
this Lease or any of the other Operative Documents and are expressly made for
the benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume,
or suffer to exist any Lien on or with respect to the Engine or any Part
thereof, title thereto, or any interest of Lessor therein or in this Lease,
except (i) the respective rights of Lessor, Lessee, Owner Participant, Indenture
Trustee and any other Indemnitee as herein provided or provided under the other
Operative Documents or the Financing Documents; (ii) Head Lessor's Liens,
Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes either not yet due or
being diligently contested in good faith by appropriate proceedings in
accordance with Section 10 and so long as adequate reserves are maintained with
respect to such Liens and only so long as neither such proceedings nor such
Liens involve any material danger of the sale, forfeiture or loss of any of the
Engine or any Part, or any interest of Lessor or Indenture Trustee therein or
any risk of criminal liability of Lessor or Indenture Trustee; (iv) inchoate
materialmen's, mechanics', workmen's, repairmen's employees', or other like
inchoate Liens arising
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in the ordinary course of business for sums not overdue by more than 45 days or
being diligently contested in good faith and only so long as neither such
proceedings nor any such Liens involve any material danger of the sale,
forfeiture or loss of the Engine or any Part, or any interest of Lessor or
Indenture Trustee therein; (v) the rights of other Persons to the extent
expressly permitted by the provisions of Section 6(a), 9(c) or 19; (vi) Liens
arising out of any judgment or award against Lessee (or any Permitted Sublessee)
unless the judgment or award shall not, within thirty (30) days after the entry
thereof, have been discharged, vacated, reversed, or execution thereof stayed
pending appeal or shall not have been discharged, vacated or reversed within
thirty (30) days after the expiration of such stay and only so long as such
Liens shall not involve any material danger of the sale, forfeiture or loss of
the Engine or any Part, or any interest of Lessor or Indenture Trustee therein
and provided that the execution of such judgment or award or an attachment
relating thereto shall not have occurred within such thirty (30) day period;
and, (vii) any other Lien with respect to which Lessee (or a Permitted
Sublessee) shall have provided a bond adequate in the reasonable opinion of
Indenture Trustee (if the Lien of the Indenture has not been discharged) and
Owner Participant. Lessee shall promptly, at its own expense, take or cause to
be taken such action as may be necessary to duly discharge any Lien (except for
the Liens referred to in clauses (i) through (vii) of this Section 14) directly
or indirectly created, incurred, assumed, or suffered to exist by Lessee if the
same shall arise at any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease, the
Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and Trust
Supplement, and any other supplement from time to time required by the terms
hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement, Lease
Supplement, Indenture Supplement, Trust Supplement and such other supplements to
be duly filed and recorded, and maintained of record, in accordance with the
applicable laws of the government of registry of the Aircraft and the Engine. If
any filing or recording is reasonably necessary to protect the interests of
Lessor or Indenture Trustee, Lessee shall, at its own cost and expense (except
it shall be at Lessor's expense if in connection with a change in ownership of
the Engine or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default) and upon request by Lessor cause
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any financing statements and any and all additional instruments and other
documents, so far as permitted by applicable Law, to be kept, filed, and
recorded and to be re-executed, refiled and re-recorded at all times in the
appropriate office pursuant or in relation to any applicable Laws of any
Governmental Entity, to protect and preserve the rights and interests of Lessor
or Indenture Trustee hereunder, under the Indenture and in the Engine, and
Lessee shall furnish to Lessor and Indenture Trustee, evidence, reasonably
satisfactory to Lessor and Indenture Trustee, of each such filing or refiling
and recordation and rerecordation.
Without limiting the foregoing, Lessee shall do or cause to be
done, at Lessee's cost and expense (except it shall be at Lessor's expense if in
connection with a change in ownership of the Engine or any other transfer or
assignment by Lessor other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), any and all acts and
things within its control which may be required under the terms of the Mortgage
Convention to protect and preserve the title of Lessor, the Lien of the
Indenture, this Lease and the interests of Lessor and Indenture Trustee within
the jurisdiction of any signatory which has ratified the Mortgage Convention in
such jurisdiction and in the territories thereof in which Lessee, any Permitted
Sublessee or any wet sublessee may operate the Engine, as Lessor may reasonably
request. Lessee shall also do or cause to be done, at its own expense (except it
shall be at Lessor's expense if in connection with a change in the ownership of
the Engine or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with an
Event of Default), any and all acts and things which may be required under the
terms of any other Law involving any jurisdiction in which Lessee, any Permitted
Sublessee or any wet lessee may operate the Engine, which Lessor may reasonably
request, to protect and preserve the title of the Lessor, this Lease, the
Indenture and Lessor's and Indenture Trustee's interest in the Engine and under
any of the Operative Documents or Financing Documents within any such
jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and
duly execute and deliver to Lessor or Indenture Trustee, as applicable, such
further documents and assurances and take such further actions as Owner
Participant or Indenture Trustee may from time to time reasonably request in
order to more effectively carry out the intent and purpose of this Lease and the
other Operative Documents and the Financing Documents and to protect the rights
and remedies created or intended to be created in
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favor of Lessor or Indenture Trustee hereunder and the other Operative Documents
and the Financing Documents including, without limitation, if reasonably
requested by Owner Participant or Indenture Trustee, at the expense of Lessee
(except it shall be at Lessor's expense if in connection with a change in the
ownership of the Engine or any other transfer or assignment by Lessor or
Indenture Trustee other than as contemplated hereunder or under the Financing
Documents or in connection with an Event of Default), the execution and delivery
of supplements or amendments hereto in recordable form, subjecting to this
Lease, the Indenture and the other Financing Documents, any replacement Engine
and the recording or filing of counterparts thereof in accordance with the laws
of any appropriate jurisdiction.
Section 16. Return of Engine and Records.
(a) Return. On any Return Occasion, Lessee, at its own expense
and risk, shall return the Engine to Lessor (or any Person designated by Lessor)
in at least the condition specified in this Section and Exhibit E hereto at any
Lessee system location in the continental United States selected by Lessor, as
Lessor may elect, or such other location as Lessor and Lessee may agree.
(b) Status Upon Return. Upon any Return Occasion hereunder,
the Engine shall be: (i) free and clear of all Liens, except for the Lien of the
Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly
certified as an airworthy engine by the FAA under Part 121 of the regulations
promulgated under the Federal Aviation Act which are in effect on the date of
such Return Occasion; (iii) in full airworthy condition for over water and EROPS
operation according to the FAA standards required to allow the Engine to be
operated under, and in full compliance with, an applicable standard certificate
of airworthiness and Part 121 of the regulations promulgated under the Federal
Aviation Act for such operation, such compliance to be by means of such
mechanical repairs or modifications or such inspections as may be required
thereby, but not by operational restrictions, by logbook entries or other method
of acceptance of such restrictions; (iv) in full compliance with Lessee's
Maintenance Program; (v) in full compliance with the maintenance and operation
provisions of this Lease and all FAA airworthiness directives, mandatory service
bulletins and equivalent requirements which by their terms require compliance on
or before the last day of the Term (without regard to any deferral, waiver,
deviation or exemption granted by the FAA specifically to Lessee delaying such
compliance); (vi) in good and airworthy operating condition, and in the same
condition as when delivered to
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Lessee hereunder, ordinary wear and tear excepted, with no open or outstanding
deferred maintenance items, scheduled or unscheduled, with all systems and
components fully serviceable and operational and with no placards restricting
operation or use, and (vii) with all remaining warranties, indemnities, policies
and guarantees referred to in Section 5(d) made available to Lessor in a manner
and by documents in form and substance reasonably satisfactory to Lessor.
(c) Substitute Engine. In the event any engine not owned by
Lessor shall be redelivered on any Return Occasion, without limiting Lessee's
obligations under the Tax Indemnification Agreement, such engine shall be of the
same model and equivalent modification status as the Engine or, at Lessee's
option, an IAE engine of an improved model suitable for installation and use on
an Airframe without diminishing the value, remaining useful life or utility of
such Airframe, in each such case having a value, remaining useful life and
utility at least equal to (as determined in accordance with the Appraisal
Procedure), and be in an operating condition as good as the Engine, assuming the
Engine was in the condition and repair as required by the terms hereof
immediately prior to such termination and shall conform to the return condition
requirements set forth in this Section 16 and Exhibit E, and Lessee, at its own
expense and concurrently with such delivery, shall cause such engine to become
an Engine by complying with Section 11(b) hereof. Lessee's obligation to comply
with the terms of this Section 16(c) shall be conditioned on Lessor's
transferring to Lessee all of Lessor's right, title and interest in and to any
such Engine at the Return Occasion "AS IS, WHERE IS," without any
representation, warranty or recourse of any kind whatsoever, express or implied,
except a warranty that such Engine is free and clear of Lessor's Liens.
(d) Records and Documents. Upon the return of the Engine,
Lessee shall deliver to Lessor (i) all logs, manuals and data, and inspection,
modification, overhaul and other records, related to the Engine, including,
without limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Engine and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Engine under an FAA approved maintenance
program after the Term or to transition maintenance to another program,
including, without limitation, another registry, or, in the event an Event of
Default shall have occurred, to continue to maintain the Engine under the
Maintenance Program, in each case as Lessor
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may reasonably request, and all documentation with respect to the Engine set
forth on Exhibit B or otherwise delivered to Lessee at delivery thereof, and
(ii) all records necessary or required by the FAA to certify and place the
Engine on an FAA or other country's, as the case may be, approved maintenance
program. All of the foregoing shall, at Lessee's expense, be up-to-date and in
the latest revision status as of the last day of the Term, including, without
limitation, all software and other electronically-held materials which have
been supplied by or on behalf of Manufacturer or Original Head Lessee, which
must be updated to the latest revision status as of the last day of the Term
within such software base and all data therein or pertaining thereto shall be
deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Engine,
components, rotables, and assemblies and, as a minimum, extend to include all
activities associated with each of the last completed maintenance checks,
repairs, scheduled inspections and functional tests, and overhauls performed
under Lessee's Maintenance Program. All components and assemblies identified
with safe life limits shall be identified with their service histories,
accumulated cycles or flight hours as applicable and remaining service lives on
a separate listing; such identification shall be sufficient to allow
traceability of such components and assemblies from the date on which such
components and assemblies were manufactured to the date on which such
identification is made, and to measure the service histories, accumulated cycles
or flight hours as applicable and remaining service lives in each engine,
including but not limited to the Engine, in which such components and assemblies
have been used. All components and assemblies which are identified on the
maintenance records by part numbers and serial numbers other than the
manufacturer's shall be provided with interchange or cross reference listing
necessary to establish complete traceability. All documentation, flight, and
maintenance records as specified by United States Federal Aviation Regulations
91.173, 91.174, and each paragraph of regulation 121.380 which normally
accompany the transfer of an engine which has been operating in regulated
commercial air service, shall be delivered to Lessor with the Engine. Any
documents or records required to be delivered hereunder shall be in English.
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(e) Condition of Engine. Upon any Return Occasion, Lessee
shall return such Engine to Lessor in such condition that the Engine shall also
comply with each and every condition and requirement set forth elsewhere in this
Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion, Lessee shall
make the Engine available to Lessor at the location where the designated check
or checks required hereunder to be performed immediately prior to redelivery is
to be performed for detailed inspection of the documents referred to in
paragraph (d) above and the Engine and Parts structure and parts, at Lessee's
expense (excluding compensation to representatives of Lessor), in order to
verify that the condition of such Engine complies with the requirements set
forth above (such inspection being hereinafter referred to as the "Final
Inspection"). The Final Inspection shall be combined with such check or checks
and may include such other items as reasonably requested by Lessor. Lessee shall
give Lessor not less than thirty (30) days prior written notice of the
commencement date of such Final Inspection. The period allowed for the Final
Inspection shall be the same period during which such checks are being performed
and shall have such duration as to permit the opening of any areas of the Engine
which are customarily necessary or advisable to satisfy Lessor as to compliance
with the requirements of this Section 16 and Exhibit E. The Final Inspection
shall commence on the date so noticed which shall be on or before the expiration
of the Term with respect to the Engine and shall continue on consecutive days
until all activity required above to be conducted has been concluded. To the
extent that any portion of the Final Inspection extends beyond the expiration of
the Term, unless Lessor has terminated the Lease pursuant to Section 18(g)
hereof, the Term with respect to the Engine undergoing the Final Inspection
shall be deemed to have been automatically extended, and all obligations
hereunder continued, on a daily basis until the Final Inspection shall have been
concluded and Lessee shall pay Rent during any such extension in an amount equal
to the average daily Basic Rent or Renewal Rent, as the case may be, paid in
respect of the last year of the Basic Term or Renewal Term, as the case may be
(and Stipulated Loss Value during such extension shall equal the Stipulated Loss
Value on the last day of the Basic Term or Renewal Term, as the case may be);
provided, however, that Lessee shall not be required to pay Rent with respect to
the Engine during the period of extension to the extent that Lessor is
responsible for the delay in completion of the Final Inspection. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee, except
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that Lessee shall not be liable for any storage expenses which are incurred
after the sixtieth (60th) day after the Term to the extent that storage
continues thereafter due to Lessor's delay in completion of the Final
Inspection.
(g) Engine Records and Documents. In order to enable Lessor to
prepare for the Final Inspection of the Engine pursuant to Subsection 16(f)
above, Lessee agrees to make available to Lessor at a maintenance base of Lessee
with adequate facilities for short-term maintenance, where the Final Inspection
is to occur, not later than ten (10) days prior to the commencement of such
Final Inspection, the Engine Records and Documents listed in Exhibit B hereto,
together with such other documentation (including, without limitation, original
airworthiness directive compliance documents and other work documents) regarding
the condition, use, maintenance, or operation as Lessor may reasonably request
or require to substantiate the status of the Engine. Such Records and Documents
shall be sufficient to enable Lessor to trace the service history, accumulated
cycles or flight hours as applicable and remaining service life of the Engine,
including but not limited to a listing of each airframe on which the Engine has
been installed.
(h) Corrections and Subsequent Corrections. To the extent that
the Engine fails upon a Return Occasion to conform to any requirement imposed by
this Lease Lessor may, at its option, (i) continue the Lease in effect in the
manner provided for in Section 16(f) above with regard to automatic extension
until such time as the Engine is brought up to the condition required by this
Section 16, including Exhibit E, or (ii) accept the return of the Engine and
thereafter have any such nonconformance corrected, at such time as Lessor may
deem appropriate but not to commence later than ninety (90) days following the
return of the Engine, at commercial rates then charged by the Person selected by
Lessor to perform such correction. Lessee's obligations to pay such Supplemental
Rent shall survive the Expiration Date or other termination of this Lease.
Nothing set forth in this paragraph shall constitute a limitation on Lessor's or
Owner Participant's ability to recover from Lessee any damages, expenses or
losses pursuant to Sections 13 or 18 hereof suffered as a result of Lessee's
failure to effect the return of the Engine at the time, in the place and in the
condition as specified in this Section 16 and Exhibit E hereto.
(i) [Intentionally Left Blank].
(j) Exportation of the Engine. Lessee shall, at Lessee's
expense, take such action as Lessor may reasonably
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request to assist Lessor in obtaining any required documents in relation to the
export of the Engine from the United States (including, without limitation, a
valid and subsisting export license).
(k) Service Bulletin and Modification Kits. Lessee shall
deliver to Lessor, at no cost to Lessor, all service bulletin kits furnished
without charge by the manufacturer for installation on the Engine which have not
been so installed together with appropriate instructions for installation. In
the event such uninstalled kits were purchased or manufactured by Lessee, then
Lessor shall be advised of such kits by Lessee and have a right of first refusal
to purchase such kits at Lessee's cost for a period of ninety (90) days after
return.
(l) Storage Upon Return. Upon any Return Occasion, Lessee
shall, at Lessor's request and at Lessee's risk and expense, in addition to
other storage referred to above, arrange for the parking, storage and insurance
of the Engine for a period not exceeding sixty (60) days at such reasonable
location as Lessor requests where Lessee has or can arrange for storage. Lessee
shall pay or cause to be paid all costs and expenses for such parking, storage
and insurance.
(m) Resale/Release Cooperation. During the last twelve (12)
months of the Term, with reasonable notice and at reasonable times, Lessee will
cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable
respects, with the efforts of Lessor to sell or lease the Engine after the end
of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Engine and the records
relating thereto to the extent it does not unreasonably interfere with the
operation or maintenance of the Engine or the conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic Rent,
Renewal Rent or Stipulated Loss Value to Lessor within three (3) Business Days,
after the date on which such
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payment is due, or (ii) any other payment of Supplemental Rent due hereunder
within ten Business Days, after the date on which such payment is due and Lessee
has received written demand therefor by the party entitled thereto; provided
that any failure of Lessee to pay to Lessor or Owner Participant when due any
Excepted Payments (as defined in the Indenture) shall not constitute an Event of
Default unless Lessor delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force and
effect any insurance required under the provisions of Section 12 hereof or shall
operate the Engine outside of the scope or in violation of the terms of the
insurance or United States Government indemnity coverage required to be
maintained with respect to such Engine; or
(c) Any representation or warranty made by Lessee herein or in
the Refunding Agreement or in any certificate furnished by Lessee in connection
herewith or therewith is or was incorrect at the time made in any material
respect and such incorrectness shall not have been cured within thirty (30) days
after the receipt by Lessee of a written notice from Lessor or the Indenture
Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant,
condition, or agreement to be performed or observed by it pursuant to this Lease
or the Refunding Agreement, and such failure shall continue uncured for thirty
(30) days after written notice thereof is given by Lessor or Indenture Trustee
to Lessee; provided, however, that if Lessee shall have undertaken to cure any
such failure which arises under the first or second sentence of Section 6(c), or
Section 6(d), as such provisions of Section 6 relate to maintenance, service,
repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee in
attempting to cure such failure, such failure is not cured within said thirty
(30) day period but is curable with future due diligence, there shall exist no
Event of Default under this Section 17 so long as Lessee is proceeding with due
diligence to cure such failure and such failure is remedied not later than one
hundred eighty (180) days after receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a custodian,
receiver, trustee or liquidator of itself or all or any material part of
Lessee's property or Lessee's consolidated property, or Lessee admits in writing
its inability to, or is unable to, or does not, pay its debts generally as they
come due, or makes a general assignment for the benefit of creditors, or Lessee
files a voluntary
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petition in bankruptcy or a voluntary petition seeking reorganization in a
proceeding under any bankruptcy or insolvency Laws (as now or hereafter in
effect), or an answer admitting the material allegations of a petition filed
against Lessee in any such proceeding, or Lessee by voluntary petition, answer
or consent seeks relief under the provisions of any other bankruptcy, insolvency
or other similar Law providing for the reorganization or winding-up of
corporations, or provides for an agreement, composition, extension or adjustment
with its creditors, or any corporate action (including, without limitation, any
board of directors or shareholder action) is taken by Lessee in furtherance of
any of the foregoing, whether or not the same is fully effected or accomplished;
or
(f) An order, judgment or decree is entered by any court
appointing, without the consent of Lessee, a custodian, receiver, trustee or
liquidator of Lessee, or of all or any material part of Lessee's property, or
Lessee's consolidated property, or all or any material part of Lessee's property
or Lessee's consolidated property is sequestered, and any such order, judgment
or decree of appointment or sequestration remains in effect, undismissed,
unstayed or unvacated for a period of ninety (90) days after the date of entry
thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a proceeding
under the Federal bankruptcy laws or other insolvency Laws (as now or hereafter
in effect) is filed and is not withdrawn or dismissed within ninety (90) days
thereafter or at any time an order for relief is granted in such proceeding, or
if, under the provisions of any Law providing for reorganization or winding-up
of corporations which may apply to Lessee, any court of competent jurisdiction
assumes jurisdiction over, or custody or control of, Lessee or of all or any
material part of Lessee's property, or Lessee's consolidated property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of ninety (90) days or at any time an order for relief
is granted in such proceeding; or
(h) Lessee's cessation of business as a commercial passenger
Certificated Air Carrier or, except in either case in connection with a labor
dispute, announcement thereof or Lessee's suspension of its business as a
commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
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(i) Lessee's loss or suspension of its United States air
carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor may, at its option,
declare by written notice to Lessee this Lease to be in default, provided,
however, that this Lease shall be deemed to be declared in default automatically
without the necessity of such written declaration upon the occurrence of any
Event of Default described in paragraph (e), (f) or (g) of Section 17 hereof;
and at any time thereafter, so long as any outstanding Event of Default shall
not have been remedied, Lessor may do one or more of the following with respect
to the Engine as Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with any mandatory requirements of,
applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's cost and expense, immediately return, and
Lessee hereby agrees that it shall return promptly, the Engine to Lessor in the
manner specified in such notice, in which event such return shall not be delayed
for the purposes of complying with the return conditions specified in Section 16
and Exhibit E hereof (none of which conditions shall be deemed to affect
Lessor's possession of the Engine) or delayed for any other reason; provided,
however, that Lessee shall remain and be liable to Lessor for amounts provided
for herein or other damages resulting from the Engine not being in the condition
required by Section 16 and Exhibit E. Notwithstanding the foregoing, at Lessor's
option, Lessee shall be required thereafter to take such actions as would be
required by the provisions of this Lease if the Engine were being returned at
the end of the Term hereof with respect to the Engine. In addition, Lessor or
Lessor's agent, at its option and to the extent permitted by applicable Law, may
but shall not be obligated to enter upon the premises where the Engine is
located to take immediate possession of and, at Lessor's option, remove the same
by summary proceedings or otherwise, all without liability accruing to Lessor or
Lessor's agent for or by reason of such entry or taking of possession or removal
whether for the restoration of damage to property, or otherwise, caused by such
entry or taking, except direct damages to the extent caused by Lessor's gross
negligence or willful misconduct.
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(b) With or without taking possession thereof, sell or cause
to be sold, the Engine or any part thereof, or Lessor's interest therein, at
private or public sale, as Lessor in its sole discretion may determine, or
otherwise dispose of, hold, use, operate, or lease to others, or keep idle the
Engine, as Lessor in its sole discretion may determine, all free and clear of
any rights of Lessee or any Permitted Sublessee and except as hereinafter set
forth in this Section 18. Lessor may be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due for
the period commencing after the Stipulated Loss Value Date specified for payment
in such notice), any unpaid Rent for the Engine to and including the Stipulated
Loss Value Date specified in such notice, plus whichever of the following
amounts as Lessor may specify, in its sole and absolute discretion, in such
notice: (i) an amount equal to the excess, if any, of the sum of the Stipulated
Loss Value for the Engine computed as of the date specified in such notice plus,
if such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an
amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such
date, over the fair market sale value of the Engine as of the date specified in
such notice or (ii) an amount equal to the excess, if any, of the sum of the
Stipulated Loss Value for the Engine computed as of the date specified in such
notice plus, if such date is a Basic Rent Payment Date or Renewal Rent Payment
Date, an amount equal to the Basic Rent or the Renewal Rent, as the case may be,
due on such date, over the fair market rental value of the Engine for the
remainder of the Term as of the date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above,
shall have sold the Engine, or its interest therein, Lessor, in lieu of
exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date immediately prior to the date such sale
occurs), any unpaid Rent due to and including the
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date of sale, plus the amount by which the Stipulated Loss Value of the Engine,
computed as of such Stipulated Loss Value Date, exceeds the net proceeds of such
sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph (b), (c)
or (d) above, by notice to Lessee, Lessor may require Lessee to pay, on the next
Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees that it will so
pay to Lessor, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, payable in
advance for the period on and after the Stipulated Loss Value Date), any unpaid
Basic Rent or Renewal Rent, as the case may be, for such Engine due and unpaid
for any period prior to and including, and any Basic Rent or Renewal Rent
payable on, the Stipulated Loss Value Date, plus, an amount equal to the
Stipulated Loss Value for the Engine computed as of such Stipulated Loss Value
Date; and upon such payment of liquidated damages and the payment of all other
Rent then due hereunder and the discharge of the Lien of the Indenture pursuant
to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer, without
recourse or warranty (except as to the absence of Lessor's Liens and the Lien of
the Indenture), all right, title and interest of Lessor in and to the Engine to
Lessee or as it may direct and Lessor shall, at Lessee's expense, execute and
deliver such documents evidencing such transfer and take such further action as
Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to paragraph (b) above,
shall have relet the or Engine under a long term lease, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to such or Engine,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
Lessor on such demand, as liquidated damages for loss of bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for such
Engine due after the time of reletting) any unpaid Rent for such Engine due up
to the date of reletting, plus the amount, if any, by which the aggregate Basic
Rent or Renewal Rent, as the case may be, for such Engine which would otherwise
have become due over the Basic Term or Renewal Term, as the case may be,
discounted periodically (equal to installment frequency) to present worth as of
the date of reletting at the rate of 8.50% per annum, exceeds the aggregate
basic rental payments to become due under the reletting from the date of such
reletting to the date upon which the Term for the Engine would have expired but
for Lessee's default, discounted periodically (equal to
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installment frequency) to present worth as of the date of the reletting at the
rate of 8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by written
notice to Lessee which cancellation, rescission and/or termination shall be
effective upon dispatch, whereupon Lessee's right to possess and use the Engine
shall immediately cease, however, Lessee shall be and remain liable for damages
and losses suffered by Lessor and all other amounts payable by Lessee hereunder.
(h) Lessor may exercise any other right or remedy which may be
available to it under applicable laws, or may proceed by appropriate court
action or actions, either at law or in equity, to enforce any other remedy or
right Lessor may have hereunder, under the other Operative Documents, at law or
in equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable (without
duplication of the remedies above and of Lessee's obligations under Section 10
and Section 13 hereof and subject to the exclusions set forth therein) for any
and all unpaid Rent before, during or after the exercise of any of the above
mentioned remedies (including without limitation interest on unpaid amounts with
respect to all amounts not paid when due, including, without limitation, any
amounts payable pursuant to the foregoing provisions of this Section 18), and,
except as specified above, until satisfaction of all of Lessee's obligations to
Lessor hereunder and for all legal fees and other costs and expenses incurred by
any Indemnitee by reason of the occurrence of any Event of Default or the
exercise of an Indemnitee's remedies with respect thereto, including all costs
and expenses incurred in connection with the return of the Engine in accordance
with the terms of Section 16 and Exhibit E hereof or in placing the Engine in
the condition and with airworthiness certification as required by such Section
and such Exhibit and costs and expenses related to the Lease, the Refunding
Agreement, the Indenture, the Pass Through Trust Agreements, the Intercreditor
Agreement or each Liquidity Facility. All liquidated damages payable pursuant to
the foregoing shall bear interest, which shall be payable on the date the
payment of such liquidated damages is due at a rate equal to the Interest Rate
from and including the date due to and excluding the date actually paid.
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In effecting any repossession, Lessor, its representatives and
agents, to the extent permitted by applicable Law, (i) shall have the right to
enter upon any premises where it reasonably believes the Engine or Part to be
located, (ii) shall not be liable, in conversion or otherwise, for the taking of
any personal property of Lessee which is in or attached to the Engine or Part
which is repossessed, (iii) shall not be liable or responsible, in any manner,
for any damage or injury to any of Lessee's property in repossessing and holding
the Engine or Part, except for direct damages caused by Lessor's gross
negligence or willful misconduct, and (iv) shall have the right to maintain
possession of and dispose of the Engine or Part on any premises owned by Lessee
or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole expense,
assemble and make the Engine or Part available at a place designated by Lessor
in accordance with Section 16 and Exhibit E hereof. Lessee hereby agrees that,
in the event of the return to or repossession by Lessor of the Engine or Part,
or otherwise upon the occurrence of an Event of Default, any rights in any
warranty (express or implied), service life policy, infringement indemnity,
performance guaranty or the like heretofore made available to Lessee or
otherwise held by Lessee shall without further act, notice or writing be deemed
automatically cancelled and shall be enforceable solely by and for the benefit
of, and assigned to, Lessor. Lessee shall be liable to Lessor (without
duplication) for all expenses, disbursements, costs and fees incurred in (i)
repossessing, storing, preserving, shipping, maintaining, repairing and
refurbishing the Engine or Part to the condition required by Section 16 and
Exhibit E hereof and (ii) preparing the Engine or Part for sale or lease,
advertising the sale or lease of the Engine or Part and selling or releasing the
Engine or Part. Lessor is hereby authorized and instructed, at its option, to
make expenditures which Lessor considers advisable to repair and restore the
Engine or Part to the condition required by Section 16 and Exhibit E hereof, all
at Lessee's sole expense.
For the purpose of this Section 18, the "fair market rental
value" or the "fair market sales value" of the Engine or Part shall be
determined pursuant to the Appraisal Procedure.
At any sale of the Engine or Part pursuant to this Section ,
Owner Participant may bid for and purchase such property and Lessee agrees that
the amounts paid therefor
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shall be used in the computations contemplated herein and Lessee shall remain
liable for any deficiency.
No remedy referred to in this Section is intended to be
exclusive, but, to the extent permitted by Law, each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and, to the extent permitted by Law, the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way be,
or be construed to be, a waiver of the same Event of Default in the future or
any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate damages
in connection with the remedies described in Sections 18(c), (d), (e) or (f)
above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Engine leased hereunder or otherwise to more effectively carry out Lessor's
rights and remedies and to file said documents for recordation with the FAA,
under the Uniform Commercial Code, and with any other appropriate Governmental
Entity, and otherwise act in Lessee's name and place with respect to the Engine,
provided that an Event of Default has occurred and is continuing and this Lease
has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full force
and effect and survive the expiration or other termination of this Lease and are
expressly made for the benefit of and shall be enforceable by Lessor, Owner
Participant and, if the Lien of the Indenture has not been discharged, Indenture
Trustee.
Section 19. Security for Obligations.
Security for Obligations. In order to secure the Equipment
Notes, Lessor has created, by the Indenture, a security interest in the Trust
Indenture Estate, including, without limitation, this Lease and all Rent and
other sums payable hereunder, except as provided in the Indenture and subject in
each case to Liens permitted hereunder. The Indenture provides, among other
things for the assignment by Lessor to Indenture Trustee of its right, title and
interest in, to and under this Lease, to the extent set forth in the Indenture,
for the creation of a first-mortgage lien on and
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perfected security interest in all of Lessor's right, title and interest in and
to the Engine in favor of Indenture Trustee. Lessee hereby consents to such
assignment and to the creation of such mortgage and security interest and
acknowledges receipt of copies of the Trust Agreement and the Indenture, it
being understood that such consent shall not affect any requirement or the
absence of any requirement for any consent under any other circumstances. Until
the Lien of the Indenture has been discharged, Lessee will furnish to Indenture
Trustee counterparts of all notices and other writings of any kind required to
be delivered hereunder by Lessee to Lessor. Until the Lien of the Indenture has
been discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss
Value and all other amounts payable hereunder (other than Excepted Payments) to
or as directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and
(b) Indenture Trustee shall be entitled to exercise the rights of Lessor (but
not Owner Participant) (other than Expected Rights) herein as and to the extent
provided herein or in the Indenture and any express reference to Indenture
Trustee in any Section of this Lease shall not give rise to any implication that
Indenture Trustee may not exercise the rights of Lessor in any other Section of
this Lease as and to the extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement which
require or permit action by, the payment of monies to, the consent or approval
of, the furnishing of any instrument or information to, or the performance of
any other obligation to, Indenture Trustee, shall not be effective, and the
Sections hereof containing such provisions shall be read as though there were no
such requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received from
Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee under
this Lease by a Permitted Sublessee shall constitute payment or performance of
such obligation by Lessee.
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Section 20. Renewal Option.
Renewal Option. Lessee may renew this Lease as provided in the
following clause (i) and subject to the following clause (ii):
(i) Exercise of Renewal Option. Provided
that this Lease has not been previously terminated and that no Default or Event
of Default shall have occurred and be continuing at the time of the giving of
irrevocable notice hereinafter referred to in this clause (i) or at the time of
the commencement of the Renewal Term, Lessee, at its option, may renew this
Lease for one Renewal Term consisting of a period equal to five years. The right
to renew this Lease for such Renewal Term pursuant to this clause (i) shall be
exercised upon irrevocable notice from Lessee received by Lessor of Lessee's
election to so renew this Lease not less than twelve (12) months and not more
than twenty-four (24) months prior to the last day of the Basic Term. The
Renewal Rent for the Renewal Term shall be the "fair market rental value" of the
Engine for such Renewal Term (the "renewal fair market rental value") as
determined in accordance with the Appraisal Procedure. For purposes of this
paragraph (i), the Appraisal Procedure shall be initiated by Lessee no earlier
than nine (9) months prior to the end of the Basic Term. If Lessee shall fail to
exercise its option to extend the term of this Lease for the Renewal Term in
accordance with the provisions of this paragraph, all of Lessee's rights to
extend the Term for such Renewal Term shall expire. Lessee shall pay all
reasonable costs and expenses, including, without limitation, reasonable legal
fees and expenses, incurred by Lessor, Owner Participant and the Indenture
Trustee in connection with the exercise of such option.
(ii) Provisions Applicable During Renewal
Term. All provisions of this Lease, including, without limitation, as to Rent
and Stipulated Loss Value (which shall be, with appropriate adjustments, in no
event less than the greater of 120% of the "fair market sales value" of the
Engine as of the first day of the Renewal Term as determined pursuant to the
Appraisal Procedure or the amount set forth on Exhibit A as of the end of the
Basic Term), shall remain in effect and be applicable during such Renewal Term,
except that Lessee shall pay to the Lessor, semi-annually in arrears as Renewal
Rent on each Renewal Rent Payment Date, the amount for such Renewal Term as
determined in accordance with clause (i) of this Section 20.
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Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision
of this Lease 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. To the extent
permitted by Law, each of Lessor and Lessee hereby waives any provision of Law
which renders any provision hereof prohibited or unenforceable in any respect.
No term or provision of this Lease may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing expressed to be a
supplement or amendment to, or waiver or termination of this Lease signed by an
officer of the party against which the enforcement of the change, waiver,
discharge, or termination is sought. This Lease shall constitute an agreement of
lease, and nothing herein shall be construed as conveying to Lessee any right,
title, or interest in the Engine or any Part except as a lessee only. Without
limiting the foregoing, the parties hereto agree to treat this Agreement as a
lease for United States federal income tax purposes and Lessee will not file a
tax return which is inconsistent with the foregoing and nothing contained herein
shall be construed as an election by Lessor to treat Lessee as having acquired
the Engine for the purpose of the investment credit allowed by Section 38 of the
1954 Code or any similar or successor statute. The headings in this Lease are
for convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED
IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor and
Lessee required or permitted under the terms and provisions hereof shall be in
writing and shall be sent to Lessor or Lessee at their respective addresses set
forth in Exhibit C hereto (or such other addresses as the parties may designate
from time to time in writing). All notices, reports or other documents provided
to Lessor or Lessee shall be provided concurrently to Indenture Trustee
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(until such time as the Lien of the Indenture is discharged) and to Owner
Participant, at such address as Owner Participant and Indenture Trustee,
respectively, may designate from time to time. All notices and instructions
hereunder shall become effective when received.
(d) Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any covenant, agreement, or obligation contained herein, Lessor
shall have the right but not the obligation to make such payment or conform or
comply with such agreement, covenant, or obligation, and the amount of such
payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. The taking of any such action by
Lessor pursuant to this Section 21(d) shall not constitute a waiver or release
of any obligation of Lessee under this Lease, nor a waiver of any Event of
Default which may arise out of Lessee's nonperformance of such obligation, nor
an election or waiver by Lessor or any remedy or right available to Lessor under
or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction), no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the original counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by or on behalf of Indenture Trustee on
the signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default shall have occurred and be continuing and this Lease has not
been declared or deemed to be in default, Lessor shall not take or cause to be
taken any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Engine
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass Through
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Trustee, Note Holder or any other Person lawfully, claiming by or through them,
and provided further, that the foregoing shall not be deemed to have modified
the obligations of Lessee pursuant to Section 4(d) hereof, which obligations
remain absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as provided
in the Refunding Agreement, there has been no third party as agent involved in
this Lease and each indemnifies the other from liability for fees, commissions,
or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held by Lessor
or Indenture Trustee and are payable to Lessee shall, unless a Default or an
Event of Default shall have occurred and be continuing, be invested as provided
below until paid to Lessee or applied by Lessor or Indenture Trustee to the
extent provided herein. Until paid to Lessee or applied as provided herein or in
the Indenture such monies shall be invested by Lessor or Indenture Trustee from
time to time at the expense of Lessee in Specified Investments, as directed by
Lessee in accordance with the provisions of Section 3.07 of the Indenture if the
Lien of the Indenture shall not have been discharged and thereafter as provided
below. There shall be promptly (but not more frequently than monthly) remitted
to Lessee any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions and other reasonable expenses, if
any, incurred in connection with such investment) unless a Default or an Event
of Default shall have occurred and be continuing. Lessee will promptly pay to
Lessor or Indenture Trustee, as the case may be, and hold Lessor or Indenture
Trustee harmless from, on demand, the amount of any loss realized as the result
of any such investment (together with any Taxes, fees, commission and other
reasonable expenses, if any, incurred in connection with such investment).
(i) Entire Agreement; Amendment. This Lease (including the
Exhibits hereto), any related letter agreements and the other Operative
Documents, the Financing Documents and the Purchase Documents (including the
Exhibits thereto) and all closing documents delivered in connection with any of
the foregoing embody the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof. This Lease may be changed,
waived, discharged, amended, revised or terminated only by an instrument in
writing signed by the party against which enforcement is sought.
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(j) Expenses. Without limiting Section 13 or 18, Lessee agrees
within fifteen (15) days after demand to pay or reimburse Lessor for all
reasonable out-of-pocket costs and expenses (including, without limitation,
legal and other professional fees and expenses) incurred or payable by Lessor in
connection with or related to (i) the fees and expenses of Owner Trustee and
Indenture Trustee, (ii) to the extent requested by or relating to acts or
omissions of Lessee or as otherwise provided herein or to give effect to the
provisions hereof, or the other Operative Documents, the Financing Documents or
the Purchase Documents, any future amendments, supplements or other
modifications hereof or thereof, or waivers or consents hereunder or thereunder,
and (iii) any Default or Event of Default or the enforcement of any of Lessor's
rights, remedies or privileges hereunder or at law or in equity, but not
Lessor's legal fees and expenses in connection with the negotiation and
execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section 1110 of
Title 11 of the United States Code is amended, or if it is repealed and another
statute is enacted in lieu thereof, Lessor and Lessee agree to amend this Lease
and take such other action not inconsistent with this Lease as Lessor reasonably
deems necessary so as to afford to Lessor the rights and benefits as such
amended or substituted statute confers upon owners and lessors of aircraft
engines similarly situated to Lessor.
(l) [Intentionally Left Blank].
(m) Submission to Jurisdiction; Service of Process; Waiver of
Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submits for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United States District Court for the Southern District
of New York. Each of Lessee and Lessor represents and warrants that it is not
currently entitled to, and agrees that to the extent that Lessee or Lessor
hereinafter may acquire, any immunity (including, without limitation, sovereign
immunity) from jurisdiction of any court or from any legal process, it hereby,
to the extent permitted by Law, waives such immunity, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not personally subject to
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the jurisdiction of the above-named courts that it is immune from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that this Lease or any of the other Operative Documents or the
subject matter hereof or thereof or any of the transactions contemplated hereby
and thereby may not be enforced in or by such courts. Each of Lessee and Lessor
hereby generally consents to service of process by registered mail, return
receipt requested, addressed to it at its address set forth in Exhibit C, or at
such other office of Lessee or Lessor as from time to time may be designated by
Lessee or Lessor (as applicable) in writing to Lessee or Lessor (as applicable),
Owner Participant and Indenture Trustee. Each of Lessee and Lessor hereby agrees
that its submission to jurisdiction and its designation of service of process by
mail set forth above is made for the express benefit of Lessor, Lessee, Owner
Participant, Indenture Trustee, each Note Holder and their successors and
assigns (as applicable). Final (after all appeals) judgment (the enforcement of
which has not been stayed) against either Lessee or Lessor obtained in any suit
originally brought in the court of the State of New York in New York County or
in the United States District of New York shall be conclusive, and, to the
extent permitted by applicable Law, may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
Lessee therein described; provided that the plaintiff at its option may bring
suit, or institute other judicial proceedings, against Lessee or Lessor, as the
case may be, or any of their assets in the courts of any country or place where
such Person or such assets may be found. EACH OF LESSEE AND LESSOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED,
including, without limitation, contract claims, tort claims, breach of duty
claims and other common law and statutory claims. Lessor and Lessee represent
and warrant that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THE OPERATIVE DOCUMENTS. In the event of litigation, this
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Agreement may be filed as a written consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto agree that all
statements, representations, covenants and agreements made by Lessor (when made
in its capacity as such and not in its individual capacity) contained in this
Agreement, unless expressly otherwise stated, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies that can be exercised and enforced against the Trust Estate. Therefore,
no recourse shall be had with respect to anything contained in this Agreement
(except for any express provisions that Lessor is responsible for in its
individual capacity), against Lessor in its individual capacity or against any
institution or person that becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them; provided that (i) this Section 21(n) shall not
be construed to prohibit any action or proceeding against any party hereto for
its own willful misconduct or grossly negligent conduct for which it would
otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Engine for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 14(d) of the Refunding Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree that the
Original Head Lease, as amended and restated by this Amended and Restated Engine
Lease Agreement [GPA 1991 AWA-E3] (and as otherwise extended, amended, modified,
renewed or supplemented), shall be governed by Article 2-A of the Uniform
Commercial Code of New York.
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IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Lease to be executed by its duly authorized
officer as of the day and year first above written.
Lessor:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as otherwise
expressly provided herein, but solely as
Owner Trustee
By:_______________________________________
Title:
Lessee:
AMERICA WEST AIRLINES, INC.
By:_______________________________________
Title:
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The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease on this ____ day of November, 1996 and
consent to the terms hereof.
FLEET NATIONAL BANK, not in its individual
capacity, but solely as Indenture Trustee
By:_______________________________________
Title:
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TABLE OF CONTENTS
<TABLE>
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Section 1. Definitions..................................................... 1
Section 2. Agreement to Lease.............................................. 19
Section 3. Delivery and Acceptance; Term................................... 19
(a) Time of Delivery........................................ 19
(b) [Intentionally Left Blank.]............................. 19
(c) Acceptance of Engine.................................... 19
(d) Term of Lease........................................... 20
Section 4. Rent............................................................ 20
(a) Rent.................................................... 20
(b) Minimum Payments........................................ 20
(c) Date, Place and Method of Payment....................... 21
(d) Prohibition Against Setoff,
Counterclaim, Etc....................................... 21
Section 5. Representations, Warranties and Covenants....................... 23
(a) Warranties and Disclaimer of
Warranties.............................................. 23
(b) Representations and Warranties
of Lessor. ............................................. 24
(c) No Amendments to Financing Documents.................... 24
(d) Suppliers' Warranties................................... 25
Section 6. Possession and Use.............................................. 25
(a) Possession.............................................. 25
(b) [Intentionally Left Blank].............................. 32
(c) Lawful Insured Operations............................... 32
(d) Maintenance............................................. 33
(e) Registration and Insignia............................... 35
Section 7. Inspection...................................................... 35
Section 8. Additional Covenants of Lessee.................................. 36
(a) Financial Information................................... 36
(b) Maintenance of Corporate Existence...................... 38
(c) Maintenance of Status................................... 38
(d) Payment of Taxes........................................ 38
(e) Consolidation, Merger, Etc.............................. 39
(f) Information............................................. 40
(g) Place of Business....................................... 40
(h) Certain Limitations on Use.............................. 40
(i) Section 1110............................................ 41
(j) Permits and Licenses.................................... 41
(k) Security Opinion; Annual Certificate.................... 41
(l) Letter of Credit........................................ 43
</TABLE>
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<TABLE>
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Section 9. Replacement of Parts; Alterations,
Modifications and Additions..................................... 45
(a) Replacement of Parts.................................... 45
(b) Alterations, Modifications and
Additions............................................... 46
(c) Pooling................................................. 48
Section 10. General Tax Indemnity........................................... 49
(a) Indemnity............................................... 49
(b) Exclusions.............................................. 51
(c) Covered Income Tax...................................... 53
(d) Reports and Returns..................................... 55
(e) After-Tax Basis......................................... 55
(f) Tax Benefit............................................. 56
(g) Payment................................................. 56
(h) Contest................................................. 57
(i) Refund.................................................. 59
(j) Diligence............................................... 59
(k) Affiliated Group........................................ 59
(l) Verification............................................ 60
(m) Survival................................................ 60
Section 11. Loss, Damage and Requisition.................................... 60
(a) Event of Loss with Respect to
the Engine.............................................. 60
(b) Conveyance of Replacement Engine........................ 62
(c) Application of Proceeds and Payments.................... 64
(d) Requisition for Use by Government
with Respect to the Engine.............................. 65
(e) Application in Default.................................. 65
Section 12. Insurance....................................................... 66
(a) Public Liability and Property
Damage Insurance........................................ 66
(b) Insurance Against Loss or Damage........................ 67
(c) Application of Insurance Proceeds
for an Event of Loss.................................... 70
(d) Application of Insurance Proceeds for
Other than an Event of Loss............................. 71
(e) Application in Default.................................. 71
(f) Certificates............................................ 72
(g) Reinsurance............................................. 72
(h) Storage................................................. 73
(i) Amounts Held............................................ 73
(j) After the Term.......................................... 74
(k) Governmental Indemnity.................................. 74
Section 13. General Indemnity............................................... 74
</TABLE>
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<TABLE>
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Section 14. Liens........................................................... 79
Section 15. Protection of Title and Further
Assurances...................................................... 80
Section 16. Return of Engine and Records.................................... 82
(a) Return.................................................. 82
(b) Status Upon Return...................................... 82
(c) Substitute Engine....................................... 83
(d) Records and Documents................................... 83
(e) Condition of Engine..................................... 85
(f) Final Inspection........................................ 85
(g) Engine Records and Documents............................ 86
(h) Corrections and Subsequent
Corrections............................................. 86
(i) [Intentionally Left Blank].............................. 86
(j) Exportation of the Engine............................... 86
(k) Service Bulletin and Modification
Kits.................................................... 87
(l) Storage Upon Return..................................... 87
(m) Resale/Release Cooperation.............................. 87
Section 17. Events of Default............................................... 87
Section 18. Remedies........................................................ 90
Section 19. Security for Obligations........................................ 95
Section 20. Renewal Option.................................................. 97
Renewal Option.................................................. 97
Section 21. Miscellaneous................................................... 98
(a) Severability, Amendment, and Construction............... 98
(b) GOVERNING LAW........................................... 98
(c) Notices................................................. 98
(d) Lessor's Right to Perform for Lessee.................... 99
(e) Counterparts............................................ 99
(f) Quiet Enjoyment......................................... 99
(g) Brokers.................................................100
(h) Investment of Funds.....................................100
(i) Entire Agreement; Amendment.............................100
(j) Expenses................................................101
(k) Federal Bankruptcy Code.................................101
(l) [Intentionally Left Blank]..............................101
(m) Submission to Jurisdiction; Service
of Process; Waiver of Forum Non
Conveniens; Waiver of Jury Trial........................101
(n) Limitation on Recourse..................................103
(o) Successor Trustee.......................................103
</TABLE>
-iii-
<PAGE> 109
<TABLE>
<CAPTION>
Page
----
<S> <C>
(p) Article 2-A of the UCC..................................103
</TABLE>
ANNEXES
Annex A - Description of Original Head Lease
EXHIBITS
Exhibit A - Stipulated Loss Values
Exhibit B - Engine Records and Documents
Exhibit C - Definitions and Values
Exhibit D-1 - Lease Supplement No. 2
Exhibit D-2 - Letter of Credit
Exhibit E - Return Condition Requirements
Exhibit F-1 - Foreign Air Carriers
Exhibit F-2 - Permitted Foreign Sublessee Domiciles
Exhibit F-3 - Permitted Sublessee Assignment Consent
Exhibit G - [Intentionally Left Blank]
Exhibit H - [Intentionally Left Blank]
Exhibit I - [Intentionally Left Blank]
Exhibit J - [Intentionally Left Blank]
Exhibit K - Form of Engine Status Report
-iv-
<PAGE> 1
EXHIBIT 4.33
- -------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-5]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- -------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 55
Registration No. N624AW
Leased by America West Airlines, Inc.
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
GRANTING CLAUSE................................................ 3
HABENDUM CLAUSE................................................ 7
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions............................. 9
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes......................... 23
SECTION 2.02. Issuance and Terms of Equipment Notes........... 29
SECTION 2.03. Payments from Trust Indenture Estate
Only.......................................... 32
SECTION 2.04. Method of Payment............................... 34
SECTION 2.05. Application of Payments......................... 36
SECTION 2.06. Termination of Interest in Trust
Indenture Estate.............................. 37
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes............................... 37
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes............................... 39
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation.................................. 39
SECTION 2.10. Mandatory Redemptions of Equipment
Notes......................................... 40
SECTION 2.11. Redemptions; Notice of Redemption............... 40
SECTION 2.12. Option to Purchase Equipment Notes.............. 41
SECTION 2.13. Subordination................................... 42
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions...................... 43
SECTION 3.02. Event of Loss and Replacement................... 44
SECTION 3.03. Payment After Indenture Event of
Default, etc.................................. 46
SECTION 3.04. Certain Payments................................ 48
SECTION 3.05. Other Payments.................................. 49
SECTION 3.06. Payments to Owner Trustee....................... 50
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee....................................... 50
Trust Indenture
<PAGE> 3
- ii - Page
----
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner
Trustee....................................... 51
SECTION 4.02. Indenture Events of Default..................... 52
SECTION 4.03. Certain Rights.................................. 55
SECTION 4.04. Remedies........................................ 57
SECTION 4.05. Return of the Aircraft, etc..................... 60
SECTION 4.06. Remedies Cumulative............................. 62
SECTION 4.07. Discontinuance of Proceedings................... 62
SECTION 4.08. Waiver of Past Indenture Defaults............... 62
SECTION 4.09. Indenture Trustee May Prove Debt................ 63
SECTION 4.10. Limitations on Suits by Note Holders............ 65
SECTION 4.11. Unconditional Right of Note Holders to
Receive Principal, Interest and Premium,
and to Institute Certain Suits................ 65
SECTION 4.12. Exercise of Remedies by Foreign Note
Holders....................................... 65
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default............ 66
SECTION 5.02. Action Upon Instructions........................ 67
SECTION 5.03. Indemnification................................. 68
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions..................... 68
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions.......... 69
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts................. 69
SECTION 5.07. Indenture Supplements for Replacements.......... 73
SECTION 5.08. Effect of Replacement........................... 73
SECTION 5.09. Notices, etc.................................... 73
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant............................. 74
SECTION 5.11. Evidence of Action Taken by Note Holder......... 76
SECTION 5.12. Right of Revocation of Action Taken............. 76
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties................. 77
SECTION 6.02. Absence of Duties............................... 77
SECTION 6.03. No Representations or Warranties as to
Trust Indenture
<PAGE> 4
- iii - Page
----
Aircraft or Documents........................ 78
SECTION 6.04. No Segregation of Moneys; No Interest.......... 78
SECTION 6.05. Reliance; Agents; Advice of Counsel............ 79
SECTION 6.06. Capacity in Which Acting....................... 80
SECTION 6.07. Compensation................................... 80
SECTION 6.08. May Become Note Holder......................... 80
SECTION 6.09. Further Assurances; Financing
Statements................................... 80
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification....................... 80
SECTION 7.02. Exculpation and Release of Liability........... 82
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee.............. 82
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor............ 82
SECTION 8.03. Appointment of Separate Trustees............... 84
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures.................................... 86
SECTION 9.02. Effect of Supplemental Indenture................ 89
SECTION 9.03. Documents to Be Given to Trustee................ 89
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures....................... 89
SECTION 9.05. Trustees Protected.............................. 90
SECTION 9.06. Documents Mailed to Note Holders................ 90
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement............ 90
SECTION 9.08. Notices to Liquidity Provider................... 90
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture........................ 91
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders........................ 91
SECTION 10.03. Sale of Aircraft by Indenture Trustee
is Binding.................................... 91
Trust Indenture
<PAGE> 5
- iv - Page
----
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
Lessee and Note Holders....................... 92
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease............................... 92
SECTION 10.06. Notices......................................... 92
SECTION 10.07. Severability.................................... 93
SECTION 10.08. No Oral Modifications or Continuing
Waivers....................................... 93
SECTION 10.09. Successors and Assigns.......................... 93
SECTION 10.10. Headings........................................ 93
SECTION 10.11. Normal Commercial Relations..................... 93
SECTION 10.12. Governing Law; Counterpart Form................. 94
SECTION 10.13. Section 1110.................................... 94
SECTION 10.14. JL Security Agreement........................... 94
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
Trust Indenture
<PAGE> 6
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-5]
SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [GPA 1989 BN-5] (this "Second Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank,
successor by merger to Manufacturers Hanover Trust Company), a New York
corporation, not in its individual capacity except as otherwise specifically set
forth herein, but solely as indenture trustee hereunder (in such capacity,
together with its successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company
entered into the Trust Agreement [GPA 1989 BN-5] dated as of September 22, 1989,
as supplemented by Trust Agreement Supplement [GPA 1989 BN-5] No. 1 dated
September 25, 1989, as further supplemented by Trust Agreement Supplement [GPA
1989 BN-5] No. 2 dated October 24, 1991, and as further supplemented by Trust
Agreement Supplement [GPA 1989 BN-5] No. 3 dated the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"),
whereby, among other things, Wilmington Trust Company has declared a certain
trust for the use and benefit of the Owner Participant, subject, however, to the
Trust Indenture Estate created pursuant hereto for the use and benefit of (to
the extent set forth herein), and with the priority of certain payments to, the
Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized
and directed to execute and deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [GPA 1989 BN-5] dated as
of September 22, 1989, as supplemented by Trust Indenture Supplement No. 1 dated
September 25, 1989, which were recorded by the Federal Aviation Administration
on September 26, 1989 as one instrument and assigned Conveyance No. G75346 (as
so supplemented or otherwise modified to the date hereof, the "Original
Indenture"), (ii) the Owner Trustee and the
Trust Indenture
<PAGE> 7
- 2 -
Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-5]
dated as of September 22, 1989, as supplemented by Lease Supplement [GPA 1989
BN-5] No. 1 dated September 25, 1989, which were recorded by the Federal
Aviation Administration on September 26, 1989 as one instrument and assigned
Conveyance No. G75347 (as so supplemented or otherwise modified to the date
hereof, the "Original Lease") and (iii) pursuant to the Original Indenture, the
Owner Trustee issued and sold to the Original Loan Participants (as defined in
the Original Indenture) the Original Loan Certificates;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into an Amended and Restated Trust Indenture and Security Agreement [GPA
1989 BN-5] dated as of October 1, 1991, as supplemented by the Trust Indenture
Supplement No. 2 [GPA 1989 BN-5], dated October 24, 1991, which were recorded by
the Federal Aviation Administration on November 12, 1991 as one document and
assigned Conveyance No. Z91420, and as amended by Amendment No. 1 to Trust
Indenture and Security Agreement dated as of September 3, 1996 which was
recorded by the FAA on September 27, 1996 and assigned Conveyance No. Z99588 and
as further amended by Amendment No. 2 to Trust Indenture and Security Agreement
dated as of September 30, 1996 which was recorded by the FAA on November 12,
1996 and assigned Conveyance No. P08720 (as amended, supplemented or otherwise
modified to the date hereof, the "First Amended and Restated Indenture"), (ii)
the Owner Trustee and the Original Head Lessee entered into an Amended and
Restated Aircraft Lease Agreement [GPA 1989 BN-5] dated as of October 1, 1991,
which amended and restated the Original Lease, as supplemented by Lease
Supplement [GPA 1989 BN-5] No. 2 dated October 24, 1991, which were recorded by
the Federal Aviation Administration on November 12, 1991 as one document and
assigned Conveyance No. Z91421 (as amended, supplemented or otherwise modified
to the date hereof, the "First Amended and Restated Lease") and (iii) pursuant
to the First Amended and Restated Indenture, the Owner Trustee issued and sold
to the Certificate Holders (as defined in the First Amended and Restated
Indenture) Equipment Trust Certificates, Series BN-5 in exchange for the
Original Loan Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and
restate the First Amended and Restated Lease pursuant to Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-5] dated as of
the date hereof among the Original Head Lessee, as assignor and the Original
Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the
Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-5] dated as of
the date hereof between the Owner Trustee and the Lessee (as so assigned,
amended and restated, the "Second Amended and Restated Lease" or the "Lease")
and to enter into Lease Supplement No. 3 and (ii) cause the implementation of
the
Trust Indenture
<PAGE> 8
- 3 -
Refinancing Transaction pursuant to which, among other things, the Equipment
Trust Certificates issued to the Certificate Holders pursuant to the First
Amended and Restated Indenture shall be redeemed and new Equipment Notes shall
be issued to the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Second Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
First Amended and Restated Indenture, (ii) to provide for the issuance by the
Owner Trustee of the Equipment Notes and (iii) to provide for the assignment,
mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of
the Trust Indenture Estate hereunder, among other things, of certain of the
Owner Trustee's estate, right, title and interest in and to the Aircraft and,
except as hereinafter expressly provided, all of the Owner Trustee's right,
title and interest in, to and under the Lease (as amended and restated to date
and as the same may at any time and from time to time be further amended,
restated or otherwise modified in accordance with the terms thereof and hereof)
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Note Holders, subject to Section 2.13 and
Article III hereof;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner Trustee and authenticated, issued and
delivered by the Indenture Trustee hereunder, the legal, valid and binding
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Second Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS SECOND AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment
of the Principal Amount of, interest on, Make Whole Amount, if any, and all
other amounts due with respect to, all Equipment Notes from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions contained herein and in the
Refunding Agreement and the Equipment Notes, for the benefit of the Note
Holders, and the prompt payment of any and all amounts
Trust Indenture
<PAGE> 9
- 4 -
from time to time owing hereunder and under the Refunding Agreement by the Owner
Trustee, the Owner Participant and the Lessee to the Note Holders and for the
uses and purposes and subject to the terms and provisions hereof, and in
consideration of the premises and of the covenants herein contained, and of the
acceptance of the 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, its successors and
assigns, for the security and benefit of the Note Holders from time to time, a
first priority security interest in and mortgage Lien on all estate, right,
title and interest of the Owner Trustee in, to and under the following described
property, rights, interests and privileges, whether now or hereafter acquired,
other than Excepted Payments (which collectively, excluding Excepted Payments
but including all property hereafter specifically subjected to the Lien of this
Indenture by any Indenture Supplement or any indenture supplemental hereto, are
included within the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and
all replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire an interest under any of the
Lease, the Japanese Lease Agreement or the Japanese Lease Assignment,
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 and other documents to which the Owner Trustee shall from time to
time acquire an interest at any time maintained by the Lessee with
respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement (to the extent assigned by the
Purchase Agreement Assignment); the Purchase Agreement Assignment; the
Consents and Agreements; the Japanese Lease Agreement, the Japanese
Lease Supplement, the Supplemental Agreement, the Assumption Agreement,
the Confirmation Agreement, the FUYO Guaranty, the JL Security
Agreement and the Omnibus Agreement (each to the extent assigned by the
Japanese Lease Assignment); the Japanese Lease Assignment; all
documents and property and interest therein assigned by the Japanese
Lease Assignment to the extent not otherwise covered; the
Manufacturer's
Trust Indenture
<PAGE> 10
- 5 -
Warranty Bill of Sale; the BFE Bill of Sale; each notice, letter
agreement or other document related to any of the foregoing entered
into by or for the benefit of the Owner Trustee (or assigned to the
Owner Trustee); in each case including, without limitation, (x) all
rights of the Owner Trustee to exercise any election or option or to
make any decision or determination or to give any notice, consent,
waiver or approval or to take any other action under or in respect of
any such document or to accept surrender or redelivery of the Aircraft
or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Trustee, whether arising under any such document
or by statute or at law or in equity, or otherwise, arising out of any
Lease Event of Default or any "Event of Default" under and as defined
in the Japanese Lease Agreement, and (y) any right to restitution from
the Lessee, the Manufacturer or any other Person in respect of any
determination of invalidity of any such document, it being agreed that
the rights, powers and remedies referred to in the preceding clauses
(x) and (y) are presently assigned and transferred to the Indenture
Trustee and may, except as provided in Section 5.10 or elsewhere in
this Indenture, be exercised by the Indenture Trustee without the
necessity of proceeding under Section 4.04 to exercise remedies
hereunder;
(3) each Sublease Assignment and each Assigned Sublease (to
the extent assigned under such Sublease Assignment), and including,
without limitation, all rents or other payments of any kind made under
such Assigned Sublease (to the extent assigned under such Sublease
Assignment), all collateral security or credit support (in the nature
of a guarantee, letter of credit, credit insurance, Lien on or security
interest in any property or otherwise) for the obligations of the
Permitted Sublessee thereunder (to the extent assigned under such
Sublease Assignment) and all rights of the Owner Trustee to exercise
any election or option or to give any notice, consent, waiver, or
approval under or with respect of any thereof 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 (in each case to
the extent assigned to the Owner Trustee), whether arising under any
Assigned Sublease or any Sublease Assignment or by statute or at law or
in equity, or otherwise, arising out of any default under any Assigned
Sublease, it being agreed that the rights, powers and remedies referred
to above in this paragraph (3) are presently assigned and transferred
to the Indenture Trustee and may, except as provided in Section 5.10 or
elsewhere in this Indenture, be exercised by the Indenture Trustee
without the necessity of proceeding under Section 4.04 to exercise
remedies hereunder;
Trust Indenture
<PAGE> 11
- 6 -
(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, without limitation, 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 requisition proceeds with respect to the Aircraft or
any part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease and/or the Japanese Lease Agreement), and all
insurance proceeds with respect to the Aircraft or any part thereof,
including but not limited to the insurance required under Section 12 of
the Lease or under any comparable provision of any Assigned Sublease
(but excluding any excess insurance maintained by the Lessee and not
required under Section 12 of the Lease or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and
all rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
Concurrently with the delivery of the Original Indenture, the
Owner Trustee delivered to the Indenture Trustee the chattel paper original
executed counterparts of the Original Lease and Lease Supplement No. 1,
certified copies of the Purchase Agreement and the Consents and Agreements, and
execution copies of the Purchase Agreement Warranties Assignment, the Japanese
Lease Agreement, the Japanese Lease Supplement, the Japanese Lease Assignment,
the Assumption Agreement, the Confirmation Agreement, the FUYO Guaranty, the
Supplemental Agreement, the JL Security Agreement, the original Manufacturer's
Warranty Bill of Sale and the original BFE Bill of Sale. Concurrently with the
delivery of the First Amended and Restated Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel paper original executed
counterparts of the First Amended and Restated Lease and Lease Supplement No. 2.
Concurrently with the delivery of this Second Amended and Restated Indenture,
the Owner Trustee is delivering to the
Trust Indenture
<PAGE> 12
- 7 -
Indenture Trustee the chattel paper original executed counterparts of the Second
Amended and Restated Lease and Lease Supplement No. 3. All property referred to
in this Granting Clause, whenever acquired by the Owner Trustee, shall secure
all obligations under and with respect to the Equipment Notes at any time
outstanding. Any and all properties referred to in this Granting Clause which
are hereafter acquired by the Owner Trustee, shall, without further conveyance,
assignment or act by the Owner Trustee or the Indenture Trustee thereby become
and be subject to the security interest hereby granted as fully and completely
as though specifically described herein.
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 Note Holders from time to time, except as set forth in
Section 2.13 and Article III hereof without any preference, distinction or
priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or otherwise) to ask, require, demand, receive
and give acquittance for any and all moneys and claims for moneys (in each case
including insurance and requisition proceeds but excluding Excepted Payments)
due and to become due to the Owner Trustee under or arising out of the Indenture
Documents and all other property which now or hereafter constitutes part of the
Trust Indenture Estate, to endorse any checks or other instruments or
Trust Indenture
<PAGE> 13
- 8 -
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. Under the Lease, the Lessee is directed
to make all payments of Rent (other than Excepted Payments) and all other
amounts which are required to be paid to or deposited with the Owner Trustee
pursuant to the Lease (other than Excepted Payments) directly to the Indenture
Trustee at such address or addresses as the Indenture Trustee shall specify, for
application as provided in this Indenture. Pursuant to each Sublease Assignment,
each Permitted Sublessee will be directed from and after (i) notice of the
occurrence of a Lease Event of Default and (ii) notice that the Lease is
declared or deemed in default, to make all payments of rent and all other
amounts which are required to be paid to or deposited with the Lessee pursuant
to the related Assigned Sublease and which are assigned thereunder directly to
the Indenture Trustee at such address or addresses as the Indenture Trustee
shall specify, for application or to be held as provided in this Indenture. The
Owner Trustee agrees that promptly on receipt thereof, it will transfer to the
Indenture Trustee any and all moneys from time to time received by it
constituting part of the Trust Indenture Estate, for distribution by the
Indenture Trustee pursuant to this Indenture, except (a) to the extent the Owner
Trustee is entitled to distribution of such moneys pursuant to this Indenture
and (b) that the Owner Trustee shall accept for distribution pursuant to the
Trust Agreement any amounts distributed to it by the Indenture Trustee under
this Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that it will not assign or
pledge or otherwise dispose of, so long as this Indenture shall remain in effect
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its estate, right, title or interest hereby assigned, to anyone
other than the Indenture Trustee, and that, with respect to such estate, right,
title and interest hereby assigned, subject to its rights pursuant to Section
5.10 hereof, it will not, except as provided in this Indenture (including,
without limitation, Section 9.01) and except as to Excepted Payments, (i) accept
any payment from the Lessee, any Permitted Sublessee, FUYO or the Japanese
Lessor under any of the Indenture Documents, enter into any agreement amending,
modifying or supplementing any of the Indenture Documents, or execute any waiver
or modification of, or
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consent under, the terms of any of the Indenture Documents, (ii) settle or
compromise any claim arising under any of the Indenture Documents, (iii) give
any notice or exercise any right or take any action under any of the Indenture
Documents, or (iv) 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. For purposes of Section 4.02(e) hereof,
this is the fourth paragraph following the Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations
under 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 might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments. Further,
nothing in the Granting Clause or the preceding paragraphs shall impair any of
the rights of the Owner Trustee or the Owner Participant under Section 5.10
hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained
in the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments as the same may from time to time be supplemented or
amended or the terms thereof waived or modified to the extent permitted by, and
in accordance with, the terms thereof and of the other Operative Documents and
references to various Persons shall be deemed to be references to and include
their respective permitted successors and assigns.
"Amortization Amount" means, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Principal
Amount Repayment Date on the Amortization Schedule.
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"Amortization Schedule" means the amortization schedule for
the Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Assumption Agreement" means, collectively, the two Assumption
Agreements dated as of September 22, 1989 between GPA Offshore and the
Grand Cayman branch of the Japanese Lender.
"Average Life Date" for each Equipment Note to be redeemed
shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such
Equipment Note. "Remaining Weighted Average Life" of such Equipment
Note, at the redemption date of such Equipment Note, shall be the
number of days equal to the quotient obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then
remaining installment of principal, including the payment due on the
maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid
Principal Amount of such Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the
United States Code, 11 U.S.C. Sections 101 et seq., as amended.
"BFE Bill of Sale" means the full warranty (as to title) bill
of sale covering the Buyer Furnished Equipment, transferring all right,
title and interest therein to the Owner Trustee.
"Business Day" means a day other than a Saturday, Sunday or a
day on which banks are required or authorized to close in either The
City of New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the
Intercreditor Agreement shall be deposited.
"Code" means the Internal Revenue Code of 1986, as
amended.
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"Confirmation Agreement" means, collectively, Confirmation
No.1 and Confirmation No. 2.
"Confirmation No. 1" has the meaning set forth in Appendix X
to the Japanese Lease Agreement.
"Confirmation No. 2" has the meaning set forth in Appendix X
to the Japanese Lease Agreement.
"Consents and Agreements" means both the Consent and Agreement
[GPA 1989 BN-5] of the Manufacturer and the Consent and Agreement [GPA
1989 BN-5] of the Manufacturer's Subsidiary, each dated as of the
Delivery Date and attached to the Purchase Agreement Assignment.
"Continuous Stay Period" has the meaning specified in
Section 4.04(a).
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee located at 450 West 33rd Street, New
York, New York 10001, Attention: Corporate Trust Department, or such
other office at which the Indenture Trustee's corporate trust business
shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Lessee, the Owner Trustee and the Note
Holders.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be evidenced
by bonds, debentures, notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series
C and Series D, the rate per annum specified for such Series under the
heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means September 25, 1989.
"Deposit Agreement" means the Deposit Agreement dated as of
September 22, 1989 between Barclays Bank PLC, a public limited company
organized under the laws of England and acting through its branch
office in Grand Cayman and the Designated Financial Institution (as
described in Section 3 of Confirmation No. 2).
"Dollars", "U.S. $" and "$" mean the lawful currency of
the United States of America.
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<PAGE> 17
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"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of
such depository institution has a long-term unsecured debt rating from
each Rating Agency of at least A-3 or its equivalent.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has
a long-term unsecured debt rating from each Rating Agency of at least
A-3 or its equivalent.
"Equipment Notes" means the Equipment Notes, in substantially
the form set out in Section 2.01 hereof, issued by the Owner Trustee
and authenticated by the Indenture Trustee pursuant to the terms of
this Indenture.
"Equity Collateral" has the meaning assigned to such term in
the definition of "Excepted Payments."
"Excepted Payments" means (i) indemnity payments and interest
in respect thereof paid or payable in respect of the Owner Participant,
the Trust Company, the Owner Trustee or any of their respective
successors, permitted assigns (and, in the case of a permitted assign
of the Owner Participant that is a partnership, the partners of such
partnership), directors, officers, employees, servants, agents,
subsidiaries, affiliates or shareholders by the Lessee pursuant to
Section 13 of the Lease and not in support of any payment obligation of
the Owner Trustee under any Indenture Document, (ii) any proceeds of
public liability insurance in respect of the Aircraft payable as a
result of insurance claims paid respecting, or losses suffered by, the
Trust Company or the Indenture Trustee in its individual capacity or
the Owner Participant, (iii) any proceeds of insurance maintained with
respect to the Aircraft by or for the benefit of the Owner Participant
(whether directly or through the Owner Trustee) and not required under
Section 12 of the Lease, (iv) payments of
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Supplemental Rent by the Lessee in respect of any amounts payable to
the Owner Participant, the Trust Company, the Owner Trustee, or any of
their respective successors, permitted assigns, directors, officers,
employees, servants, agents, subsidiaries, affiliates or shareholders
under Section 10 of the Lease or by the Lessee or the Parent Guarantor
under the Tax Indemnification Agreement, as the case may be, and not in
support of any payment obligation of the Owner Trustee under any
Indenture Document, (v) Transaction Expenses paid or payable by the
Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee,
the Indenture Trustee or the Owner Participant pursuant to Section 21
of the Refunding Agreement or the Lease, (vi) any letter of credit
pursuant to Section 8(l) of the Lease (including, without limitation,
any replacement letter of credit (the "Equity Collateral")) and any
payment or proceeds of any such Equity Collateral to the extent
retained or applied as provided in Section 8(l) of the Lease, and (vii)
subject to the last sentence of Section 5.10 hereof, any right to
enforce the payment of any amount described in clauses (i) through (vi)
above and the proceeds thereof.
"Excess Amount" has the meaning specified in Section 2.03(b)
hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such
Liquidity Facility in accordance with the provisions thereof other than
a Downgrade Drawing.
"First Japanese Lease Assignment" means the Lease Assignment
[GPA 1989 BN-5] dated as of September 28, 1989 between GPA Offshore and
the Original Head Lessee.
"FUYO" means FUYO General Lease Co., Ltd., a corporation
organized under the laws of Japan, and its successors and assigns under
the Japanese Financing Documents.
"FUYO Guaranty" means the Guaranty Agreement dated as of
September 22, 1989 from FUYO for the benefit of the "Lessee" (under and
as defined in the Japanese Lease Agreement) and such "Lessee's"
successors and permitted assigns.
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<PAGE> 19
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"Government Obligations" means direct obligations of the
United States of America that are not callable, redeemable or payable
prior to maturity, in whole or in part, directly or indirectly, by any
Person.
"GPA Offshore" means Air Tara Caymans I, Limited, a Cayman
Islands corporation wholly-owned by the Parent Guarantor, and its
successors and permitted assigns under the Japanese Financing
Documents.
"Indenture," "this Indenture," and "the Indenture" mean this
Second Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented
by any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); the original Manufacturer's Warranty Bill of
Sale; any Sublease Assignment; any Assigned Sublease; the Purchase
Agreement, (to the extent assigned to or for the benefit of the Owner
Trustee); the Purchase Agreement Warranties Assignment; the Consents
and Agreements; the BFE Bill of Sale; the Japanese Lease Agreement; the
Japanese Lease Supplement; the Supplemental Agreement; the FUYO
Guaranty; the Assumption Agreement; the Confirmation Agreement; the JL
Security Agreement; the Omnibus Agreement and the other Japanese
Financing Documents (each to the extent assigned by the Japanese Lease
Assignment); and the Japanese Lease Assignment.
"Indenture Event of Default" has the meaning set forth in
Section 4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and
Security Agreement listed on Schedule 1 to the Intercreditor Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Aircraft and any
Replacement
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<PAGE> 20
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Airframe and Replacement Engine included in the property of the Owner
Trustee covered by this Indenture, including, without limitation, Trust
Indenture Supplement No. 1 dated September 25, 1989, which was recorded
as one instrument by the FAA with the Original Indenture, Trust
Indenture Supplement No. 2 dated October 24, 1991, which was recorded
as one instrument by the FAA with the First Amended and Restated
Indenture, and Trust Indenture Supplement No. 3 dated November 26,
1996, which is being filed for recordation as one instrument by the FAA
with this Second Amended and Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Japanese Financing Documents" means, collectively, the
Omnibus Agreement, the Japanese Loan Agreement, the Japanese Security
Agreement, the Japanese Lease Agreement, the Japanese Lease Supplement,
the Supplemental Agreement, the Deposit Agreement, the FUYO Guaranty,
the Assumption Agreement, the Confirmation Agreement, the JL Security
Agreement, the Japanese Lease Assignment and any other documents or
agreements referred to in the Japanese Lease Assignment.
"Japanese Lease Agreement" means the Lease Agreement dated as
of September 22, 1989 between the Japanese Lessor, as lessor, and GPA
Offshore, as lessee, which with the Japanese Lease Supplement, the
Supplemental Agreement and the Japanese Lease Assignment attached was
recorded as one instrument by the FAA on September 26, 1989 and
assigned Conveyance No. G75345.
"Japanese Lease Assignment" means the Lease Assignment dated
as of September 22, 1989 between GPA Offshore and the Owner Trustee.
Trust Indenture
<PAGE> 21
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"Japanese Lease Supplement" means the Lease Supplement No. 1
dated September 25, 1989 between the Japanese Lessor and GPA Offshore,
covering the Aircraft, supplementing the Japanese Lease Agreement.
"Japanese Lender" means Barclays Bank PLC, a public limited
company organized under the laws of England and acting through its
branch office in Tokyo, Japan, and its successors and permitted assigns
under the Japanese Financing Documents.
"Japanese Lessor" means FG Unity Leasing Co., Ltd., a Japanese
limited purpose corporation wholly-owned by FUYO and acting as
proprietor in a "Tokumei Kumiai" arrangement, and its successors and
permitted assigns under the Japanese Financing Documents.
"Japanese Loan Agreement" means the Loan Agreement dated as of
September 22, 1989 between the Japanese Lessor and the Japanese Lender.
"Japanese Security Agreement" means the Bank Security
Agreement dated as of September 22, 1989 between the Japanese Lessor
and the Japanese Lender.
"JL Security Agreement" means the Lessor Security Agreement
dated as of September 22, 1989 between the Japanese Lessor and GPA
Offshore.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as amended and restated by the First Amended and
Restated Lease, and as assigned and further amended and restated by
Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA
1989 BN-5] dated as of the date hereof and Second Amended and Restated
Aircraft Lease Agreement [GPA 1989 BN-5] dated as of the date hereof
and supplemented by Lease Supplement [GPA 1989 BN-5] No. 3 dated
November 26, 1996, which are being filed for recordation as one
instrument with the FAA contemporaneously herewith.
"Lease Default" means an event or condition that, with the
giving of notice or the lapse of time or both, would become a Lease
Event of Default.
"Lease Event of Default" means any event or condition defined
as an "Event of Default" in Section 17 of the Lease.
Trust Indenture
<PAGE> 22
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"Lessee" means America West Airlines, Inc., a Delaware
corporation, in its capacity as lessee under the Second Amended and
Restated Lease, and its successors, and to the extent permitted by the
Refunding Agreement, its assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or
claim of any kind, including any thereof arising under any conditional
sale agreement, equipment trust agreement or title retention agreement.
"Majority in Interest of Note Holders" means, as of a
particular date of determination and subject to Section 2.6 of the
Intercreditor Agreement, the Holders of more than 50% in aggregate
unpaid Principal Amount of all Equipment Notes outstanding as of such
date. For purposes of this definition, there shall be excluded any
Equipment Notes held by the Owner Trustee or the Owner Participant or
any interests of the Owner Participant therein by reason of subrogation
pursuant to Section 4.03 of the Indenture (unless all Equipment Notes
then outstanding shall be held by the Owner Trustee or the Owner
Participant) or any Equipment Notes held by the Lessee or any Affiliate
of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate
equal to (i) in the case of the Series A Equipment Notes and Series B
Equipment Notes, the Treasury Yield and (ii) in the case of the Series
C Equipment Notes and Series D Equipment Notes, the Treasury Yield plus
0.75% exceeds (b) the outstanding principal amount of such Equipment
Note plus accrued interest. For purposes of determining the Make-Whole
Amount, "Treasury Yield" at the time of determination with respect to
any Equipment Note means the interest rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semiannual yield to maturity for United States
Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities
Trust Indenture
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market either as determined by interpolation between the most recent
weekly average yield to maturity for two series of United States
Treasury securities, trading in the public securities markets, (A) one
maturing as close as possible to, but earlier than, the Average Life
Date of such Equipment Note and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Equipment
Note, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note is reported on
the most recent H.15(519), such weekly average yield to maturity as
published in such H.15(519). "H.15(519)" means the weekly statistical
release designated as such, or any successor publication, published by
the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Amount shall be the third Business Day
prior to the applicable redemption date and the "most recent H.15(519)"
means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"Manufacturer's Warranty Bill of Sale" means the full warranty
(as to title) bill of sale covering the Aircraft (including all of the
Buyer Furnished Equipment covered by the BFE Bill of Sale) executed by
the Manufacturer's Subsidiary in favor of the Owner Trustee, dated the
Delivery Date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person other
than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from
time to time of one or more Equipment Notes as reflected in the
Register maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and
signature of such Responsible Officer, that is delivered to the
Indenture Trustee.
"Omnibus Agreement" means the Agreement to Purchase and Lease
dated as of September 22, 1989 among the Parent Guarantor, GPA
Offshore, the Japanese Lender and the Japanese Lessor.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may
Trust Indenture
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be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions or (ii) Latham & Watkins or other counsel
designated by the Lessee and reasonably satisfactory to the Indenture
Trustee or, in the case of legal counsel for the Owner Trustee, may be
Morris, James, Hitchens & Williams or other counsel designated by the
Owner Trustee and reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease and the First Amended and Restated Lease.
"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1989 BN-5] dated as of September 22, 1989, as
supplemented by Trust Indenture Supplement No. 1 dated September 25,
1989 and as in effect immediately prior to the amendment and
restatement thereof dated as of October 1, 1991, which were recorded as
one instrument by the FAA on September 26, 1989 and assigned Conveyance
No. G75346.
"Original Loan Certificates" means the Loan Certificates
issued under and as defined in the Original Indenture.
"Original Sublessee" means America West Airlines, Inc.
("AWA"), a Delaware corporation, in its capacity as sublessee under the
Aircraft Sublease Agreement [GPA 1989 BN-5] dated as of September 21,
1990 between the Original Head Lessee in its capacity as sublessor
thereunder and AWA in its capacity as sublessee.
"Owner Participant" means _________________________, a
Delaware corporation, as Owner Participant under the Trust Agreement,
and its successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the four Pass Through
Trusts established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through
Trust Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a
national banking association, not in its individual capacity
Trust Indenture
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but solely as pass through trustee under each of the four separate Pass
Through Trust Agreements.
"Past Due Rate" means, with respect to any amount not paid
when due (whether at stated maturity, by acceleration or otherwise)
under or in respect of any Equipment Note, a rate of interest per annum
(computed on the basis of a year of 360 days comprised of twelve 30-day
months) equal to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Equipment Notes have
been paid in full.
"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with
respect to all Equipment Notes, means the aggregate stated original
principal amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on
which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [GPA 1989 BN-5] dated the Delivery Date, between the Parent
Guarantor and the Owner Trustee, together with the Consent and
Agreements attached thereto.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to
rate the Certificates issued pursuant to the Pass Through Trust
Agreements and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated
by the Refunding Agreement and the other documents entered into on and
in connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1989
BN-5] dated as of November 20, 1996, among the Lessee, the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through
Trustee, the Owner Participant, the Subordination Agent and the
Indenture
Trustee.
Trust Indenture
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"Register" has the meaning set forth in Section 2.07
hereof.
"Registrar" has the meaning set forth in Section 2.07
hereof.
"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice
president or, in the case of the Owner Trustee, an officer of the Owner
Trustee in its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date
agreed to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date
of the filing with the FAA of Trust Indenture Supplement No. 3.
"Secured Obligations" has the meaning set forth in
Section 2.06 hereof.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series D."
"Sublease Assignment" means a sublease assignment by the
Lessee in favor of the Owner Trustee (including the consent thereto
given by the sublessee thereunder) with
Trust Indenture
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respect to the assignment of a Permitted Sublease pursuant to Section
6(a) of the Lease.
"Supplemental Agreement" means the Supplemental Agreement
dated as of September 22, 1989 between the Japanese Lessor and GPA
Offshore.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity and not as Owner
Trustee, and its successors under the Trust Agreement, in their
respective individual capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means all
estate, right, title and interest of the Owner Trustee in and to the
properties, rights and interests covered by the Granting Clause of the
Indenture, excluding, however, in each case, Excepted Payments.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code (for purposes of this definition, the "United
States"), (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political
subdivision thereof or therein or (iii) any estate or trust that is
subject to United States federal income taxation regardless of the
source of its income.
Trust Indenture
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment
Notes shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1989 BN-5]
DATED AS OF SEPTEMBER 22, 1989, AS AMENDED.
SERIES [A/B/C/D] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING
UNITED STATES REGISTRATION NUMBER N624AW.
No. ____ Date: [________, 1996]
$-------------------
DEBT RATE MATURITY DATE
[____________] [_______,____]
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement [GPA 1989 BN-5], dated as of September 22,
1989, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to Fleet
National Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $________ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semi-
Trust Indenture
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annual installments commencing on January 2, 1997, and thereafter on July 2 and
January 2 of each year, to and including -----------, ----.
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and if
such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the Second
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-5],
dated as of November 26, 1996, between the Owner Trustee and The Chase Manhattan
Bank (formerly known as Chemical Bank, successor by merger to Manufacturers
Hanover Trust Company) (the "Indenture Trustee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used in this
Equipment Note and not defined herein shall have the respective meanings
assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as above provided and that none of the Owner Participant, the
Owner Trustee and the
Trust Indenture
<PAGE> 30
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Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Indenture Trustee or at the office of any successor in the manner
provided in Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and
interest and other amounts due hereunder shall be payable in Dollars in
immediately available funds at the Corporate Trust Office of the Indenture
Trustee, or as otherwise provided in the Indenture. Each such payment shall be
made on the date such payment is due and without any presentment or surrender of
this Equipment Note, except that in the case of any final payment with respect
to this Equipment Note, the Equipment Note shall be surrendered promptly
thereafter to the Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note,
agrees that, except as provided in the Indenture, each payment received by it
hereunder shall be applied, first, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by law, any
overdue interest and any other overdue amounts hereunder) to the date of such
payment, second, to the payment of the portion of the Principal Amount of this
Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Indenture, and fourth, the balance,
if any, remaining thereafter, to the payment of the portion of the Principal
Amount of this Equipment Note remaining unpaid in the inverse order of its
normal maturity.
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 Trust Indenture Estate is held by
the Indenture Trustee as security, in part, for the Equipment Notes. The
provisions of this Equipment Note are subject to the Indenture. Reference is
hereby made to the Indenture and the Refunding Agreement for a complete
statement of the rights and obligations of the Holder
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of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or
the Owner Trustee as provided in Section 2.12 of the Indenture and to
acceleration by the Indenture Trustee as provided in Section 4.04 of the
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B
Equipment Notes](2) [Series C Equipment Notes](3), and this Equipment Note is
issued subject to such provisions. The Note Holder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Indenture Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination as
- --------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
Trust Indenture
<PAGE> 32
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provided in the Indenture and (c) appoints the Indenture Trustee his
attorney-in-fact for such purpose.](4)
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
- --------
(4) To be inserted in the case of a Series B, Series C or Series
D Equipment Note.
Trust Indenture
<PAGE> 33
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IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its officer thereunto
duly authorized on the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:________________________________
Name:
Title:
Trust Indenture
<PAGE> 34
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SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
four separate series consisting of Series A, Series B, Series C and Series D and
in the maturities and principal amounts and shall bear interest as specified in
Schedule I hereto. On the date of the consummation of the Refinancing
Transaction, (i) each Equipment Note shall be issued to the Pass Through
Trustees (or their designee) under the Pass Through Trust Agreements set forth
in Schedule II to be attached hereto in connection therewith and (ii) the
Equipment Trust Certificates issued under the First Amended and Restated Trust
Indenture shall be concurrently redeemed. The Equipment Notes shall be issued in
registered form only. The Equipment Notes shall be issued in denominations of
$1,000 and integral multiples thereof, except that one Equipment Note of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity.
The Principal Amount of each Equipment Note shall be payable
on the dates and in the installments equal to the corresponding percentage of
the Principal Amount as set forth in Schedule I hereto which shall be attached
as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
Trust Indenture
<PAGE> 35
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any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) and notified to the Indenture
Trustee) other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Drawings under any Liquidity Facility except to the extent included in
Net Interest and Related Charges (as defined below), and (c) any and all amounts
received by the Owner Trustee which are payable by Lessee under clause (vii) or
(viii) of the definition of Supplemental Rent. The Indenture Trustee shall have
no duty or obligation to (i) verify or confirm the accuracy of any of the
amounts (other than the portion of the Principal Amount of, and interest on, the
Equipment Notes issued hereunder) paid to it by the Owner Trustee or (ii)
determine whether any amounts are owed by the Owner Trustee under this Section
2.02. As used in this Section 2.02, "Owner Trustee's pro rata share" means as of
any time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
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<PAGE> 36
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(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default (as defined below) under any
Equipment Note a fraction, the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued under
the Indentures. As used in this Section 2.02, "Net Interest and Related Charges"
means (as determined by the Subordination Agent in consultation with the
Liquidity Providers and notified to the Indenture Trustee except that the Past
Due Rate shall be determined by the Indenture Trustee and notified to the
Subordination Agent) the sum of (i) the amount, if any, by which interest
payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or
Downgrade Drawing (other than a Downgrade Drawing that is not an Applied
Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount
which would be payable if such advances bore interest at the Designated Interest
Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section
3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or
similar provisions of any succeeding liquidity facility) which result from any
Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section
2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as
defined in the applicable Indentures) in respect of "Series A Equipment Notes",
"Series B Equipment Notes" and "Series C Equipment Notes" issued under the
Indentures, except with respect to that portion of any Final Drawing (or
Downgrade Drawing which becomes a Final Drawing) which remains in a Cash
Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" issued under the Indentures which has
not been cured other than solely because of acceleration. For purposes of
Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Equipment Notes
bearing the signatures of individuals who were at any time the proper officers
of the Owner
Trust Indenture
<PAGE> 37
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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. The Owner Trustee may from time to time execute
and deliver Equipment Notes with respect to the Aircraft to the Indenture
Trustee for authentication upon original issue and such Equipment Notes shall
thereupon be authenticated and delivered by the Indenture Trustee upon the
written request of the Owner Trustee signed by a Vice President or Assistant
Vice President or other authorized officer of the Owner Trustee; provided,
however, that each such request shall specify the aggregate Principal Amount of
all Equipment Notes to be authenticated hereunder on original issue with respect
to the Aircraft. No Equipment Note shall be secured by or be entitled to any
benefit under this Indenture or be valid or obligatory for any purposes, unless
there appears on such Equipment Note a certificate of authentication in the form
provided for herein executed by the Indenture Trustee by the manual signature of
one of its authorized officers and such certificate upon any Equipment Notes
shall be conclusive evidence, and the only evidence, that such Equipment Note
has been duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a)
Without impairing any of the other rights, powers, remedies, privileges or Liens
of the Note Holders under this Indenture, each Note Holder, by its acceptance of
an Equipment Note, agrees that, except as expressly provided in this Indenture,
the Refunding Agreement or any other Operative Document, (i) the obligation to
make all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such other
agreements to the contrary notwithstanding (except for any
Trust Indenture
<PAGE> 38
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express provisions or representations that the Trust Company is responsible for,
or is making, for which there would be personal liability of the Trust Company),
no recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means
the amount by which such payment exceeds the amount that would have been
received by a Note Holder or the Indenture Trustee if the Trust Company, the
Owner Trustee or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this Section
2.03(b) shall prevent a Note Holder or the Indenture
Trust Indenture
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Trustee from enforcing any personal recourse obligation (and retaining the
proceeds thereof) of the Trust Company, the Owner Trustee or the Owner
Participant under the Refunding Agreement, this Indenture (and any exhibits or
annexes hereto or thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such funds were received after
12:00 noon, New York City time, at the
Trust Indenture
<PAGE> 40
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place of payment. Prior to the due presentment for registration of transfer of
any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and
treat the Person in whose name any Equipment Note is registered on the Register
as the absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee
shall be affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Equipment Note (and such exclusion and withholding
shall constitute payment in respect of such Equipment Note) any and all United
States withholding Taxes applicable thereto as required by law. The Indenture
Trustee agrees to act as such withholding agent and, in connection therewith,
whenever any present or future United States Taxes or similar charges are
required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts (and such withholding
shall constitute payment in respect of such Equipment Note) and timely pay the
same to the appropriate authority in the name of and on behalf of the Note
Holders, that it will file any necessary United States withholding tax returns
or statements when due, and that as promptly as possible after the payment
thereof it will deliver to each Note Holder (with a copy to the Owner Trustee
and the Lessee) appropriate receipts showing the payment thereof, together with
such additional documentary evidence as any such Note Holder, the Owner
Participant and the Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture
Trust Indenture
<PAGE> 41
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Trustee has no reason to know that any information set forth in such form is
inaccurate), the Indenture Trustee shall withhold only the amount, if any,
required by law (after taking into account any applicable exemptions claimed by
the Note Holder) to be withheld from payments hereunder or under the Equipment
Notes held by such Holder in respect of United States federal income Tax (and
such withholding shall constitute payment in respect of such Equipment Note). If
a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture
Trustee a properly completed and currently effective U.S. Internal Revenue
Service Form 4224 in duplicate (or such successor certificate, form or forms as
may be required by the United States Treasury Department as necessary in order
to avoid withholding of United States federal income tax), during the calendar
year in which the payment is made (but prior to the making of such payment), and
has not notified the Indenture Trustee of the withdrawal or inaccuracy of such
certificate or form prior to the date of such payment (and the Indenture Trustee
has no reason to know that any information set forth in such form is inaccurate)
or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form W-9, if
applicable, prior to a payment hereunder or under the Equipment Notes held by
such Holder, no amount shall be withheld from payments in respect of United
States federal income tax. If any Note Holder has notified the Indenture Trustee
that any of the foregoing forms or certificates is withdrawn or inaccurate, or
if such Holder has not filed a form claiming an exemption from United States
withholding Tax or if the Code or the regulations thereunder or the
administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Equipment Notes held by such Holder, the Indenture Trustee
agrees to withhold from each payment due to the relevant Note Holder withholding
Taxes at the appropriate rate under law (and such withholding shall constitute
payment in respect of such Equipment Notes) and will, on a timely basis as more
fully provided above, deposit such amounts with an authorized depository and
make such returns, statements, receipts and other documentary evidence in
connection therewith as required by applicable law.
None of the Owner Trustee, the Owner Participant or the Lessee
shall have any liability for the failure of the Indenture Trustee to withhold
taxes in the manner provided for herein or for any false, inaccurate or untrue
evidence provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of each
Equipment Note, each payment of Principal Amount, Make-Whole Amount, if any, and
interest or other amounts due thereon shall be applied:
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First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and, to the extent permitted by law,
any overdue interest and any other overdue amounts thereunder) to the
date of such payment;
Second: to the payment of the Principal Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any,
and any other amount due hereunder or under such Equipment
Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture
Estate. A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request from the registered Holder thereof for the
issuance of a new Equipment Note, specifying, in the case of a surrender for
transfer, the name and address of the new Holder or Holders.
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Upon surrender for registration of transfer of any Equipment Note, 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 unpaid portion of the Principal Amount and
of the same series. At the option of the Note Holder, Equipment Notes may be
exchanged for other Equipment Notes of any authorized denominations of a like
aggregate unpaid portion of the Principal Amount, upon surrender of the
Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust
Office. 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 Note Holder making the exchange is entitled to
receive. All Equipment Notes issued upon any registration of transfer or
exchange of Equipment Notes (whether under this Section 2.07 or under Section
2.08 hereof or otherwise under this Indenture) shall be the valid obligations of
the Owner Trustee evidencing the same respective obligations, and entitled to
the same security and benefits under this 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 Indenture Trustee) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Indenture Trustee
duly executed by the Note Holder or such Holder's attorney duly authorized in
writing, and the Indenture Trustee shall require evidence satisfactory to it as
to the compliance of any such transfer with the Securities Act and the
securities laws of any applicable state. The Indenture Trustee shall make a
notation on each new Equipment Note of the amount of all payments of Principal
Amount 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 on
such old Equipment Note or Equipment Notes has been paid. Interest shall be
deemed to have been paid on such new Equipment Note to the date on which
interest shall have been paid on such old Equipment Note, and all payments of
the Principal Amount marked on such new Equipment Note, as provided above, shall
be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner
Trustee shall be required to exchange any surrendered Equipment Notes as
provided above during the ten-day period preceding the Payment Date. The
Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant
and Lessee of each registration of a transfer of an Equipment Note. Any such
transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees
to the provisions of the Refunding Agreement applicable to Note Holders, and
shall be deemed to have represented and warranted to the parties to the
Refunding Agreement as to the matters represented and warranted by the
Subordination Agent in its capacity as the initial Holder of the Equipment
Notes. Subject to compliance by the Note Holder and
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its transferee (if any) of the requirements set forth in this Section 2.07, the
Indenture Trustee and the Owner Trustee shall use all reasonable efforts to
issue new Equipment Notes upon transfer or exchange within 10 Business Days of
the date an Equipment Note is surrendered for transfer or exchange.
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 Holder of such
Equipment Note, execute and the Indenture Trustee shall authenticate and deliver
in replacement thereof a new Equipment Note, payable in the same Principal
Amount dated the same date and captioned as originally issued. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee and a copy thereof shall be furnished to
the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost
or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such Person, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the
Indenture Trustee shall be accepted as satisfactory indemnity and security and
no further indemnity or security shall be required as a condition to the
execution and delivery of such new Equipment Note.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Note Holder for any registration of
transfer or exchange of Equipment Notes, but the Indenture Trustee, as
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes; provided, however, that none of the
Lessee, the Owner Trustee, the Indenture Trustee or the Owner Participant shall
bear costs of registration, transfer or exchange in connection with the
consummation of the Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Equipment
Notes surrendered for replacement, redemption, transfer,
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exchange, payment or cancellation and shall destroy the canceled Equipment
Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither
any redemption of any Equipment Note nor any purchase by the Owner Trustee of
any Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Equipment Notes shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Note Holder of such Equipment Notes to be
redeemed or purchased, at such Note Holder's address appearing in the Register.
All notices of redemption or purchase shall state: (1) the redemption date, (2)
the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any Person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Equipment Notes to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New
York City time, on the redemption date in immediately available funds the
redemption price of the Equipment Notes to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid, the Equipment Notes to be redeemed or purchased shall, on the
redemption date, become due and payable at the
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Corporate Trust Office of the Indenture Trustee, and from and after such
redemption date (unless there shall be a default in the payment of the
redemption price) any such Equipment Notes then outstanding shall cease to bear
interest. Upon surrender of any such Equipment Note for redemption or purchase
in accordance with said notice, such Equipment Note shall be redeemed at the
redemption price. If any Equipment Note called for redemption or purchase shall
not be so paid upon surrender thereof for redemption, the principal amount
thereof shall, until paid, continue to bear interest from the applicable
redemption date at the interest rate in effect for such Equipment Note as of
such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the
Owner Trustee or the Owner Participant may, upon the events and subject to the
terms and conditions and for the price set forth in this Section 2.12, purchase
all but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each
Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to, but not including, the date of purchase and all
other amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Refunding Agreement to the Holder
thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon
an Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default (and there is no
Indenture Trustee Event), the purchase price thereof shall equal the price
provided in the preceding sentence plus the Make-Whole Amount, if any; provided
further, that under no circumstances shall the Make-Whole Amount be payable by
the Lessee.
Such option to purchase the Equipment Notes may be
exercised by the Owner Trustee or the Owner Participant giving
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written notice of its election of such option to the Indenture Trustee, which
notice shall specify a date for such purchase not more than 30 days or less than
15 days after the date of such notice. The Indenture Trustee shall not exercise
any of the remedies hereunder or, without the consent of the Owner Trustee or
the Owner Participant, under the Lease, during the period from the time that a
notice of exercise by the Owner Participant of such option to purchase becomes
irrevocable until the date on which such purchase is required to occur pursuant
to the terms of the preceding sentence. Such election to purchase the Equipment
Notes shall become irrevocable upon the fifteenth day preceding the date
specified in the written notice described in the first sentence of this
paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Note Holders will comply with all
the provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Articles II and III hereof.
(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid
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in full, the Note Holders of Series B until the Secured Obligations in respect
of Series B Equipment Notes have been paid in full and (iii) after the Secured
Obligations in respect of Series B Equipment Notes have been paid in full, the
Note Holders of Series C until the Secured Obligations in respect of Series C
Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Sections 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as rent
under any Assigned Sublease shall be promptly distributed in the following order
of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments
of Principal Amount, and interest and other amounts (as well as any
interest on overdue Principal Amount, and to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts)
then due to the Note Holders under all Series A Equipment Notes shall
be distributed to the Note Holders of Series A ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then due under all Series
A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall be distributed to the
Note Holders of Series B ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series B Equipment Note bears to the aggregate
amount of the payments then due under all Series B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much
of such installment or payment remaining as shall be
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required to pay in full the aggregate amount of the payment or payments
of Principal Amount and interest and other amounts (as well as any
interest on any overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any other overdue
amounts) then due to the Note Holders under all Series C Equipment
Notes shall be distributed to the Note Holders of Series C ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series C
Equipment Note bears to the aggregate amount of the payments then due
under all Series C Equipment Notes; and
(iv) after giving effect to clause (iii) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series D Equipment Notes shall be
distributed to the Note Holders of Series D ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series D Equipment Note bears
to the aggregate amount of the payments then due under all Series D
Equipment Notes; and
second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that
if an Indenture Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 3.07
hereof until whichever of the following shall first occur: (i) all
Indenture Defaults shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second", or
(ii) Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of said
Section 3.03, or (iii) the 180th day after receipt of such payment, in
which event such balance shall be distributed as provided in this
clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any payment
received by the Indenture Trustee with respect to the Airframe or the Airframe
and one or both Engines as the result of an Event of Loss thereto shall be
applied to the redemption of
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the Equipment Notes and to all other amounts payable hereunder by applying such
funds in the following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event
of Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other
amounts (as well as any interest on overdue Principal Amount, and to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due to the Note Holders under all Equipment
Notes, all in the order of priority specified in clause "first" of
Section 3.01 hereof, and
third, if and to the extent required to be paid to the Lessee
(or if directed by the Lessee, any Permitted Sublessee) in
reimbursement of payment of Stipulated Loss Value pursuant to Section
11(d) of the Lease, to the Lessee (or if directed by the Lessee, any
Permitted Sublessee), and otherwise as provided in clause "fourth" of
Section 3.03 hereof;
provided that, if a Replacement Airframe or a Replacement Airframe and one or
more Replacement Engines are to be substituted for the Airframe or the Airframe
and one or both Engines subject to such Event of Loss as provided in Section 11
of the Lease and Section 5.06 hereof, any proceeds which result from such Event
of Loss and are paid to the Indenture Trustee shall be held by the Indenture
Trustee as part of the Trust Indenture Estate as security for the obligations of
the Lessee under the Operative Documents and invested in accordance with the
terms of Section 3.07 hereof and, unless theretofore applied in accordance with
the provisions of the Lease and this Indenture, such proceeds shall, to the
extent payable to the Lessee under the Lease, be released to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) upon or in connection with the
replacement thereof as provided in such Sections.
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Airframe or the Airframe and one or both Engines) shall be
applied as provided in the applicable provisions of the Lease; provided,
however, that to the extent that any portion of such amounts held for account of
the Lessee are not at the time required to be paid to the Lessee (or any
Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12
of the Lease, shall be held by the Indenture Trustee as security for the
obligations of the Lessee
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under the Operative Documents and shall be invested in accordance with the terms
of Section 3.07 hereof and at such time as the conditions specified in the Lease
for payment of such amounts to the Lessee shall be fulfilled, such portion, and
the net proceeds of any investment thereof, shall, unless theretofore applied in
accordance with the provisions of the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07
hereof, and notwithstanding Section 2.05 hereof, all payments received and
amounts held or realized by the Indenture Trustee after an Indenture Event of
Default shall have occurred and be continuing or after the Indenture Trustee has
given notice to the Owner Trustee and the Owner Participant pursuant to Section
4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease
or of the foreclosure of this Indenture, or after the Equipment Notes shall have
become due and payable as provided herein, and all payments or amounts then held
by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long
as such Indenture Event of Default shall be continuing, be promptly distributed
by the Indenture Trustee in the following order of priority, without
duplication:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for all amounts due to it
pursuant to Section 6.07 hereof, plus any tax, expense, charge or other
loss (including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Trust Indenture
Estate pursuant to Section 4.05(b) hereof) incurred by the Indenture
Trustee (to the extent not previously reimbursed) (including, without
limitation, the expenses of any sale, taking or other proceeding,
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 then existing or prior Note Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to the then existing or
prior Note Holders, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be distributed
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ratably, without priority of one over any other, in accordance with the
amount of the payment or payments made by each such then existing or
prior Note Holder pursuant to said Section 5.03 and applicable (in the
case of each such then existing Note Holder) to the Equipment Notes
held by such existing Note Holder at the time of distribution by the
Indenture Trustee;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid Principal Amount
of all Series A Equipment Notes, and the accrued but unpaid interest
and other amounts due thereon and all other Secured Obligations in
respect of the Series A Equipment Notes (other than Make-Whole Amount,
if any) to the date of distribution, shall be distributed to the Note
Holders of Series A, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series A Equipment Notes
held by each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount, if
any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series B Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series B Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series B, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series B Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series B
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal
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Amount of all Series C Equipment Notes, and the accrued but unpaid
interest and other amounts due thereon and all other Secured
Obligations in respect of the Series C Equipment Notes (other than
Make-Whole Amount, if any) to the date of distribution, shall be
distributed to the Note Holders of Series C, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all Series C
Equipment Notes held by each Holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series C Equipment Notes held
by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
(iv) after giving effect to paragraph (iii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series D Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series D Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series D, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series D Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series D
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by
the Indenture Trustee for which provision as to the application thereof is made
in the Lease shall be applied forthwith to the purpose for which such payment
was made in
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accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or the
Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii)
any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity
Providers, and (v) the Pass Through Trustees, in each case whether pursuant to
Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as
Supplemental Rent, directly to the Person entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of the fourth paragraph of Section
2.02 shall be distributed to the Subordination Agent to be distributed in
accordance with the terms of the Intercreditor Agreement, and any payment
received by the Indenture Trustee under clause (c) of the fourth paragraph of
Section 2.02 shall be distributed directly to the Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and
3.04 hereof, any payments received by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture
shall be distributed by the Indenture Trustee, unless otherwise agreed in
writing, subject to Section 6.07 hereof (i) to the extent received or realized
at any time prior to the payment in full of all obligations to the Note Holders
secured by the Lien of this Indenture, in the order of priority specified in
Section 3.01 hereof, and (ii) to the extent received or realized at any time
after payment in full of all obligations to the Note Holders secured by the Lien
of this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause
"first" of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated to
indemnify against thereunder, in the manner provided in clause "first"
of Section 3.03 hereof, and
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second, in the manner provided in clause "fourth" of
Section 3.03 hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts
distributed hereunder by the Indenture Trustee to the Owner Trustee shall be
paid to the Owner Trustee by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account as may be specified pursuant to the Refunding
Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's
rights to hold moneys for security pursuant to Section 21(h) of the Lease shall
be held in accordance with the terms of such Section; and the Indenture Trustee
hereby agrees to perform the duties of the Owner Trustee under such Section.
Except as provided in the preceding sentence, any amounts held by the Indenture
Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof,
pursuant to Section 3.02 hereof, pursuant to the second sentence of Section
3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant
to a Sublease Assignment, or pursuant to any provision of any other Operative
Document providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture
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Trustee reasonably believes such sale is necessary to make a distribution
required by this Indenture.
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee.
(a) The Trust Company hereby covenants and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Lien
attributable to it in its individual capacity with respect to any of the
properties or assets of the Trust Indenture Estate and shall, at its own cost
and expense promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Trust Company will cause restitution to be made to
the Trust Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Equipment Notes and hereunder in accordance
with the terms of the Equipment Notes and this Indenture and all
amounts payable by it to the Note Holders under the Refunding Agreement
and the other Operative Documents;
(ii) the Owner Trustee will not directly or indirectly create,
incur, assume or suffer to exist any Lessor's Liens attributable to it
with respect to any of the properties or assets of the Trust Indenture
Estate, and shall, at its own cost and expense, promptly take such
action as may be necessary duly to discharge any such Lessor's Lien,
and the Owner Trustee will cause restitution to be made to the Trust
Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it;
(iii) in the event an officer with responsibility for or
familiarity with the transactions contemplated hereunder or under the
other Operative Documents (or any Vice President) in the Corporate
Trust Administration Department of the Owner Trustee shall have actual
knowledge of an Indenture Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Indenture Default or
Event of
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Loss to the Indenture Trustee, the Lessee and the Owner
Participant;
(iv) 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 or any
Japanese Financing Document, including, without limitation, a copy of
each report or notice received pursuant to Section 12(f) of the Lease,
to the extent that the same shall not have been furnished, or is not
required to be furnished by the Lessee, to the Indenture Trustee
pursuant to the Lease or otherwise;
(v) except as contemplated by the Operative Documents or with
the consent of the Indenture Trustee acting in accordance with Article
IX hereof, the Owner Trustee will not incur any indebtedness for
borrowed money; and
(vi) 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 Japanese Lease Agreement, the Japanese
Lease Assignment and the Lease, the Refunding Agreement, the Trust
Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing
(other than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, or interest on, any Equipment Note
(other than as a result of a Lease Default) and such failure shall have
continued unremedied for ten calendar days; or the failure of the Owner
Trustee to pay when due any other amount due and payable under any
Equipment Note or hereunder (other than as a result of a Lease Default)
and such failure shall have continued unremedied for 15 calendar days
after notice thereof being given to the Owner Trustee from the
Indenture Trustee or any Note Holder; or
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(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 4.01(a) hereof or Section 13 of the
Refunding Agreement or by the Owner Trustee as the Owner Trustee
pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding
Agreement or any Lessor's Lien required to be discharged by the Owner
Participant pursuant to Section 13 of the Refunding Agreement shall
remain undischarged for a period of 30 calendar days after, as the case
may be, an officer with responsibility for or familiarity with the
transactions contemplated hereunder or under the other Operative
Documents (or any Vice President) in the Corporate Trust Administration
Department of the Trust Company or an officer of the Owner Participant
shall have actual knowledge of such Lien; provided, that no Indenture
Event of Default shall arise under this Section 4.02(c) as a result of
a failure by the Owner Trustee or the Owner Participant to observe or
perform any covenant referred to in this Section 4.02(c) if the Lessee
shall have discharged all Lessor's Liens required to be discharged by
the Owner Trustee or the Owner Participant pursuant to such covenants
and compensated the Indenture Trustee and the Trust Indenture Estate
for all claims, losses and expenses arising from the failure of the
Owner Trustee or the Owner Participant, as the case may be, to observe
and perform any such covenant; or
(d) any representation or warranty made by the Owner
Participant, the Owner Trustee or the Trust Company herein or in the
Refunding Agreement or by any Person (if any) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Documents or in any related guarantee or support agreement shall prove
to have been false or incorrect when made in any respect materially
adverse to the rights and interests of the Note Holders; and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, such
misrepresentation shall not have been corrected as of a day within 30
calendar days following notice thereof being given to the Owner
Participant, the Owner Trustee, the Trust Company or such Person, as
the case may be, by the Indenture Trustee or a Majority in Interest of
Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any
of its covenants or agreements in the fourth paragraph following the
Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01
hereof, or any failure by the Owner Participant or the Trust Company to
observe or perform any of its respective covenants in Section 9(b)(11),
10 or 14 of the Refunding Agreement; or
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(f) except as provided in the following paragraph (j), any
failure by the Owner Trustee or the Trust Company to observe or perform
any other covenant or obligation of the Owner Trustee contained in this
Indenture or in the Refunding Agreement or any failure by the Owner
Participant to observe or perform any other covenant or obligation of
the Owner Participant contained in the Refunding Agreement or any
failure of any Person that may guarantee or support the obligations of
an Owner Participant not originally party to the Refunding Agreement
under the Operative Documents to observe or perform any covenant or
obligation of such Person contained in any such guarantee or support
agreement, which failure is not remedied within a period of 30 calendar
days following notice being given to the Owner Trustee, the Owner
Participant or such Person, as the case may be, by the Indenture
Trustee or a Majority in Interest of Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant
or any Person that may guarantee or support the obligations of an Owner
Participant not originally party to the Refunding Agreement under the
Operative Documents shall (i) be unable to pay its debts generally as
they become due within the meaning of the Bankruptcy Code, (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 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 with respect thereto (and not in its
individual capacity) or the Owner Participant or any Person that may
guarantee or support the obligations of an Owner Participant not
originally party to the Refunding Agreement under the Operative
Documents, as the case may be, a custodian, receiver, trustee or other
officer with similar powers with respect to it 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
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ordering the dissolution, winding-up or liquidation of the Trust Estate
or the Owner Trustee with respect thereto (and not in its individual
capacity) or the Owner Participant or such Person, as the case may be;
or
(i) any petition for any relief specified in the foregoing
paragraph (h) shall be filed against the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or any Person that may guarantee or support the
obligations of an Owner Participant not originally party to the
Refunding Agreement under the Operative Documents, as the case may be,
and such petition shall not be dismissed within 60 days; or
(j) at any time when the Aircraft shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid
and duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by
the Lessee in the payment of any installment of Basic Rent due under the Lease,
the Owner Participant may, within ten calendar days (or such longer period
ending on the expiry of the applicable grace period specified in the Lease with
respect to such default) after notice of such default, without the consent or
concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for
application in accordance with Section 3.01 hereof, a sum equal to the amount of
all (but not less than all) of the Principal Amount and interest as shall then
(without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof)
be due and payable on the Equipment Notes. 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 Trustee
shall have been furnished by the Owner Participant with all funds necessary for
remedying such default, the Owner Participant may, within fifteen calendar days
(or such longer period ending on the expiry of any applicable grace period
specified in the Lease with respect to such default) after notice of such
default, without the consent or concurrence of any Note Holder, instruct the
Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) 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 Basic
Rent theretofore due and payable
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and to remedy (but solely for purposes of this Indenture) any default by the
Owner Trustee in the payment of any amount due and payable under the Equipment
Notes or hereunder, 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 default by the Lessee under the Lease to the
same extent that like performance by the Lessee itself would have remedied such
default (but any such payment or performance shall not 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, such Lease Event of
Default shall have been remedied, then any declaration pursuant to the Lease
that the Lease is in default, and any declaration pursuant to this Indenture
that the Equipment Notes are due and payable or that an Indenture Event of
Default exists hereunder, based upon such Lease Event of Default, shall be
deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the
case may be, shall (to the extent of any such payments made by it) be subrogated
to the rights of the Note Holders hereunder to receive such payment of Rent from
the Indenture Trustee (and the payment of interest on account of such Rent being
overdue), and shall be entitled, so long as no other Indenture Default or
Indenture Event of Default shall have occurred and be continuing or would result
therefrom, to receive, subject to the terms 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 by commencing an action at law against the Lessee and
obtaining and enforcing a judgment against the Lessee for the payment of such
amount; provided, however, that at no time while an Indenture 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 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 hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease as to (i) each of the three Basic Rent Payment
Dates immediately preceding the date of such default or (ii) in the
aggregate more than six Basic Rent Payment Dates,
(y) the second sentence of this Section 4.03 shall cease to
apply, and no payment by the Owner Participant in
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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 Lease Event of Default for the purposes of this
Indenture, if during the 12-month period immediately preceding the
relevant default by the Lessee there shall have been expended by the
Owner Participant pursuant to the second sentence of this Section 4.03
(and shall have not been reimbursed by the Lessee or any Permitted
Sublessee themselves to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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
(subject to the rights of the Owner Participant or the Owner Trustee to cure any
such Indenture Event of Default set forth in Section 4.03 hereof and the
obligations of the Indenture Trustee set forth in this Section 4.04(a) and
subject to Section 10.05 hereof) 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
hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a
Majority in Interest of Note Holders, exercise any and all of the remedies
pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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
but, in the case of the Aircraft, only as permitted by Section 18 of the Lease,
and may exclude the Owner Participant, the Owner Trustee and the Lessee and all
Persons claiming under any of them or wholly or partly therefrom; provided,
however, that the Indenture Trustee shall give the Owner Trustee and the Owner
Participant ten days' prior written notice of the initial exercise of such
remedies by the Indenture Trustee under the Lease (if not stayed or otherwise
precluded by applicable law from giving such notice); provided, further, that
the Indenture Trustee shall give the Owner Trustee and the Owner Participant
twenty days' prior written notice of its intention to sell the Aircraft. Without
limiting any of the foregoing, it is understood and agreed that the Indenture
Trustee may exercise any right of sale of the Aircraft available to it, even
though it
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shall not have taken possession of the Aircraft and shall not have possession
thereof at the time of such sale.
Anything in this Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails to participate in such proceedings, the Owner Trustee shall have
the right (without affecting in any way any right or remedy of the Indenture
Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the
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avoidance of doubt, it is expressly understood and agreed, subject only to the
immediately preceding paragraph, that 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 otherwise
exercising all of its rights, powers and remedies under this Indenture,
including without limitation this Article IV.
(b) If an Indenture Event of Default referred to in clause
(g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment Notes
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the Equipment Notes
which by such declaration shall have become payable) shall have been duly paid
and every other Indenture Default and Indenture Event of Default with respect to
any covenant or provision of this Indenture shall have been cured, then and in
every such case a Majority in Interest of Note Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
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Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
Except as otherwise provided in Section 2.12, no Make-Whole
Amount shall become payable on the Equipment Notes as a result of any
acceleration under Sections 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Indenture. The Owner Trustee or
Owner Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Aircraft, etc. (a) If an Indenture
Event of Default shall have occurred and be continuing, at the request of the
Indenture Trustee the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such 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 Trust Indenture Estate; provided that the
Indenture Trustee shall at the time be entitled to obtain such possession under
Section 4.04(a) and the other applicable provisions of this Indenture. If the
Owner Trustee shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture Trustee
may (i) obtain a judgment conferring on the Indenture Trustee the right to
immediate possession and requiring the Owner Trustee to execute and deliver such
instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents to the fullest extent it
may lawfully do so, and (ii) to the extent permitted by law, pursue all or part
of the Trust Indenture Estate wherever it may be
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found (but not in violation of Section 10.05 hereof or of the Lease) and may
enter any of the premises of the Lessee wherever such Trust Indenture Estate may
be or be supposed to be and search for and take possession of and remove the
same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that the
provisions hereof shall not be construed so as to expand the obligations of the
Lessee under the Lease, including Section 16 thereof). In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, lease,
control or manage the Trust Indenture Estate and to carry on the business
(without limiting the express provisions of Section 5.10 hereof) and to exercise
all rights and powers of the Owner Participant and the Owner Trustee relating to
the Trust Indenture Estate, as the Indenture Trustee 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 Trust Indenture Estate or any part thereof as the Indenture
Trustee may determine; and the Indenture Trustee shall be entitled to collect
and receive directly all tolls, rents (including Rent), revenues, issues,
income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder, except Excepted Payments. The Indenture Trustee shall,
pursuant to the exercise of its remedies under this Article IV, to the extent
permitted by applicable law, be entitled to the appointment of a receiver for
all or any part of the Trust Indenture Estate, whether such receivership be
incidental to a proposed sale of the Trust Indenture Estate or otherwise, and
the Owner Trustee hereby consents to the appointment of such receiver and will
not oppose any such appointment. Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, leasing, control, management or disposition of the
Trust Indenture Estate and of 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
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other proper charges upon the Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder 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 or
such Note Holder, then and in every such case the Owner Trustee, the Indenture
Trustee, the Note Holders and the Lessee shall, subject to any determination in
such proceedings, be restored to their former positions and rights hereunder
with respect to the Trust Indenture Estate, and all rights, remedies and powers
of the Indenture Trustee and the Note Holders shall continue as if no such
proceedings had been instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right consequent thereon; provided,
however, that in the absence of
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written instructions from the Holders of all Equipment Notes then outstanding,
the Indenture Trustee shall not waive any Indenture Default (i) in the payment
of the Principal Amount of or interest on any Equipment Note then outstanding,
or (ii) in respect of a covenant or provision hereof which, under Article IX
hereof, cannot be modified or amended without the consent of each Note Holder.
SECTION 4.09. Indenture Trustee May Prove Debt. If the Owner
Trustee shall fail to pay any amount payable hereunder or under the Equipment
Notes, the Indenture Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action or proceedings at
law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against the Owner Trustee or other
obligor upon the Equipment Notes and collect in the manner provided by law out
of the property of the Owner Trustee or other obligor upon the Equipment Notes,
wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the
Owner Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Owner Trustee
or its property, or in case of any other comparable judicial proceedings
relative to the Owner Trustee upon the Equipment Notes, or to the property of
the Owner Trustee, the Indenture Trustee, irrespective of whether the Principal
Amount of the Equipment Notes shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of Principal Amount and interest owing and unpaid in respect of the
Equipment Notes, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation, expenses and
disbursements to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the Note
Holders allowed in any judicial proceedings relative to the Owner
Trustee or to the property of the Owner Trustee,
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(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Note Holders in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or Person performing similar
functions in comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Note Holders and of
the Indenture Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Note Holders (by such Note Holder's acceptance
of an Equipment Note) to make payments to the Indenture Trustee, and, in the
event that the Indenture Trustee shall consent to the making of payments
directly to the Note Holders, to pay to the Indenture Trustee such amounts as
shall be sufficient to cover reasonable compensation, expenses and disbursements
to the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred by the Indenture Trustee and each predecessor Indenture Trustee except
as a result of negligence or bad faith.
Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Note Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Equipment Notes or the rights of any Holder thereof,
or to authorize the Indenture Trustee to vote in respect of the claim of any
Note Holder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
All rights of action and of asserting claims under this
Indenture, or under any of the Equipment Notes, may be prosecuted and enforced
by the Indenture Trustee without the possession of any of the Equipment Notes or
the production thereof in any trial or other proceedings relative thereto, and
any such action or proceedings instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation
of the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents and attorneys, shall be for the ratable benefit of the Note
Holders.
In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall
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be a party), the Indenture Trustee shall be held to represent all the Note
Holders, and it shall not be necessary to make any Note Holders parties to any
such proceedings.
SECTION 4.10. Limitations on Suits by Note Holders. No Note
Holder shall have any right to pursue a remedy under this Indenture or any
Equipment Note, unless such Note Holder previously shall have given to the
Indenture Trustee written notice of an Indenture Default and of the continuance
thereof, as hereinbefore provided, and unless also a Majority in Interest of
Note Holders shall have made a written request to the Indenture Trustee to
pursue such remedy and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Indenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall have
failed to pursue such remedy and no direction inconsistent with such written
request shall have been given to the Indenture Trustee during such 60-day period
pursuant to Section 5.02 hereof; it being understood and intended, and being
expressly covenanted by each Note Holder and the Indenture Trustee, that no one
or more Note Holders shall have any right in any manner whatever by virtue or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of any other Note Holder or, except as otherwise provided herein
(including, without limitation, Section 2.13), to obtain or seek to obtain
priority over or preference to any other such Note Holder or to enforce any
right under this Indenture, except in the manner herein provided. For the
protection and enforcement of the provisions of this Section 4.10, each and
every Note Holder and the Indenture Trustee shall be entitled to such relief as
can be given either at law or in equity.
SECTION 4.11. Unconditional Right of Note Holders to Receive
Principal, Interest and Premium, and to Institute Certain Suits. Notwithstanding
any other provision in this Indenture and any provision of any Equipment Note,
the right of any Note Holder to receive payment of the Principal Amount of and
interest on such Equipment Note on or after the respective due dates expressed
in such Equipment Note, or, subject to Section 4.10, to institute suit in a
manner consistent with the limitations contained in Section 4.04(a) hereof for
the enforcement of any such payment on or after such respective dates as herein
provided, shall not be impaired or affected without the consent of such Note
Holder.
SECTION 4.12. Exercise of Remedies by Foreign Note Holders. If
the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a
time when (i) the Aircraft is registered with the Federal Aviation
Administration, (ii) 25% or more of the then unpaid Principal Amount of the
Equipment Notes
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is held by one or more Persons which are not a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii)
remedies are to be exercised pursuant to this Article IV as a result of the
occurrence of an Indenture Event of Default which is not a Lease Event of
Default, the Indenture Trustee shall make arrangements, if any, as may be
required by law so that such exercise of remedies shall not result in the
ineligibility of the Aircraft to be registered under the Federal Aviation Act.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the
event the Indenture Trustee shall have knowledge of an Indenture Event of
Default, or shall have knowledge of an Indenture Default arising either from a
failure to pay Rent or a Lease Default of the type referred to in the second
sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof
to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex,
telegraph or telephone (confirmed by written notice in the manner provided by
Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to
the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof
and of this Section 5.01, the Indenture Trustee shall take such action, or
refrain from taking such action, with respect to any Indenture Event of Default
or Indenture Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Note Holders. Subject to the provisions of Section 5.03
hereof, if the Indenture Trustee shall not have received instructions as above
provided within 20 calendar days after mailing notice of such Indenture Default
or Indenture Event of Default to the Note Holders, the Indenture Trustee may,
subject to instructions thereafter received pursuant to the preceding provisions
of this Section 5.01, take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action, with respect
to such Indenture Default or Indenture Event of Default as it shall determine to
be advisable and in the best interests of the Note Holders 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 its own affairs; provided that the
Indenture Trustee may not sell the Aircraft or any part thereof without the
consent of a Majority in Interest of Note Holders. In the event the Indenture
Trustee shall at any time elect to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the
case of any such party) not stayed or otherwise prohibited by
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applicable law, the Owner Participant, the Note Holders, the Owner Trustee and
the Lessee. For all purposes of this Indenture, in the absence of actual
knowledge on the part of an officer in the Corporate Trust Office, in the case
of the Indenture Trustee, or its Corporate Trust Administration Department, 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 an Indenture Event of
Default (except, in the case of the Indenture Trustee, the failure of the Lessee
to pay any installment of Rent when due, if any portion of such installment was
then required to be paid to the Indenture Trustee, which failure shall
constitute knowledge of an Indenture Default for purposes of the first sentence
of this Section 5.01) unless notified in writing by the Lessee, the Owner
Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the
Indenture Trustee.
SECTION 5.02. Action Upon Instructions. Subject to the terms
of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, 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 to
take such other action hereunder or under any other Indenture Document or in
respect of any part or all of the Trust Indenture Estate as shall be specified
in such instructions; (ii) take such action with respect to, or to preserve or
protect, the Trust Indenture Estate (including the discharge of Liens) as shall
be specified in such instructions and as are 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 of 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 interest created hereunder in the Trust Indenture Estate as may
be specified from time to time in written instructions of a Majority in Interest
of Note Holders (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may, but shall not be obligated to, execute and
file or cause to be filed any financing statement which it from time to time
deems appropriate or any continuation statement that the Lessee, in discharge of
its obligations under Section 3(v) of the Refunding Agreement or any other
Operative Document, may so request. Notwithstanding the foregoing or anything in
this Indenture to the contrary, the Indenture Trustee may, on the advice of its
counsel and without the consent or
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approval of any Note Holder, approve any counsel asked to opine on any matters
under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the
Lease or under this Indenture and approve any opinion issued by such counsel;
provided, however, that this provision will not interfere with the Owner
Participant's right to consent to such counsel. None of the Owner Participant,
the Owner Trustee or the Lessee have any liability for the failure of the
Indenture Trustee to discharge its obligations hereunder.
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 hereof unless
the Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the first sentence
thereof) or 5.02 or Article IV hereof, nor shall any other provision of this
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 of the other Indenture Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Aircraft or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided
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herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and obtain such instructions promptly so as not
unreasonably to delay the proposed action of Lessee in respect of which the
instructions are sought. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Article VII hereof or any
other Operative Document) promptly take such action as may be necessary to duly
discharge all Lenders' Liens on any part of the Trust Indenture Estate
attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding
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, or place Liens on, the Aircraft or any
other part of the Trust Indenture Estate except (i) as required or permitted by
the terms of the Lease or the Refunding Agreement, or (ii) in accordance with
the powers granted to, or the authority conferred upon, the Owner Trustee and
the Indenture Trustee pursuant to this Indenture and in accordance with the
terms hereof.
SECTION 5.06. Replacement Airframes, Replacement Engines and
Replacement Parts. (a) If at any time and from time to time, the Airframe or
Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a),
11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s),
as the case may be, in accordance with the provisions of this Section 5.06 and
the provisions of said Sections of the Lease, the Owner Trustee shall, at such
time or times, but subject to compliance with the conditions to such replacement
set forth in the Lease, direct the Indenture Trustee to execute and deliver to
or as directed in writing by the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine(s) 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:
(1) A written request from the Owner Trustee, requesting such release
and specifically describing the Airframe and/or Engine(s) so to be released and
the Replacement Airframe and/or Replacement Engine(s).
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(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number (or other applicable
registration number) and manufacturer's serial number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number (or other applicable
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 hold legal title to (or, if
the Japanese Lease Agreement is then in effect, be the beneficial owner
of) such Replacement Airframe free and clear of all Liens except
Permitted Liens, that such Replacement Airframe will on such date be in
good operating condition, and that such Replacement Airframe has been
or, substantially concurrently with such replacement, is in the process
of being duly registered with the Owner Trustee as owner thereof under
the Federal Aviation Act or under the law then applicable to the
registration of the Aircraft and that an airworthiness certificate has
been duly issued under the Federal Aviation Act (or such other
applicable law) with respect to such Replacement Airframe, and that
such registration and certificate is in full force and effect, and the
Lessee or a Permitted Sublessee will have the full right and authority
to use such Replacement Airframe;
(iv) that the insurance required by Section 12 of the Lease is in
full force and effect with respect to such Replacement Airframe and all
premiums then due thereon have been paid in full;
(v) that the Replacement Airframe is of a like Airbus A320-231
model airframe with equivalent or better modification status;
(vi) that no Lease 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 a Replacement Airframe;
(vii) an appraisal prepared in accordance with the Appraisal
Procedure (as defined in the Lease) confirms that
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the Replacement Airframe has a value, utility and remaining useful life
at least equal to that of the Airframe which suffered the Event of Loss
assuming that the same were maintained in accordance with the
requirements of the Lease whether or not they are in fact so
maintained; and
(viii) that each of the conditions specified in Section 11(a)
and (c) of the Lease with respect to such Replacement Airframe have
been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) 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;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Engine the Owner Trustee will hold title to (or, if the
Japanese Lease Agreement is then in effect, beneficial ownership of)
such Replacement Engine free and clear of all Liens except Permitted
Liens, that such Replacement Engine will on such date be in good
operating condition, and that such Replacement Engine is the same or an
improved model as the Engine to be released;
(iv) the value, remaining useful life and utility of the
Replacement Engine as of the date of such certificate (which value,
remaining useful life and utility shall not be less than the then
value, remaining useful life and utility of the Engine requested to be
released, assuming such Engine was in the condition and repair required
to be maintained under the Lease (but without regard to hours and
cycles until overhaul));
(v) that no Lease 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 Engine; and
(vi) that each of the conditions specified in Section 11(b) of
the Lease with respect to such Replacement Engine have been satisfied.
(3) The appropriate instrument or instruments (i) transferring to the
Owner Trustee title to (of, if the Japanese Lease Agreement is then in effect,
beneficial ownership of) the Replacement Airframe or Replacement Engine to be
received as consideration for the Airframe or Engine to be released, (ii)
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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 (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Airframe or Replacement Engine to the Lien of this Indenture
and to the Japanese Lease Agreement, if then in effect, and subjecting to any
relevant Assigned Sublease and Sublease Assignment, including, without
limitation, an Indenture Supplement.
(4) With respect to a Replacement Airframe, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee confirming
the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof.
(5) The opinion of counsel to the Lessee, satisfactory to the Indenture
Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the requirements of this
Indenture and the Lease and, upon the basis of such application, the
property so sold or disposed of may be properly released from the Lien
of this Indenture and all conditions precedent herein provided for
relating to such release have been complied with;
(ii) the Replacement Airframe and/or Replacement Engine(s) have
been validly subjected to the Lien of this Indenture and covered by the
Lease and the Japanese Lease Agreement, if then in effect, the
instruments subjecting such Replacement Airframe or Replacement Engine
to the Lien of this Indenture, the Lease and, the Japanese Lease
Agreement, if then in effect, and subjecting to any relevant Assigned
Sublease and Sublease Assignment, as the case may be, have been duly
filed for recordation pursuant to the Federal Aviation Act or any other
law then applicable to the registration of the Aircraft, and no further
action, filing or recording of any document is necessary in order to
establish and perfect, in the United States and, if the Aircraft is
registered outside the United States, in the jurisdiction of
registration, the legal title to (or, if the Japanese Lease Agreement
is then in effect, the beneficial ownership of) the Owner Trustee to
such Replacement Airframe and/or Replacement Engine and the Lien of
this Indenture on such Replacement Airframe and/or Replacement Engine;
and
(iii) the Owner Trustee and the Indenture Trustee (as assignee
of the Owner Trustee's rights under the Lease)
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shall be entitled to the benefits of Section 1110 of the Bankruptcy
Code with respect to the Replacement Airframe and, if an Event of Loss
with respect to the Aircraft has occurred, the Replacement Engines to
the same extent as with respect to the Airframe and Engines then
installed thereon prior to such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Airframe or Engine as contemplated by
Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for
the benefit of the Note Holders and the Lessee, subject to fulfillment of the
conditions precedent and compliance by the Lessee with its obligations set forth
in Section 11 of the Lease, to execute and deliver the appropriate instruments
as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee
(or any relevant Permitted Sublessee) an appropriate instrument releasing the
Airframe and/or Engine(s) being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or Engine as contemplated by Section 11
of the Lease and Section 5.06 hereof, all provisions of this Indenture relating
to the Airframe or Engine(s) being replaced shall be applicable to such
Replacement Airframe or Replacement Engine(s) with the same force and effect as
if such Replacement Airframe or Replacement Engine(s) were the same airframe or
engine(s), as the case may be, as the Airframe or Engine(s) being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note
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Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Note Holder shall affect the
sufficiency of such notice with respect to other Note Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Note Holders shall be filed with the Indenture Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this Indenture, including
the Granting Clause, but subject always to the final paragraph of this Section
5.10, the following rights shall be reserved to the Owner Trustee or Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
(a) the Owner Trustee or the Owner Participant may, without
the consent of the Indenture Trustee, demand, collect, sue for or
otherwise obtain all amounts included in Excepted Payments from the
Lessee, exercise any election or option or make any decision or
determination or give or receive any notice, consent, waiver or
approval in respect of any Excepted Payment and seek legal or equitable
remedies to require the Lessee to maintain the insurance coverage
referred to in Section 12 of the Lease (or the comparable provisions of
any Assigned Sublease) and such specific performance of the covenants
of the Lessee under the Lease (or the comparable provisions of any
Assigned Sublease) relating to the protection, maintenance, possession
and use of the Aircraft; provided, that the rights referred to in this
clause (a) shall not be deemed to include the exercise of any remedies
provided for in Section 18 of the Lease (or the comparable provisions
of any Assigned Sublease) other than the right to proceed by
appropriate court action, either at law or in equity, to enforce
payment by the Lessee of such amounts included in Excepted Payments or
performance by the Lessee of such insurance covenant or to recover
damages for the breach thereof or for specific performance of any
covenant of the Lessee;
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(b) unless an Indenture Event of Default and an Indenture
Trustee Event shall have occurred and be continuing, the Indenture
Trustee shall not, without the consent of the Owner Trustee, which
consent shall not be withheld if no right or interest of the Owner
Trustee or the Owner Participant shall be materially diminished or
impaired thereby, (i) enter into, execute and deliver amendments,
modifications, waivers or consents in respect of any of the provisions
of the Lease, any Assigned Sublease or any Sublease Assignment, or (ii)
approve any accountants, engineers, appraisers or counsel as
satisfactory to render services for or issue opinions to the Owner
Trustee pursuant to the Operative Documents; provided that, whether or
not an Indenture Event of Default has occurred and is continuing, the
Owner Trustee's consent shall be required with respect to any
amendments, modifications, waivers or consents in respect of any of the
provisions of Sections 6, 12 or 16 of the Lease, or of any other
Section of the Lease to the extent such action shall affect (y) the
amount or timing of, or the right to enforce payment of any Excepted
Payment or (z) the amount or timing of any amounts payable by the
Lessee under the Lease as originally executed (or as subsequently
modified with the consent of the Owner Trustee) which, absent the
occurrence and continuance of an Indenture Event of Default hereunder,
would be distributable to the Owner Trustee under Article III hereof;
(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses
(a), (b) and (c) above, so long as no Indenture Event of Default has
occurred and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner
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Trustee and the Owner Participant under the Lease shall be exercised by
the Owner Trustee and/or the Owner Participant, as the case may be, to
the exclusion of the Indenture Trustee and any Note Holder and without
the consent of the Indenture Trustee or any Note Holder; provided that
the foregoing shall not, nor shall any other provision of this Section
5.10, limit (A) any rights separately and expressly granted to the
Indenture Trustee or any Note Holder under the Lease or the other
Operative Documents (including, without limitation, Section 15 of the
Refunding Agreement) or (B) the right of the Indenture Trustee or any
Note Holder to receive any funds to be delivered to the Owner Trustee
under the Lease (except with respect to Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment), (B) declare the Lease to be in default under
Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and
4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than
in connection with Excepted Payments) and in Article IV hereof.
SECTION 5.11. Evidence of Action Taken by Note Holder. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Note Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Note Holders in person or by agent duly appointed in
writing, and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof
of execution of any instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Sections 5.04,
5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner
Trustee if made in the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the
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Corporate Trust Office and upon proof of holding an Equipment Note, revoke such
action so far as concerns such Equipment Note. Except as aforesaid any such
action taken by the Note Holder shall be conclusive and binding upon such Note
Holder and upon all future Note Holders and owners of such Equipment Note and of
any Equipment Notes issued in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon any such Equipment
Note. Any action taken by the Note Holders of the percentage in aggregate
Principal Amount of the Equipment Notes specified in this Indenture in
connection with such action shall be conclusively binding upon the Owner
Trustee, the Indenture Trustee and the Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee in
its individual capacity accepts the trust hereby created and agrees to perform
the same but only upon the terms of this Indenture. The Indenture Trustee agrees
for the benefit of the Note Holders, the Owner Trustee and the Owner Participant
to receive and disburse all moneys constituting part of the Trust Indenture
Estate in accordance with the terms hereof; and neither the Trust Company nor
the Indenture Trustee shall be answerable or accountable under any
circumstances, except for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be negligence), or as provided in the fourth sentence of Section 2.04(a)
hereof and in the last sentence of Section 5.04 hereof, and except for
liabilities that may result, in the case of the Trust Company, from the
inaccuracy of any representation or warranty of the Trust Company in the
Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the
failure to perform any covenant of the Trust Company pursuant to Section 4.01(a)
hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of
the Indenture Trustee, from the inaccuracy of any representation or warranty, or
failure to perform any covenant, of the Indenture Trustee made in its individual
capacity herein, in the Refunding Agreement or in any other document. None of
the Owner Participant, the Trust Company or the Indenture Trustee shall be
liable for any action or inaction of any other one of such parties, except, in
the case of the Owner Participant, for any action or omission of the Owner
Trustee performed or omitted on the instructions of the Owner Participant. The
Owner Trustee shall not be deemed a trustee for the Note Holders for any
purpose.
SECTION 6.02. Absence of Duties. In the case of the Indenture Trustee,
except in accordance with written instructions
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furnished pursuant to Section 5.01, 5.02 or 9.01 hereof, and except as provided
in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof
and, in the case of the Owner Trustee, except as provided in Section 4.01(b),
6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding
Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to
see to any registration of the Aircraft or any recording or filing of the Lease
or of this Indenture or any other document, or to see to the maintenance of any
such registration, recording or filing, (ii) to see to any insurance on the
Aircraft, 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 Trust 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 or
any of the Permitted Sublessee's covenants under any Assigned Sublease with
respect to the Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE)
NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE
MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE 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 ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except
that the Trust Company warrants that (i) on the Delivery Date for the Aircraft
the Owner Trustee shall have received whatever interest in the Aircraft was
conveyed to it under the Japanese Lease Agreement and the Japanese Lease
Assignment subject to the rights of the parties to the Indenture Documents and
(ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the
Trust Company. Neither the Trust Company nor the Indenture Trustee 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 Documents 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 in its individual capacity or as
Indenture Trustee made under this Indenture or in the other Operative Documents.
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SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid to
or retained by the Indenture Trustee pursuant to any provision hereof and not
then required to be distributed to any Note Holder, the Lessee or the Owner
Trustee as provided in Article III hereof need not be segregated in any manner
except to the extent required by law, 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 hereof) 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 any liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the
Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of 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, but in the case of any such certificate, the Owner
Trustee and the Indenture Trustee shall be under a duty to examine the same to
determine whether or not it conforms to the requirements of this Indenture. 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, except that any such execution or performance shall not derogate
from
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the Indenture Trustee's obligations under the third sentence of Section 2.04(a),
the Indenture Trustee and the Owner Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or attorney appointed
with due care hereunder. The Indenture Trustee may, at the expense of the Trust
Indenture Estate, consult with counsel, accountants and other skilled Persons to
be selected and retained by it, and the Owner Trustee and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by them
in accordance with the written advice or written opinion of any such counsel,
accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against any Note Holder or the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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
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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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee from and after the
Restatement Date (whether or not also agreed to be indemnified against by any
other Person under any other document) in any way relating to or arising out of
this Indenture, the Trust Agreement, the Equipment Notes, the other Indenture
Documents or the enforcement of any of the terms of any thereof, or in any way
relating to or arising out of the manufacture, purchase, acceptance,
nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use,
operation, condition, sale, return or other disposition of the Aircraft or any
Engine (including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust
Indenture Estate or the action or inaction of the Indenture Trustee hereunder,
except only (i) in the case of willful misconduct or gross negligence (or
negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the
Indenture Trustee, in its individual capacity and as Indenture Trustee, and its
successors, permitted assigns, agents and servants, thereunder; provided that so
long as the
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Lease is in effect, the Indenture Trustee shall not make any claim under this
Section 7.01 for any amount indemnified against by the Lessee under the Lease
without first (but only to the extent not stayed or otherwise prevented by
operation of law) making demand on the Lessee for payment of such amount. The
Indenture Trustee shall notify the Owner Trustee and the Lessee promptly of any
claim for which it may seek indemnity. The Lessee shall be entitled to defend
any claim by the Indenture Trustee to the extent provided in Section 10 or 13 of
the Lease. The Indenture Trustee shall be entitled to indemnification from the
Trust Indenture Estate for any liability, obligation, loss, damage, penalty,
claim, action, suit, cost, expense or disbursement indemnified against pursuant
to this Section 7.01 to the extent not reimbursed by the Lessee or others, but
without releasing any of them from their respective agreements of reimbursement;
and to secure the same the Indenture Trustee shall have a prior Lien on the
Trust Indenture Estate. The indemnities contained in this Section 7.01 shall
survive the termination of this Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
agent or affiliate of the Trust Company or the Owner Participant (the
"Exculpated Equity Persons") shall have any obligation, duty or liability of any
kind whatsoever to the Indenture Trustee or any such Note Holder in connection
with the exercise by any Exculpated Equity Person of any rights of the Owner
Trustee or the taking of any action or the failure to take any action by any
Exculpated Equity Person in connection with any rights of the Owner Trustee
under this Indenture or the Lease, and each such Note Holder hereby waives and
releases, to the extent permitted by applicable law, each Exculpated Equity
Person of any and all such obligations, duties or liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case
of any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Trust Company pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to the Indenture Trustee and to each Note Holder.
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SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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 and assuming such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Indenture Trustee, without further act, shall become vested with and
bound by all the estates, properties, rights, powers, duties and obligations of
the predecessor Indenture Trustee hereunder and under the other Indenture
Documents in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; but nevertheless upon the written
request of such successor Indenture Trustee, such predecessor Indenture Trustee
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor Indenture Trustee all moneys or other property then held by
such predecessor Indenture Trustee hereunder, subject nevertheless to its claim
provided for in Section 6.07 hereof.
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(c) Any successor Indenture Trustee, however appointed, shall
be a "citizen of the United States" within the meaning of Section 40102(a)(15)
of the Federal Aviation Act and shall also be a bank or trust company having a
combined capital and surplus of at least $200,000,000 if there be such an
institution willing, able and legally qualified to perform the duties of the
Indenture Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the foregoing,
upon the request of the Owner Trustee or the Lessee, any such successor
corporation referred to in this Section 8.02(d) shall deliver to the Owner
Trustee and the Lessee an instrument confirming its status as the Indenture
Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate may at the time be
located or in which any action of the Indenture Trustee may be required to be
performed or taken, the Indenture Trustee, by an instrument in writing signed by
it, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee, acting jointly with the Indenture
Trustee, of all or any part of the Trust Indenture Estate to the full extent
that local law makes it necessary for such separate trustee or separate trustees
or co-trustee acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust 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
to act alone) subject to all the terms of this Indenture. Any separate trustee
or
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separate trustees or co-trustee may, at any time by an instrument in writing,
constitute the Indenture Trustee its, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act, and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Indenture
Trustee;
(ii) all other rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional
trustee or trustees and separate trustee or trustees jointly except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Indenture Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the
holding of title to the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional
trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent
of, the Indenture Trustee; and
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(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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.03,
the powers of any additional trustee or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures.
(a) Except as otherwise provided in Section 5.10 hereof, and except with respect
to Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or supplement to the Lease or any of the Japanese Financing
Documents, or execute and deliver any written waiver or modification of, or
consent under, the terms of the Lease or any of the Japanese Financing
Documents, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by the Indenture Trustee acting on instructions of a
Majority in Interest of Note Holders. Anything to the contrary contained in this
Section 9.01 notwithstanding, without the necessity of the consent of any of the
Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee,
(i) any Excepted Payments payable to the Owner Trustee or Owner Participant may
be modified, amended, changed or waived in such manner as shall be agreed to by
the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long
as no Indenture Event of Default has occurred and is continuing, enter into
amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and
Exhibits B and E (except to the extent that such amendment would adversely
affect the rights or exercise of remedies under Section 18 of the Lease) so long
as such
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amendments, modifications and changes do not and would not (A) affect the time
of, or reduce the amount of, Basic Rent or Stipulated Loss Value payments until
after the payment in full of all Secured Obligations, (B) impair the Lien of
this Indenture, (C) adversely affect the value, utility or useful life of the
Aircraft or any Engine or (D) otherwise adversely affect the Note Holders in any
material respect, and (iii) the Lessee may effect the re-registration of the
Aircraft in accordance with but always subject to the terms and conditions
applicable thereto specified in Section 11 of the Refunding Agreement and
Section 6(e) of the Lease and the Indenture Trustee may approve any Permitted
Sublessee as provided in clause (c) of the definition of such term set forth in
the Lease and may exercise the rights of the Indenture Trustee under Section 15
of the Refunding Agreement. For the avoidance of doubt, nothing in this Section
9.01 shall limit in any way the rights of the Owner Trustee and/or the Owner
Participant under Section 5.10(d) to exercise certain rights and powers under
the Lease to the exclusion of the Indenture Trustee and any Note Holder and
without the consent of the Indenture Trustee or any Note Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise, whether in its
official or individual capacity.
Any supplemental indenture authorized by the provisions of
this Section 9.01 may be executed without the consent of the Note Holders
notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, any of the Japanese
Financing Documents or any other agreement included in the Trust Indenture
Estate, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by a Majority in Interest of Note Holders, or does not
adversely affect the Note Holders in any material respect. Upon the written
request of a Majority in Interest of Note Holders, the Indenture Trustee shall
from time to time enter into any such supplement or amendment, or execute and
deliver any such waiver, modification or consent, as may be specified in such
request and as may be (in the case of any such
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amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the Lease which would permit redemption of
Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any
of the provisions of Section 4(b) of the Lease, or modify, amend or supplement
the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any
assignment of any thereof, in either case releasing the Lessee (or Permitted
Sublessee) from its obligations in respect of the payment of Basic Rent or
Stipulated Loss Value for the Aircraft or altering the absolute and
unconditional character of the obligations of Lessee to pay Rent as set forth in
Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned
Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate
or any part thereof other than Permitted Liens or deprive any Note Holder of the
benefit of the Lien of this Indenture on the Trust Indenture Estate, except as
provided in connection with the exercise of remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as
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the Owner Trustee in accordance with the terms of the Trust Agreement or to
evidence the succession of a new trustee hereunder pursuant hereto, the removal
of the trustee hereunder or the appointment of any co-trustee or co-trustees or
any separate or additional trustee or trustees; (iii) to convey, transfer,
assign, mortgage or pledge any property to or with the Indenture Trustee or to
make any other provisions with respect to matters or questions arising hereunder
so long as such action shall not adversely affect the interests of the Note
Holders in its capacity solely as Note Holder or impose upon the Lessee any
additional indemnification obligations; (iv) to correct or amplify the
description of any property at any time subject to the Lien of this Indenture or
better to assure, convey and confirm unto the Indenture Trustee any property
subject or required to be subject to the Lien of this Indenture, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of the Owner Trustee for the benefit of the Note Holders, or to
surrender any rights or powers herein conferred upon the Owner Trustee, the
Owner Participant or the Lessee; (vi) to add to the rights of the Note Holders;
and (vii) to include on the Equipment Notes any legend as may be required by
law.
(d) Without the consent of the Lessee, no amendment or
supplement to this Indenture or waiver or modification of the terms hereof shall
adversely affect the Lessee in any material respect or impose upon the Lessee
any additional indemnification obligations.
SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Indenture Trustee, the Owner Trustee
and the Note Holders shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for all and any
purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and
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delivered after the execution of any supplemental indenture pursuant to the
provisions of this Article IX may bear a notation in form approved by the
Indenture Trustee as to any matter provided for by such supplemental indenture.
If the Owner Trustee or the Indenture Trustee shall so determine, new Equipment
Notes so modified as to conform, in the opinion of the Owner Trustee and the
Indenture Trustee, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Owner Trustee, authenticated by
the Indenture Trustee and delivered in exchange for the Equipment Notes then
outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such copy
to each Note Holder), but the failure of the Owner Trustee or the Indenture
Trustee to mail such conformed copies shall not impair or affect the validity of
such document. The Indenture Trustee will furnish to each Note Holder, promptly
upon receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to the Indenture Trustee
under the Lease or hereunder to the extent that the same were not required to
have been furnished to such Note Holder pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX, no
written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX 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, any Engines or other property
thereto or to release the Aircraft, any Engine or other property therefrom or to
execute and deliver an Indenture Supplement, in each case pursuant to the terms
hereof or to execute and deliver any supplement or certificate necessary with
respect to the foregoing under the Japanese Lease Agreement.
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SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge
of such Lien and the termination of such security interest in the Aircraft and
release of 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
Trustee to give effect to such discharge, termination and 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 as expressly
provided pursuant to Article X hereof or upon any sale or other final
disposition by the Indenture Trustee of all property part of the Trust Indenture
Estate and the final distribution by the Indenture Trustee of all moneys or
other property or proceeds constituting part of the Trust Indenture Estate in
accordance with the terms hereof. Except as aforesaid otherwise provided, this
Indenture and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Note Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
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SECTION 10.03. Sale of Aircraft by Indenture Trustee is
Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee
made pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the 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 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of the Aircraft, except in
accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations, directions, consents,
waivers or documents required or permitted by the terms of this Indenture shall
be in English and in writing, mailed by first-class registered or certified
mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the
Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration Department (telex:
835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the
Owner Participant at its address set forth in the Refunding Agreement, (ii) if
to the Indenture Trustee, addressed to it at its office at 450 West 33rd Street,
15th Floor, New York, New York 10001, Attention: Corporate Trust Department
(telecopy: (212) 946-8160) or (iii) if to the Owner Participant, the Lessee or
any Note Holder, addressed to such party at such address as such party shall
have furnished by notice to the Owner Trustee and the Indenture Trustee, or,
until an address is so furnished, addressed to the address of such party (if
any) set forth on the
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signature pages to the Refunding Agreement or in the Register. Whenever any
notice in writing is required to be given by the Owner Trustee or the Indenture
Trustee or any Note Holder to any of the other of them, such notice shall be
deemed and such requirement satisfied when such notice is received. Any party
hereto may change the address to which notices to such party will be sent by
giving notice of such change to the other parties to this Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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 permitted assigns of each, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Note Holder shall bind the successors and assigns of
such Note Holder. This Indenture and the Trust Indenture Estate shall not be
affected by any amendment or supplement to the Trust Agreement or by any other
action taken under or in respect of the Trust Agreement, except that each
reference in this Indenture to the Trust Agreement shall mean the Trust
Agreement as amended and supplemented from time to time to the extent permitted
hereby and thereby. Each Note Holder by its acceptance of an Equipment Note
agrees to be bound by this Indenture and all provisions of the Refunding
Agreement applicable to a Note Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the
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Indenture Trustee, the Owner Trustee, the Owner Participant, any Note Holder or
any bank or other Affiliate of any of them may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
the Lessee or any Permitted Sublessee fully to the same extent as if this
Indenture were not in effect, including without limitation the making of loans
or other extensions of credit to the Lessee for any purpose whatsoever, whether
related to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the
parties that the Owner Trustee, as lessor under the Lease (and the Indenture
Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled
to the benefits of Section 1110 of the Bankruptcy Code with respect to the right
to take possession of the Aircraft, Airframe, Engines and Parts as provided in
the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in
which Lessee is a debtor, and in any instance where more than one construction
is possible of the terms and conditions hereof or of any other pertinent
Operative Document, each such party agrees that a construction which would
preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14. JL Security Agreement. The Owner Trustee hereby
confirms and agrees that its security interest in and to the Aircraft granted
under the JL Security Agreement is and shall be subject and subordinate in all
respects to the Lien of this Indenture, and in the event the Indenture Trustee
shall foreclose the Lien of this Indenture and sell or otherwise transfer the
Aircraft, such sale or other transfer shall be free and clear of such security
interest.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
expressly provided herein, but
solely as Owner Trustee
By: _________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity, except as
expressly provided herein, but
solely as Indenture Trustee
By: _________________________________
Name:
Title:
Trust Indenture
<PAGE> 101
EXHIBIT A
TO
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-5]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1989 BN-5]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1989 BN-5] dated as
of September 22, 1989 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1989
BN-5] dated as of September 22, 1989, as amended and restated as of October 1,
1991 and as further amended and restated as of November 26, 1996 (as so amended
and restated, the "Indenture") between the Owner Trustee and The Chase Manhattan
Bank (formerly known as Chemical Bank, successor by merger to Manufacturers
Hanover Trust Company), as Indenture Trustee (the "Indenture Trustee"), provides
for the execution and delivery of a supplement thereto substantially in the form
hereof which shall particularly describe the Aircraft (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 Trust Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated September 22, 1989 subjected to the Lien of
such Indenture the airframe and engines therein described, which Original
Indenture and Trust Indenture Supplement No. 1 have been duly recorded with the
Federal Aviation Administration as one document on September 26, 1989 and
assigned Conveyance No. G75346.
WHEREAS, the Amended and Restated Indenture (which amended and
restated the Original Indenture), as supplemented by Trust Indenture Supplement
No. 2 dated October 24, 1991 subjected to the Lien of such Indenture the
airframe and engines therein described, which Amended and Restated Indenture and
Trust Indenture Supplement No. 2 have been duly recorded with the Federal
Aviation Administration as one document on November 12, 1991 and assigned
Conveyance No. Z91420.
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- 2 -
WHEREAS(1), 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(2), the Owner Trustee has, as provided in the
Indenture, heretofore executed and delivered to the Indenture Trustee [3]
Indenture Supplement(s) for the purpose of specifically subjecting to the Lien
of the Indenture certain airframes and/or engines therein described, which
Indenture Supplement(s) is (are) dated and has (have) been duly recorded with
the Federal Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
---- ---------------- ----------------
NOW, THEREFORE, This Supplement Witnesseth, that, to secure
the prompt payment of the Principal Amount of, interest on, Make-Whole Amount,
if any, and all other amounts due with respect to, all 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 contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner
Trustee has granted, bargained, sold,
- ----------
1 This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
2 This recital not to be included in the first Indenture Supplement.
3 Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 103
- 3 -
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 Note Holders from time to time, in the trust created
by the Indenture, a first priority security interest in and mortgage Lien on all
estate, right, title and interest of the Owner Trustee in, to and under the
following described property:
AIRFRAME(S)
( ) airframe(s) identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------ ----- ------ -------------
together with all 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.
AIRCRAFT ENGINES
( ) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as
follows:
Manufacturer's
Manufacturer Model Serial Number
- ------------ ----- -------------
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engines.
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.
Form of Trust Indenture Supplement
<PAGE> 104
- 4 -
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 Note Holders from time to time, in the trust created
by the Indenture, all of the estate, right, title and interest of the Owner
Trustee in, to and under the Lease and Lease Supplement [GPA 1989 BN-5] No. 3 of
even date herewith (other than Excepted Payments) 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 Note Holders from time to time for the uses and purposes and
subject to the terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and shall form a part of it, and the Indenture is hereby incorporated
by reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 105
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this
Supplement to be duly executed by one of its officers thereunto duly authorized
on the day and year first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By_________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 106
SCHEDULE I
TO
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-5]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
<S> <C> <C> <C>
Series A $ 11,936,661 02-Jul-2005 6.85%
Series B $ 4,476,247 02-Jan-2002 6.93%
Series C $ 4,476,247 02-Jan-2002 6.86%
Series D $ 2,288,832 02-Jan-98 8.16%
</TABLE>
<PAGE> 107
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N624AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 108
SERIES B
Aircraft: N624AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 109
SERIES C
Aircraft: N624AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 110
SERIES D
Aircraft: N624AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 111
SCHEDULE II
TO
SECOND AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[GPA 1989 BN-5]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1A, dated
November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1B, dated
November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1C, dated
November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1D, dated
November 26, 1996.
Schedule II-1
<PAGE> 1
EXHIBIT 4.34
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-6]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 65
Registration No. N626AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GRANTING CLAUSE.............................................................. 3
HABENDUM CLAUSE.............................................................. 7
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions........................................... 9
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes....................................... 22
SECTION 2.02. Issuance and Terms of Equipment Notes......................... 28
SECTION 2.03. Payments from Trust Indenture Estate
Only....................................................... 31
SECTION 2.04. Method of Payment............................................. 32
SECTION 2.05. Application of Payments....................................... 35
SECTION 2.06. Termination of Interest in Trust
Indenture Estate........................................... 36
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes............................................ 36
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes............................................ 37
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation............................................... 38
SECTION 2.10. Mandatory Redemptions of Equipment
Notes...................................................... 38
SECTION 2.11. Redemptions; Notice of Redemption............................. 39
SECTION 2.12. Option to Purchase Equipment Notes............................ 40
SECTION 2.13. Subordination................................................. 41
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions.................................... 42
SECTION 3.02. Event of Loss and Replacement................................. 43
SECTION 3.03. Payment After Indenture Event of
Default, etc............................................... 44
SECTION 3.04. Certain Payments.............................................. 47
SECTION 3.05. Other Payments................................................ 48
SECTION 3.06. Payments to Owner Trustee..................................... 48
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee........................................ 49
</TABLE>
Trust Indenture
<PAGE> 3
- ii -
<TABLE>
<CAPTION>
Page
----
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
<S> <C>
SECTION 4.01. Covenants of Trust Company and Owner
Trustee.................................................. 49
SECTION 4.02. Indenture Events of Default................................... 51
SECTION 4.03. Certain Rights................................................ 54
SECTION 4.04. Remedies...................................................... 55
SECTION 4.05. Return of the Aircraft, etc................................... 59
SECTION 4.06. Remedies Cumulative........................................... 60
SECTION 4.07. Discontinuance of Proceedings................................. 60
SECTION 4.08. Waiver of Past Indenture Defaults............................. 61
SECTION 4.09. Indenture Trustee May Prove Debt.............................. 61
SECTION 4.10. Limitations on Suits by Note Holders.......................... 63
SECTION 4.11. Unconditional Right of Note Holders to
Receive Principal, Interest and
Premium, and to Institute Certain
Suits.................................................... 64
SECTION 4.12. Exercise of Remedies by Foreign Note
Holders.................................................. 64
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default.......................... 64
SECTION 5.02. Action Upon Instructions...................................... 65
SECTION 5.03. Indemnification............................................... 66
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions................................ 66
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions..................... 67
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts............................ 67
SECTION 5.07. Indenture Supplements for Replacements........................ 71
SECTION 5.08. Effect of Replacement......................................... 71
SECTION 5.09. Notices, etc.................................................. 71
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant........................................ 72
SECTION 5.11. Evidence of Action Taken by Note Holder....................... 74
SECTION 5.12. Right of Revocation of Action Taken........................... 74
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties............................... 75
SECTION 6.02. Absence of Duties............................................. 75
</TABLE>
Trust Indenture
<PAGE> 4
- iii -
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents.................................... 76
SECTION 6.04. No Segregation of Moneys; No Interest........................ 77
SECTION 6.05. Reliance; Agents; Advice of Counsel.......................... 77
SECTION 6.06. Capacity in Which Acting..................................... 78
SECTION 6.07. Compensation................................................. 78
SECTION 6.08. May Become Note Holder....................................... 78
SECTION 6.09. Further Assurances; Financing
Statements............................................... 78
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification..................................... 79
SECTION 7.02. Exculpation and Release of Liability......................... 80
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee............................ 80
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor........................ 80
SECTION 8.03. Appointment of Separate Trustees............................. 82
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures............................................... 84
SECTION 9.02. Effect of Supplemental Indenture............................. 87
SECTION 9.03. Documents to Be Given to Trustee............................. 87
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures.................................. 87
SECTION 9.05. Trustees Protected........................................... 87
SECTION 9.06. Documents Mailed to Note Holders............................. 88
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement....................... 88
SECTION 9.08. Notices to Liquidity Provider................................ 88
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture.................................... 88
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders................................... 89
</TABLE>
Trust Indenture
<PAGE> 5
- iv -
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 10.03. Sale of Aircraft by Indenture Trustee
is Binding............................................... 89
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
Lessee and Note Holders.................................. 89
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease.......................................... 90
SECTION 10.06. Notices..................................................... 90
SECTION 10.07. Severability................................................ 90
SECTION 10.08. No Oral Modifications or Continuing
Waivers.................................................. 90
SECTION 10.09. Successors and Assigns...................................... 91
SECTION 10.10. Headings.................................................... 91
SECTION 10.11. Normal Commercial Relations................................. 91
SECTION 10.12. Governing Law; Counterpart Form............................. 91
SECTION 10.13. Section 1110................................................ 91
SECTION 10.14. JL Security Agreement....................................... 92
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
</TABLE>
Trust Indenture
<PAGE> 6
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-6]
SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [GPA 1989 BN-6] (this "Second Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank,
successor by merger to Manufacturers Hanover Trust Company), a New York
corporation, not in its individual capacity except as otherwise specifically set
forth herein, but solely as indenture trustee hereunder (in such capacity,
together with its successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company
entered into the Trust Agreement [GPA 1989 BN-6] dated as of December 15, 1989,
as supplemented by Trust Agreement Supplement [GPA 1989 BN-6] No. 1 dated
December 22, 1989, as further supplemented by Trust Agreement Supplement [GPA
1989 BN-6] No. 2 dated October 24, 1991, and as further supplemented by Trust
Agreement Supplement [GPA 1989 BN-6] No. 3 dated the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"),
whereby, among other things, Wilmington Trust Company has declared a certain
trust for the use and benefit of the Owner Participant, subject, however, to the
Trust Indenture Estate created pursuant hereto for the use and benefit of (to
the extent set forth herein), and with the priority of certain payments to, the
Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized
and directed to execute and deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [GPA 1989 BN-6] dated as
of December 15, 1989, as supplemented by Trust Indenture Supplement No. 1 dated
December 22, 1989, which were recorded by the Federal Aviation Administration on
April 2, 1990 as one instrument and assigned Conveyance No. V79847 (as so
supplemented or otherwise modified to the date hereof, the "Original
Indenture"), (ii) the Owner Trustee and the Original
Trust Indenture
<PAGE> 7
- 2 -
Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-6] dated as
of December 15, 1989, as supplemented by Lease Supplement [GPA 1989 BN-6] No. 1
dated December 22, 1989, which were recorded by the Federal Aviation
Administration on April 2, 1990 as one instrument and assigned Conveyance No.
V79848 (as so supplemented or otherwise modified to the date hereof, the
"Original Lease") and (iii) pursuant to the Original Indenture, the Owner
Trustee issued and sold to the Original Loan Participants (as defined in the
Original Indenture) the Original Loan Certificates;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into an Amended and Restated Trust Indenture and Security Agreement [GPA
1989 BN-6] dated as of October 1, 1991, as supplemented by the Trust Indenture
Supplement No. 2 [GPA 1989 BN-6], dated October 24, 1991, which were recorded by
the Federal Aviation Administration on November 12, 1991 as one document and
assigned Conveyance No. Z91423 (as amended, supplemented or otherwise modified
to the date hereof, the "First Amended and Restated Indenture"), (ii) the Owner
Trustee and the Original Head Lessee entered into an Amended and Restated
Aircraft Lease Agreement [GPA 1989 BN-6] dated as of October 1, 1991, which
amended and restated the Original Lease, as supplemented by Lease Supplement
[GPA 1989 BN-6] No. 2 dated October 24, 1991, which were recorded by the Federal
Aviation Administration on November 12, 1991 as one document and assigned
Conveyance No. Z91424 (as amended, supplemented or otherwise modified to the
date hereof, the "First Amended and Restated Lease") and (iii) pursuant to the
First Amended and Restated Indenture, the Owner Trustee issued and sold to the
Certificate Holders (as defined in the First Amended and Restated Indenture)
Equipment Trust Certificates, Series BN-6 in exchange for the Original Loan
Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and
restate the First Amended and Restated Lease pursuant to Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-6] dated as of
the date hereof among the Original Head Lessee, as assignor and the Original
Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the
Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6] dated as of
the date hereof between the Owner Trustee and the Lessee (as so assigned,
amended and restated, the "Second Amended and Restated Lease" or the "Lease")
and to enter into Lease Supplement No. 3 and (ii) cause the implementation of
the Refinancing Transaction pursuant to which, among other things, the Equipment
Trust Certificates issued to the Certificate Holders pursuant to the First
Amended and Restated Indenture shall be redeemed and new Equipment Notes shall
be issued to the Pass Through Trustees (or their designee);
Trust Indenture
<PAGE> 8
- 3 -
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Second Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
First Amended and Restated Indenture, (ii) to provide for the issuance by the
Owner Trustee of the Equipment Notes and (iii) to provide for the assignment,
mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of
the Trust Indenture Estate hereunder, among other things, of certain of the
Owner Trustee's estate, right, title and interest in and to the Aircraft and,
except as hereinafter expressly provided, all of the Owner Trustee's right,
title and interest in, to and under the Lease (as amended and restated to date
and as the same may at any time and from time to time be further amended,
restated or otherwise modified in accordance with the terms thereof and hereof)
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Note Holders, subject to Section 2.13 and
Article III hereof;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner Trustee and authenticated, issued and
delivered by the Indenture Trustee hereunder, the legal, valid and binding
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Second Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS SECOND AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment
of the Principal Amount of, interest on, Make- Whole Amount, if any, and all
other amounts due with respect to, all Equipment Notes from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions contained herein and in the
Refunding Agreement and the Equipment Notes, for the benefit of the Note
Holders, and the prompt payment of any and all amounts from time to time owing
hereunder and under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee to the Note Holders and for the uses and purposes and
subject to the terms and provisions hereof, and in consideration of the premises
and of the covenants herein contained, and of the acceptance of the Equipment
Notes by the Holders thereof, and of
Trust Indenture
<PAGE> 9
- 4 -
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, its
successors and assigns, for the security and benefit of the Note Holders from
time to time, a first priority security interest in and mortgage Lien on all
estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments (which collectively, excluding
Excepted Payments but including all property hereafter specifically subjected to
the Lien of this Indenture by any Indenture Supplement or any indenture
supplemental hereto, are included within the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and
all replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire an interest under any of the
Lease, the Japanese Lease Agreement, the First Japanese Lease
Assignment or the Second Japanese Lease Assignment, 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 and other documents to which the Owner Trustee shall from time to
time acquire an interest at any time maintained by the Lessee with
respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement (to the extent assigned to or for the
benefit of the Owner Trustee); the Purchase Agreement Warranties
Assignment; the Second Aircraft Warranty Bill of Sale; the Japanese
Lease Agreement, the Japanese Lease Supplement, the Supplemental
Agreement, the Japanese Lessor's Consent, the Assumption Agreement, the
Confirmation Agreement, the FUYO Guaranty, the JL Security Agreement
and the Omnibus Agreement (each to the extent assigned by the First
Japanese Lease Assignment and the Second Japanese Lease Assignment);
the First Japanese Lease Assignment; the Second Japanese Lease
Assignment; all documents and property and interest therein assigned by
the First Japanese Lease Assignment and the Second Japanese Lease
Assignment to the extent not otherwise covered; the BFE Bill of Sale;
each notice, letter agreement or other document related to any of the
foregoing
Trust Indenture
<PAGE> 10
- 5 -
entered into by or for the benefit of the Owner Trustee (or assigned to
the Owner Trustee); in each case including, without limitation, (x) all
rights of the Owner Trustee to exercise any election or option or to
make any decision or determination or to give any notice, consent,
waiver or approval or to take any other action under or in respect of
any such document or to accept surrender or redelivery of the Aircraft
or any part thereof, as well as all the rights, powers and remedies on
the part of the Owner Trustee, whether arising under any such document
or by statute or at law or in equity, or otherwise, arising out of any
Lease Event of Default or any "Event of Default" under and as defined
in the Japanese Lease Agreement, and (y) any right to restitution from
the Lessee, the Manufacturer or any other Person in respect of any
determination of invalidity of any such document, it being agreed that
the rights, powers and remedies referred to in the preceding clauses
(x) and (y) are presently assigned and transferred to the Indenture
Trustee and may, except as provided in Section 5.10 or elsewhere in
this Indenture, be exercised by the Indenture Trustee without the
necessity of proceeding under Section 4.04 to exercise remedies
hereunder;
(3) each Sublease Assignment and each Assigned Sublease (to
the extent assigned under such Sublease Assignment), and including,
without limitation, all rents or other payments of any kind made under
such Assigned Sublease (to the extent assigned under such Sublease
Assignment), all collateral security or credit support (in the nature
of a guarantee, letter of credit, credit insurance, Lien on or security
interest in any property or otherwise) for the obligations of the
Permitted Sublessee thereunder (to the extent assigned under such
Sublease Assignment) and all rights of the Owner Trustee to exercise
any election or option or to give any notice, consent, waiver, or
approval under or with respect of any thereof 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 (in each case to
the extent assigned to the Owner Trustee), whether arising under any
Assigned Sublease or any Sublease Assignment or by statute or at law or
in equity, or otherwise, arising out of any default under any Assigned
Sublease, it being agreed that the rights, powers and remedies referred
to above in this paragraph (3) are presently assigned and transferred
to the Indenture Trustee and may, except as provided in Section 5.10 or
elsewhere in this Indenture, be exercised by the Indenture Trustee
without the necessity of proceeding under Section 4.04 to exercise
remedies hereunder;
Trust Indenture
<PAGE> 11
- 6 -
(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, without limitation, 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 requisition proceeds with respect to the Aircraft or
any part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease and/or the Japanese Lease Agreement), and all
insurance proceeds with respect to the Aircraft or any part thereof,
including but not limited to the insurance required under Section 12 of
the Lease or under any comparable provision of any Assigned Sublease
(but excluding any excess insurance maintained by the Lessee and not
required under Section 12 of the Lease or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and
all rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel paper original executed
counterparts of the Original Lease and Lease Supplement No. 1, certified copies
of the Purchase Agreement, and execution copies of the Purchase Agreement
Warranties Assignment, the Japanese Lease Agreement, the Japanese Lease
Supplement, the First Japanese Lease Assignment, the Second Japanese Lease
Assignment, the Japanese Lessor's Consent, the Assumption Agreement, the
Confirmation Agreement, the FUYO Guaranty, the Supplemental Agreement, and the
JL Security Agreement. The Owner Trustee thereafter delivered to the Indenture
Trustee the original BFE Bill of Sale. Concurrently with the delivery of the
First Amended and Restated Indenture, the Owner Trustee delivered to the
Indenture Trustee the chattel paper original executed counterparts of the First
Amended and Restated Lease and Lease Supplement No. 2. Concurrently with the
delivery of this Second Amended and Restated Indenture, the Owner
Trust Indenture
<PAGE> 12
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Trustee is delivering to the Indenture Trustee the chattel paper original
executed counterparts of the Second Amended and Restated Lease and Lease
Supplement No. 3. All property referred to in this Granting Clause, whenever
acquired by the Owner Trustee, shall secure all obligations under and with
respect to the Equipment Notes at any time outstanding. Any and all properties
referred to in this Granting Clause which are hereafter acquired by the Owner
Trustee, shall, without further conveyance, assignment or act by the Owner
Trustee or the Indenture Trustee thereby become and be subject to the security
interest hereby granted as fully and completely as though specifically described
herein.
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 Note Holders from time to time, except as set forth in
Section 2.13 and Article III hereof without any preference, distinction or
priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or otherwise) to ask, require, demand, receive
and give acquittance for any and all moneys and claims for moneys (in each case
including insurance and requisition proceeds but excluding Excepted Payments)
due and to become due to the Owner Trustee under or arising out of the Indenture
Documents and all other property which now or hereafter constitutes part of the
Trust
Trust Indenture
<PAGE> 13
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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. Under the Lease, the Lessee is directed to make
all payments of Rent (other than Excepted Payments) and all other amounts which
are required to be paid to or deposited with the Owner Trustee pursuant to the
Lease (other than Excepted Payments) directly to the Indenture Trustee at such
address or addresses as the Indenture Trustee shall specify, for application as
provided in this Indenture. Pursuant to each Sublease Assignment, each Permitted
Sublessee will be directed from and after (i) notice of the occurrence of a
Lease Event of Default and (ii) notice that the Lease is declared or deemed in
default, to make all payments of rent and all other amounts which are required
to be paid to or deposited with the Lessee pursuant to the related Assigned
Sublease and which are assigned thereunder directly to the Indenture Trustee at
such address or addresses as the Indenture Trustee shall specify, for
application or to be held as provided in this Indenture. The Owner Trustee
agrees that promptly on receipt thereof, it will transfer to the Indenture
Trustee any and all moneys from time to time received by it constituting part of
the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant
to this Indenture, except (a) to the extent the Owner Trustee is entitled to
distribution of such moneys pursuant to this Indenture and (b) that the Owner
Trustee shall accept for distribution pursuant to the Trust Agreement any
amounts distributed to it by the Indenture Trustee under this Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that it will not assign or
pledge or otherwise dispose of, so long as this Indenture shall remain in effect
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its estate, right, title or interest hereby assigned, to anyone
other than the Indenture Trustee, and that, with respect to such estate, right,
title and interest hereby assigned, subject to its rights pursuant to Section
5.10 hereof, it will not, except as provided in this Indenture (including,
without limitation, Section 9.01) and except as to Excepted Payments, (i) accept
any payment from the Lessee, any Permitted Sublessee, FUYO or the Japanese
Lessor under any of the Indenture Documents, enter into any agreement amending,
modifying or supplementing any of the
Trust Indenture
<PAGE> 14
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Indenture Documents, or execute any waiver or modification of, or consent under,
the terms of any of the Indenture Documents, (ii) settle or compromise any claim
arising under any of the Indenture Documents, (iii) give any notice or exercise
any right or take any action under any of the Indenture Documents, or (iv)
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. For purposes of Section 4.02(e) hereof, this is the fourth paragraph
following the Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations
under 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 might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments. Further,
nothing in the Granting Clause or the preceding paragraphs shall impair any of
the rights of the Owner Trustee or the Owner Participant under Section 5.10
hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained
in the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments as the same may from time to time be supplemented or
amended or the terms thereof waived or modified to the extent permitted by, and
in accordance with, the terms thereof and of the other Operative Documents and
references to various Persons shall be deemed to be references to and include
their respective permitted successors and assigns.
"Amortization Amount" means, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Principal
Amount Repayment Date on the Amortization Schedule.
Trust Indenture
<PAGE> 15
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"Amortization Schedule" means the amortization schedule for
the Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Assumption Agreement" means, collectively, the two Assumption
Agreements dated as of September 28, 1989 between GPA Offshore and the
Grand Cayman branch of the Japanese Lender.
"Average Life Date" for each Equipment Note to be redeemed
shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such
Equipment Note. "Remaining Weighted Average Life" of such Equipment
Note, at the redemption date of such Equipment Note, shall be the
number of days equal to the quotient obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then
remaining installment of principal, including the payment due on the
maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid
Principal Amount of such Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the
United States Code, 11 U.S.C. Sections 101 et seq., as amended.
"BFE Bill of Sale" means the full warranty (as to title) bill
of sale covering the Buyer Furnished Equipment, transferring all right,
title and interest therein to the Owner Trustee.
"Business Day" means a day other than a Saturday, Sunday or a
day on which banks are required or authorized to close in either The
City of New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the
Intercreditor Agreement shall be deposited.
"Code" means the Internal Revenue Code of 1986, as
amended.
Trust Indenture
<PAGE> 16
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"Confirmation Agreement" means, collectively, Confirmation
No. 1 and Confirmation No. 2.
"Confirmation No. 1" has the meaning set forth in Appendix X
to the Japanese Lease Agreement.
"Confirmation No. 2" has the meaning set forth in Appendix X
to the Japanese Lease Agreement.
"Continuous Stay Period" has the meaning specified in
Section 4.04(a).
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee located at 450 West 33rd Street, New
York, New York 10001, Attention: Corporate Trust Department, or such
other office at which the Indenture Trustee's corporate trust business
shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Lessee, the Owner Trustee and the Note
Holders.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be evidenced
by bonds, debentures, notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series
C and Series D, the rate per annum specified for such Series under the
heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means December 22, 1989.
"Deposit Agreement" means the Deposit Agreement dated as of
September 28, 1989 between Barclays Bank PLC, a public limited company
organized under the laws of England and acting through its branch
office in Grand Cayman and the Designated Financial Institution (as
described in Section 3 of Confirmation No. 2).
"Dollars", "U.S. $" and "$" mean the lawful currency of the
United States of America.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the
Trust Indenture
<PAGE> 17
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United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in
such account, so long as any of the securities of such depository
institution has a long-term unsecured debt rating from each Rating
Agency of at least A-3 or its equivalent.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has
a long-term unsecured debt rating from each Rating Agency of at least
A-3 or its equivalent.
"Equipment Notes" means the Equipment Notes, in substantially
the form set out in Section 2.01 hereof, issued by the Owner Trustee
and authenticated by the Indenture Trustee pursuant to the terms of
this Indenture.
"Equity Collateral" has the meaning assigned to such
term in the definition of "Excepted Payments."
"Excepted Payments" means (i) indemnity payments and interest
in respect thereof paid or payable in respect of the Owner Participant,
the Trust Company, the Owner Trustee or any of their respective
successors, permitted assigns (and, in the case of a permitted assign
of the Owner Participant that is a partnership, the partners of such
partnership), directors, officers, employees, servants, agents,
subsidiaries, affiliates or shareholders by the Lessee pursuant to
Section 13 of the Lease and not in support of any payment obligation of
the Owner Trustee under any Indenture Document, (ii) any proceeds of
public liability insurance in respect of the Aircraft payable as a
result of insurance claims paid respecting, or losses suffered by, the
Trust Company or the Indenture Trustee in its individual capacity or
the Owner Participant, (iii) any proceeds of insurance maintained with
respect to the Aircraft by or for the benefit of the Owner Participant
(whether directly or through the Owner Trustee) and not required under
Section 12 of the Lease, (iv) payments of Supplemental Rent by the
Lessee in respect of any amounts payable to the Owner Participant, the
Trust Company, the Owner Trustee, or any of their respective
successors, permitted assigns, directors, officers, employees,
servants, agents, subsidiaries, affiliates or shareholders under
Section 10 of the Lease or by the Lessee or the Parent Guarantor under
the Tax Indemnification Agreement, as the
Trust Indenture
<PAGE> 18
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case may be, and not in support of any payment obligation of the Owner
Trustee under any Indenture Document, (v) Transaction Expenses paid or
payable by the Lessee or the Parent Guarantor to the Trust Company, the
Owner Trustee, the Indenture Trustee or the Owner Participant pursuant
to Section 21 of the Refunding Agreement or the Lease, (vi) any letter
of credit pursuant to Section 8(l) of the Lease (including, without
limitation, any replacement letter of credit (the "Equity Collateral"))
and any payment or proceeds of any such Equity Collateral to the extent
retained or applied as provided in Section 8(l) of the Lease, and (vii)
subject to the last sentence of Section 5.10 hereof, any right to
enforce the payment of any amount described in clauses (i) through (vi)
above and the proceeds thereof.
"Excess Amount" has the meaning specified in Section
2.03(b) hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such
Liquidity Facility in accordance with the provisions thereof other than
a Downgrade Drawing.
"First Japanese Lease Assignment" means the Lease Assignment
[GPA 1989 BN-6] dated as of September 28, 1989 between GPA Offshore and
the Original Head Lessee.
"FUYO" means FUYO General Lease Co., Ltd., a corporation
organized under the laws of Japan, and its successors and assigns under
the Japanese Financing Documents.
"FUYO Guaranty" means the Guaranty Agreement dated as of
September 28, 1989 from FUYO for the benefit of the "Lessee" (under and
as defined in the Japanese Lease Agreement) and such "Lessee's"
successors and permitted assigns.
"Government Obligations" means direct obligations of the
United States of America that are not callable, redeemable or payable
prior to maturity, in whole or in part, directly or indirectly, by any
Person.
"GPA Offshore" means Air Tara Caymans II, Limited, a
Cayman Islands corporation wholly-owned by the Parent
Trust Indenture
<PAGE> 19
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Guarantor, and its successors and permitted assigns under the Japanese
Financing Documents.
"Indenture," "this Indenture," and "the Indenture" mean this
Second Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented
by any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement, (to the extent assigned to or for the benefit
of the Owner Trustee); the Purchase Agreement Warranties Assignment;
the BFE Bill of Sale; the Japanese Lease Agreement; the Japanese Lease
Supplement; the Supplemental Agreement; the Japanese Lessor's Consent;
the FUYO Guaranty; the Assumption Agreement; the Confirmation
Agreement; the JL Security Agreement; the Omnibus Agreement and the
other Japanese Financing Documents (each to the extent assigned by the
First Japanese Lease Assignment and the Second Japanese Lease
Assignment); the First Japanese Lease Assignment; and the Second
Japanese Lease Assignment.
"Indenture Event of Default" has the meaning set forth
in Section 4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and
Security Agreement listed on Schedule 1 to the Intercreditor Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Aircraft and any
Replacement Airframe and Replacement Engine included in the property of
the Owner Trustee covered by this Indenture, including, without
limitation, Trust Indenture Supplement No. 1 dated December 22, 1989,
which was recorded as one instrument by the FAA with the Original
Indenture, Trust Indenture Supplement No. 2 dated October 24, 1991,
which was recorded as one instrument by the FAA with the First Amended
and
Trust Indenture
<PAGE> 20
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Restated Indenture, and Trust Indenture Supplement No. 3 dated November
26, 1996, which is being filed for recordation as one instrument by the
FAA with this Second Amended and Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Japanese Financing Documents" means, collectively, the
Omnibus Agreement, the Japanese Loan Agreement, the Japanese Security
Agreement, the Japanese Lease Agreement, the Japanese Lease Supplement,
the Supplemental Agreement, the Japanese Lessor's Consent, the Deposit
Agreement, the FUYO Guaranty, the Assumption Agreement, the
Confirmation Agreement, the JL Security Agreement, the First Japanese
Lease Assignment, the Second Japanese Lease Assignment and any other
documents or agreements referred to in the Second Japanese Lease
Assignment.
"Japanese Lease Agreement" means the Lease Agreement dated as
of September 28, 1989 between the Japanese Lessor, as lessor, and GPA
Offshore, as lessee, which with the Japanese Lease Supplement, the
Supplemental Agreement and the First Japanese Lease Assignment attached
was recorded as one instrument by the FAA on September 29, 1989 and
assigned Conveyance No. G75383.
"Japanese Lease Supplement" means the Lease Supplement
No. 1 dated September 29, 1989 between the Japanese Lessor
and GPA Offshore, covering the Aircraft, supplementing the
Japanese Lease Agreement.
"Japanese Lender" means Barclays Bank PLC, a public limited
company organized under the laws of England and acting through its
branch office in Tokyo, Japan, and its successors and permitted assigns
under the Japanese Financing Documents.
Trust Indenture
<PAGE> 21
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"Japanese Lessor" means FG Vision Leasing Co., Ltd., a
Japanese limited purpose corporation wholly-owned by FUYO and acting as
proprietor in a "Tokumei Kumiai" arrangement, and its successors and
permitted assigns under the Japanese Financing Documents.
"Japanese Lessor's Consent" means the Consent of the Japanese
Lessor, dated as of the Delivery Date, with respect to certain matters
contained in the Japanese Lease Agreement.
"Japanese Loan Agreement" means the Loan Agreement dated as of
September 28, 1989 between the Japanese Lessor and the Japanese Lender.
"Japanese Security Agreement" means the Bank Security
Agreement dated as of September 28, 1989 between the Japanese Lessor
and the Japanese Lender.
"JL Security Agreement" means the Lessor Security Agreement
dated as of September 28, 1989 between the Japanese Lessor and GPA
Offshore.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as amended and restated by the First Amended and
Restated Lease, and as assigned and further amended and restated by
Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA
1989 BN-6] dated as of the date hereof and Second Amended and Restated
Aircraft Lease Agreement [GPA 1989 BN-6] dated as of the date hereof
and supplemented by Lease Supplement [GPA 1989 BN-6] No. 3 dated
November 26, 1996, which are being filed for recordation as one
instrument with the FAA contemporaneously herewith.
"Lease Default" means an event or condition that, with the
giving of notice or the lapse of time or both, would become a Lease
Event of Default.
"Lease Event of Default" means any event or condition defined
as an "Event of Default" in Section 17 of the Lease.
"Lessee" means America West Airlines, Inc., a Delaware
corporation, in its capacity as lessee under the Second Amended and
Restated Lease, and its successors, and to the extent permitted by the
Refunding Agreement, its assigns thereunder.
Trust Indenture
<PAGE> 22
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"Lien" means any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or
claim of any kind, including any thereof arising under any conditional
sale agreement, equipment trust agreement or title retention agreement.
"Majority in Interest of Note Holders" means, as of a
particular date of determination and subject to Section 2.6 of the
Intercreditor Agreement, the Holders of more than 50% in aggregate
unpaid Principal Amount of all Equipment Notes outstanding as of such
date. For purposes of this definition, there shall be excluded any
Equipment Notes held by the Owner Trustee or the Owner Participant or
any interests of the Owner Participant therein by reason of subrogation
pursuant to Section 4.03 of the Indenture (unless all Equipment Notes
then outstanding shall be held by the Owner Trustee or the Owner
Participant) or any Equipment Notes held by the Lessee or any Affiliate
of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate
equal to (i) in the case of the Series A Equipment Notes and Series B
Equipment Notes, the Treasury Yield and (ii) in the case of the Series
C Equipment Notes and Series D Equipment Notes, the Treasury Yield plus
0.75% exceeds (b) the outstanding principal amount of such Equipment
Note plus accrued interest. For purposes of determining the Make-Whole
Amount, "Treasury Yield" at the time of determination with respect to
any Equipment Note means the interest rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semiannual yield to maturity for United States
Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities market either as determined
by interpolation between the most recent weekly average yield to
maturity for two series of United States Treasury securities, trading
in the public securities markets, (A) one maturing as close as possible
to, but earlier than, the Average Life Date of such Equipment Note and
(B) the other maturing as close as
Trust Indenture
<PAGE> 23
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possible to, but later than, the Average Life Date of such Equipment
Note, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note is reported on
the most recent H.15(519), such weekly average yield to maturity as
published in such H.15(519). "H.15(519)" means the weekly statistical
release designated as such, or any successor publication, published by
the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Amount shall be the third Business Day
prior to the applicable redemption date and the "most recent H.15(519)"
means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person
other than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from
time to time of one or more Equipment Notes as reflected in the
Register maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and
signature of such Responsible Officer, that is delivered to the
Indenture Trustee.
"Omnibus Agreement" means the Agreement to Purchase and Lease
dated as of September 28, 1989 among the Parent Guarantor, GPA
Offshore, the Japanese Lender and the Japanese Lessor.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such
written opinions or (ii) Latham & Watkins or other counsel designated
by the Lessee and reasonably satisfactory to the Indenture Trustee or,
in the case of legal counsel for the Owner Trustee, may be Morris,
James, Hitchens & Williams or other counsel designated by the Owner
Trustee and reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease and the First Amended and Restated Lease.
Trust Indenture
<PAGE> 24
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"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1989 BN-6] dated as of December 15, 1989, as
supplemented by Trust Indenture Supplement No. 1 dated December 22,
1989 and as in effect immediately prior to the amendment and
restatement thereof dated as of October 1, 1991, which were recorded as
one instrument by the FAA on April 2, 1990 and assigned Conveyance No.
V79847.
"Original Loan Certificates" means the Loan Certificates
issued under and as defined in the Original Indenture.
"Original Sublessee" means America West Airlines, Inc.
("AWA"), a Delaware corporation, in its capacity as sublessee under the
Aircraft Sublease Agreement [GPA 1989 BN-6] dated as of September 21,
1990 between the Original Head Lessee in its capacity as sublessor
thereunder and AWA in its capacity as sublessee.
"Owner Participant" means ________________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the four Pass Through
Trusts established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through
Trust Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a national
banking association, not in its individual capacity but solely as pass
through trustee under each of the four separate Pass Through Trust
Agreements.
"Past Due Rate" means, with respect to any amount not paid
when due (whether at stated maturity, by acceleration or otherwise)
under or in respect of any Equipment Note, a rate of interest per annum
(computed on the basis of a year of 360 days comprised of twelve 30-day
months) equal to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Equipment Notes have
been paid in full.
Trust Indenture
<PAGE> 25
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"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with
respect to all Equipment Notes, means the aggregate stated original
principal amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on
which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement Warranties Assignment" means the Purchase
Agreement Warranties Assignment [GPA 1989 BN-6] dated the Delivery
Date, between the Original Head Lessee and the Owner Trustee.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to
rate the Certificates issued pursuant to the Pass Through Trust
Agreements and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated
by the Refunding Agreement and the other documents entered into on and
in connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1989
BN-6] dated as of November 20, 1996, among the Lessee, the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through
Trustee, the Owner Participant, the Subordination Agent and the
Indenture
Trustee.
"Register" has the meaning set forth in Section 2.07 hereof.
"Registrar" has the meaning set forth in Section 2.07 hereof.
"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice
president or, in the case of the Owner Trustee, an officer of the Owner
Trustee in its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date
agreed to by the parties to the Refunding Agreement as the date for the
consummation of the
Trust Indenture
<PAGE> 26
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Refinancing Transaction, as evidenced by the date of the filing with
the FAA of Trust Indenture Supplement No. 3.
"Second Japanese Lease Assignment" means the Lease
Assignment No. 2 dated as of December 15, 1989 between the Original
Head Lessee and the Owner Trustee, which was recorded by the FAA on
April 2, 1990 and assigned Conveyance No. V79846.
"Secured Obligations" has the meaning set forth in Section
2.06 hereof.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series D."
"Sublease Assignment" means a sublease assignment by the
Lessee in favor of the Owner Trustee (including the consent thereto
given by the sublessee thereunder) with respect to the assignment of a
Permitted Sublease pursuant to Section 6(a) of the Lease.
"Supplemental Agreement" means the Supplemental Agreement
dated as of September 28, 1989 between the Japanese Lessor and GPA
Offshore.
Trust Indenture
<PAGE> 27
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"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity and not as Owner
Trustee, and its successors under the Trust Agreement, in their
respective individual capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means all
estate, right, title and interest of the Owner Trustee in and to the
properties, rights and interests covered by the Granting Clause of the
Indenture, excluding, however, in each case, Excepted Payments.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code (for purposes of this definition, the "United
States"), (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political
subdivision thereof or therein or (iii) any estate or trust that is
subject to United States federal income taxation regardless of the
source of its income.
Trust Indenture
<PAGE> 28
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment
Notes shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1989 BN-6]
DATED AS OF DECEMBER 15, 1989, AS AMENDED.
SERIES [A/B/C/D] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING
UNITED STATES REGISTRATION NUMBER N626AW.
No. ____ Date: [________, 1996]
$________________
DEBT RATE MATURITY DATE
[________] [_______, ____]
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement [GPA 1989 BN-6], dated as of December 15,
1989, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to Fleet
National Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $________ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semi-
Trust Indenture
<PAGE> 29
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annual installments commencing on January 2, 1997, and thereafter on July 2 and
January 2 of each year, to and including ______________, ____.
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and if
such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the Second
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-6],
dated as of November 26, 1996, between the Owner Trustee and The Chase Manhattan
Bank (formerly known as Chemical Bank, successor by merger to Manufacturers
Hanover Trust Company) (the "Indenture Trustee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used in this
Equipment Note and not defined herein shall have the respective meanings
assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as above provided and that none of the Owner Participant, the
Owner Trustee and the
Trust Indenture
<PAGE> 30
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Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Indenture Trustee or at the office of any successor in the manner
provided in Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and
interest and other amounts due hereunder shall be payable in Dollars in
immediately available funds at the Corporate Trust Office of the Indenture
Trustee, or as otherwise provided in the Indenture. Each such payment shall be
made on the date such payment is due and without any presentment or surrender of
this Equipment Note, except that in the case of any final payment with respect
to this Equipment Note, the Equipment Note shall be surrendered promptly
thereafter to the Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note,
agrees that, except as provided in the Indenture, each payment received by it
hereunder shall be applied, first, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by law, any
overdue interest and any other overdue amounts hereunder) to the date of such
payment, second, to the payment of the portion of the Principal Amount of this
Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Indenture, and fourth, the balance,
if any, remaining thereafter, to the payment of the portion of the Principal
Amount of this Equipment Note remaining unpaid in the inverse order of its
normal maturity.
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 Trust Indenture Estate is held by
the Indenture Trustee as security, in part, for the Equipment Notes. The
provisions of this Equipment Note are subject to the Indenture. Reference is
hereby made to the Indenture and the Refunding Agreement for a complete
statement of the rights and obligations of the Holder
Trust Indenture
<PAGE> 31
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of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or
the Owner Trustee as provided in Section 2.12 of the Indenture and to
acceleration by the Indenture Trustee as provided in Section 4.04 of the
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B
Equipment Notes](2) [Series C Equipment Notes](3), and this Equipment Note is
issued subject to such provisions. The Note Holder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Indenture Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination as
- --------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
Trust Indenture
<PAGE> 32
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provided in the Indenture and (c) appoints the Indenture Trustee his attorney-
in-fact for such purpose.](4)
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
- --------
(4) To be inserted in the case of a Series B, Series C or Series
D Equipment Note.
Trust Indenture
<PAGE> 33
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IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its officer thereunto
duly authorized on the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By________________________________
Name:
Title:
Trust Indenture
<PAGE> 34
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SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
---------------- ----------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
four separate series consisting of Series A, Series B, Series C and Series D and
in the maturities and principal amounts and shall bear interest as specified in
Schedule I hereto. On the date of the consummation of the Refinancing
Transaction, (i) each Equipment Note shall be issued to the Pass Through
Trustees (or their designee) under the Pass Through Trust Agreements set forth
in Schedule II to be attached hereto in connection therewith and (ii) the
Equipment Trust Certificates issued under the First Amended and Restated Trust
Indenture shall be concurrently redeemed. The Equipment Notes shall be issued in
registered form only. The Equipment Notes shall be issued in denominations of
$1,000 and integral multiples thereof, except that one Equipment Note of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity.
The Principal Amount of each Equipment Note shall be payable
on the dates and in the installments equal to the corresponding percentage of
the Principal Amount as set forth in Schedule I hereto which shall be attached
as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
Trust Indenture
<PAGE> 35
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any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
Trust Indenture
<PAGE> 36
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(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default (as defined below) under any
Equipment Note a fraction, the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued under
the Indentures. As used in this Section 2.02, "Net Interest and Related Charges"
means (as determined by the Subordination Agent in consultation with the
Liquidity Providers and notified to the Indenture Trustee except that the Past
Due Rate shall be determined by the Indenture Trustee and notified to the
Subordination Agent) the sum of (i) the amount, if any, by which interest
payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or
Downgrade Drawing (other than a Downgrade Drawing that is not an Applied
Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount
which would be payable if such advances bore interest at the Designated Interest
Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section
3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or
similar provisions of any succeeding liquidity facility) which result from any
Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section
2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as
defined in the applicable Indentures) in respect of "Series A Equipment Notes",
"Series B Equipment Notes" and "Series C Equipment Notes" issued under the
Indentures, except with respect to that portion of any Final Drawing (or
Downgrade Drawing which becomes a Final Drawing) which remains in a Cash
Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" issued under the Indentures which has
not been cured other than solely because of acceleration. For purposes of
Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Equipment Notes
bearing the signatures of individuals who were at any time the proper officers
of the Owner
Trust Indenture
<PAGE> 37
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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. The Owner Trustee may from time to time execute
and deliver Equipment Notes with respect to the Aircraft to the Indenture
Trustee for authentication upon original issue and such Equipment Notes shall
thereupon be authenticated and delivered by the Indenture Trustee upon the
written request of the Owner Trustee signed by a Vice President or Assistant
Vice President or other authorized officer of the Owner Trustee; provided,
however, that each such request shall specify the aggregate Principal Amount of
all Equipment Notes to be authenticated hereunder on original issue with respect
to the Aircraft. No Equipment Note shall be secured by or be entitled to any
benefit under this Indenture or be valid or obligatory for any purposes, unless
there appears on such Equipment Note a certificate of authentication in the form
provided for herein executed by the Indenture Trustee by the manual signature of
one of its authorized officers and such certificate upon any Equipment Notes
shall be conclusive evidence, and the only evidence, that such Equipment Note
has been duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a)
Without impairing any of the other rights, powers, remedies, privileges or Liens
of the Note Holders under this Indenture, each Note Holder, by its acceptance of
an Equipment Note, agrees that, except as expressly provided in this Indenture,
the Refunding Agreement or any other Operative Document, (i) the obligation to
make all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such other
agreements to the contrary notwithstanding (except for any
Trust Indenture
<PAGE> 38
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express provisions or representations that the Trust Company is responsible for,
or is making, for which there would be personal liability of the Trust Company),
no recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means
the amount by which such payment exceeds the amount that would have been
received by a Note Holder or the Indenture Trustee if the Trust Company, the
Owner Trustee or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this Section
2.03(b) shall prevent a Note Holder or the Indenture
Trust Indenture
<PAGE> 39
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Trustee from enforcing any personal recourse obligation (and retaining the
proceeds thereof) of the Trust Company, the Owner Trustee or the Owner
Participant under the Refunding Agreement, this Indenture (and any exhibits or
annexes hereto or thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such funds were received after
12:00 noon, New York City time, at the
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place of payment. Prior to the due presentment for registration of transfer of
any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and
treat the Person in whose name any Equipment Note is registered on the Register
as the absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee
shall be affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Equipment Note (and such exclusion and withholding
shall constitute payment in respect of such Equipment Note) any and all United
States withholding Taxes applicable thereto as required by law. The Indenture
Trustee agrees to act as such withholding agent and, in connection therewith,
whenever any present or future United States Taxes or similar charges are
required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts (and such withholding
shall constitute payment in respect of such Equipment Note) and timely pay the
same to the appropriate authority in the name of and on behalf of the Note
Holders, that it will file any necessary United States withholding tax returns
or statements when due, and that as promptly as possible after the payment
thereof it will deliver to each Note Holder (with a copy to the Owner Trustee
and the Lessee) appropriate receipts showing the payment thereof, together with
such additional documentary evidence as any such Note Holder, the Owner
Participant and the Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture
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Trustee has no reason to know that any information set forth in such form is
inaccurate), the Indenture Trustee shall withhold only the amount, if any,
required by law (after taking into account any applicable exemptions claimed by
the Note Holder) to be withheld from payments hereunder or under the Equipment
Notes held by such Holder in respect of United States federal income Tax (and
such withholding shall constitute payment in respect of such Equipment Note). If
a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture
Trustee a properly completed and currently effective U.S. Internal Revenue
Service Form 4224 in duplicate (or such successor certificate, form or forms as
may be required by the United States Treasury Department as necessary in order
to avoid withholding of United States federal income tax), during the calendar
year in which the payment is made (but prior to the making of such payment), and
has not notified the Indenture Trustee of the withdrawal or inaccuracy of such
certificate or form prior to the date of such payment (and the Indenture Trustee
has no reason to know that any information set forth in such form is inaccurate)
or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form W-9, if
applicable, prior to a payment hereunder or under the Equipment Notes held by
such Holder, no amount shall be withheld from payments in respect of United
States federal income tax. If any Note Holder has notified the Indenture Trustee
that any of the foregoing forms or certificates is withdrawn or inaccurate, or
if such Holder has not filed a form claiming an exemption from United States
withholding Tax or if the Code or the regulations thereunder or the
administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Equipment Notes held by such Holder, the Indenture Trustee
agrees to withhold from each payment due to the relevant Note Holder withholding
Taxes at the appropriate rate under law (and such withholding shall constitute
payment in respect of such Equipment Notes) and will, on a timely basis as more
fully provided above, deposit such amounts with an authorized depository and
make such returns, statements, receipts and other documentary evidence in
connection therewith as required by applicable law.
None of the Owner Trustee, the Owner Participant or the Lessee
shall have any liability for the failure of the Indenture Trustee to withhold
taxes in the manner provided for herein or for any false, inaccurate or untrue
evidence provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of each
Equipment Note, each payment of Principal Amount, Make-Whole Amount, if any, and
interest or other amounts due thereon shall be applied:
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First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and, to the extent permitted by law,
any overdue interest and any other overdue amounts thereunder) to the
date of such payment;
Second: to the payment of the Principal Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture
Estate. A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request from the registered Holder thereof for the
issuance of a new Equipment Note, specifying, in the case of a surrender for
transfer, the name and address of the new Holder or Holders.
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Upon surrender for registration of transfer of any Equipment Note, 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 unpaid portion of the Principal Amount and
of the same series. At the option of the Note Holder, Equipment Notes may be
exchanged for other Equipment Notes of any authorized denominations of a like
aggregate unpaid portion of the Principal Amount, upon surrender of the
Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust
Office. 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 Note Holder making the exchange is entitled to
receive. All Equipment Notes issued upon any registration of transfer or
exchange of Equipment Notes (whether under this Section 2.07 or under Section
2.08 hereof or otherwise under this Indenture) shall be the valid obligations of
the Owner Trustee evidencing the same respective obligations, and entitled to
the same security and benefits under this 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 Indenture Trustee) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Indenture Trustee
duly executed by the Note Holder or such Holder's attorney duly authorized in
writing, and the Indenture Trustee shall require evidence satisfactory to it as
to the compliance of any such transfer with the Securities Act and the
securities laws of any applicable state. The Indenture Trustee shall make a
notation on each new Equipment Note of the amount of all payments of Principal
Amount 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 on
such old Equipment Note or Equipment Notes has been paid. Interest shall be
deemed to have been paid on such new Equipment Note to the date on which
interest shall have been paid on such old Equipment Note, and all payments of
the Principal Amount marked on such new Equipment Note, as provided above, shall
be deemed to have been made thereon. Neither the Indenture Trustee nor the Owner
Trustee shall be required to exchange any surrendered Equipment Notes as
provided above during the ten-day period preceding the Payment Date. The
Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant
and Lessee of each registration of a transfer of an Equipment Note. Any such
transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees
to the provisions of the Refunding Agreement applicable to Note Holders, and
shall be deemed to have represented and warranted to the parties to the
Refunding Agreement as to the matters represented and warranted by the
Subordination Agent in its capacity as the initial Holder of the Equipment
Notes. Subject to compliance by the Note Holder and
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its transferee (if any) of the requirements set forth in this Section 2.07, the
Indenture Trustee and the Owner Trustee shall use all reasonable efforts to
issue new Equipment Notes upon transfer or exchange within 10 Business Days of
the date an Equipment Note is surrendered for transfer or exchange.
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 Holder of such
Equipment Note, execute and the Indenture Trustee shall authenticate and deliver
in replacement thereof a new Equipment Note, payable in the same Principal
Amount dated the same date and captioned as originally issued. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee and a copy thereof shall be furnished to
the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost
or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such Person, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the
Indenture Trustee shall be accepted as satisfactory indemnity and security and
no further indemnity or security shall be required as a condition to the
execution and delivery of such new Equipment Note.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Note Holder for any registration of
transfer or exchange of Equipment Notes, but the Indenture Trustee, as
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes; provided, however, that none of the
Lessee, the Owner Trustee, the Indenture Trustee or the Owner Participant shall
bear costs of registration, transfer or exchange in connection with the
consummation of the Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Equipment
Notes surrendered for replacement, redemption, transfer,
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exchange, payment or cancellation and shall destroy the canceled Equipment
Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither
any redemption of any Equipment Note nor any purchase by the Owner Trustee of
any Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Equipment Notes shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Note Holder of such Equipment Notes to be
redeemed or purchased, at such Note Holder's address appearing in the Register.
All notices of redemption or purchase shall state: (1) the redemption date, (2)
the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any Person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Equipment Notes to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New
York City time, on the redemption date in immediately available funds the
redemption price of the Equipment Notes to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid, the Equipment Notes to be redeemed or purchased shall, on the
redemption date, become due and payable at the
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Corporate Trust Office of the Indenture Trustee, and from and after such
redemption date (unless there shall be a default in the payment of the
redemption price) any such Equipment Notes then outstanding shall cease to bear
interest. Upon surrender of any such Equipment Note for redemption or purchase
in accordance with said notice, such Equipment Note shall be redeemed at the
redemption price. If any Equipment Note called for redemption or purchase shall
not be so paid upon surrender thereof for redemption, the principal amount
thereof shall, until paid, continue to bear interest from the applicable
redemption date at the interest rate in effect for such Equipment Note as of
such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the
Owner Trustee or the Owner Participant may, upon the events and subject to the
terms and conditions and for the price set forth in this Section 2.12, purchase
all but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each
Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to, but not including, the date of purchase and all
other amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Refunding Agreement to the Holder
thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon
an Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default (and there is no
Indenture Trustee Event), the purchase price thereof shall equal the price
provided in the preceding sentence plus the Make-Whole Amount, if any; provided
further, that under no circumstances shall the Make-Whole Amount be payable by
the Lessee.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant giving
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written notice of its election of such option to the Indenture Trustee, which
notice shall specify a date for such purchase not more than 30 days or less than
15 days after the date of such notice. The Indenture Trustee shall not exercise
any of the remedies hereunder or, without the consent of the Owner Trustee or
the Owner Participant, under the Lease, during the period from the time that a
notice of exercise by the Owner Participant of such option to purchase becomes
irrevocable until the date on which such purchase is required to occur pursuant
to the terms of the preceding sentence. Such election to purchase the Equipment
Notes shall become irrevocable upon the fifteenth day preceding the date
specified in the written notice described in the first sentence of this
paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Note Holders will comply with all
the provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Articles II and III hereof.
(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid
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in full, the Note Holders of Series B until the Secured Obligations in respect
of Series B Equipment Notes have been paid in full and (iii) after the Secured
Obligations in respect of Series B Equipment Notes have been paid in full, the
Note Holders of Series C until the Secured Obligations in respect of Series C
Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Sections 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as rent
under any Assigned Sublease shall be promptly distributed in the following order
of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments
of Principal Amount, and interest and other amounts (as well as any
interest on overdue Principal Amount, and to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts)
then due to the Note Holders under all Series A Equipment Notes shall
be distributed to the Note Holders of Series A ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then due under all Series
A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall be distributed to the
Note Holders of Series B ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series B Equipment Note bears to the aggregate
amount of the payments then due under all Series B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much
of such installment or payment remaining as shall be
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required to pay in full the aggregate amount of the payment or payments
of Principal Amount and interest and other amounts (as well as any
interest on any overdue Principal Amount and, to the extent permitted
by applicable law, on any overdue interest and any other overdue
amounts) then due to the Note Holders under all Series C Equipment
Notes shall be distributed to the Note Holders of Series C ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series C
Equipment Note bears to the aggregate amount of the payments then due
under all Series C Equipment Notes; and
(iv) after giving effect to clause (iii) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series D Equipment Notes shall be distributed to the
Note Holders of Series D ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series D Equipment Note bears to the aggregate
amount of the payments then due under all Series D Equipment Notes; and
second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that
if an Indenture Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 3.07
hereof until whichever of the following shall first occur: (i) all
Indenture Defaults shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second", or
(ii) Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of said
Section 3.03, or (iii) the 180th day after receipt of such payment, in
which event such balance shall be distributed as provided in this
clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any
payment received by the Indenture Trustee with respect to the
Airframe or the Airframe and one or both Engines as the result of
an Event of Loss thereto shall be applied to the redemption of
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the Equipment Notes and to all other amounts payable hereunder by applying such
funds in the following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event
of Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other
amounts (as well as any interest on overdue Principal Amount, and to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due to the Note Holders under all Equipment
Notes, all in the order of priority specified in clause "first" of
Section 3.01 hereof, and
third, if and to the extent required to be paid to the Lessee
(or if directed by the Lessee, any Permitted Sublessee) in
reimbursement of payment of Stipulated Loss Value pursuant to Section
11(d) of the Lease, to the Lessee (or if directed by the Lessee, any
Permitted Sublessee), and otherwise as provided in clause "fourth" of
Section 3.03 hereof;
provided that, if a Replacement Airframe or a Replacement Airframe and one or
more Replacement Engines are to be substituted for the Airframe or the Airframe
and one or both Engines subject to such Event of Loss as provided in Section 11
of the Lease and Section 5.06 hereof, any proceeds which result from such Event
of Loss and are paid to the Indenture Trustee shall be held by the Indenture
Trustee as part of the Trust Indenture Estate as security for the obligations of
the Lessee under the Operative Documents and invested in accordance with the
terms of Section 3.07 hereof and, unless theretofore applied in accordance with
the provisions of the Lease and this Indenture, such proceeds shall, to the
extent payable to the Lessee under the Lease, be released to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) upon or in connection with the
replacement thereof as provided in such Sections.
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Airframe or the Airframe and one or both Engines) shall be
applied as provided in the applicable provisions of the Lease; provided,
however, that to the extent that any portion of such amounts held for account of
the Lessee are not at the time required to be paid to the Lessee (or any
Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12
of the Lease, shall be held by the Indenture Trustee as security for the
obligations of the Lessee
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under the Operative Documents and shall be invested in accordance with the terms
of Section 3.07 hereof and at such time as the conditions specified in the Lease
for payment of such amounts to the Lessee shall be fulfilled, such portion, and
the net proceeds of any investment thereof, shall, unless theretofore applied in
accordance with the provisions of the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07
hereof, and notwithstanding Section 2.05 hereof, all payments received and
amounts held or realized by the Indenture Trustee after an Indenture Event of
Default shall have occurred and be continuing or after the Indenture Trustee has
given notice to the Owner Trustee and the Owner Participant pursuant to Section
4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease
or of the foreclosure of this Indenture, or after the Equipment Notes shall have
become due and payable as provided herein, and all payments or amounts then held
by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long
as such Indenture Event of Default shall be continuing, be promptly distributed
by the Indenture Trustee in the following order of priority, without
duplication:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for all amounts due to it
pursuant to Section 6.07 hereof, plus any tax, expense, charge or other
loss (including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Trust Indenture
Estate pursuant to Section 4.05(b) hereof) incurred by the Indenture
Trustee (to the extent not previously reimbursed) (including, without
limitation, the expenses of any sale, taking or other proceeding,
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 then existing or prior Note Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to the then existing or
prior Note Holders, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be distributed
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ratably, without priority of one over any other, in accordance with the
amount of the payment or payments made by each such then existing or
prior Note Holder pursuant to said Section 5.03 and applicable (in the
case of each such then existing Note Holder) to the Equipment Notes
held by such existing Note Holder at the time of distribution by the
Indenture Trustee;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid Principal Amount
of all Series A Equipment Notes, and the accrued but unpaid interest
and other amounts due thereon and all other Secured Obligations in
respect of the Series A Equipment Notes (other than Make-Whole Amount,
if any) to the date of distribution, shall be distributed to the Note
Holders of Series A, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series A Equipment Notes
held by each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount, if
any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series B Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series B Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series B, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series B Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series B Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal
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Amount of all Series C Equipment Notes, and the accrued but unpaid
interest and other amounts due thereon and all other Secured
Obligations in respect of the Series C Equipment Notes (other than
Make-Whole Amount, if any) to the date of distribution, shall be
distributed to the Note Holders of Series C, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all Series C
Equipment Notes held by each Holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series C Equipment Notes held
by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series D Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series D Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series D, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series D Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series D Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by
the Indenture Trustee for which provision as to the application thereof is made
in the Lease shall be applied forthwith to the purpose for which such payment
was made in
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accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or the
Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii)
any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity
Providers, and (v) the Pass Through Trustees, in each case whether pursuant to
Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as
Supplemental Rent, directly to the Person entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of the fourth paragraph of Section
2.02 shall be distributed to the Subordination Agent to be distributed in
accordance with the terms of the Intercreditor Agreement, and any payment
received by the Indenture Trustee under clause (c) of the fourth paragraph of
Section 2.02 shall be distributed directly to the Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and
3.04 hereof, any payments received by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture
shall be distributed by the Indenture Trustee, unless otherwise agreed in
writing, subject to Section 6.07 hereof (i) to the extent received or realized
at any time prior to the payment in full of all obligations to the Note Holders
secured by the Lien of this Indenture, in the order of priority specified in
Section 3.01 hereof, and (ii) to the extent received or realized at any time
after payment in full of all obligations to the Note Holders secured by the Lien
of this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause
"first" of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated to
indemnify against thereunder, in the manner provided in clause "first"
of Section 3.03 hereof, and
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second, in the manner provided in clause "fourth" of
Section 3.03 hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts
distributed hereunder by the Indenture Trustee to the Owner Trustee shall be
paid to the Owner Trustee by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account as may be specified pursuant to the Refunding
Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's
rights to hold moneys for security pursuant to Section 21(h) of the Lease shall
be held in accordance with the terms of such Section ; and the Indenture Trustee
hereby agrees to perform the duties of the Owner Trustee under such Section .
Except as provided in the preceding sentence, any amounts held by the Indenture
Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof,
pursuant to Section 3.02 hereof, pursuant to the second sentence of Section
3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant
to a Sublease Assignment, or pursuant to any provision of any other Operative
Document providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture
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Trustee reasonably believes such sale is necessary to make a distribution
required by this Indenture.
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee.
(a) The Trust Company hereby covenants and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Lien
attributable to it in its individual capacity with respect to any of the
properties or assets of the Trust Indenture Estate and shall, at its own cost
and expense promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Trust Company will cause restitution to be made to
the Trust Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it.
(b) The Owner Trustee hereby covenants and agrees as
follows:
(i) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Equipment Notes and hereunder in accordance
with the terms of the Equipment Notes and this Indenture and all
amounts payable by it to the Note Holders under the Refunding Agreement
and the other Operative Documents;
(ii) the Owner Trustee will not directly or indirectly create,
incur, assume or suffer to exist any Lessor's Liens attributable to it
with respect to any of the properties or assets of the Trust Indenture
Estate, and shall, at its own cost and expense, promptly take such
action as may be necessary duly to discharge any such Lessor's Lien,
and the Owner Trustee will cause restitution to be made to the Trust
Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it;
(iii) in the event an officer with responsibility for or familiarity
with the transactions contemplated hereunder or under the other
Operative Documents (or any Vice President) in the Corporate Trust
Administration Department of the Owner Trustee shall have actual
knowledge of an Indenture Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Indenture Default or
Event of
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Loss to the Indenture Trustee, the Lessee and the Owner Participant;
(iv) 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 or any
Japanese Financing Document, including, without limitation, a copy of
each report or notice received pursuant to Section 12(f) of the Lease,
to the extent that the same shall not have been furnished, or is not
required to be furnished by the Lessee, to the Indenture Trustee
pursuant to the Lease or otherwise;
(v) except as contemplated by the Operative Documents or with
the consent of the Indenture Trustee acting in accordance with Article
IX hereof, the Owner Trustee will not incur any indebtedness for
borrowed money; and
(vi) 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 Japanese Lease Agreement, the Second
Japanese Lease Assignment and the Lease, the Refunding Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be
continuing (other than a failure to pay when due any amount
in respect of Excepted Payments); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, or interest on, any Equipment Note
(other than as a result of a Lease Default) and such failure shall have
continued unremedied for ten calendar days; or the failure of the Owner
Trustee to pay when due any other amount due and payable under any
Equipment Note or hereunder (other than as a result of a Lease Default)
and such failure shall have continued unremedied for 15 calendar days
after notice thereof being given to the Owner Trustee from the
Indenture Trustee or any Note Holder; or
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(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 4.01(a) hereof or Section 13 of the
Refunding Agreement or by the Owner Trustee as the Owner Trustee
pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding
Agreement or any Lessor's Lien required to be discharged by the Owner
Participant pursuant to Section 13 of the Refunding Agreement shall
remain undischarged for a period of 30 calendar days after, as the case
may be, an officer with responsibility for or familiarity with the
transactions contemplated hereunder or under the other Operative
Documents (or any Vice President) in the Corporate Trust Administration
Department of the Trust Company or an officer of the Owner Participant
shall have actual knowledge of such Lien; provided, that no Indenture
Event of Default shall arise under this Section 4.02(c) as a result of
a failure by the Owner Trustee or the Owner Participant to observe or
perform any covenant referred to in this Section 4.02(c) if the Lessee
shall have discharged all Lessor's Liens required to be discharged by
the Owner Trustee or the Owner Participant pursuant to such covenants
and compensated the Indenture Trustee and the Trust Indenture Estate
for all claims, losses and expenses arising from the failure of the
Owner Trustee or the Owner Participant, as the case may be, to observe
and perform any such covenant; or
(d) any representation or warranty made by the Owner
Participant, the Owner Trustee or the Trust Company herein or in the
Refunding Agreement or by any Person (if any) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Documents or in any related guarantee or support agreement shall prove
to have been false or incorrect when made in any respect materially
adverse to the rights and interests of the Note Holders; and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, such
misrepresentation shall not have been corrected as of a day within 30
calendar days following notice thereof being given to the Owner
Participant, the Owner Trustee, the Trust Company or such Person, as
the case may be, by the Indenture Trustee or a Majority in Interest of
Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any
of its covenants or agreements in the fourth paragraph following the
Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01
hereof, or any failure by the Owner Participant or the Trust Company to
observe or perform any of its respective covenants in Section 9(b)(11),
10 or 14 of the Refunding Agreement; or
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(f) except as provided in the following paragraph (j), any
failure by the Owner Trustee or the Trust Company to observe or perform
any other covenant or obligation of the Owner Trustee contained in this
Indenture or in the Refunding Agreement or any failure by the Owner
Participant to observe or perform any other covenant or obligation of
the Owner Participant contained in the Refunding Agreement or any
failure of any Person that may guarantee or support the obligations of
an Owner Participant not originally party to the Refunding Agreement
under the Operative Documents to observe or perform any covenant or
obligation of such Person contained in any such guarantee or support
agreement, which failure is not remedied within a period of 30 calendar
days following notice being given to the Owner Trustee, the Owner
Participant or such Person, as the case may be, by the Indenture
Trustee or a Majority in Interest of Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant
or any Person that may guarantee or support the obligations of an Owner
Participant not originally party to the Refunding Agreement under the
Operative Documents shall (i) be unable to pay its debts generally as
they become due within the meaning of the Bankruptcy Code, (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 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 with respect thereto (and not in its
individual capacity) or the Owner Participant or any Person that may
guarantee or support the obligations of an Owner Participant not
originally party to the Refunding Agreement under the Operative
Documents, as the case may be, a custodian, receiver, trustee or other
officer with similar powers with respect to it 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
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ordering the dissolution, winding-up or liquidation of the Trust Estate
or the Owner Trustee with respect thereto (and not in its individual
capacity) or the Owner Participant or such Person, as the case may be;
or
(i) any petition for any relief specified in the foregoing
paragraph (h) shall be filed against the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or any Person that may guarantee or support the
obligations of an Owner Participant not originally party to the
Refunding Agreement under the Operative Documents, as the case may be,
and such petition shall not be dismissed within 60 days; or
(j) at any time when the Aircraft shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid
and duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by
the Lessee in the payment of any installment of Basic Rent due under the Lease,
the Owner Participant may, within ten calendar days (or such longer period
ending on the expiry of the applicable grace period specified in the Lease with
respect to such default) after notice of such default, without the consent or
concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for
application in accordance with Section 3.01 hereof, a sum equal to the amount of
all (but not less than all) of the Principal Amount and interest as shall then
(without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof)
be due and payable on the Equipment Notes. 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 Trustee
shall have been furnished by the Owner Participant with all funds necessary for
remedying such default, the Owner Participant may, within fifteen calendar days
(or such longer period ending on the expiry of any applicable grace period
specified in the Lease with respect to such default) after notice of such
default, without the consent or concurrence of any Note Holder, instruct the
Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) 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 Basic
Rent theretofore due and payable
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and to remedy (but solely for purposes of this Indenture) any default by the
Owner Trustee in the payment of any amount due and payable under the Equipment
Notes or hereunder, 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 default by the Lessee under the Lease to the
same extent that like performance by the Lessee itself would have remedied such
default (but any such payment or performance shall not 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, such Lease Event of
Default shall have been remedied, then any declaration pursuant to the Lease
that the Lease is in default, and any declaration pursuant to this Indenture
that the Equipment Notes are due and payable or that an Indenture Event of
Default exists hereunder, based upon such Lease Event of Default, shall be
deemed to be rescinded, and the Owner Participant or the Owner Trustee, as the
case may be, shall (to the extent of any such payments made by it) be subrogated
to the rights of the Note Holders hereunder to receive such payment of Rent from
the Indenture Trustee (and the payment of interest on account of such Rent being
overdue), and shall be entitled, so long as no other Indenture Default or
Indenture Event of Default shall have occurred and be continuing or would result
therefrom, to receive, subject to the terms 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 by commencing an action at law against the Lessee and
obtaining and enforcing a judgment against the Lessee for the payment of such
amount; provided, however, that at no time while an Indenture 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 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 hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease as to (i) each of the three Basic Rent Payment
Dates immediately preceding the date of such default or (ii) in the
aggregate more than six Basic Rent Payment Dates,
(y) the second sentence of this Section 4.03 shall
cease to apply, and no payment by the Owner Participant in
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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 Lease Event of Default for the purposes of this
Indenture, if during the 12-month period immediately preceding the
relevant default by the Lessee there shall have been expended by the
Owner Participant pursuant to the second sentence of this Section 4.03
(and shall have not been reimbursed by the Lessee or any Permitted
Sublessee themselves to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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
(subject to the rights of the Owner Participant or the Owner Trustee to cure any
such Indenture Event of Default set forth in Section 4.03 hereof and the
obligations of the Indenture Trustee set forth in this Section 4.04(a) and
subject to Section 10.05 hereof) 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
hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a
Majority in Interest of Note Holders, exercise any and all of the remedies
pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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
but, in the case of the Aircraft, only as permitted by Section 18 of the Lease,
and may exclude the Owner Participant, the Owner Trustee and the Lessee and all
Persons claiming under any of them or wholly or partly therefrom; provided,
however, that the Indenture Trustee shall give the Owner Trustee and the Owner
Participant ten days' prior written notice of the initial exercise of such
remedies by the Indenture Trustee under the Lease (if not stayed or otherwise
precluded by applicable law from giving such notice); provided, further, that
the Indenture Trustee shall give the Owner Trustee and the Owner Participant
twenty days' prior written notice of its intention to sell the Aircraft. Without
limiting any of the foregoing, it is understood and agreed that the Indenture
Trustee may exercise any right of sale of the Aircraft available to it, even
though it
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shall not have taken possession of the Aircraft and shall not have possession
thereof at the time of such sale.
Anything in this Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails to participate in such proceedings, the Owner Trustee shall have
the right (without affecting in any way any right or remedy of the Indenture
Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the
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avoidance of doubt, it is expressly understood and agreed, subject only to the
immediately preceding paragraph, that 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 otherwise
exercising all of its rights, powers and remedies under this Indenture,
including without limitation this Article IV.
(b) If an Indenture Event of Default referred to in clause
(g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment Notes
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the Equipment Notes
which by such declaration shall have become payable) shall have been duly paid
and every other Indenture Default and Indenture Event of Default with respect to
any covenant or provision of this Indenture shall have been cured, then and in
every such case a Majority in Interest of Note Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
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Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
Except as otherwise provided in Section 2.12, no Make-Whole
Amount shall become payable on the Equipment Notes as a result of any
acceleration under Sections 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Indenture. The Owner Trustee or
Owner Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Aircraft, etc. (a) If an Indenture
Event of Default shall have occurred and be continuing, at the request of the
Indenture Trustee the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such 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 Trust Indenture Estate; provided that the
Indenture Trustee shall at the time be entitled to obtain such possession under
Section 4.04(a) and the other applicable provisions of this Indenture. If the
Owner Trustee shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture Trustee
may (i) obtain a judgment conferring on the Indenture Trustee the right to
immediate possession and requiring the Owner Trustee to execute and deliver such
instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents to the fullest extent it
may lawfully do so, and (ii) to the extent permitted by law, pursue all or part
of the Trust Indenture Estate wherever it may be
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found (but not in violation of Section 10.05 hereof or of the Lease) and may
enter any of the premises of the Lessee wherever such Trust Indenture Estate may
be or be supposed to be and search for and take possession of and remove the
same (but not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that the
provisions hereof shall not be construed so as to expand the obligations of the
Lessee under the Lease, including Section 16 thereof). In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, lease,
control or manage the Trust Indenture Estate and to carry on the business
(without limiting the express provisions of Section 5.10 hereof) and to exercise
all rights and powers of the Owner Participant and the Owner Trustee relating to
the Trust Indenture Estate, as the Indenture Trustee 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 Trust Indenture Estate or any part thereof as the Indenture
Trustee may determine; and the Indenture Trustee shall be entitled to collect
and receive directly all tolls, rents (including Rent), revenues, issues,
income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder, except Excepted Payments. The Indenture Trustee shall,
pursuant to the exercise of its remedies under this Article IV, to the extent
permitted by applicable law, be entitled to the appointment of a receiver for
all or any part of the Trust Indenture Estate, whether such receivership be
incidental to a proposed sale of the Trust Indenture Estate or otherwise, and
the Owner Trustee hereby consents to the appointment of such receiver and will
not oppose any such appointment. Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, leasing, control, management or disposition of the
Trust Indenture Estate and of 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
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other proper charges upon the Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder 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 or
such Note Holder, then and in every such case the Owner Trustee, the Indenture
Trustee, the Note Holders and the Lessee shall, subject to any determination in
such proceedings, be restored to their former positions and rights hereunder
with respect to the Trust Indenture Estate, and all rights, remedies and powers
of the Indenture Trustee and the Note Holders shall continue as if no such
proceedings had been instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right consequent thereon; provided,
however, that in the absence of
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written instructions from the Holders of all Equipment Notes then outstanding,
the Indenture Trustee shall not waive any Indenture Default (i) in the payment
of the Principal Amount of or interest on any Equipment Note then outstanding,
or (ii) in respect of a covenant or provision hereof which, under Article IX
hereof, cannot be modified or amended without the consent of each Note Holder.
SECTION 4.09. Indenture Trustee May Prove Debt. If the Owner
Trustee shall fail to pay any amount payable hereunder or under the Equipment
Notes, the Indenture Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action or proceedings at
law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against the Owner Trustee or other
obligor upon the Equipment Notes and collect in the manner provided by law out
of the property of the Owner Trustee or other obligor upon the Equipment Notes,
wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the
Owner Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Owner Trustee
or its property, or in case of any other comparable judicial proceedings
relative to the Owner Trustee upon the Equipment Notes, or to the property of
the Owner Trustee, the Indenture Trustee, irrespective of whether the Principal
Amount of the Equipment Notes shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section , shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of Principal Amount and interest owing and unpaid in respect of the
Equipment Notes, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation, expenses and
disbursements to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the Note
Holders allowed in any judicial proceedings relative to the Owner
Trustee or to the property of the Owner Trustee,
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(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Note Holders in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or Person performing similar
functions in comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Note Holders and of
the Indenture Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Note Holders (by such Note Holder's acceptance
of an Equipment Note) to make payments to the Indenture Trustee, and, in the
event that the Indenture Trustee shall consent to the making of payments
directly to the Note Holders, to pay to the Indenture Trustee such amounts as
shall be sufficient to cover reasonable compensation, expenses and disbursements
to the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred by the Indenture Trustee and each predecessor Indenture Trustee except
as a result of negligence or bad faith.
Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Note Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Equipment Notes or the rights of any Holder thereof,
or to authorize the Indenture Trustee to vote in respect of the claim of any
Note Holder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
All rights of action and of asserting claims under this
Indenture, or under any of the Equipment Notes, may be prosecuted and enforced
by the Indenture Trustee without the possession of any of the Equipment Notes or
the production thereof in any trial or other proceedings relative thereto, and
any such action or proceedings instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation
of the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents and attorneys, shall be for the ratable benefit of the Note
Holders.
In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall
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be a party), the Indenture Trustee shall be held to represent all the Note
Holders, and it shall not be necessary to make any Note Holders parties to any
such proceedings.
SECTION 4.10. Limitations on Suits by Note Holders. No Note
Holder shall have any right to pursue a remedy under this Indenture or any
Equipment Note, unless such Note Holder previously shall have given to the
Indenture Trustee written notice of an Indenture Default and of the continuance
thereof, as hereinbefore provided, and unless also a Majority in Interest of
Note Holders shall have made a written request to the Indenture Trustee to
pursue such remedy and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Indenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall have
failed to pursue such remedy and no direction inconsistent with such written
request shall have been given to the Indenture Trustee during such 60-day period
pursuant to Section 5.02 hereof; it being understood and intended, and being
expressly covenanted by each Note Holder and the Indenture Trustee, that no one
or more Note Holders shall have any right in any manner whatever by virtue or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of any other Note Holder or, except as otherwise provided herein
(including, without limitation, Section 2.13), to obtain or seek to obtain
priority over or preference to any other such Note Holder or to enforce any
right under this Indenture, except in the manner herein provided. For the
protection and enforcement of the provisions of this Section 4.10, each and
every Note Holder and the Indenture Trustee shall be entitled to such relief as
can be given either at law or in equity.
SECTION 4.11. Unconditional Right of Note Holders to Receive
Principal, Interest and Premium, and to Institute Certain Suits. Notwithstanding
any other provision in this Indenture and any provision of any Equipment Note,
the right of any Note Holder to receive payment of the Principal Amount of and
interest on such Equipment Note on or after the respective due dates expressed
in such Equipment Note, or, subject to Section 4.10, to institute suit in a
manner consistent with the limitations contained in Section 4.04(a) hereof for
the enforcement of any such payment on or after such respective dates as herein
provided, shall not be impaired or affected without the consent of such Note
Holder.
SECTION 4.12. Exercise of Remedies by Foreign Note Holders. If
the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a
time when (i) the Aircraft is registered with the Federal Aviation
Administration, (ii) 25% or more of the then unpaid Principal Amount of the
Equipment Notes
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is held by one or more Persons which are not a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii)
remedies are to be exercised pursuant to this Article IV as a result of the
occurrence of an Indenture Event of Default which is not a Lease Event of
Default, the Indenture Trustee shall make arrangements, if any, as may be
required by law so that such exercise of remedies shall not result in the
ineligibility of the Aircraft to be registered under the Federal Aviation Act.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the
event the Indenture Trustee shall have knowledge of an Indenture Event of
Default, or shall have knowledge of an Indenture Default arising either from a
failure to pay Rent or a Lease Default of the type referred to in the second
sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof
to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex,
telegraph or telephone (confirmed by written notice in the manner provided by
Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to
the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof
and of this Section 5.01, the Indenture Trustee shall take such action, or
refrain from taking such action, with respect to any Indenture Event of Default
or Indenture Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Note Holders. Subject to the provisions of Section 5.03
hereof, if the Indenture Trustee shall not have received instructions as above
provided within 20 calendar days after mailing notice of such Indenture Default
or Indenture Event of Default to the Note Holders, the Indenture Trustee may,
subject to instructions thereafter received pursuant to the preceding provisions
of this Section 5.01, take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action, with respect
to such Indenture Default or Indenture Event of Default as it shall determine to
be advisable and in the best interests of the Note Holders 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 its own affairs; provided that the
Indenture Trustee may not sell the Aircraft or any part thereof without the
consent of a Majority in Interest of Note Holders. In the event the Indenture
Trustee shall at any time elect to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the
case of any such party) not stayed or otherwise prohibited by
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applicable law, the Owner Participant, the Note Holders, the Owner Trustee and
the Lessee. For all purposes of this Indenture, in the absence of actual
knowledge on the part of an officer in the Corporate Trust Office, in the case
of the Indenture Trustee, or its Corporate Trust Administration Department, 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 an Indenture Event of
Default (except, in the case of the Indenture Trustee, the failure of the Lessee
to pay any installment of Rent when due, if any portion of such installment was
then required to be paid to the Indenture Trustee, which failure shall
constitute knowledge of an Indenture Default for purposes of the first sentence
of this Section 5.01) unless notified in writing by the Lessee, the Owner
Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the
Indenture Trustee.
SECTION 5.02. Action Upon Instructions. Subject to the terms
of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, 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 to
take such other action hereunder or under any other Indenture Document or in
respect of any part or all of the Trust Indenture Estate as shall be specified
in such instructions; (ii) take such action with respect to, or to preserve or
protect, the Trust Indenture Estate (including the discharge of Liens) as shall
be specified in such instructions and as are 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 of 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 interest created hereunder in the Trust Indenture Estate as may
be specified from time to time in written instructions of a Majority in Interest
of Note Holders (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may, but shall not be obligated to, execute and
file or cause to be filed any financing statement which it from time to time
deems appropriate or any continuation statement that the Lessee, in discharge of
its obligations under Section 3(v) of the Refunding Agreement or any other
Operative Document, may so request. Notwithstanding the foregoing or anything in
this Indenture to the contrary, the Indenture Trustee may, on the advice of its
counsel and without the consent or
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approval of any Note Holder, approve any counsel asked to opine on any matters
under Section 11(b)(ii) of the Refunding Agreement, Section 6(a)(iii) of the
Lease or under this Indenture and approve any opinion issued by such counsel;
provided, however, that this provision will not interfere with the Owner
Participant's right to consent to such counsel. None of the Owner Participant,
the Owner Trustee or the Lessee have any liability for the failure of the
Indenture Trustee to discharge its obligations hereunder.
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 hereof unless
the Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the first sentence
thereof) or 5.02 or Article IV hereof, nor shall any other provision of this
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 of the other Indenture Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Aircraft or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided
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herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and obtain such instructions promptly so as not
unreasonably to delay the proposed action of Lessee in respect of which the
instructions are sought. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Article VII hereof or any
other Operative Document) promptly take such action as may be necessary to duly
discharge all Lenders' Liens on any part of the Trust Indenture Estate
attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding
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, or place Liens on, the Aircraft or any
other part of the Trust Indenture Estate except (i) as required or permitted by
the terms of the Lease or the Refunding Agreement, or (ii) in accordance with
the powers granted to, or the authority conferred upon, the Owner Trustee and
the Indenture Trustee pursuant to this Indenture and in accordance with the
terms hereof.
SECTION 5.06. Replacement Airframes, Replacement Engines and
Replacement Parts. (a) If at any time and from time to time, the Airframe or
Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a),
11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s),
as the case may be, in accordance with the provisions of this Section 5.06 and
the provisions of said Sections of the Lease, the Owner Trustee shall, at such
time or times, but subject to compliance with the conditions to such replacement
set forth in the Lease, direct the Indenture Trustee to execute and deliver to
or as directed in writing by the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine(s) 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:
(1) A written request from the Owner Trustee, requesting such release
and specifically describing the Airframe and/or Engine(s) so to be released and
the Replacement Airframe and/or Replacement Engine(s).
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(2) A certificate signed by a duly authorized officer of the
Lessee stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number (or other applicable
registration number) and manufacturer's serial number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number (or other applicable
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 hold legal title to (or, if
the Japanese Lease Agreement is then in effect, be the beneficial owner
of) such Replacement Airframe free and clear of all Liens except
Permitted Liens, that such Replacement Airframe will on such date be in
good operating condition, and that such Replacement Airframe has been
or, substantially concurrently with such replacement, is in the process
of being duly registered with the Owner Trustee as owner thereof under
the Federal Aviation Act or under the law then applicable to the
registration of the Aircraft and that an airworthiness certificate has
been duly issued under the Federal Aviation Act (or such other
applicable law) with respect to such Replacement Airframe, and that
such registration and certificate is in full force and effect, and the
Lessee or a Permitted Sublessee will have the full right and authority
to use such Replacement Airframe;
(iv) that the insurance required by Section 12 of the Lease is in
full force and effect with respect to such Replacement Airframe and all
premiums then due thereon have been paid in full;
(v) that the Replacement Airframe is of a like Airbus A320-231
model airframe with equivalent or better modification status;
(vi) that no Lease 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 a Replacement Airframe;
(vii) an appraisal prepared in accordance with the Appraisal
Procedure (as defined in the Lease) confirms that
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the Replacement Airframe has a value, utility and remaining useful life
at least equal to that of the Airframe which suffered the Event of Loss
assuming that the same were maintained in accordance with the
requirements of the Lease whether or not they are in fact so
maintained; and
(viii) that each of the conditions specified in Section 11(a) and (c)
of the Lease with respect to such Replacement Airframe have been
satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) 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;
(iii) that on the date of the Indenture Supplement relating to the
Replacement Engine the Owner Trustee will hold title to (or, if the
Japanese Lease Agreement is then in effect, beneficial ownership of)
such Replacement Engine free and clear of all Liens except Permitted
Liens, that such Replacement Engine will on such date be in good
operating condition, and that such Replacement Engine is the same or an
improved model as the Engine to be released;
(iv) the value, remaining useful life and utility of the
Replacement Engine as of the date of such certificate (which value,
remaining useful life and utility shall not be less than the then
value, remaining useful life and utility of the Engine requested to be
released, assuming such Engine was in the condition and repair required
to be maintained under the Lease (but without regard to hours and
cycles until overhaul));
(v) that no Lease 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 Engine; and
(vi) that each of the conditions specified in Section 11(b) of the
Lease with respect to such Replacement Engine have been satisfied.
(3) The appropriate instrument or instruments (i) transferring to the
Owner Trustee title to (of, if the Japanese Lease Agreement is then in effect,
beneficial ownership of) the Replacement Airframe or Replacement Engine to be
received as consideration for the Airframe or Engine to be released, (ii)
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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 (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Airframe or Replacement Engine to the Lien of this Indenture
and to the Japanese Lease Agreement, if then in effect, and subjecting to any
relevant Assigned Sublease and Sublease Assignment, including, without
limitation, an Indenture Supplement.
(4) With respect to a Replacement Airframe, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee confirming
the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof.
(5) The opinion of counsel to the Lessee satisfactory to the Indenture
Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the requirements of this
Indenture and the Lease and, upon the basis of such application, the
property so sold or disposed of may be properly released from the Lien
of this Indenture and all conditions precedent herein provided for
relating to such release have been complied with;
(ii) the Replacement Airframe and/or Replacement Engine(s) have
been validly subjected to the Lien of this Indenture and covered by the
Lease and the Japanese Lease Agreement, if then in effect, the
instruments subjecting such Replacement Airframe or Replacement Engine
to the Lien of this Indenture, the Lease and, the Japanese Lease
Agreement, if then in effect, and subjecting to any relevant Assigned
Sublease and Sublease Assignment, as the case may be, have been duly
filed for recordation pursuant to the Federal Aviation Act or any other
law then applicable to the registration of the Aircraft, and no further
action, filing or recording of any document is necessary in order to
establish and perfect, in the United States and, if the Aircraft is
registered outside the United States, in the jurisdiction of
registration, the legal title to (or, if the Japanese Lease Agreement
is then in effect, the beneficial ownership of) the Owner Trustee to
such Replacement Airframe and/or Replacement Engine and the Lien of
this Indenture on such Replacement Airframe and/or Replacement Engine;
and
(iii) the Owner Trustee and the Indenture Trustee (as assignee of
the Owner Trustee's rights under the Lease)
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shall be entitled to the benefits of Section 1110 of the Bankruptcy
Code with respect to the Replacement Airframe and, if an Event of Loss
with respect to the Aircraft has occurred, the Replacement Engines to
the same extent as with respect to the Airframe and Engines then
installed thereon prior to such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Airframe or Engine as contemplated by
Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for
the benefit of the Note Holders and the Lessee, subject to fulfillment of the
conditions precedent and compliance by the Lessee with its obligations set forth
in Section 11 of the Lease, to execute and deliver the appropriate instruments
as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee
(or any relevant Permitted Sublessee) an appropriate instrument releasing the
Airframe and/or Engine(s) being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or Engine as contemplated by Section 11
of the Lease and Section 5.06 hereof, all provisions of this Indenture relating
to the Airframe or Engine(s) being replaced shall be applicable to such
Replacement Airframe or Replacement Engine(s) with the same force and effect as
if such Replacement Airframe or Replacement Engine(s) were the same airframe or
engine(s), as the case may be, as the Airframe or Engine(s) being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note
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Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Note Holder shall affect the
sufficiency of such notice with respect to other Note Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Note Holders shall be filed with the Indenture Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this Indenture, including
the Granting Clause, but subject always to the final paragraph of this Section
5.10, the following rights shall be reserved to the Owner Trustee or Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
(a) the Owner Trustee or the Owner Participant may, without
the consent of the Indenture Trustee, demand, collect, sue for or
otherwise obtain all amounts included in Excepted Payments from the
Lessee, exercise any election or option or make any decision or
determination or give or receive any notice, consent, waiver or
approval in respect of any Excepted Payment and seek legal or equitable
remedies to require the Lessee to maintain the insurance coverage
referred to in Section 12 of the Lease (or the comparable provisions of
any Assigned Sublease) and such specific performance of the covenants
of the Lessee under the Lease (or the comparable provisions of any
Assigned Sublease) relating to the protection, maintenance, possession
and use of the Aircraft; provided, that the rights referred to in this
clause (a) shall not be deemed to include the exercise of any remedies
provided for in Section 18 of the Lease (or the comparable provisions
of any Assigned Sublease) other than the right to proceed by
appropriate court action, either at law or in equity, to enforce
payment by the Lessee of such amounts included in Excepted Payments or
performance by the Lessee of such insurance covenant or to recover
damages for the breach thereof or for specific performance of any
covenant of the Lessee;
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(b) unless an Indenture Event of Default and an Indenture
Trustee Event shall have occurred and be continuing, the Indenture
Trustee shall not, without the consent of the Owner Trustee, which
consent shall not be withheld if no right or interest of the Owner
Trustee or the Owner Participant shall be materially diminished or
impaired thereby, (i) enter into, execute and deliver amendments,
modifications, waivers or consents in respect of any of the provisions
of the Lease, any Assigned Sublease or any Sublease Assignment, or (ii)
approve any accountants, engineers, appraisers or counsel as
satisfactory to render services for or issue opinions to the Owner
Trustee pursuant to the Operative Documents; provided that, whether or
not an Indenture Event of Default has occurred and is continuing, the
Owner Trustee's consent shall be required with respect to any
amendments, modifications, waivers or consents in respect of any of the
provisions of Sections 6, 12 or 16 of the Lease, or of any other
Section of the Lease to the extent such action shall affect (y) the
amount or timing of, or the right to enforce payment of any Excepted
Payment or (z) the amount or timing of any amounts payable by the
Lessee under the Lease as originally executed (or as subsequently
modified with the consent of the Owner Trustee) which, absent the
occurrence and continuance of an Indenture Event of Default hereunder,
would be distributable to the Owner Trustee under Article III hereof;
(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses
(a), (b) and (c) above, so long as no Indenture Event of Default has
occurred and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner
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Trustee and the Owner Participant under the Lease shall be exercised by
the Owner Trustee and/or the Owner Participant, as the case may be, to
the exclusion of the Indenture Trustee and any Note Holder and without
the consent of the Indenture Trustee or any Note Holder; provided that
the foregoing shall not, nor shall any other provision of this Section
5.10, limit (A) any rights separately and expressly granted to the
Indenture Trustee or any Note Holder under the Lease or the other
Operative Documents (including, without limitation, Section 15 of the
Refunding Agreement) or (B) the right of the Indenture Trustee or any
Note Holder to receive any funds to be delivered to the Owner Trustee
under the Lease (except with respect to Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment), (B) declare the Lease to be in default under
Section 18 thereof and (C) subject only to the provisions of Sections 4.03 and
4.04(a) hereof, exercise the remedies set forth in such Section 18 (other than
in connection with Excepted Payments) and in Article IV hereof.
SECTION 5.11. Evidence of Action Taken by Note Holder. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Note Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Note Holders in person or by agent duly appointed in
writing, and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof
of execution of any instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Sections 5.04,
5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner
Trustee if made in the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the
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Corporate Trust Office and upon proof of holding an Equipment Note, revoke such
action so far as concerns such Equipment Note. Except as aforesaid any such
action taken by the Note Holder shall be conclusive and binding upon such Note
Holder and upon all future Note Holders and owners of such Equipment Note and of
any Equipment Notes issued in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon any such Equipment
Note. Any action taken by the Note Holders of the percentage in aggregate
Principal Amount of the Equipment Notes specified in this Indenture in
connection with such action shall be conclusively binding upon the Owner
Trustee, the Indenture Trustee and the Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee shall be answerable or accountable under
any circumstances, except for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be negligence), or as provided in the fourth sentence of Section 2.04(a)
hereof and in the last sentence of Section 5.04 hereof, and except for
liabilities that may result, in the case of the Trust Company, from the
inaccuracy of any representation or warranty of the Trust Company in the
Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the
failure to perform any covenant of the Trust Company pursuant to Section 4.01(a)
hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of
the Indenture Trustee, from the inaccuracy of any representation or warranty, or
failure to perform any covenant, of the Indenture Trustee made in its individual
capacity herein, in the Refunding Agreement or in any other document. None of
the Owner Participant, the Trust Company or the Indenture Trustee shall be
liable for any action or inaction of any other one of such parties, except, in
the case of the Owner Participant, for any action or omission of the Owner
Trustee performed or omitted on the instructions of the Owner Participant. The
Owner Trustee shall not be deemed a trustee for the Note Holders for any
purpose.
SECTION 6.02. Absence of Duties. In the case of the
Indenture Trustee, except in accordance with written instructions
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furnished pursuant to Section 5.01, 5.02 or 9.01 hereof, and except as provided
in, and without limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof
and, in the case of the Owner Trustee, except as provided in Section 4.01(b),
6.09 or 9.01 hereof and in the Trust Agreement, the Lease and the Refunding
Agreement, the Owner Trustee and the Indenture Trustee shall have no duty (i) to
see to any registration of the Aircraft or any recording or filing of the Lease
or of this Indenture or any other document, or to see to the maintenance of any
such registration, recording or filing, (ii) to see to any insurance on the
Aircraft, 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 Trust 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 or
any of the Permitted Sublessee's covenants under any Assigned Sublease with
respect to the Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft
or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE
TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO
HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE 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 ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except
that the Trust Company warrants that (i) on the Delivery Date for the Aircraft
the Owner Trustee shall have received whatever interest in the Aircraft was
conveyed to it under the Japanese Lease Agreement and the Second Japanese Lease
Assignment subject to the rights of the parties to the Indenture Documents and
(ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the
Trust Company. Neither the Trust Company nor the Indenture Trustee 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 Documents 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 in its individual capacity or as
Indenture
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Trustee made under this Indenture or in the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any
moneys paid to or retained by the Indenture Trustee pursuant to any provision
hereof and not then required to be distributed to any Note Holder, the Lessee or
the Owner Trustee as provided in Article III hereof need not be segregated in
any manner except to the extent required by law, 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 hereof) 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 any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of
the Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of 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, but in the case of any such certificate, the Owner
Trustee and the Indenture Trustee shall be under a duty to examine the same to
determine whether or not it conforms to the requirements of this Indenture. 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
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the trusts or powers hereof and perform its powers and duties hereunder directly
or through agents or attorneys and, except that any such execution or
performance shall not derogate from the Indenture Trustee's obligations under
the third sentence of Section 2.04(a), the Indenture Trustee and the Owner
Trustee shall not be responsible for any misconduct or negligence on the part of
any such agent or attorney appointed with due care hereunder. The Indenture
Trustee may, at the expense of the Trust Indenture Estate, consult with counsel,
accountants and other skilled Persons to be selected and retained by it, and the
Owner Trustee and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by them in accordance with the written advice
or written opinion of any such counsel, accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against any Note Holder or the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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
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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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee from and after the
Restatement Date (whether or not also agreed to be indemnified against by any
other Person under any other document) in any way relating to or arising out of
this Indenture, the Trust Agreement, the Equipment Notes, the other Indenture
Documents or the enforcement of any of the terms of any thereof, or in any way
relating to or arising out of the manufacture, purchase, acceptance,
nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use,
operation, condition, sale, return or other disposition of the Aircraft or any
Engine (including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust
Indenture Estate or the action or inaction of the Indenture Trustee hereunder,
except only (i) in the case of willful misconduct or gross negligence (or
negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's
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indemnities to the Indenture Trustee, in its individual capacity and as
Indenture Trustee, and its successors, permitted assigns, agents and servants,
thereunder; provided that so long as the Lease is in effect, the Indenture
Trustee shall not make any claim under this Section 7.01 for any amount
indemnified against by the Lessee under the Lease without first (but only to the
extent not stayed or otherwise prevented by operation of law) making demand on
the Lessee for payment of such amount. The Indenture Trustee shall notify the
Owner Trustee and the Lessee promptly of any claim for which it may seek
indemnity. The Lessee shall be entitled to defend any claim by the Indenture
Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture
Trustee shall be entitled to indemnification from the Trust Indenture Estate for
any liability, obligation, loss, damage, penalty, claim, action, suit, cost,
expense or disbursement indemnified against pursuant to this Section 7.01 to the
extent not reimbursed by the Lessee or others, but without releasing any of them
from their respective agreements of reimbursement; and to secure the same the
Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. The
indemnities contained in this Section 7.01 shall survive the termination of this
Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
agent or affiliate of the Trust Company or the Owner Participant (the
"Exculpated Equity Persons") shall have any obligation, duty or liability of any
kind whatsoever to the Indenture Trustee or any such Note Holder in connection
with the exercise by any Exculpated Equity Person of any rights of the Owner
Trustee or the taking of any action or the failure to take any action by any
Exculpated Equity Person in connection with any rights of the Owner Trustee
under this Indenture or the Lease, and each such Note Holder hereby waives and
releases, to the extent permitted by applicable law, each Exculpated Equity
Person of any and all such obligations, duties or liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case
of any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Trust Company pursuant to the Trust
Agreement,
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the successor Owner Trustee shall give prompt written notice thereof to the
Indenture Trustee and to each Note Holder.
SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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 and assuming such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Indenture Trustee, without further act, shall become vested with and
bound by all the estates, properties, rights, powers, duties and obligations of
the predecessor Indenture Trustee hereunder and under the other Indenture
Documents in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; but nevertheless upon the written
request of such successor Indenture Trustee, such predecessor Indenture Trustee
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor
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Indenture Trustee all moneys or other property then held by such predecessor
Indenture Trustee hereunder, subject nevertheless to its claim provided for in
Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall
be a "citizen of the United States" within the meaning of Section 40102(a)(15)
of the Federal Aviation Act and shall also be a bank or trust company having a
combined capital and surplus of at least $200,000,000 if there be such an
institution willing, able and legally qualified to perform the duties of the
Indenture Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the foregoing,
upon the request of the Owner Trustee or the Lessee, any such successor
corporation referred to in this Section 8.02(d) shall deliver to the Owner
Trustee and the Lessee an instrument confirming its status as the Indenture
Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate
may at the time be located or in which any action of the Indenture Trustee may
be required to be performed or taken, the Indenture Trustee, by an instrument in
writing signed by it, may appoint one or more individuals or corporations to act
as separate trustee or separate trustees or co-trustee, acting jointly with the
Indenture Trustee, of all or any part of the Trust Indenture Estate to the full
extent that local law makes it necessary for such separate trustee or separate
trustees or co-trustee acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust Indenture Estate or
any part thereof, and with such rights and duties, as shall be specified
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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 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, his or her
attorney-in-fact and agent with full power and authority to do all acts and
things and to exercise all discretion on its, his or her behalf and in its, his
or her name. In case any such separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, the title to the Trust Indenture
Estate and all assets, property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act, and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Indenture
Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional
trustee or trustees and separate trustee or trustees jointly except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Indenture Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the
holding of title to the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional
trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee shall be exercised
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hereunder by such additional trustee or separate trustee
except jointly with, or with the consent of, the Indenture
Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.03,
the powers of any additional trustee or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures.
(a) Except as otherwise provided in Section 5.10 hereof, and except with respect
to Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or supplement to the Lease or any of the Japanese Financing
Documents, or execute and deliver any written waiver or modification of, or
consent under, the terms of the Lease or any of the Japanese Financing
Documents, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by the Indenture Trustee acting on instructions of a
Majority in Interest of Note Holders. Anything to the contrary contained in this
Section 9.01 notwithstanding, without the necessity of the consent of any of the
Note Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee,
(i) any Excepted Payments payable to the Owner Trustee or Owner Participant may
be modified, amended, changed or waived in such manner as shall be agreed to by
the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee may, so long
as no Indenture Event of Default has occurred and is continuing, enter into
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amendments of or additions to the Lease to modify Sections 6(d), 9 and 16 and
Exhibits B and E (except to the extent that such amendment would adversely
affect the rights or exercise of remedies under Section 18 of the Lease) so long
as such amendments, modifications and changes do not and would not (A) affect
the time of, or reduce the amount of, Basic Rent or Stipulated Loss Value
payments until after the payment in full of all Secured Obligations, (B) impair
the Lien of this Indenture, (C) adversely affect the value, utility or useful
life of the Aircraft or any Engine or (D) otherwise adversely affect the Note
Holders in any material respect, and (iii) the Lessee may effect the
re-registration of the Aircraft in accordance with but always subject to the
terms and conditions applicable thereto specified in Section 11 of the Refunding
Agreement and Section 6(e) of the Lease and the Indenture Trustee may approve
any Permitted Sublessee as provided in clause (c) of the definition of such term
set forth in the Lease and may exercise the rights of the Indenture Trustee
under Section 15 of the Refunding Agreement. For the avoidance of doubt, nothing
in this Section 9.01 shall limit in any way the rights of the Owner Trustee
and/or the Owner Participant under Section 5.10(d) to exercise certain rights
and powers under the Lease to the exclusion of the Indenture Trustee and any
Note Holder and without the consent of the Indenture Trustee or any Note Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise, whether in its
official or individual capacity.
Any supplemental indenture authorized by the provisions of
this Section 9.01 may be executed without the consent of the Note Holders
notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, any of the Japanese
Financing Documents or any other agreement included in the Trust Indenture
Estate, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by a Majority in Interest of Note Holders, or does not
adversely affect the Note Holders in any material respect. Upon the written
request of a Majority in
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Interest of Note Holders, the Indenture Trustee shall from time to time enter
into any such supplement or amendment, or execute and deliver any such waiver,
modification or consent, as may be specified in such request and as may be (in
the case of any such amendment, supplement or modification), to the extent such
agreement is required, agreed to by the Owner Trustee and Lessee or, as may be
appropriate, the Manufacturer; provided, however, that, without the consent of
each Holder of an affected Equipment Note then outstanding and of each Liquidity
Provider, no such amendment of or supplement to this Indenture, the Lease, the
Refunding Agreement or any other Indenture Document or waiver or modification of
the terms of, or consent under, any thereof, shall (i) modify any of the
provisions of this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e),
5.06 or 5.10 hereof, Section 17 (except to add a Lease Event of Default) of the
Lease, the definitions of "Indenture Event of Default", "Indenture Default",
"Indenture Trustee Event", "Lease Event of Default", "Lease Default", "Majority
in Interest of Note Holders", "Make-Whole Amount" or "Note Holder", or the
percentage of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount, or change the time of payment or method of calculation
of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with
respect to any Equipment Note, or alter or modify the provisions of Article III
hereof with respect to the order of priorities in which distribution thereunder
shall be made as among the Note Holders, the Owner Trustee and the Lessee, (iii)
reduce, modify or amend any indemnities in favor of the Note Holders, (iv)
consent to any change in this Indenture or the Lease which would permit
redemption of Equipment Notes earlier than permitted under Section 2.10 hereof,
(v) modify any of the provisions of Section 4(b) of the Lease, or modify, amend
or supplement the Lease, any Assigned Sublease or any Sublease Assignment, or
consent to any assignment of any thereof, in either case releasing the Lessee
(or Permitted Sublessee) from its obligations in respect of the payment of Basic
Rent or Stipulated Loss Value for the Aircraft or altering the absolute and
unconditional character of the obligations of Lessee to pay Rent as set forth in
Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned
Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate
or any part thereof other than Permitted Liens or deprive any Note Holder of the
benefit of the Lien of this Indenture on the Trust Indenture Estate, except as
provided in connection with the exercise of remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with
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the provisions hereof (provided that such change does not adversely affect the
interests of any Note Holder in its capacity solely as Note Holder) or (B) to
cure any ambiguity or correct any mistake; (ii) to evidence the succession of
another party as the Owner Trustee in accordance with the terms of the Trust
Agreement or to evidence the succession of a new trustee hereunder pursuant
hereto, the removal of the trustee hereunder or the appointment of any
co-trustee or co-trustees or any separate or additional trustee or trustees;
(iii) to convey, transfer, assign, mortgage or pledge any property to or with
the Indenture Trustee or to make any other provisions with respect to matters or
questions arising hereunder so long as such action shall not adversely affect
the interests of the Note Holders in its capacity solely as Note Holder or
impose upon the Lessee any additional indemnification obligations; (iv) to
correct or amplify the description of any property at any time subject to the
Lien of this Indenture or better to assure, convey and confirm unto the
Indenture Trustee any property subject or required to be subject to the Lien of
this Indenture, the Airframe or Engines or any Replacement Airframe or
Replacement Engine; (v) to add to the covenants of the Owner Trustee for the
benefit of the Note Holders, or to surrender any rights or powers herein
conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to
add to the rights of the Note Holders; and (vii) to include on the Equipment
Notes any legend as may be required by law.
(d) Without the consent of the Lessee, no amendment or
supplement to this Indenture or waiver or modification of the terms hereof shall
adversely affect the Lessee in any material respect or impose upon the Lessee
any additional indemnification obligations.
SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Indenture Trustee, the Owner Trustee
and the Note Holders shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for all and any
purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture
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referred to in Section 9.01 complies with the applicable provisions of this
Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such copy
to each Note Holder), but the failure of the Owner Trustee or the Indenture
Trustee to mail such conformed copies shall not impair or affect the validity of
such document. The Indenture Trustee will furnish to each Note Holder, promptly
upon receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to the Indenture Trustee
under the Lease or hereunder to the extent that the same were not required to
have been furnished to such Note Holder pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX, no
written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX 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, any
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Engines or other property thereto or to release the Aircraft, any Engine or
other property therefrom or to execute and deliver an Indenture Supplement, in
each case pursuant to the terms hereof or to execute and deliver any supplement
or certificate necessary with respect to the foregoing under the Japanese Lease
Agreement.
SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge
of such Lien and the termination of such security interest in the Aircraft and
release of 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
Trustee to give effect to such discharge, termination and 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 as expressly
provided pursuant to Article X hereof or upon any sale or other final
disposition by the Indenture Trustee of all property part of the Trust Indenture
Estate and the final distribution by the Indenture Trustee of all moneys or
other property or proceeds constituting part of the Trust Indenture Estate in
accordance with the terms hereof. Except as aforesaid otherwise provided, this
Indenture and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Note Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other
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right, title and interest of any Note Holder in and to the Trust Indenture
Estate or hereunder shall operate to terminate this Indenture or entitle such
Note Holder or any successor or transferee of such Holder to an accounting or to
the transfer to it of legal title to any part of the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is
Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee
made pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the 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 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of the Aircraft, except in
accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations, directions, consents,
waivers or documents required or permitted by the terms of this Indenture shall
be in English and in writing, mailed by first-class registered or certified
mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the
Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration Department (telex:
835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the
Owner Participant at its address set forth in the Refunding Agreement, (ii) if
to the Indenture Trustee, addressed to it at its office at 450 West 33rd Street,
15th Floor, New York, New York 10001,
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Attention: Corporate Trust Department (telecopy: (212) 946-8160) or (iii) if to
the Owner Participant, the Lessee or any Note Holder, addressed to such party at
such address as such party shall have furnished by notice to the Owner Trustee
and the Indenture Trustee, or, until an address is so furnished, addressed to
the address of such party (if any) set forth on the signature pages to the
Refunding Agreement or in the Register. Whenever any notice in writing is
required to be given by the Owner Trustee or the Indenture Trustee or any Note
Holder to any of the other of them, such notice shall be deemed and such
requirement satisfied when such notice is received. Any party hereto may change
the address to which notices to such party will be sent by giving notice of such
change to the other parties to this Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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 permitted assigns of each, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Note Holder shall bind the successors and assigns of
such Note Holder. This Indenture and the Trust Indenture Estate shall not be
affected by any amendment or supplement to the Trust Agreement or by any other
action taken under or in respect of the Trust Agreement, except that each
reference in this Indenture to the Trust Agreement shall mean the Trust
Agreement as amended and supplemented from time to time to the extent permitted
hereby and thereby. Each Note Holder by its acceptance of an Equipment Note
agrees to be bound by this Indenture and all provisions of the Refunding
Agreement applicable to a Note Holder.
Trust Indenture
<PAGE> 99
- 94 -
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Indenture Trustee, the
Owner Trustee, the Owner Participant, any Note Holder or any bank or other
Affiliate of any of them may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Lessee or any Permitted Sublessee fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Lessee for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the
parties that the Owner Trustee, as lessor under the Lease (and the Indenture
Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled
to the benefits of Section 1110 of the Bankruptcy Code with respect to the right
to take possession of the Aircraft, Airframe, Engines and Parts as provided in
the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in
which Lessee is a debtor, and in any instance where more than one construction
is possible of the terms and conditions hereof or of any other pertinent
Operative Document, each such party agrees that a construction which would
preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14. JL Security Agreement. The Owner Trustee hereby
confirms and agrees that its security interest in and to the Aircraft granted
under the JL Security Agreement is and shall be subject and subordinate in all
respects to the Lien of this Indenture, and in the event the Indenture Trustee
shall foreclose the Lien of this Indenture and sell or otherwise transfer the
Aircraft, such sale or other transfer shall be free and clear of such security
interest.
Trust Indenture
<PAGE> 100
- 95 -
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
expressly provided herein, but
solely as Owner Trustee
By:_________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity, except as
expressly provided herein, but
solely as Indenture Trustee
By:_________________________________
Name:
Title:
Trust Indenture
<PAGE> 101
EXHIBIT A
TO
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-6]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1989 BN-6]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1989 BN-6] dated as
of December 15, 1989 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1989
BN-6] dated as of December 15, 1989, as amended and restated as of October 1,
1991 and as further amended and restated as of November 26, 1996 (as so amended
and restated, the "Indenture") between the Owner Trustee and The Chase Manhattan
Bank (formerly known as Chemical Bank, successor by merger to Manufacturers
Hanover Trust Company), as Indenture Trustee (the "Indenture Trustee"), provides
for the execution and delivery of a supplement thereto substantially in the form
hereof which shall particularly describe the Aircraft (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 Trust Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated December 22, 1989 subjected to the Lien of such
Indenture the airframe and engines therein described, which Original Indenture
and Trust Indenture Supplement No. 1 have been duly recorded with the Federal
Aviation Administration as one document on April 2, 1990 and assigned Conveyance
No. V79847.
WHEREAS, the Amended and Restated Indenture (which amended and
restated the Original Indenture), as supplemented by Trust Indenture Supplement
No. 2 dated October 24, 1991 subjected to the Lien of such Indenture the
airframe and engines therein described, which Amended and Restated Indenture and
Trust Indenture Supplement No. 2 have been duly recorded with the Federal
Aviation Administration as one document on November 12, 1991 and assigned
Conveyance No. Z91423.
<PAGE> 102
- 2 -
WHEREAS(1), 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(2), the Owner Trustee has, as provided in the
Indenture, heretofore executed and delivered to the Indenture Trustee [3]
Indenture Supplement(s) for the purpose of specifically subjecting to the Lien
of the Indenture certain airframes and/or engines therein described, which
Indenture Supplement(s) is (are) dated and has (have) been duly recorded with
the Federal Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
---- ---------------- ----------------
NOW, THEREFORE, This Supplement Witnesseth, that, to secure
the prompt payment of the Principal Amount of, interest on, Make-Whole Amount,
if any, and all other amounts due with respect to, all 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 contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner
Trustee has granted, bargained, sold,
- --------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
(2) This recital not to be included in the first Indenture
Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 103
- 3 -
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 Note Holders from time to time, in the trust created
by the Indenture, a first priority security interest in and mortgage Lien on all
estate, right, title and interest of the Owner Trustee in, to and under the
following described property:
AIRFRAME(S)
( ) airframe(s) identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------ ----- ---------------- --------------
together with all 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.
AIRCRAFT ENGINES
( ) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as
follows:
Manufacturer's
Manufacturer Model Serial Number
------------ ----- --------------
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engines.
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.
Form of Trust Indenture Supplement
<PAGE> 104
- 4 -
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 Note Holders from time to time, in the trust created
by the Indenture, all of the estate, right, title and interest of the Owner
Trustee in, to and under the Lease and Lease Supplement [GPA 1989 BN-6] No. 3 of
even date herewith (other than Excepted Payments) 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 Note Holders from time to time for the uses and purposes and
subject to the terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and shall form a part of it, and the Indenture is hereby incorporated
by reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 105
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this
Supplement to be duly executed by one of its officers thereunto duly authorized
on the day and year first above written.
WILMINGTON TRUST COMPANY, not in
its individual capacity, except
as otherwise expressly provided
herein, but solely as Owner Trustee
By_________________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 106
SCHEDULE I
TO
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-6]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- -------- ---------
<S> <C> <C> <C>
Series A $11,936,662 02-Jan-2006 6.85%
Series B $ 4,476,246 02-Jul 2002 6.93%
Series C $ 4,476,247 02-Jan-2002 6.86%
Series D $ 3,575,831 02-Jul-98 8.16%
</TABLE>
<PAGE> 107
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N626AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 108
SERIES B
Aircraft: N626AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 109
SERIES C
Aircraft: N626AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 110
SERIES D
Aircraft: N626AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 111
SCHEDULE II
TO
SECOND AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT
[GPA 1989 BN-6]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1D, dated November 26, 1996.
Schedule II-1
<PAGE> 1
EXHIBIT 4.35
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-10]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 77
Registration No. N631AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
GRANTING CLAUSE............................................................. 3
HABENDUM CLAUSE............................................................. 7
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions.......................................... 9
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes...................................... 21
SECTION 2.02. Issuance and Terms of Equipment Notes........................ 27
SECTION 2.03. Payments from Trust Indenture Estate
Only.......................................... 30
SECTION 2.04. Method of Payment............................................ 32
SECTION 2.05. Application of Payments...................................... 35
SECTION 2.06. Termination of Interest in Trust
Indenture Estate.............................. 35
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes............................... 36
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes............................... 37
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation.................................. 38
SECTION 2.10. Mandatory Redemptions of Equipment
Notes......................................... 38
SECTION 2.11. Redemptions; Notice of Redemption............................ 38
SECTION 2.12. Option to Purchase Equipment Notes........................... 39
SECTION 2.13. Subordination................................................ 41
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions................................... 41
SECTION 3.02. Event of Loss and Replacement................................ 43
SECTION 3.03. Payment After Indenture Event of
Default, etc.................................. 44
SECTION 3.04. Certain Payments............................................. 47
SECTION 3.05. Other Payments............................................... 48
SECTION 3.06. Payments to Owner Trustee.................................... 48
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee....................................... 49
- i -
Trust Indenture
<PAGE> 3
Page
----
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner
Trustee....................................... 50
SECTION 4.02. Indenture Events of Default.................................. 51
SECTION 4.03. Certain Rights............................................... 54
SECTION 4.04. Remedies..................................................... 56
SECTION 4.05. Return of the Aircraft, etc.................................. 59
SECTION 4.06. Remedies Cumulative.......................................... 61
SECTION 4.07. Discontinuance of Proceedings................................ 61
SECTION 4.08. Waiver of Past Indenture Defaults............................ 62
SECTION 4.09. Indenture Trustee May Prove Debt............................. 62
SECTION 4.10. Limitations on Suits by Note Holders......................... 64
SECTION 4.11. Unconditional Right of Note Holders to
Receive Principal, Interest and Premium, and
to Institute Certain Suits.................... 65
SECTION 4.12. Exercise of Remedies by Foreign Note
Holders....................................... 65
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default......................... 65
SECTION 5.02. Action Upon Instructions..................................... 66
SECTION 5.03. Indemnification.............................................. 67
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions..................... 68
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions.......... 68
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts................. 69
SECTION 5.07. Indenture Supplements for Replacements....................... 73
SECTION 5.08. Effect of Replacement........................................ 73
SECTION 5.09. Notices, etc................................................. 73
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant............................. 74
SECTION 5.11. Evidence of Action Taken by Note Holder...................... 76
SECTION 5.12. Right of Revocation of Action Taken.......................... 76
- ii -
Trust Indenture
<PAGE> 4
Page
----
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties.............................. 77
SECTION 6.02. Absence of Duties............................................ 77
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents......................... 78
SECTION 6.04. No Segregation of Moneys; No Interest........................ 78
SECTION 6.05. Reliance; Agents; Advice of Counsel.......................... 79
SECTION 6.06. Capacity in Which Acting..................................... 80
SECTION 6.07. Compensation................................................. 80
SECTION 6.08. May Become Note Holder....................................... 80
SECTION 6.09. Further Assurances; Financing Statements..................... 80
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification..................................... 81
SECTION 7.02. Exculpation and Release of Liability......................... 82
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee............................ 82
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor............. 83
SECTION 8.03. Appointment of Separate Trustees............................. 84
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures.................................... 86
SECTION 9.02. Effect of Supplemental Indenture............................. 89
SECTION 9.03. Documents to Be Given to Trustee............................. 90
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures....................... 90
SECTION 9.05. Trustees Protected........................................... 90
SECTION 9.06. Documents Mailed to Note Holders............................. 90
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement............ 91
SECTION 9.08. Notices to Liquidity Provider................................ 91
- iii -
Trust Indenture
<PAGE> 5
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture.................................... 91
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders....................... 92
SECTION 10.03. Sale of Aircraft by Indenture Trustee
is Binding................................... 92
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee
and Note Holders............................................ 92
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease.............................. 92
SECTION 10.06. Notices..................................................... 93
SECTION 10.07. Severability................................................ 93
SECTION 10.08. No Oral Modifications or Continuing
Waivers...................................... 93
SECTION 10.09. Successors and Assigns...................................... 93
SECTION 10.10. Headings.................................................... 94
SECTION 10.11. Normal Commercial Relations................................. 94
SECTION 10.12. Governing Law; Counterpart Form............................. 94
SECTION 10.13. Section 1110................................................ 94
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
- iv -
Trust Indenture
<PAGE> 6
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-10]
SECOND AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [GPA 1989 BN-10] (this "Second Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank,
successor by merger to Manufacturers Hanover Trust Company), a New York
corporation, not in its individual capacity except as otherwise specifically set
forth herein, but solely as indenture trustee hereunder (in such capacity,
together with its successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company
entered into the Trust Agreement [GPA 1989 BN-10] dated as of December 19, 1989,
as supplemented by Trust Agreement Supplement [GPA 1989 BN-10] No. 1 dated
December 22, 1989, as further supplemented by Trust Agreement Supplement [GPA
1989 BN-10] No. 2 dated October 24, 1991, and as further supplemented by Trust
Agreement Supplement [GPA 1989 BN-10] No. 3 dated the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"),
whereby, among other things, Wilmington Trust Company has declared a certain
trust for the use and benefit of the Owner Participant, subject, however, to the
Trust Indenture Estate created pursuant hereto for the use and benefit of (to
the extent set forth herein), and with the priority of certain payments to, the
Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized
and directed to execute and deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [GPA 1989 BN-10] dated
as of December 19, 1989, as supplemented by Trust Indenture Supplement No. 1
dated December 22, 1989, which were recorded by the Federal Aviation
Administration on December 27, 1989 as one instrument and assigned Conveyance
No.
Trust Indenture
<PAGE> 7
- 2 -
S86321 (as so supplemented or otherwise modified to the date hereof, the
"Original Indenture"), (ii) the Owner Trustee and the Original Head Lessee
entered into the Aircraft Lease Agreement [GPA 1989 BN-10] dated as of December
19, 1989, as supplemented by Lease Supplement [GPA 1989 BN-10] No. 1 dated
December 22, 1989, which were recorded by the Federal Aviation Administration on
December 27, 1989 as one instrument and assigned Conveyance No. S86322 (as so
supplemented or otherwise modified to the date hereof, the "Original Lease") and
(iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to
the Original Loan Participants (as defined in the Original Indenture) the
Original Loan Certificates;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into an Amended and Restated Trust Indenture and Security Agreement [GPA
1989 BN-10] dated as of October 1, 1991, as supplemented by the Trust Indenture
Supplement No. 2 [GPA 1989 BN-10], dated October 24, 1991, which were recorded
by the Federal Aviation Administration on October 25, 1991 as one document and
assigned Conveyance No. Q52003 (as amended, supplemented or otherwise modified
to the date hereof, the "First Amended and Restated Indenture"), (ii) the Owner
Trustee and the Original Head Lessee entered into an Amended and Restated
Aircraft Lease Agreement [GPA 1989 BN-10] dated as of October 1, 1991, which
amended and restated the Original Lease, as supplemented by Lease Supplement
[GPA 1989 BN-10] No. 2 dated October 24, 1991, which were recorded by the
Federal Aviation Administration on October 25, 1991 as one document and assigned
Conveyance No. Q52004 (as amended, supplemented or otherwise modified to the
date hereof, the "First Amended and Restated Lease") and (iii) pursuant to the
First Amended and Restated Indenture, the Owner Trustee issued and sold to the
Certificate Holders (as defined in the First Amended and Restated Indenture)
Equipment Trust Certificates, Series BN-10 in exchange for the Original Loan
Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and
restate the First Amended and Restated Lease pursuant to Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-10] dated as of
the date hereof among the Original Head Lessee, as assignor and the Original
Sublessee, as assignee, the Owner Trustee and the Indenture Trustee and the
Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-10] dated as
of the date hereof between the Owner Trustee and the Lessee (as so assigned,
amended and restated, the "Second Amended and Restated Lease" or the "Lease")
and to enter into Lease Supplement No. 3 and (ii) cause the implementation of
the Refinancing Transaction pursuant to which, among other things, the Equipment
Trust Certificates issued to the Certificate
Trust Indenture
<PAGE> 8
- 3 -
Holders pursuant to the First Amended and Restated Indenture shall be redeemed
and new Equipment Notes shall be issued to the Pass Through Trustees (or their
designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this Second Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
First Amended and Restated Indenture, (ii) to provide for the issuance by the
Owner Trustee of the Equipment Notes and (iii) to provide for the assignment,
mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of
the Trust Indenture Estate hereunder, among other things, of certain of the
Owner Trustee's estate, right, title and interest in and to the Aircraft and,
except as hereinafter expressly provided, all of the Owner Trustee's right,
title and interest in, to and under the Lease (as amended and restated to date
and as the same may at any time and from time to time be further amended,
restated or otherwise modified in accordance with the terms thereof and hereof)
and all payments and other amounts received hereunder or thereunder in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's obligations to the Indenture Trustee, for the
ratable benefit and security of the Note Holders, subject to Section 2.13 and
Article III hereof;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner Trustee and authenticated, issued and
delivered by the Indenture Trustee hereunder, the legal, valid and binding
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Second Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS SECOND AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment
of the Principal Amount of, interest on, Make- Whole Amount, if any, and all
other amounts due with respect to, all Equipment Notes from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions contained herein and in the
Refunding Agreement and the Equipment Notes, for the benefit of the Note
Holders, and the prompt payment of any and all amounts
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from time to time owing hereunder and under the Refunding Agreement by the Owner
Trustee, the Owner Participant and the Lessee to the Note Holders and for the
uses and purposes and subject to the terms and provisions hereof, and in
consideration of the premises and of the covenants herein contained, and of the
acceptance of the 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, its successors and
assigns, for the security and benefit of the Note Holders from time to time, a
first priority security interest in and mortgage Lien on all estate, right,
title and interest of the Owner Trustee in, to and under the following described
property, rights, interests and privileges, whether now or hereafter acquired,
other than Excepted Payments (which collectively, excluding Excepted Payments
but including all property hereafter specifically subjected to the Lien of this
Indenture by any Indenture Supplement or any indenture supplemental hereto, are
included within the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and
all replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire an interest under 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 and other documents to which the Owner Trustee shall from time to
time acquire an interest at any time maintained by the Lessee with
respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement (to the extent assigned to or for the
benefit of the Owner Trustee), including the Consent and Guaranty; the
Purchase Agreement Warranties Assignment, with the Consents and
Agreements attached thereto; the Second Aircraft Warranty Bill of Sale;
the BFE Bill of Sale; each notice, letter agreement or other document
related to any of the foregoing entered into by or for the benefit of
the Owner Trustee (or assigned to the Owner Trustee); in each case
including, without limitation, (x) all rights of the Owner
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Trustee to exercise any election or option or to make any decision or
determination or to give any notice, consent, waiver or approval or to
take any other action under or in respect of any such document or to
accept surrender or redelivery of the Aircraft or any part thereof, as
well as all the rights, powers and remedies on the part of the Owner
Trustee, whether arising under any such document or by statute or at
law or in equity, or otherwise, arising out of any Lease Event of
Default, and (y) any right to restitution from the Lessee, the
Manufacturer or any other Person in respect of any determination of
invalidity of any such document, it being agreed that the rights,
powers and remedies referred to in the preceding clauses (x) and (y)
are presently assigned and transferred to the Indenture Trustee and
may, except as provided in Section 5.10 or elsewhere in this Indenture,
be exercised by the Indenture Trustee without the necessity of
proceeding under Section 4.04 to exercise remedies hereunder;
(3) each Sublease Assignment and each Assigned Sublease (to
the extent assigned under such Sublease Assignment), and including,
without limitation, all rents or other payments of any kind made under
such Assigned Sublease (to the extent assigned under such Sublease
Assignment), all collateral security or credit support (in the nature
of a guarantee, letter of credit, credit insurance, Lien on or security
interest in any property or otherwise) for the obligations of the
Permitted Sublessee thereunder (to the extent assigned under such
Sublease Assignment) and all rights of the Owner Trustee to exercise
any election or option or to give any notice, consent, waiver, or
approval under or with respect of any thereof 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 (in each case to
the extent assigned to the Owner Trustee), whether arising under any
Assigned Sublease or any Sublease Assignment or by statute or at law or
in equity, or otherwise, arising out of any default under any Assigned
Sublease, it being agreed that the rights, powers and remedies referred
to above in this paragraph (3) are presently assigned and transferred
to the Indenture Trustee and may, except as provided in Section 5.10 or
elsewhere in this Indenture, be exercised by the Indenture Trustee
without the necessity of proceeding under Section 4.04 to exercise
remedies hereunder;
(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, without
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limitation, 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 requisition proceeds with respect to the Aircraft or
any part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Aircraft or any part thereof, including but not limited to the
insurance required under Section 12 of the Lease or under any
comparable provision of any Assigned Sublease (but excluding any excess
insurance maintained by the Lessee and not required under Section 12 of
the Lease or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and
all rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel paper original executed
counterparts of the Original Lease and Lease Supplement No. 1, certified copies
of the Purchase Agreement, execution copies of the Purchase Agreement Warranties
Assignment, and the original Second Aircraft Warranty Bill of Sale. The Owner
Trustee thereafter delivered to the Indenture Trustee the original BFE Bill of
Sale. Concurrently with the delivery of the First Amended and Restated
Indenture, the Owner Trustee delivered to the Indenture Trustee the chattel
paper original executed counterparts of the First Amended and Restated Lease and
Lease Supplement No. 2. Concurrently with the delivery of this Second Amended
and Restated Indenture, the Owner Trustee is delivering to the Indenture Trustee
the chattel paper original executed counterparts of the Second Amended and
Restated Lease and Lease Supplement No. 3. All property referred to in this
Granting Clause, whenever acquired by the Owner Trustee, shall secure all
obligations under and with respect to the Equipment Notes at any time
outstanding. Any and all properties referred
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to in this Granting Clause which are hereafter acquired by the Owner Trustee,
shall, without further conveyance, assignment or act by the Owner Trustee or the
Indenture Trustee thereby become and be subject to the security interest hereby
granted as fully and completely as though specifically described herein.
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 Note Holders from time to time, except as set forth in
Section 2.13 and Article III hereof without any preference, distinction or
priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or otherwise) to ask, require, demand, receive
and give acquittance for any and all moneys and claims for moneys (in each case
including insurance and requisition proceeds but excluding Excepted Payments)
due and to become due to the Owner Trustee under or arising out of the Indenture
Documents and all other property which now or hereafter constitutes part of the
Trust Indenture Estate, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or to
institute any proceedings which the Indenture Trustee may deem to be necessary
or advisable in the premises. Under the Lease, the Lessee is directed to make
all payments of
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Rent (other than Excepted Payments) and all other amounts which are required to
be paid to or deposited with the Owner Trustee pursuant to the Lease (other than
Excepted Payments) directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application as provided in
this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee
will be directed from and after (i) notice of the occurrence of a Lease Event of
Default and (ii) notice that the Lease is declared or deemed in default, to make
all payments of rent and all other amounts which are required to be paid to or
deposited with the Lessee pursuant to the related Assigned Sublease and which
are assigned thereunder directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application or to be held
as provided in this Indenture. The Owner Trustee agrees that promptly on receipt
thereof, it will transfer to the Indenture Trustee any and all moneys from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Indenture, except (a) to
the extent the Owner Trustee is entitled to distribution of such moneys pursuant
to this Indenture and (b) that the Owner Trustee shall accept for distribution
pursuant to the Trust Agreement any amounts distributed to it by the Indenture
Trustee under this Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that it will not assign or
pledge or otherwise dispose of, so long as this Indenture shall remain in effect
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its estate, right, title or interest hereby assigned, to anyone
other than the Indenture Trustee, and that, with respect to such estate, right,
title and interest hereby assigned, subject to its rights pursuant to Section
5.10 hereof, it will not, except as provided in this Indenture (including,
without limitation, Section 9.01) and except as to Excepted Payments, (i) accept
any payment from the Lessee or any Permitted Sublessee under any of the
Indenture Documents, enter into any agreement amending, modifying or
supplementing any of the Indenture Documents, or execute any waiver or
modification of, or consent under, the terms of any of the Indenture Documents,
(ii) settle or compromise any claim arising under any of the Indenture
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Documents, (iii) give any notice or exercise any right or take any action under
any of the Indenture Documents, or (iv) 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. For purposes of Section
4.02(e) hereof, this is the fourth paragraph following the Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations
under 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 might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments. Further,
nothing in the Granting Clause or the preceding paragraphs shall impair any of
the rights of the Owner Trustee or the Owner Participant under Section 5.10
hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained
in the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments as the same may from time to time be supplemented or
amended or the terms thereof waived or modified to the extent permitted by, and
in accordance with, the terms thereof and of the other Operative Documents and
references to various Persons shall be deemed to be references to and include
their respective permitted successors and assigns.
"Amortization Amount" means, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Principal
Amount Repayment Date on the Amortization Schedule.
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"Amortization Schedule" means the amortization schedule for
the Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed
shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such
Equipment Note. "Remaining Weighted Average Life" of such Equipment
Note, at the redemption date of such Equipment Note, shall be the
number of days equal to the quotient obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then
remaining installment of principal, including the payment due on the
maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid
Principal Amount of such Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the
United States Code, 11 U.S.C. Sections 101 et seq., as amended.
"BFE Bill of Sale" means the full warranty (as to title) bill
of sale covering the Buyer Furnished Equipment, transferring all right,
title and interest therein to the Owner Trustee.
"Business Day" means a day other than a Saturday, Sunday or a
day on which banks are required or authorized to close in either The
City of New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the
Intercreditor Agreement shall be deposited.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Consents and Agreements" means the confirmations by
the Manufacturer and the Manufacturer's Subsidiary included
in the Purchase Agreement Assignment and the Purchase
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Agreement Warranties Assignment of the transfer of rights under the
Purchase Agreement.
"Continuous Stay Period" has the meaning specified in
Section 4.04(a).
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee located at 450 West 33rd Street, New
York, New York 10001, Attention: Corporate Trust Department, or such
other office at which the Indenture Trustee's corporate trust business
shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Lessee, the Owner Trustee and the Note
Holders.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be evidenced
by bonds, debentures, notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series
C and Series D, the rate per annum specified for such Series under the
heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means December 22, 1989.
"Dollars", "U.S. $" and "$" mean the lawful currency of
the United States of America.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of
such depository institution has a long-term unsecured debt rating from
each Rating Agency of at least A- 3 or its equivalent.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution
Trust Indenture
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organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from each
Rating Agency of at least A-3 or its equivalent.
"Equipment Notes" means the Equipment Notes, in substantially
the form set out in Section 2.01 hereof, issued by the Owner Trustee
and authenticated by the Indenture Trustee pursuant to the terms of
this Indenture.
"Equity Collateral" has the meaning assigned to such
term in the definition of "Excepted Payments."
"Excepted Payments" means (i) indemnity payments and interest
in respect thereof paid or payable in respect of the Owner Participant,
the Trust Company, the Owner Trustee or any of their respective
successors, permitted assigns (and, in the case of a permitted assign
of the Owner Participant that is a partnership, the partners of such
partnership), directors, officers, employees, servants, agents,
subsidiaries, affiliates or shareholders by the Lessee pursuant to
Section 13 of the Lease and not in support of any payment obligation of
the Owner Trustee under any Indenture Document, (ii) any proceeds of
public liability insurance in respect of the Aircraft payable as a
result of insurance claims paid respecting, or losses suffered by, the
Trust Company or the Indenture Trustee in its individual capacity or
the Owner Participant, (iii) any proceeds of insurance maintained with
respect to the Aircraft by or for the benefit of the Owner Participant
(whether directly or through the Owner Trustee) and not required under
Section 12 of the Lease, (iv) payments of Supplemental Rent by the
Lessee in respect of any amounts payable to the Owner Participant, the
Trust Company, the Owner Trustee, or any of their respective
successors, permitted assigns, directors, officers, employees,
servants, agents, subsidiaries, affiliates or shareholders under
Section 10 of the Lease or by the Lessee or the Parent Guarantor under
the Tax Indemnification Agreement, as the case may be, and not in
support of any payment obligation of the Owner Trustee under any
Indenture Document, (v) Transaction Expenses paid or payable by the
Lessee or the Parent Guarantor to the Trust Company, the Owner Trustee,
the Indenture Trustee or the Owner Participant pursuant to Section 21
of the Refunding Agreement or the Lease, (vi) any letter of credit
pursuant to Section 8(l) of the Lease (including, without limitation,
any replacement letter of credit (the "Equity Collateral")) and any
payment or
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proceeds of any such Equity Collateral to the extent retained or
applied as provided in Section 8(l) of the Lease, and (vii) subject to
the last sentence of Section 5.10 hereof, any right to enforce the
payment of any amount described in clauses (i) through (vi) above and
the proceeds thereof.
"Excess Amount" has the meaning specified in Section
2.03(b) hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such
Liquidity Facility in accordance with the provisions thereof other than
a Downgrade Drawing.
"Government Obligations" means direct obligations of the
United States of America that are not callable, redeemable or payable
prior to maturity, in whole or in part, directly or indirectly, by any
Person.
"Indenture," "this Indenture," and "the Indenture" mean this
Second Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented
by any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Second Aircraft Warranty Bill of Sale; the Purchase Agreement,
including the Consent and Guaranty (to the extent assigned to or for
the benefit of the Owner Trustee); the Purchase Agreement Warranties
Assignment and the Consents and Agreements attached thereto; and the
BFE Bill of Sale.
"Indenture Event of Default" has the meaning set forth
in Section 4.02 hereof.
Trust Indenture
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"Indentures" means, collectively, each Trust Indenture and
Security Agreement listed on Schedule 1 to the Intercreditor Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Aircraft and any
Replacement Airframe and Replacement Engine included in the property of
the Owner Trustee covered by this Indenture, including, without
limitation, Trust Indenture Supplement No. 1 dated December 22, 1989,
which was recorded as one instrument by the FAA with the Original
Indenture, Trust Indenture Supplement No. 2 dated October 24, 1991,
which was recorded as one instrument by the FAA with the First Amended
and Restated Indenture, and Trust Indenture Supplement No. 3 dated
November 26, 1996, which is being filed for recordation as one
instrument by the FAA with this Second Amended and Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as amended and restated by the First Amended and
Restated Lease, and as assigned and further amended and restated by
Assignment and Amendment No. 1 and Sublease Termination Agreement [GPA
1989 BN-10] dated as of the date hereof and Second Amended and Restated
Aircraft Lease Agreement [GPA 1989 BN-10] dated as of the date hereof
and supplemented by Lease Supplement [GPA 1989 BN-10] No. 3 dated
November 26,
Trust Indenture
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1996, which are being filed for recordation as one instrument with the
FAA contemporaneously herewith.
"Lease Default" means an event or condition that, with the
giving of notice or the lapse of time or both, would become a Lease
Event of Default.
"Lease Event of Default" means any event or condition defined
as an "Event of Default" in Section 17 of the Lease.
"Lessee" means America West Airlines, Inc., a Delaware
corporation, in its capacity as lessee under the Second Amended and
Restated Lease, and its successors, and to the extent permitted by the
Refunding Agreement, its assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or
claim of any kind, including any thereof arising under any conditional
sale agreement, equipment trust agreement or title retention agreement.
"Majority in Interest of Note Holders" means, as of a
particular date of determination and subject to Section 2.6 of the
Intercreditor Agreement, the Holders of more than 50% in aggregate
unpaid Principal Amount of all Equipment Notes outstanding as of such
date. For purposes of this definition, there shall be excluded any
Equipment Notes held by the Owner Trustee or the Owner Participant or
any interests of the Owner Participant therein by reason of subrogation
pursuant to Section 4.03 of the Indenture (unless all Equipment Notes
then outstanding shall be held by the Owner Trustee or the Owner
Participant) or any Equipment Notes held by the Lessee or any Affiliate
of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate
equal to (i) in the case of the Series A Equipment Notes and Series B
Equipment Notes, the Treasury Yield and (ii) in the case of
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the Series C Equipment Notes and Series D Equipment Notes, the Treasury
Yield plus 0.75% exceeds (b) the outstanding principal amount of such
Equipment Note plus accrued interest. For purposes of determining the
Make-Whole Amount, "Treasury Yield" at the time of determination with
respect to any Equipment Note means the interest rate (expressed as a
semiannual equivalent and as a decimal and, in the case of United
States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity for
United States Treasury securities maturing on the Average Life Date of
such Equipment Note and trading in the public securities market either
as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities,
trading in the public securities markets, (A) one maturing as close as
possible to, but earlier than, the Average Life Date of such Equipment
Note and (B) the other maturing as close as possible to, but later
than, the Average Life Date of such Equipment Note, in each case as
published in the most recent H.15(519) or, if a weekly average yield to
maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported on the most recent
H.15(519), such weekly average yield to maturity as published in such
H.15(519). "H.15(519)" means the weekly statistical release designated
as such, or any successor publication, published by the Board of
Governors of the Federal Reserve System. The date of determination of a
Make-Whole Amount shall be the third Business Day prior to the
applicable redemption date and the "most recent H.15(519)" means the
H.15(519) published prior to the close of business on the third
Business Day prior to the applicable redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person
other than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from
time to time of one or more Equipment Notes as reflected in the
Register maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and
signature of such Responsible Officer, that is delivered to the
Indenture Trustee.
Trust Indenture
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"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such
written opinions or (ii) Latham & Watkins or other counsel designated
by the Lessee and reasonably satisfactory to the Indenture Trustee or,
in the case of legal counsel for the Owner Trustee, may be Morris,
James, Hitchens & Williams or other counsel designated by the Owner
Trustee and reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease and the First Amended and Restated Lease.
"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1989 BN-10] dated as of December 19, 1989, as
supplemented by Trust Indenture Supplement No. 1 dated December 22,
1989 and as in effect immediately prior to the amendment and
restatement thereof dated as of October 1, 1991, which were recorded as
one instrument by the FAA on December 27, 1989 and assigned Conveyance
No. S86321.
"Original Loan Certificates" means the Loan Certificates
issued under and as defined in the Original Indenture.
"Original Sublessee" means America West Airlines, Inc.
("AWA"), a Delaware corporation, in its capacity as sublessee under the
Aircraft Sublease Agreement [GPA 1989 BN-10] dated as of September 21,
1990 between the Original Head Lessee in its capacity as sublessor
thereunder and AWA in its capacity as sublessee.
"Owner Participant" means ________________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the four Pass Through
Trusts established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through
Trust Agreements set forth on Schedule II hereto.
Trust Indenture
<PAGE> 23
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"Pass Through Trustee" means Fleet National Bank, a national
banking association, not in its individual capacity but solely as pass
through trustee under each of the four separate Pass Through Trust
Agreements.
"Past Due Rate" means, with respect to any amount not paid
when due (whether at stated maturity, by acceleration or otherwise)
under or in respect of any Equipment Note, a rate of interest per annum
(computed on the basis of a year of 360 days comprised of twelve 30-day
months) equal to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Equipment Notes have
been paid in full.
"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with
respect to all Equipment Notes, means the aggregate stated original
principal amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on
which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement Warranties Assignment" means the
Purchase Agreement Warranties Assignment [GPA 1989 BN-10]
dated the Delivery Date, between the Original Head Lessee
and the Owner Trustee.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to
rate the Certificates issued pursuant to the Pass Through Trust
Agreements and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated
by the Refunding Agreement and the other documents entered into on and
in connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1989
BN-10] dated as of November 20, 1996, among the Lessee, the Original
Head Lessee, the Parent Guarantor, the
Trust Indenture
<PAGE> 24
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Owner Trustee, the Pass Through Trustee, the Owner
Participant, the Subordination Agent and the Indenture
Trustee.
"Register" has the meaning set forth in Section 2.07
hereof.
"Registrar" has the meaning set forth in Section 2.07
hereof.
"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice
president or, in the case of the Owner Trustee, an officer of the Owner
Trustee in its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date
agreed to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date
of the filing with the FAA of Trust Indenture Supplement No. 3.
"Second Aircraft Warranty Bill of Sale" means the full
warranty (as to title) bill of sale covering the Aircraft (excluding
all of the Buyer Furnished Equipment to be covered by the BFE Bill of
Sale) executed by the Original Head Lessee in favor of the Owner
Trustee, dated December 22, 1990.
"Secured Obligations" has the meaning set forth in
Section 2.06 hereof.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in
Trust Indenture
<PAGE> 25
- 20 -
the Principal Amount and maturities and bearing interest as specified
in Section 2.02 and Schedule I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series D."
"Sublease Assignment" means a sublease assignment by the
Lessee in favor of the Owner Trustee (including the consent thereto
given by the sublessee thereunder) with respect to the assignment of a
Permitted Sublease pursuant to Section 6(a) of the Lease.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity and not as Owner
Trustee, and its successors under the Trust Agreement, in their
respective individual capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means all
estate, right, title and interest of the Owner Trustee in and to the
properties, rights and interests covered by the Granting Clause of the
Indenture, excluding, however, in each case, Excepted Payments.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code (for purposes of this definition, the "United
States"), (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political
subdivision thereof or therein or (iii) any estate or trust that is
subject to United States federal income taxation regardless of the
source of its income.
Trust Indenture
<PAGE> 26
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment
Notes shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1989 BN-10]
DATED AS OF DECEMBER 19, 1989, AS AMENDED.
SERIES [A/B/C/D] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING
UNITED STATES REGISTRATION NUMBER N631AW.
No. ____ Date: [________, 1996]
$____________________
DEBT RATE MATURITY DATE
[_________] [__________,____]
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement [GPA 1989 BN-10], dated as of December 19,
1989, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to Fleet
National Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $________ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto.
Trust Indenture
<PAGE> 27
- 22 -
Accrued but unpaid interest shall be due and payable in semi-annual installments
commencing on January 2, 1997, and thereafter on July 2 and January 2 of each
year, to and including
___________, ____.
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and if
such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the Second
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-10],
dated as of November 26, 1996, between the Owner Trustee and The Chase Manhattan
Bank (formerly known as Chemical Bank, successor by merger to Manufacturers
Hanover Trust Company) (the "Indenture Trustee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used in this
Equipment Note and not defined herein shall have the respective meanings
assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance
Trust Indenture
<PAGE> 28
- 23 -
of this Equipment Note, agrees that it will look solely to the income and
proceeds from the Trust Indenture Estate to the extent available for
distribution to the Holder hereof as above provided and that none of the Owner
Participant, the Owner Trustee and the Indenture Trustee is personally liable or
liable in any manner, including, without limitation, extending to any assets
other than the Trust Indenture Estate to the Holder hereof for any amounts
payable or any liability under this Equipment Note or, except as provided in the
Indenture or in the Refunding Agreement, for any liability under the Indenture
or the Refunding Agreement; provided, however, that nothing herein contained
shall limit, restrict or impair any and all rights or remedies of the Indenture
Trustee hereunder, subject always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Indenture Trustee or at the office of any successor in the manner
provided in Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and
interest and other amounts due hereunder shall be payable in Dollars in
immediately available funds at the Corporate Trust Office of the Indenture
Trustee, or as otherwise provided in the Indenture. Each such payment shall be
made on the date such payment is due and without any presentment or surrender of
this Equipment Note, except that in the case of any final payment with respect
to this Equipment Note, the Equipment Note shall be surrendered promptly
thereafter to the Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note,
agrees that, except as provided in the Indenture, each payment received by it
hereunder shall be applied, first, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by law, any
overdue interest and any other overdue amounts hereunder) to the date of such
payment, second, to the payment of the portion of the Principal Amount of this
Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Indenture, and fourth, the balance,
if any, remaining thereafter, to the payment of the portion of the Principal
Amount of this Equipment Note remaining unpaid in the inverse order of its
normal maturity.
This Equipment Note is one of the Equipment Notes
referred to in the Indenture which have been or are to be issued
Trust Indenture
<PAGE> 29
- 24 -
by the Owner Trustee pursuant to the terms of the Indenture. The Trust Indenture
Estate is held by the Indenture Trustee as security, in part, for the Equipment
Notes. The provisions of this Equipment Note are subject to the Indenture.
Reference is hereby made to the Indenture and the Refunding Agreement for a
complete statement of the rights and obligations of the Holder of, and the
nature and extent of the security for, this Equipment Note and the rights and
obligations of the Holders of, and the nature and extent of the security for,
any other Equipment Notes executed and delivered under the Indenture, 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 the
Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or
the Owner Trustee as provided in Section 2.12 of the Indenture and to
acceleration by the Indenture Trustee as provided in Section 4.04 of the
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B
Equipment Notes](2) [Series C Equipment Notes](3), and this Equipment Note is
issued subject to such provisions. The Note Holder of this
- --------------------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
Trust Indenture
<PAGE> 30
- 25 -
Equipment Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.](4)
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
- --------
(4) To be inserted in the case of a Series B, Series C or Series
D Equipment Note.
Trust Indenture
<PAGE> 31
- 26 -
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its officer thereunto
duly authorized on the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:_______________________________
Name:
Title:
Trust Indenture
<PAGE> 32
- 27 -
SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
---------------- ----------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
four separate series consisting of Series A, Series B, Series C and Series D and
in the maturities and principal amounts and shall bear interest as specified in
Schedule I hereto. On the date of the consummation of the Refinancing
Transaction, (i) each Equipment Note shall be issued to the Pass Through
Trustees (or their designee) under the Pass Through Trust Agreements set forth
in Schedule II to be attached hereto in connection therewith and (ii) the
Equipment Trust Certificates issued under the First Amended and Restated Trust
Indenture shall be concurrently redeemed. The Equipment Notes shall be issued in
registered form only. The Equipment Notes shall be issued in denominations of
$1,000 and integral multiples thereof, except that one Equipment Note of each
Series may be in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity.
The Principal Amount of each Equipment Note shall be payable
on the dates and in the installments equal to the corresponding percentage of
the Principal Amount as set forth in Schedule I hereto which shall be attached
as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment
Trust Indenture
<PAGE> 33
- 28 -
Note shall bear interest at the Past Due Rate (calculated on the basis of a year
of 360 days comprised of twelve 30-day months) on any part of the Principal
Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable
law, interest and any other amounts payable thereunder not paid when due for any
period during which the same shall be overdue, in each case for the period the
same is overdue. Amounts shall be overdue if not paid when due (whether at
stated maturity, by acceleration or otherwise). Notwithstanding anything to the
contrary contained herein, if any date on which a payment under any Equipment
Note becomes due and payable is not a Business Day then such payment shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business Day, no
interest shall accrue on the amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of
Trust Indenture
<PAGE> 34
- 29 -
the Equipment Notes issued hereunder and the denominator of which is
the aggregate principal balance then outstanding of all "Equipment
Notes" issued under the Indentures, and
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default (as defined below) under any
Equipment Note a fraction, the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued under
the Indentures. As used in this Section 2.02, "Net Interest and Related Charges"
means (as determined by the Subordination Agent in consultation with the
Liquidity Providers and notified to the Indenture Trustee except that the Past
Due Rate shall be determined by the Indenture Trustee and notified to the
Subordination Agent) the sum of (i) the amount, if any, by which interest
payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or
Downgrade Drawing (other than a Downgrade Drawing that is not an Applied
Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount
which would be payable if such advances bore interest at the Designated Interest
Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section
3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or
similar provisions of any succeeding liquidity facility) which result from any
Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section
2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as
defined in the applicable Indentures) in respect of "Series A Equipment Notes",
"Series B Equipment Notes" and "Series C Equipment Notes" issued under the
Indentures, except with respect to that portion of any Final Drawing (or
Downgrade Drawing which becomes a Final Drawing) which remains in a Cash
Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" issued under the Indentures which has
not been cured other than solely because of acceleration. For purposes of
Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02.
Trust Indenture
<PAGE> 35
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The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. 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. The Owner Trustee may from time
to time execute and deliver Equipment Notes with respect to the Aircraft to the
Indenture Trustee for authentication upon original issue and such Equipment
Notes shall thereupon be authenticated and delivered by the Indenture Trustee
upon the written request of the Owner Trustee signed by a Vice President or
Assistant Vice President or other authorized officer of the Owner Trustee;
provided, however, that each such request shall specify the aggregate Principal
Amount of all Equipment Notes to be authenticated hereunder on original issue
with respect to the Aircraft. No Equipment Note shall be secured by or be
entitled to any benefit under this Indenture or be valid or obligatory for any
purposes, unless there appears on such Equipment Note a certificate of
authentication in the form provided for herein executed by the Indenture Trustee
by the manual signature of one of its authorized officers and such certificate
upon any Equipment Notes shall be conclusive evidence, and the only evidence,
that such Equipment Note has been duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a)
Without impairing any of the other rights, powers, remedies, privileges or Liens
of the Note Holders under this Indenture, each Note Holder, by its acceptance of
an Equipment Note, agrees that, except as expressly provided in this Indenture,
the Refunding Agreement or any other Operative Document, (i) the obligation to
make all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity)
Trust Indenture
<PAGE> 36
- 31 -
contained in this Indenture and any other Operative Document other than the
Trust Agreement, unless expressly otherwise stated, are made and intended only
for the purpose of binding the Trust Estate and establishing the existence of
rights and remedies which can be exercised and enforced against the Trust
Estate; therefore, anything contained in this Indenture or such other agreements
to the contrary notwithstanding (except for any express provisions or
representations that the Trust Company is responsible for, or is making, for
which there would be personal liability of the Trust Company), no recourse shall
be had with respect to this Indenture or such other agreements against the Trust
Company or against any institution or Person which becomes a successor trustee
or co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling Person or Persons of any of them, and (ii) none of the
Trust Company, the Owner Participant, the Indenture Trustee and any officer,
director, trustee, servant, employee, agent or direct or indirect parent or
controlling Person or Persons of any of them shall have any personal liability
for any amounts payable, or other obligation owed, hereunder, under the
Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the
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Owner Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "Excess Amount" means
the amount by which such payment exceeds the amount that would have been
received by a Note Holder or the Indenture Trustee if the Trust Company, the
Owner Trustee or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this Section
2.03(b) shall prevent a Note Holder or the Indenture Trustee from enforcing any
personal recourse obligation (and retaining the proceeds thereof) of the Trust
Company, the Owner Trustee or the Owner Participant under the Refunding
Agreement, this Indenture (and any exhibits or annexes hereto or thereto) or any
other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds
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until such payment is made. Any payment made hereunder shall be made free and
clear of and without reduction for or on account of all wire and like charges
and without any presentment or surrender of any Equipment Note, except that, in
the case of the final payment in respect of any Equipment Note, such Equipment
Note shall be surrendered to the Indenture Trustee for cancellation promptly
after such payment. Notwithstanding any other provision of this Indenture to the
contrary, the Indenture Trustee shall not be required to make, or cause to be
made, wire transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such funds were received after
12:00 noon, New York City time, at the place of payment. Prior to the due
presentment for registration of transfer of any Equipment Note, the Owner
Trustee and the Indenture Trustee shall deem and treat the Person in whose name
any Equipment Note is registered on the Register as the absolute owner and
Holder 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,
and neither the Owner Trustee nor the Indenture Trustee shall be affected by any
notice to the contrary, unless and until such change is reflected in the
Register. So long as any signatory to the Refunding Agreement or nominee thereof
shall be a registered Note Holder, all payments to it shall be made to the
account of such Note Holder specified in Schedule III thereto and otherwise in
the manner provided in or pursuant to the Refunding Agreement unless it shall
have specified some other account or manner of payment by notice to the
Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Equipment Note (and such exclusion and withholding
shall constitute payment in respect of such Equipment Note) any and all United
States withholding Taxes applicable thereto as required by law. The Indenture
Trustee agrees to act as such withholding agent and, in connection therewith,
whenever any present or future United States Taxes or similar charges are
required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts (and such withholding
shall constitute payment in respect of such Equipment Note) and timely pay the
same to the appropriate authority in the name of and on behalf of the Note
Holders, that it will file any necessary United States withholding tax returns
or statements when due, and that as promptly as possible after the payment
thereof it will deliver to each Note Holder (with a copy to the Owner Trustee
and the Lessee) appropriate receipts showing the payment thereof, together with
such additional
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documentary evidence as any such Note Holder, the Owner Participant and the
Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture Trustee has no reason to know that any information set forth in such
form is inaccurate), the Indenture Trustee shall withhold only the amount, if
any, required by law (after taking into account any applicable exemptions
claimed by the Note Holder) to be withheld from payments hereunder or under the
Equipment Notes held by such Holder in respect of United States federal income
Tax (and such withholding shall constitute payment in respect of such Equipment
Note). If a Note Holder (x) which is a Non-U.S. Person has furnished to the
Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 4224 in duplicate (or such successor certificate, form or
forms as may be required by the United States Treasury Department as necessary
in order to avoid withholding of United States federal income tax), during the
calendar year in which the payment is made (but prior to the making of such
payment), and has not notified the Indenture Trustee of the withdrawal or
inaccuracy of such certificate or form prior to the date of such payment (and
the Indenture Trustee has no reason to know that any information set forth in
such form is inaccurate) or (y) which is a U.S. Person has furnished to the
Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form W-9, if applicable, prior to a payment hereunder or under
the Equipment Notes held by such Holder, no amount shall be withheld from
payments in respect of United States federal income tax. If any Note Holder has
notified the Indenture Trustee that any of the foregoing forms or certificates
is withdrawn or inaccurate, or if such Holder has not filed a form claiming an
exemption from United States withholding Tax or if the Code or the regulations
thereunder or the administrative interpretation thereof are at any time after
the date hereof amended to require such withholding of United States federal
income taxes from payments under the Equipment Notes held by such Holder, the
Indenture Trustee agrees to withhold from each payment due to the relevant Note
Holder withholding Taxes at the appropriate rate under law (and such withholding
shall constitute payment in
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respect of such Equipment Notes) and will, on a timely basis as more fully
provided above, deposit such amounts with an authorized depository and make such
returns, statements, receipts and other documentary evidence in connection
therewith as required by applicable law.
None of the Owner Trustee, the Owner Participant or the Lessee
shall have any liability for the failure of the Indenture Trustee to withhold
taxes in the manner provided for herein or for any false, inaccurate or untrue
evidence provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of each
Equipment Note, each payment of Principal Amount, Make-Whole Amount, if any, and
interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and, to the extent permitted by law,
any overdue interest and any other overdue amounts thereunder) to the
date of such payment;
Second: to the payment of the Principal Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any,
and any other amount due hereunder or under such Equipment
Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture
Estate. A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner
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Trustee (collectively, the "Secured Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request from the registered Holder thereof for the
issuance of a new Equipment Note, specifying, in the case of a surrender for
transfer, the name and address of the new Holder or Holders. Upon surrender for
registration of transfer of any Equipment Note, 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 unpaid portion of the Principal Amount and of the same series. At the
option of the Note Holder, Equipment Notes may be exchanged for other Equipment
Notes of any authorized denominations of a like aggregate unpaid portion of the
Principal Amount, upon surrender of the Equipment Notes to be exchanged to the
Indenture Trustee at the Corporate Trust Office. 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
Note Holder making the exchange is entitled to receive. All Equipment Notes
issued upon any registration of transfer or exchange of Equipment Notes (whether
under this Section 2.07 or under Section 2.08 hereof or otherwise under this
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this 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 Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder
or such Holder's attorney duly authorized in writing, and the Indenture Trustee
shall require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act and the securities laws of any applicable
state. The Indenture Trustee shall make a notation on each new Equipment Note of
the
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amount of all payments of Principal Amount 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 on such old Equipment Note or Equipment Notes has
been paid. Interest shall be deemed to have been paid on such new Equipment Note
to the date on which interest shall have been paid on such old Equipment Note,
and all payments of the Principal Amount marked on such new Equipment Note, as
provided above, shall be deemed to have been made thereon. Neither the Indenture
Trustee nor the Owner Trustee shall be required to exchange any surrendered
Equipment Notes as provided above during the ten-day period preceding the
Payment Date. The Indenture Trustee will promptly notify the Owner Trustee, the
Owner Participant and Lessee of each registration of a transfer of an Equipment
Note. Any such transferee of an Equipment Note, by its acceptance of an
Equipment Note, agrees to the provisions of the Refunding Agreement applicable
to Note Holders, and shall be deemed to have represented and warranted to the
parties to the Refunding Agreement as to the matters represented and warranted
by the Subordination Agent in its capacity as the initial Holder of the
Equipment Notes. Subject to compliance by the Note Holder and its transferee (if
any) of the requirements set forth in this Section 2.07, the Indenture Trustee
and the Owner Trustee shall use all reasonable efforts to issue new Equipment
Notes upon transfer or exchange within 10 Business Days of the date an Equipment
Note is surrendered for transfer or exchange.
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 Holder of such
Equipment Note, execute and the Indenture Trustee shall authenticate and deliver
in replacement thereof a new Equipment Note, payable in the same Principal
Amount dated the same date and captioned as originally issued. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee and a copy thereof shall be furnished to
the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost
or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such
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Person, signed by an authorized officer thereof, in favor of, delivered to and
in form reasonably satisfactory to the Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity
and security and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Equipment Note.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Note Holder for any registration of
transfer or exchange of Equipment Notes, but the Indenture Trustee, as
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes; provided, however, that none of the
Lessee, the Owner Trustee, the Indenture Trustee or the Owner Participant shall
bear costs of registration, transfer or exchange in connection with the
consummation of the Refinancing Transaction.
(b) The Indenture Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a)
Neither any redemption of any Equipment Note nor any purchase by
the Owner Trustee of any Equipment Note may be made except to the
extent and in the manner expressly permitted by this Indenture.
No purchase of any Equipment Note may be made by the Indenture
Trustee.
(b) Notice of redemption or purchase with respect to the
Equipment Notes shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to
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each Note Holder of such Equipment Notes to be redeemed or purchased, at such
Note Holder's address appearing in the Register. All notices of redemption or
purchase shall state: (1) the redemption date, (2) the applicable basis for
determining the redemption price, (3) that on the redemption date, the
redemption price will become due and payable upon each such Equipment Note, and
that interest on such Equipment Notes shall cease to accrue on and after such
redemption date, and (4) the place or places where such Equipment Notes are to
be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any Person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Equipment Notes to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New
York City time, on the redemption date in immediately available funds the
redemption price of the Equipment Notes to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid, the Equipment Notes to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee, and from and after such redemption date (unless there shall
be a default in the payment of the redemption price) any such Equipment Notes
then outstanding shall cease to bear interest. Upon surrender of any such
Equipment Note for redemption or purchase in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any Equipment Note
called for redemption or purchase shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the
Owner Trustee or the Owner Participant may, upon the events and subject to the
terms and conditions and for the price set forth in this Section 2.12, purchase
all but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust
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Indenture Estate, this Indenture and the Equipment Notes held by it, and such
purchaser or its nominee shall assume all of such Holder's obligations under the
Refunding Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each
Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to, but not including, the date of purchase and all
other amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Refunding Agreement to the Holder
thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon
an Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default (and there is no
Indenture Trustee Event), the purchase price thereof shall equal the price
provided in the preceding sentence plus the Make-Whole Amount, if any; provided
further, that under no circumstances shall the Make-Whole Amount be payable by
the Lessee.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant giving written notice of its
election of such option to the Indenture Trustee, which notice shall specify a
date for such purchase not more than 30 days or less than 15 days after the date
of such notice. The Indenture Trustee shall not exercise any of the remedies
hereunder or, without the consent of the Owner Trustee or the Owner Participant,
under the Lease, during the period from the time that a notice of exercise by
the Owner Participant of such option to purchase becomes irrevocable until the
date on which such purchase is required to occur pursuant to the terms of the
preceding sentence. Such election to purchase the Equipment Notes shall become
irrevocable upon the fifteenth day preceding the date specified in the written
notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Note Holders will comply with all
the provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
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SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Articles II and III hereof.
(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full and (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as
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rent under any Assigned Sublease shall be promptly distributed in the following
order of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments
of Principal Amount, and interest and other amounts (as well as any
interest on overdue Principal Amount, and to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts)
then due to the Note Holders under all Series A Equipment Notes shall
be distributed to the Note Holders of Series A ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then due under all Series
A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall be distributed to the
Note Holders of Series B ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series B Equipment Note bears to the aggregate
amount of the payments then due under all Series B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series C Equipment Notes shall be
distributed to the Note Holders of Series C ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series C Equipment Note bears
to the aggregate amount of the payments then due under all Series C
Equipment Notes; and
(iv) after giving effect to clause (iii) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other
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amounts (as well as any interest on any overdue Principal Amount and,
to the extent permitted by applicable law, on any overdue interest and
any other overdue amounts) then due to the Note Holders under all
Series D Equipment Notes shall be distributed to the Note Holders of
Series D ratably, without priority of one over the other, in the
proportion that the amount of such payment or payments then due under
each Series D Equipment Note bears to the aggregate amount of the
payments then due under all Series D Equipment Notes; and
second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that
if an Indenture Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 3.07
hereof until whichever of the following shall first occur: (i) all
Indenture Defaults shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second", or
(ii) Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of said
Section 3.03, or (iii) the 180th day after receipt of such payment, in
which event such balance shall be distributed as provided in this
clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any payment
received by the Indenture Trustee with respect to the Airframe or the Airframe
and one or both Engines as the result of an Event of Loss thereto shall be
applied to the redemption of the Equipment Notes and to all other amounts
payable hereunder by applying such funds in the following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event
of Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other
amounts (as well as any interest on overdue Principal Amount, and to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due to the Note Holders under all Equipment
Notes, all in the order of priority specified in clause "first" of
Section 3.01 hereof, and
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third, if and to the extent required to be paid to the Lessee
(or if directed by the Lessee, any Permitted Sublessee) in
reimbursement of payment of Stipulated Loss Value pursuant to Section
11(d) of the Lease, to the Lessee (or if directed by the Lessee, any
Permitted Sublessee), and otherwise as provided in clause "fourth" of
Section 3.03 hereof;
provided that, if a Replacement Airframe or a Replacement Airframe and one or
more Replacement Engines are to be substituted for the Airframe or the Airframe
and one or both Engines subject to such Event of Loss as provided in Section 11
of the Lease and Section 5.06 hereof, any proceeds which result from such Event
of Loss and are paid to the Indenture Trustee shall be held by the Indenture
Trustee as part of the Trust Indenture Estate as security for the obligations of
the Lessee under the Operative Documents and invested in accordance with the
terms of Section 3.07 hereof and, unless theretofore applied in accordance with
the provisions of the Lease and this Indenture, such proceeds shall, to the
extent payable to the Lessee under the Lease, be released to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) upon or in connection with the
replacement thereof as provided in such Sections.
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Airframe or the Airframe and one or both Engines) shall be
applied as provided in the applicable provisions of the Lease; provided,
however, that to the extent that any portion of such amounts held for account of
the Lessee are not at the time required to be paid to the Lessee (or any
Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12
of the Lease, shall be held by the Indenture Trustee as security for the
obligations of the Lessee under the Operative Documents and shall be invested in
accordance with the terms of Section 3.07 hereof and at such time as the
conditions specified in the Lease for payment of such amounts to the Lessee
shall be fulfilled, such portion, and the net proceeds of any investment
thereof, shall, unless theretofore applied in accordance with the provisions of
the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07
hereof, and notwithstanding Section 2.05 hereof, all payments received and
amounts held or realized by the Indenture Trustee after an Indenture Event of
Default shall have occurred and be continuing or after the
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Indenture Trustee has given notice to the Owner Trustee and the Owner
Participant pursuant to Section 4.04(a) hereof regarding its exercise of
remedies under Section 18 of the Lease or of the foreclosure of this Indenture,
or after the Equipment Notes shall have become due and payable as provided
herein, and all payments or amounts then held by the Indenture Trustee as part
of the Trust Indenture Estate, shall, so long as such Indenture Event of Default
shall be continuing, be promptly distributed by the Indenture Trustee in the
following order of priority, without duplication:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for all amounts due to it
pursuant to Section 6.07 hereof, plus any tax, expense, charge or other
loss (including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Trust Indenture
Estate pursuant to Section 4.05(b) hereof) incurred by the Indenture
Trustee (to the extent not previously reimbursed) (including, without
limitation, the expenses of any sale, taking or other proceeding,
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 then existing or prior Note Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to the then existing or
prior Note 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 one over any other, in accordance with the
amount of the payment or payments made by each such then existing or
prior Note Holder pursuant to said Section 5.03 and applicable (in the
case of each such then existing Note Holder) to the Equipment Notes
held by such existing Note Holder at the time of distribution by the
Indenture Trustee;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid Principal Amount
of all Series A Equipment Notes, and the accrued but unpaid interest
and other amounts due
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thereon and all other Secured Obligations in respect of the Series A
Equipment Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series A, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series A Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series A
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series B Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series B Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series B, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series B Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series B Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series C Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series C Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series C, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series C Equipment Notes held by each Holder
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plus the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Principal Amount of all
Series C Equipment Notes held by all such Holders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution; and
(iv) after giving effect to paragraph (iii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series D Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series D Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series D, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series D Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series D
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by
the Indenture Trustee for which provision as to the application thereof is made
in the Lease shall be applied forthwith to the purpose for which such payment
was made in accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or the
Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii)
any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity
Providers, and (v) the Pass Through Trustees, in each case whether pursuant to
Section
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10 or 13 of the Lease or Section 21 of the Refunding Agreement or as
Supplemental Rent, directly to the Person entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of the fourth paragraph of Section
2.02 shall be distributed to the Subordination Agent to be distributed in
accordance with the terms of the Intercreditor Agreement, and any payment
received by the Indenture Trustee under clause (c) of the fourth paragraph of
Section 2.02 shall be distributed directly to the Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and
3.04 hereof, any payments received by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture
shall be distributed by the Indenture Trustee, unless otherwise agreed in
writing, subject to Section 6.07 hereof (i) to the extent received or realized
at any time prior to the payment in full of all obligations to the Note Holders
secured by the Lien of this Indenture, in the order of priority specified in
Section 3.01 hereof, and (ii) to the extent received or realized at any time
after payment in full of all obligations to the Note Holders secured by the Lien
of this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause
"first" of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated to
indemnify against thereunder, in the manner provided in clause "first"
of Section 3.03 hereof, and
second, in the manner provided in clause "fourth" of
Section 3.03 hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts
distributed hereunder by the Indenture Trustee to the Owner Trustee shall be
paid to the Owner Trustee by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities
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as shall be designated by notice from the Owner Trustee to the Indenture Trustee
from time to time. The Owner Trustee hereby notifies the Indenture Trustee that
unless and until the Indenture Trustee receives notice to the contrary from the
Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to
clause "second" of Section 3.01 hereof shall be distributed by wire transfer of
funds of the type received by the Indenture Trustee to the Owner Participant's
account as may be specified pursuant to the Refunding Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's
rights to hold moneys for security pursuant to Section 21(h) of the Lease shall
be held in accordance with the terms of such Section; and the Indenture Trustee
hereby agrees to perform the duties of the Owner Trustee under such Section.
Except as provided in the preceding sentence, any amounts held by the Indenture
Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof,
pursuant to Section 3.02 hereof, pursuant to the second sentence of Section
3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant
to a Sublease Assignment, or pursuant to any provision of any other Operative
Document providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
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ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee.
(a) The Trust Company hereby covenants and agrees that it will
not directly or indirectly create, incur, assume or suffer to exist any Lessor's
Lien attributable to it in its individual capacity with respect to any of the
properties or assets of the Trust Indenture Estate and shall, at its own cost
and expense promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Trust Company will cause restitution to be made to
the Trust Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it.
(b) The Owner Trustee hereby covenants and agrees as
follows:
(i) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Equipment Notes and hereunder in accordance
with the terms of the Equipment Notes and this Indenture and all
amounts payable by it to the Note Holders under the Refunding Agreement
and the other Operative Documents;
(ii) the Owner Trustee will not directly or indirectly
create, incur, assume or suffer to exist any Lessor's Liens
attributable to it with respect to any of the properties or assets of
the Trust Indenture Estate, and shall, at its own cost and expense,
promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Owner Trustee will cause restitution to be
made to the Trust Indenture Estate in the amount of any diminution of
the value thereof as the result of any Lessor's Liens attributable to
it;
(iii) in the event an officer with responsibility for or
familiarity with the transactions contemplated hereunder or under the
other Operative Documents (or any Vice President) in the Corporate
Trust Administration Department of the Owner Trustee shall have actual
knowledge of an Indenture Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Indenture Default or
Event of Loss to the Indenture Trustee, the Lessee and the Owner
Participant;
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(iv) 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 12(f) of the Lease, to the extent that the same
shall not have been furnished, or is not required to be furnished by
the Lessee, to the Indenture Trustee pursuant to the Lease or
otherwise;
(v) except as contemplated by the Operative Documents or with
the consent of the Indenture Trustee acting in accordance with Article
IX hereof, the Owner Trustee will not incur any indebtedness for
borrowed money; and
(vi) 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 Refunding Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing
(other than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, or interest on, any Equipment Note
(other than as a result of a Lease Default) and such failure shall have
continued unremedied for ten calendar days; or the failure of the Owner
Trustee to pay when due any other amount due and payable under any
Equipment Note or hereunder (other than as a result of a Lease Default)
and such failure shall have continued unremedied for 15 calendar days
after notice thereof being given to the Owner Trustee from the
Indenture Trustee or any Note Holder; or
(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 4.01(a) hereof or Section
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13 of the Refunding Agreement or by the Owner Trustee as the Owner
Trustee pursuant to Section 4.01(b)(ii) hereof or Section 13 of the
Refunding Agreement or any Lessor's Lien required to be discharged by
the Owner Participant pursuant to Section 13 of the Refunding Agreement
shall remain undischarged for a period of 30 calendar days after, as
the case may be, an officer with responsibility for or familiarity with
the transactions contemplated hereunder or under the other Operative
Documents (or any Vice President) in the Corporate Trust Administration
Department of the Trust Company or an officer of the Owner Participant
shall have actual knowledge of such Lien; provided, that no Indenture
Event of Default shall arise under this Section 4.02(c) as a result of
a failure by the Owner Trustee or the Owner Participant to observe or
perform any covenant referred to in this Section 4.02(c) if the Lessee
shall have discharged all Lessor's Liens required to be discharged by
the Owner Trustee or the Owner Participant pursuant to such covenants
and compensated the Indenture Trustee and the Trust Indenture Estate
for all claims, losses and expenses arising from the failure of the
Owner Trustee or the Owner Participant, as the case may be, to observe
and perform any such covenant; or
(d) any representation or warranty made by the Owner
Participant, the Owner Trustee or the Trust Company herein or in the
Refunding Agreement or by any Person (if any) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Documents or in any related guarantee or support agreement shall prove
to have been false or incorrect when made in any respect materially
adverse to the rights and interests of the Note Holders; and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, such
misrepresentation shall not have been corrected as of a day within 30
calendar days following notice thereof being given to the Owner
Participant, the Owner Trustee, the Trust Company or such Person, as
the case may be, by the Indenture Trustee or a Majority in Interest of
Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any
of its covenants or agreements in the fourth paragraph following the
Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01
hereof, or any failure by the Owner Participant or the Trust Company to
observe or perform any of its respective covenants in Section 9(b)(11),
10 or 14 of the Refunding Agreement; or
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(f) except as provided in the following paragraph (j), any
failure by the Owner Trustee or the Trust Company to observe or perform
any other covenant or obligation of the Owner Trustee contained in this
Indenture or in the Refunding Agreement or any failure by the Owner
Participant to observe or perform any other covenant or obligation of
the Owner Participant contained in the Refunding Agreement or any
failure of any Person that may guarantee or support the obligations of
an Owner Participant not originally party to the Refunding Agreement
under the Operative Documents to observe or perform any covenant or
obligation of such Person contained in any such guarantee or support
agreement, which failure is not remedied within a period of 30 calendar
days following notice being given to the Owner Trustee, the Owner
Participant or such Person, as the case may be, by the Indenture
Trustee or a Majority in Interest of Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant
or any Person that may guarantee or support the obligations of an Owner
Participant not originally party to the Refunding Agreement under the
Operative Documents shall (i) be unable to pay its debts generally as
they become due within the meaning of the Bankruptcy Code, (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 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 with respect thereto (and not in its
individual capacity) or the Owner Participant or any Person that may
guarantee or support the obligations of an Owner Participant not
originally party to the Refunding Agreement under the Operative
Documents, as the case may be, a custodian, receiver, trustee or other
officer with similar powers with respect to it 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
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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 with
respect thereto (and not in its individual capacity) or the Owner
Participant or such Person, as the case may be; or
(i) any petition for any relief specified in the foregoing
paragraph (h) shall be filed against the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or any Person that may guarantee or support the
obligations of an Owner Participant not originally party to the
Refunding Agreement under the Operative Documents, as the case may be,
and such petition shall not be dismissed within 60 days; or
(j) at any time when the Aircraft shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid
and duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by
the Lessee in the payment of any installment of Basic Rent due under the Lease,
the Owner Participant may, within ten calendar days (or such longer period
ending on the expiry of the applicable grace period specified in the Lease with
respect to such default) after notice of such default, without the consent or
concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for
application in accordance with Section 3.01 hereof, a sum equal to the amount of
all (but not less than all) of the Principal Amount and interest as shall then
(without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof)
be due and payable on the Equipment Notes. 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 Trustee
shall have been furnished by the Owner Participant with all funds necessary for
remedying such default, the Owner Participant may, within fifteen calendar days
(or such longer period ending on the expiry of any applicable grace period
specified in the Lease with respect to such default) after notice of such
default, without the consent or concurrence of any Note Holder, instruct the
Owner Trustee to exercise the Owner Trustee's rights under Section 21(d) 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
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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 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 due and payable under
the Equipment Notes or hereunder, 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 default by the Lessee
under the Lease to the same extent that like performance by the Lessee itself
would have remedied such default (but any such payment or performance shall not
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, such Lease Event of Default shall have been remedied, then any
declaration pursuant to the Lease that the Lease is in default, and any
declaration pursuant to this Indenture that the Equipment Notes are due and
payable or that an Indenture Event of Default exists hereunder, based upon such
Lease Event of Default, shall be deemed to be rescinded, and the Owner
Participant or the Owner Trustee, as the case may be, shall (to the extent of
any such payments made by it) be subrogated to the rights of the Note Holders
hereunder to receive such payment of Rent from the Indenture Trustee (and the
payment of interest on account of such Rent being overdue), and shall be
entitled, so long as no other Indenture Default or Indenture Event of Default
shall have occurred and be continuing or would result therefrom, to receive,
subject to the terms 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 by commencing an action at law against the Lessee and obtaining and enforcing
a judgment against the Lessee for the payment of such amount; provided, however,
that at no time while an Indenture 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 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 hereof; and
provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease as to
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(i) each of the three Basic Rent Payment Dates immediately preceding
the date of such default or (ii) in the aggregate more than six Basic
Rent Payment Dates,
(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 Lease Event of Default for the purposes of this Indenture,
if during the 12-month period immediately preceding the relevant
default by the Lessee there shall have been expended by the Owner
Participant pursuant to the second sentence of this Section 4.03 (and
shall have not been reimbursed by the Lessee or any Permitted Sublessee
themselves to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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
(subject to the rights of the Owner Participant or the Owner Trustee to cure any
such Indenture Event of Default set forth in Section 4.03 hereof and the
obligations of the Indenture Trustee set forth in this Section 4.04(a) and
subject to Section 10.05 hereof) 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
hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a
Majority in Interest of Note Holders, exercise any and all of the remedies
pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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
but, in the case of the Aircraft, only as permitted by Section 18 of the Lease,
and may exclude the Owner Participant, the Owner Trustee and the Lessee and all
Persons claiming under any of them or wholly or partly therefrom; provided,
however, that the Indenture Trustee shall give the Owner Trustee and the Owner
Participant ten days' prior written
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notice of the initial exercise of such remedies by the Indenture Trustee under
the Lease (if not stayed or otherwise precluded by applicable law from giving
such notice); provided, further, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant twenty days' prior written notice of its
intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Indenture Trustee may exercise any right of sale
of the Aircraft available to it, even though it shall not have taken possession
of the Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails to participate in such proceedings, the Owner Trustee shall have
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the right (without affecting in any way any right or remedy of the Indenture
Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the avoidance
of doubt, it is expressly understood and agreed, subject only to the immediately
preceding paragraph, that 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 otherwise exercising all of its
rights, powers and remedies under this Indenture, including without limitation
this Article IV.
(b) If an Indenture Event of Default referred to in clause
(g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment Notes
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the
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Equipment Notes which by such declaration shall have become payable) shall have
been duly paid and every other Indenture Default and Indenture Event of Default
with respect to any covenant or provision of this Indenture shall have been
cured, then and in every such case a Majority in Interest of Note Holders may
(but shall not be obligated to), by written instrument filed with the Indenture
Trustee, rescind and annul the Indenture Trustee's declaration and its
consequences; but no such rescission or annulment shall extend to or affect any
subsequent Indenture Default or Indenture Event of Default or impair any right
consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
Except as otherwise provided in Section 2.12, no Make-Whole
Amount shall become payable on the Equipment Notes as a result of any
acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Indenture. The Owner Trustee or
Owner Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Aircraft, etc. (a) If an Indenture
Event of Default shall have occurred and be continuing, at the request of the
Indenture Trustee the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such 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
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Indenture Trustee may specify, to obtain possession of all or any part of the
Trust Indenture Estate; provided that the Indenture Trustee shall at the time be
entitled to obtain such possession under Section 4.04(a) and the other
applicable provisions of this Indenture. If the Owner Trustee shall for any
reason fail to execute and deliver such instruments and documents after such
request by the Indenture Trustee, the Indenture Trustee may (i) obtain a
judgment conferring on the Indenture Trustee the right to immediate possession
and requiring the Owner Trustee to execute and deliver such instruments and
documents to the Indenture Trustee, to the entry of which judgment the Owner
Trustee hereby specifically consents to the fullest extent it may lawfully do
so, and (ii) to the extent permitted by law, pursue all or part of the Trust
Indenture Estate wherever it may be found (but not in violation of Section 10.05
hereof or of the Lease) and may enter any of the premises of the Lessee wherever
such Trust Indenture Estate may be or be supposed to be and search for and take
possession of and remove the same (but not in violation of Section 10.05 hereof
or of the Lease). 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 a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that the
provisions hereof shall not be construed so as to expand the obligations of the
Lessee under the Lease, including Section 16 thereof). In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, lease,
control or manage the Trust Indenture Estate and to carry on the business
(without limiting the express provisions of Section 5.10 hereof) and to exercise
all rights and powers of the Owner Participant and the Owner Trustee relating to
the Trust Indenture Estate, as the Indenture Trustee 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 Trust Indenture Estate or any part thereof as the Indenture
Trustee may determine; and the Indenture Trustee shall be entitled to collect
and receive directly all tolls, rents (including Rent), revenues, issues,
income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee
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hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to
the exercise of its remedies under this Article IV, to the extent permitted by
applicable law, be entitled to the appointment of a receiver for all or any part
of the Trust Indenture Estate, whether such receivership be incidental to a
proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee
hereby consents to the appointment of such receiver and will not oppose any such
appointment. Such tolls, rents (including Rent), revenues, issues, income,
products and profits shall be applied to pay the expenses of the use, operation,
storage, leasing, control, management or disposition of the Trust Indenture
Estate and of 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 Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder 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
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reason or shall have been determined adversely to the Indenture Trustee or such
Note Holder, then and in every such case the Owner Trustee, the Indenture
Trustee, the Note Holders and the Lessee shall, subject to any determination in
such proceedings, be restored to their former positions and rights hereunder
with respect to the Trust Indenture Estate, and all rights, remedies and powers
of the Indenture Trustee and the Note Holders shall continue as if no such
proceedings had been instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right consequent thereon; provided,
however, that in the absence of written instructions from the Holders of all
Equipment Notes then outstanding, the Indenture Trustee shall not waive any
Indenture Default (i) in the payment of the Principal Amount of or interest on
any Equipment Note then outstanding, or (ii) in respect of a covenant or
provision hereof which, under Article IX hereof, cannot be modified or amended
without the consent of each Note Holder.
SECTION 4.09. Indenture Trustee May Prove Debt. If the Owner
Trustee shall fail to pay any amount payable hereunder or under the Equipment
Notes, the Indenture Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action or proceedings at
law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against the Owner Trustee or other
obligor upon the Equipment Notes and collect in the manner provided by law out
of the property of the Owner Trustee or other obligor upon the Equipment Notes,
wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the
Owner Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Owner Trustee
or its property, or in case of any other comparable judicial proceedings
relative to the Owner Trustee upon the Equipment Notes, or to the property of
the Owner Trustee, the Indenture Trustee, irrespective of whether the Principal
Amount
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of the Equipment Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of Principal Amount and interest owing and unpaid in respect of the
Equipment Notes, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation, expenses and
disbursements to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the Note
Holders allowed in any judicial proceedings relative to the Owner
Trustee or to the property of the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Note Holders in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or Person performing similar
functions in comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Note Holders and of
the Indenture Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Note Holders (by such Note Holder's acceptance
of an Equipment Note) to make payments to the Indenture Trustee, and, in the
event that the Indenture Trustee shall consent to the making of payments
directly to the Note Holders, to pay to the Indenture Trustee such amounts as
shall be sufficient to cover reasonable compensation, expenses and disbursements
to the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred by the Indenture Trustee and each predecessor Indenture Trustee except
as a result of negligence or bad faith.
Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Note Holder any plan of
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reorganization, arrangement, adjustment or composition affecting the Equipment
Notes or the rights of any Holder thereof, or to authorize the Indenture Trustee
to vote in respect of the claim of any Note Holder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar Person.
All rights of action and of asserting claims under this
Indenture, or under any of the Equipment Notes, may be prosecuted and enforced
by the Indenture Trustee without the possession of any of the Equipment Notes or
the production thereof in any trial or other proceedings relative thereto, and
any such action or proceedings instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation
of the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents and attorneys, shall be for the ratable benefit of the Note
Holders.
In any proceedings brought by the Indenture Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Note Holders, and it shall not be necessary to make
any Note Holders parties to any such proceedings.
SECTION 4.10. Limitations on Suits by Note Holders. No Note
Holder shall have any right to pursue a remedy under this Indenture or any
Equipment Note, unless such Note Holder previously shall have given to the
Indenture Trustee written notice of an Indenture Default and of the continuance
thereof, as hereinbefore provided, and unless also a Majority in Interest of
Note Holders shall have made a written request to the Indenture Trustee to
pursue such remedy and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Indenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall have
failed to pursue such remedy and no direction inconsistent with such written
request shall have been given to the Indenture Trustee during such 60-day period
pursuant to Section 5.02 hereof; it being understood and intended, and being
expressly covenanted by each Note Holder and the Indenture Trustee, that no one
or more Note Holders shall have any right in any manner whatever by virtue or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of any other Note Holder or, except as otherwise provided herein
(including, without limitation, Section 2.13), to obtain or seek to obtain
priority over or preference to any other such Note Holder or to
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enforce any right under this Indenture, except in the manner herein provided.
For the protection and enforcement of the provisions of this Section 4.10, each
and every Note Holder and the Indenture Trustee shall be entitled to such relief
as can be given either at law or in equity.
SECTION 4.11. Unconditional Right of Note Holders to Receive
Principal, Interest and Premium, and to Institute Certain Suits. Notwithstanding
any other provision in this Indenture and any provision of any Equipment Note,
the right of any Note Holder to receive payment of the Principal Amount of and
interest on such Equipment Note on or after the respective due dates expressed
in such Equipment Note, or, subject to Section 4.10, to institute suit in a
manner consistent with the limitations contained in Section 4.04(a) hereof for
the enforcement of any such payment on or after such respective dates as herein
provided, shall not be impaired or affected without the consent of such Note
Holder.
SECTION 4.12. Exercise of Remedies by Foreign Note Holders. If
the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a
time when (i) the Aircraft is registered with the Federal Aviation
Administration, (ii) 25% or more of the then unpaid Principal Amount of the
Equipment Notes is held by one or more Persons which are not a "citizen of the
United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV
as a result of the occurrence of an Indenture Event of Default which is not a
Lease Event of Default, the Indenture Trustee shall make arrangements, if any,
as may be required by law so that such exercise of remedies shall not result in
the ineligibility of the Aircraft to be registered under the Federal Aviation
Act.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the
event the Indenture Trustee shall have knowledge of an Indenture Event of
Default, or shall have knowledge of an Indenture Default arising either from a
failure to pay Rent or a Lease Default of the type referred to in the second
sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof
to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex,
telegraph or telephone (confirmed by written notice in the manner provided by
Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to
the
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terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and
of this Section 5.01, the Indenture Trustee shall take such action, or refrain
from taking such action, with respect to any Indenture Event of Default or
Indenture Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Note Holders. Subject to the provisions of Section 5.03
hereof, if the Indenture Trustee shall not have received instructions as above
provided within 20 calendar days after mailing notice of such Indenture Default
or Indenture Event of Default to the Note Holders, the Indenture Trustee may,
subject to instructions thereafter received pursuant to the preceding provisions
of this Section 5.01, take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action, with respect
to such Indenture Default or Indenture Event of Default as it shall determine to
be advisable and in the best interests of the Note Holders 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 its own affairs; provided that the
Indenture Trustee may not sell the Aircraft or any part thereof without the
consent of a Majority in Interest of Note Holders. In the event the Indenture
Trustee shall at any time elect to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the
case of any such party) not stayed or otherwise prohibited by applicable law,
the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For
all purposes of this Indenture, in the absence of actual knowledge on the part
of an officer in the Corporate Trust Office, in the case of the Indenture
Trustee, or its Corporate Trust Administration Department, 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 an Indenture Event of Default (except,
in the case of the Indenture Trustee, the failure of the Lessee to pay any
installment of Rent when due, if any portion of such installment was then
required to be paid to the Indenture Trustee, which failure shall constitute
knowledge of an Indenture Default for purposes of the first sentence of this
Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one
or more Note Holders or, in the case of the Owner Trustee, by the Indenture
Trustee.
SECTION 5.02. Action Upon Instructions. Subject to
the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03,
5.10, 9.01 and 10.05 hereof, upon the written instructions at any
time and from time to time of a Majority in Interest of Note
Holders, the Indenture Trustee shall take such of the following
actions as may be specified in such instructions: (i) exercise
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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 to
take such other action hereunder or under any other Indenture Document or in
respect of any part or all of the Trust Indenture Estate as shall be specified
in such instructions; (ii) take such action with respect to, or to preserve or
protect, the Trust Indenture Estate (including the discharge of Liens) as shall
be specified in such instructions and as are 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 of 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 interest created hereunder in the Trust Indenture Estate as may
be specified from time to time in written instructions of a Majority in Interest
of Note Holders (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may, but shall not be obligated to, execute and
file or cause to be filed any financing statement which it from time to time
deems appropriate or any continuation statement that the Lessee, in discharge of
its obligations under Section 3(v) of the Refunding Agreement or any other
Operative Document, may so request. Notwithstanding the foregoing or anything in
this Indenture to the contrary, the Indenture Trustee may, on the advice of its
counsel and without the consent or approval of any Note Holder, approve any
counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding
Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve
any opinion issued by such counsel; provided, however, that this provision will
not interfere with the Owner Participant's right to consent to such counsel.
None of the Owner Participant, the Owner Trustee or the Lessee have any
liability for the failure of the Indenture Trustee to discharge its obligations
hereunder.
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 hereof unless
the Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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
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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. The
Indenture Trustee shall not be required to take any action under Section 5.01
(other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall
any other provision of this 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 of the
other Indenture Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Aircraft or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and obtain such instructions promptly so as not
unreasonably to delay the proposed action of Lessee in respect of which the
instructions are sought. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Article VII hereof or any
other Operative Document) promptly take such action as may be necessary to duly
discharge all Lenders' Liens on any part of the Trust Indenture Estate
attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding
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, or place Liens on, the Aircraft or any
other part of the Trust
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Indenture Estate except (i) as required or permitted by the terms of the Lease
or the Refunding Agreement, or (ii) in accordance with the powers granted to, or
the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Indenture and in accordance with the terms hereof.
SECTION 5.06. Replacement Airframes, Replacement Engines and
Replacement Parts. (a) If at any time and from time to time, the Airframe or
Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a),
11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s),
as the case may be, in accordance with the provisions of this Section 5.06 and
the provisions of said Sections of the Lease, the Owner Trustee shall, at such
time or times, but subject to compliance with the conditions to such replacement
set forth in the Lease, direct the Indenture Trustee to execute and deliver to
or as directed in writing by the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine(s) 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:
(1) A written request from the Owner Trustee, requesting such release
and specifically describing the Airframe and/or Engine(s) so to be released and
the Replacement Airframe and/or Replacement Engine(s).
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified
by manufacturer, model, FAA registration number (or other applicable
registration number) and manufacturer's serial number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number (or other applicable
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 hold legal title to
such Replacement Airframe free and clear of all Liens except Permitted
Liens, that such Replacement Airframe will on such date be in good
operating condition,
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and that such Replacement Airframe has been or, substantially
concurrently with such replacement, is in the process of being duly
registered with the Owner Trustee as owner thereof under the Federal
Aviation Act or under the law then applicable to the registration of
the Aircraft and that an airworthiness certificate has been duly issued
under the Federal Aviation Act (or such other applicable law) with
respect to such Replacement Airframe, and that such registration and
certificate is in full force and effect, and the Lessee or a Permitted
Sublessee will have the full right and authority to use such
Replacement Airframe;
(iv) that the insurance required by Section 12 of the Lease
is in full force and effect with respect to such Replacement Airframe
and all premiums then due thereon have been paid in full;
(v) that the Replacement Airframe is of a like Airbus
A320-231 model airframe with equivalent or better modifica- tion
status;
(vi) that no Lease 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 a Replacement Airframe;
(vii) an appraisal prepared in accordance with the Appraisal
Procedure (as defined in the Lease) confirms that the Replacement
Airframe has a value, utility and remaining useful life at least equal
to that of the Airframe which suffered the Event of Loss assuming that
the same were maintained in accordance with the requirements of the
Lease whether or not they are in fact so maintained; and
(viii) that each of the conditions specified in Section 11(a)
and (c) of the Lease with respect to such Replacement Airframe have
been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) 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;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Engine the Owner Trustee will
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hold title to such Replacement Engine free and clear of all Liens
except Permitted Liens, that such Replacement Engine will on such date
be in good operating condition, and that such Replacement Engine is the
same or an improved model as
the Engine to be released;
(iv) the value, remaining useful life and utility of the
Replacement Engine as of the date of such certificate (which value,
remaining useful life and utility shall not be less than the then
value, remaining useful life and utility of the Engine requested to be
released, assuming such Engine was in the condition and repair required
to be maintained under the Lease (but without regard to hours and
cycles until overhaul));
(v) that no Lease 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 Engine; and
(vi) that each of the conditions specified in Section 11(b) of
the Lease with respect to such Replacement Engine have been satisfied.
(3) The appropriate instrument or 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, (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 (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Airframe or Replacement Engine to the Lien of this Indenture
and subjecting to any relevant Assigned Sublease and Sublease Assignment,
including, without limitation, an Indenture Supplement.
(4) With respect to a Replacement Airframe, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee confirming
the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof.
(5) The opinion of counsel to the Lessee, satisfactory to the Indenture
Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the
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requirements of this Indenture and the Lease and, upon the basis of
such application, the property so sold or disposed of may be properly
released from the Lien of this Indenture and all conditions precedent
herein provided for relating to such release have been complied with;
(ii) the Replacement Airframe and/or Replacement Engine(s)
have 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 Lien of this Indenture and the Lease, and
subjecting to any relevant Assigned Sublease and Sublease Assignment,
as the case may be, have been duly filed for recordation pursuant to
the Federal Aviation Act or any other law then applicable to the
registration of the Aircraft, and no further action, filing or
recording of any document is necessary in order to establish and
perfect, in the United States and, if the Aircraft is registered
outside the United States, in the jurisdiction of registration, the
legal title to such Replacement Airframe and/or Replacement Engine and
the Lien of this Indenture on such Replacement Airframe and/or
Replacement Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as 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 to the
Replacement Airframe and, if an Event of Loss with respect to the
Aircraft has occurred, the Replacement Engines to the same extent as
with respect to the Airframe and Engines then installed thereon prior
to such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements.
In the event of the substitution of a Replacement Airframe or
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Engine as contemplated by Section 11 of the Lease, the Owner Trustee and the
Indenture Trustee agree for the benefit of the Note Holders and the Lessee,
subject to fulfillment of the conditions precedent and compliance by the Lessee
with its obligations set forth in Section 11 of the Lease, to execute and
deliver the appropriate instruments as contemplated by Section 5.06 hereof, and
execute and deliver to the Lessee (or any relevant Permitted Sublessee) an
appropriate instrument releasing the Airframe and/or Engine(s) being replaced
from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or Engine as contemplated by Section 11
of the Lease and Section 5.06 hereof, all provisions of this Indenture relating
to the Airframe or Engine(s) being replaced shall be applicable to such
Replacement Airframe or Replacement Engine(s) with the same force and effect as
if such Replacement Airframe or Replacement Engine(s) were the same airframe or
engine(s), as the case may be, as the Airframe or Engine(s) being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Note Holder shall affect the sufficiency of
such notice with respect to other Note Holders. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Note Holders
shall be filed with the Indenture Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant. Notwithstanding any other provisions of this
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Indenture, including the Granting Clause, but subject always to the final
paragraph of this Section 5.10, the following rights shall be reserved to the
Owner Trustee or Owner Participant, as the case may be (as separate and
independent rights) to the extent described herein:
(a) the Owner Trustee or the Owner Participant may, without
the consent of the Indenture Trustee, demand, collect, sue for or
otherwise obtain all amounts included in Excepted Payments from the
Lessee, exercise any election or option or make any decision or
determination or give or receive any notice, consent, waiver or
approval in respect of any Excepted Payment and seek legal or equitable
remedies to require the Lessee to maintain the insurance coverage
referred to in Section 12 of the Lease (or the comparable provisions of
any Assigned Sublease) and such specific performance of the covenants
of the Lessee under the Lease (or the comparable provisions of any
Assigned Sublease) relating to the protection, maintenance, possession
and use of the Aircraft; provided, that the rights referred to in this
clause (a) shall not be deemed to include the exercise of any remedies
provided for in Section 18 of the Lease (or the comparable provisions
of any Assigned Sublease) other than the right to proceed by
appropriate court action, either at law or in equity, to enforce
payment by the Lessee of such amounts included in Excepted Payments or
performance by the Lessee of such insurance covenant or to recover
damages for the breach thereof or for specific performance of any
covenant of the Lessee;
(b) unless an Indenture Event of Default and an Indenture
Trustee Event shall have occurred and be continuing, the Indenture
Trustee shall not, without the consent of the Owner Trustee, which
consent shall not be withheld if no right or interest of the Owner
Trustee or the Owner Participant shall be materially diminished or
impaired thereby, (i) enter into, execute and deliver amendments,
modifications, waivers or consents in respect of any of the provisions
of the Lease, any Assigned Sublease or any Sublease Assignment, or (ii)
approve any accountants, engineers, appraisers or counsel as
satisfactory to render services for or issue opinions to the Owner
Trustee pursuant to the Operative Documents; provided that, whether or
not an Indenture Event of Default has occurred and is continuing, the
Owner Trustee's consent shall be required with respect to any
amendments, modifications, waivers or consents in respect of any of the
provisions of Section 6, 12 or 16 of the Lease, or of any other Section
of the Lease to the extent such action shall affect (y) the amount or
timing of,
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or the right to enforce payment of any Excepted Payment or (z) the
amount or timing of any amounts payable by the Lessee under the Lease
as originally executed (or as subsequently modified with the consent of
the Owner Trustee) which, absent the occurrence and continuance of an
Indenture Event of Default hereunder, would be distributable to the
Owner Trustee under Article III hereof;
(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses
(a), (b) and (c) above, so long as no Indenture Event of Default has
occurred and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner Trustee and the Owner Participant under the Lease shall be
exercised by the Owner Trustee and/or the Owner Participant, as the
case may be, to the exclusion of the Indenture Trustee and any Note
Holder and without the consent of the Indenture Trustee or any Note
Holder; provided that the foregoing shall not, nor shall any other
provision of this Section 5.10, limit (A) any rights separately and
expressly granted to the Indenture Trustee or any Note Holder under the
Lease or the other Operative Documents (including, without limitation,
Section 15 of the Refunding Agreement) or (B) the right of the
Indenture Trustee or any Note Holder to receive any funds to be
delivered to the Owner Trustee under the Lease (except with respect to
Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03
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hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) demand,
collect, sue for or otherwise receive and enforce the payment of all Rent due
and payable under the Lease (other than any thereof constituting an Excepted
Payment), (B) declare the Lease to be in default under Section 18 thereof and
(C) subject only to the provisions of Sections 4.03 and 4.04(a) hereof, exercise
the remedies set forth in such Section 18 (other than in connection with
Excepted Payments) and in Article IV hereof.
SECTION 5.11. Evidence of Action Taken by Note Holder. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Note Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Note Holders in person or by agent duly appointed in
writing, and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof
of execution of any instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Sections 5.04,
5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner
Trustee if made in the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far as
concerns such Equipment Note. Except as aforesaid any such action taken by the
Note Holder shall be conclusive and binding upon such Note Holder and upon all
future Note Holders and owners of such Equipment Note and of any Equipment Notes
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Equipment Note. Any action
taken by the Note Holders of the percentage in aggregate Principal Amount of the
Equipment Notes specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Note Holders.
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ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee shall be answerable or accountable under
any circumstances, except for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be negligence), or as provided in the fourth sentence of Section 2.04(a)
hereof and in the last sentence of Section 5.04 hereof, and except for
liabilities that may result, in the case of the Trust Company, from the
inaccuracy of any representation or warranty of the Trust Company in the
Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the
failure to perform any covenant of the Trust Company pursuant to Section 4.01(a)
hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of
the Indenture Trustee, from the inaccuracy of any representation or warranty, or
failure to perform any covenant, of the Indenture Trustee made in its individual
capacity herein, in the Refunding Agreement or in any other document. None of
the Owner Participant, the Trust Company or the Indenture Trustee shall be
liable for any action or inaction of any other one of such parties, except, in
the case of the Owner Participant, for any action or omission of the Owner
Trustee performed or omitted on the instructions of the Owner Participant. The
Owner Trustee shall not be deemed a trustee for the Note Holders for any
purpose.
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, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case
of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof
and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner
Trustee and the Indenture Trustee shall have no duty (i) to see to any
registration of the Aircraft or any recording or filing of the Lease or of this
Indenture or any other document, or to see to the maintenance of any such
registration, recording or filing, (ii) to see to any insurance on the Aircraft,
whether or not the Lessee shall be in default with respect thereto, (iii) to see
to the payment or discharge of
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any Lien of any kind against any part of the Trust Estate or the Trust Indenture
Estate, (iv) to confirm, verify or inquire into the failure to receive any
financial statements 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 or any of the Permitted Sublessee's covenants under
any Assigned Sublease with respect to the Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft
or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE
TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO
HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE 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 ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE, except
that the Trust Company warrants that (i) on the Delivery Date for the Aircraft
the Owner Trustee shall have received whatever interest in the Aircraft was
conveyed to it under the Second Aircraft Warranty Bill of Sale subject to the
rights of the parties to the Indenture Documents and (ii) the Aircraft shall be
free and clear of Lessor's Liens attributable to the Trust Company. Neither the
Trust Company nor the Indenture Trustee 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
Documents 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 in its individual capacity or as Indenture Trustee made under
this Indenture or in the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any
moneys paid to or retained by the Indenture Trustee pursuant to any provision
hereof and not then required to be distributed to any Note Holder, the Lessee or
the Owner Trustee as provided in Article III hereof need not be segregated in
any manner except to the extent required by law, 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 hereof) be liable for any
interest thereon; provided that any
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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 any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of
the Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of 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, but in the case of any such certificate, the Owner
Trustee and the Indenture Trustee shall be under a duty to examine the same to
determine whether or not it conforms to the requirements of this Indenture. 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, except that any such execution or performance shall not derogate
from the Indenture Trustee's obligations under the third sentence of Section
2.04(a), the Indenture Trustee and the Owner Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care hereunder. The Indenture Trustee may, at the expense of
the Trust Indenture Estate, consult with counsel, accountants and other skilled
Persons to be selected and retained by it, and the
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Owner Trustee and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by them in accordance with the written advice
or written opinion of any such counsel, accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against any Note Holder or the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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.
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ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee from and after the
Restatement Date (whether or not also agreed to be indemnified against by any
other Person under any other document) in any way relating to or arising out of
this Indenture, the Trust Agreement, the Equipment Notes, the other Indenture
Documents or the enforcement of any of the terms of any thereof, or in any way
relating to or arising out of the manufacture, purchase, acceptance,
nonacceptance, rejection, ownership, delivery, lease, sublease, possession, use,
operation, condition, sale, return or other disposition of the Aircraft or any
Engine (including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust
Indenture Estate or the action or inaction of the Indenture Trustee hereunder,
except only (i) in the case of willful misconduct or gross negligence (or
negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the
Indenture Trustee, in its individual capacity and as Indenture Trustee, and its
successors, permitted assigns, agents and servants, thereunder; provided that so
long as the Lease is in effect, the Indenture Trustee shall not make any claim
under this Section 7.01 for any amount indemnified against by the Lessee under
the Lease without first (but only to the
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extent not stayed or otherwise prevented by operation of law) making demand on
the Lessee for payment of such amount. The Indenture Trustee shall notify the
Owner Trustee and the Lessee promptly of any claim for which it may seek
indemnity. The Lessee shall be entitled to defend any claim by the Indenture
Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture
Trustee shall be entitled to indemnification from the Trust Indenture Estate for
any liability, obligation, loss, damage, penalty, claim, action, suit, cost,
expense or disbursement indemnified against pursuant to this Section 7.01 to the
extent not reimbursed by the Lessee or others, but without releasing any of them
from their respective agreements of reimbursement; and to secure the same the
Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. The
indemnities contained in this Section 7.01 shall survive the termination of this
Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
agent or affiliate of the Trust Company or the Owner Participant (the
"Exculpated Equity Persons") shall have any obligation, duty or liability of any
kind whatsoever to the Indenture Trustee or any such Note Holder in connection
with the exercise by any Exculpated Equity Person of any rights of the Owner
Trustee or the taking of any action or the failure to take any action by any
Exculpated Equity Person in connection with any rights of the Owner Trustee
under this Indenture or the Lease, and each such Note Holder hereby waives and
releases, to the extent permitted by applicable law, each Exculpated Equity
Person of any and all such obligations, duties or liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case
of any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Trust Company pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to the Indenture Trustee and to each Note Holder.
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SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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 and assuming such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Indenture Trustee, without further act, shall become vested with and
bound by all the estates, properties, rights, powers, duties and obligations of
the predecessor Indenture Trustee hereunder and under the other Indenture
Documents in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; but nevertheless upon the written
request of such successor Indenture Trustee, such predecessor Indenture Trustee
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor Indenture Trustee all moneys or other property then held by
such
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predecessor Indenture Trustee hereunder, subject nevertheless to its claim
provided for in Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall
be a "citizen of the United States" within the meaning of Section 40102(a)(15)
of the Federal Aviation Act and shall also be a bank or trust company having a
combined capital and surplus of at least $200,000,000 if there be such an
institution willing, able and legally qualified to perform the duties of the
Indenture Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the foregoing,
upon the request of the Owner Trustee or the Lessee, any such successor
corporation referred to in this Section 8.02(d) shall deliver to the Owner
Trustee and the Lessee an instrument confirming its status as the Indenture
Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate may at the time be
located or in which any action of the Indenture Trustee may be required to be
performed or taken, the Indenture Trustee, by an instrument in writing signed by
it, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee, acting jointly with the Indenture
Trustee, of all or any part of the Trust Indenture Estate to the full extent
that local law makes it necessary for such separate trustee or separate trustees
or co-trustee acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust Indenture Estate or
any part
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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
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, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03, including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act, and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Indenture
Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed and exercised or performed by the Indenture Trustee and such
additional trustee or trustees and separate trustee or trustees jointly
except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional
trustee or trustees or separate trustee or trustees;
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(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent
of, the Indenture Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section
8.03, the powers of any additional trustee or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures.
(a) Except as otherwise provided in Section 5.10 hereof, and except with respect
to Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or supplement to the Lease, or execute and deliver any written
waiver or modification of, or consent under, the terms of the Lease, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee acting on instructions of a Majority in
Interest of Note Holders. Anything to the contrary contained in this Section
9.01 notwithstanding, without the necessity of the consent of any of the Note
Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i)
any Excepted Payments payable to the Owner Trustee or Owner Participant may be
modified, amended, changed or waived
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in such manner as shall be agreed to by the Owner Participant and Lessee, (ii)
the Owner Trustee and Lessee may, so long as no Indenture Event of Default has
occurred and is continuing, enter into amendments of or additions to the Lease
to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent
that such amendment would adversely affect the rights or exercise of remedies
under Section 18 of the Lease) so long as such amendments, modifications and
changes do not and would not (A) affect the time of, or reduce the amount of,
Basic Rent or Stipulated Loss Value payments until after the payment in full of
all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely
affect the value, utility or useful life of the Aircraft or any Engine or (D)
otherwise adversely affect the Note Holders in any material respect, and (iii)
the Lessee may effect the re-registration of the Aircraft in accordance with but
always subject to the terms and conditions applicable thereto specified in
Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the
Indenture Trustee may approve any Permitted Sublessee as provided in clause (c)
of the definition of such term set forth in the Lease and may exercise the
rights of the Indenture Trustee under Section 15 of the Refunding Agreement. For
the avoidance of doubt, nothing in this Section 9.01 shall limit in any way the
rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d)
to exercise certain rights and powers under the Lease to the exclusion of the
Indenture Trustee and any Note Holder and without the consent of the Indenture
Trustee or any Note Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise, whether in its
official or individual capacity.
Any supplemental indenture authorized by the provisions of
this Section 9.01 may be executed without the consent of the Note Holders
notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, or any other agreement
included
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in the Trust Indenture Estate, unless such supplement, amendment, waiver,
modification or consent is consented to in writing by a Majority in Interest of
Note Holders, or does not adversely affect the Note Holders in any material
respect. Upon the written request of a Majority in Interest of Note Holders, the
Indenture Trustee shall from time to time enter into any such supplement or
amendment, or execute and deliver any such waiver, modification or consent, as
may be specified in such request and as may be (in the case of any such
amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the Lease which would permit redemption of
Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any
of the provisions of Section 4(b) of the Lease, or modify, amend or supplement
the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any
assignment of any thereof, in either case releasing the Lessee (or Permitted
Sublessee) from its obligations in respect of the payment of Basic Rent or
Stipulated Loss Value for the Aircraft or altering the absolute and
unconditional character of the obligations of Lessee to pay Rent as set forth in
Sections 4(b) and 4(d) of the Lease (or comparable provisions in any Assigned
Sublease) or (vi) permit the creation of any Lien on the Trust Indenture Estate
or any part thereof other than Permitted Liens or deprive any Note Holder of the
benefit of the Lien of this Indenture on the Trust Indenture Estate, except as
provided in connection with the exercise of remedies under Article IV hereof.
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(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely as
Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Airframe or Engines or any
Replacement Airframe or Replacement Engine; (v) to add to the covenants of the
Owner Trustee for the benefit of the Note Holders, or to surrender any rights or
powers herein conferred upon the Owner Trustee, the Owner Participant or the
Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on
the Equipment Notes any legend as may be required by law.
(d) Without the consent of the Lessee, no amendment or
supplement to this Indenture or waiver or modification of the terms hereof shall
adversely affect the Lessee in any material respect or impose upon the Lessee
any additional indemnification obligations.
SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Indenture Trustee, the Owner Trustee
and the Note Holders shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part
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of the terms and conditions of this Indenture for all and any purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such copy
to each Note Holder), but the failure of the Owner Trustee or the Indenture
Trustee to mail such conformed copies shall not impair or affect the validity of
such document. The Indenture Trustee will furnish to each Note Holder, promptly
upon receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to the Indenture Trustee
under the Lease or hereunder to the extent that the same were not required to
have
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been furnished to such Note Holder pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX, no
written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX 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, any Engines or other property
thereto or to release the Aircraft, any Engine or other property therefrom or to
execute and deliver an Indenture Supplement, in each case pursuant to the terms
hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge
of such Lien and the termination of such security interest in the Aircraft and
release of 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
Trustee to give effect to such discharge, termination and 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 as expressly
provided pursuant to Article X hereof or upon any sale or other final
disposition by the Indenture Trustee of all property part of the Trust Indenture
Estate and the final distribution by the
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Indenture Trustee of all moneys or other property or proceeds constituting part
of the Trust Indenture Estate in accordance with the terms hereof. Except as
aforesaid otherwise provided, this Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Note Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is
Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee
made pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the 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 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of the Aircraft, except in
accordance with the provisions of the Lease.
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SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations, directions, consents,
waivers or documents required or permitted by the terms of this Indenture shall
be in English and in writing, mailed by first-class registered or certified
mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the
Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration Department (telex:
835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the
Owner Participant at its address set forth in the Refunding Agreement, (ii) if
to the Indenture Trustee, addressed to it at its office at 450 West 33rd Street,
15th Floor, New York, New York 10001, Attention: Corporate Trust Department
(telecopy: (212) 946-8160) or (iii) if to the Owner Participant, the Lessee or
any Note Holder, addressed to such party at such address as such party shall
have furnished by notice to the Owner Trustee and the Indenture Trustee, or,
until an address is so furnished, addressed to the address of such party (if
any) set forth on the signature pages to the Refunding Agreement or in the
Register. Whenever any notice in writing is required to be given by the Owner
Trustee or the Indenture Trustee or any Note Holder to any of the other of them,
such notice shall be deemed and such requirement satisfied when such notice is
received. Any party hereto may change the address to which notices to such party
will be sent by giving notice of such change to the other parties to this
Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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
Trust Indenture
<PAGE> 99
- 94 -
and permitted assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Note Holder
shall bind the successors and assigns of such Note Holder. This Indenture and
the Trust Indenture Estate shall not be affected by any amendment or supplement
to the Trust Agreement or by any other action taken under or in respect of the
Trust Agreement, except that each reference in this Indenture to the Trust
Agreement shall mean the Trust Agreement as amended and supplemented from time
to time to the extent permitted hereby and thereby. Each Note Holder by its
acceptance of an Equipment Note agrees to be bound by this Indenture and all
provisions of the Refunding Agreement applicable to a Note Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Indenture Trustee, the
Owner Trustee, the Owner Participant, any Note Holder or any bank or other
Affiliate of any of them may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Lessee or any Permitted Sublessee fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Lessee for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the
parties that the Owner Trustee, as lessor under the Lease (and the Indenture
Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled
to the benefits of Section 1110 of the Bankruptcy Code with respect to the right
to take possession of the Aircraft, Airframe, Engines and Parts as provided in
the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in
which Lessee is a debtor, and in any
Trust Indenture
<PAGE> 100
- 95 -
instance where more than one construction is possible of the terms and
conditions hereof or of any other pertinent Operative Document, each such party
agrees that a construction which would preserve such benefits shall control over
any construction which would not preserve such benefits.
Trust Indenture
<PAGE> 101
- 96 -
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
expressly provided herein, but
solely as Owner Trustee
By: _________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity, except as
expressly provided herein, but
solely as Indenture Trustee
By: _________________________________
Name:
Title:
Trust Indenture
<PAGE> 102
EXHIBIT A
TO
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-10]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1989 BN-10]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1989 BN-10] dated
as of December 19, 1989 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1989
BN-10] dated as of December 19, 1989, as amended and restated as of October 1,
1991 and as further amended and restated as of November 26, 1996 (as so amended
and restated, the "Indenture") between the Owner Trustee and The Chase Manhattan
Bank (formerly known as Chemical Bank, successor by merger to Manufacturers
Hanover Trust Company), as Indenture Trustee (the "Indenture Trustee"), provides
for the execution and delivery of a supplement thereto substantially in the form
hereof which shall particularly describe the Aircraft (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 Trust Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated December 22, 1989 subjected to the Lien of such
Indenture the airframe and engines therein described, which Original Indenture
and Trust Indenture Supplement No. 1 have been duly recorded with the Federal
Aviation Administration as one document on December 27, 1989 and assigned
Conveyance No. S86321.
WHEREAS, the Amended and Restated Indenture (which amended and
restated the Original Indenture), as supplemented by Trust Indenture Supplement
No. 2 dated October 24, 1991 subjected to the Lien of such Indenture the
airframe and engines therein described, which Amended and Restated Indenture and
Trust Indenture Supplement No. 2 have been duly recorded with the Federal
Aviation Administration as one document on October 25, 1991 and assigned
Conveyance No. Q52003.
<PAGE> 103
- 2 -
WHEREAS(1), 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(2), the Owner Trustee has, as provided in the
Indenture, heretofore executed and delivered to the Indenture Trustee [(3)]
Indenture Supplement(s) for the purpose of specifically subjecting to the Lien
of the Indenture certain airframes and/or engines therein described, which
Indenture Supplement(s) is (are) dated and has (have) been duly recorded with
the Federal Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
---- ---------------- ----------------
NOW, THEREFORE, This Supplement Witnesseth, that, to secure
the prompt payment of the Principal Amount of, interest on, Make-Whole Amount,
if any, and all other amounts due with respect to, all 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 contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner
Trustee has granted, bargained, sold,
- ---------------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
(2) This recital not to be included in the first Indenture
Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 104
- 3 -
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 Note Holders from time to time, in the trust created
by the Indenture, a first priority security interest in and mortgage Lien on all
estate, right, title and interest of the Owner Trustee in, to and under the
following described property:
AIRFRAME(S)
( ) airframe(s) identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------ ----- ------ -------------
together with all 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.
AIRCRAFT ENGINES
( ) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as
follows:
Manufacturer's
Manufacturer Model Serial Number
------------ ----- -------------
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engines.
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.
Form of Trust Indenture Supplement
<PAGE> 105
- 4 -
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 Note Holders from time to time, in the trust created
by the Indenture, all of the estate, right, title and interest of the Owner
Trustee in, to and under the Lease and Lease Supplement [GPA 1989 BN-10] No. 3
of even date herewith (other than Excepted Payments) 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 Note Holders from time to time for the uses and purposes and
subject to the terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and shall form a part of it, and the Indenture is hereby incorporated
by reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 106
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this
Supplement to be duly executed by one of its officers thereunto duly authorized
on the day and year first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely
as Owner Trustee
By_________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 107
SCHEDULE I
TO
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-10]
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- ---- ---------
Series A $11,936,662 02-Jan-2006 6.85%
Series B $ 4,476,246 02-Jul-2002 6.93%
Series C $ 4,476,247 02-Jan-2002 6.86%
Series D $ 3,575,831 02-Jul-98 8.16%
<PAGE> 108
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N631AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 109
SERIES B
Aircraft: N631AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 110
SERIES C
Aircraft: N631AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 111
SERIES D
Aircraft: N631AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 112
SCHEDULE II
TO
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-10]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1A, dated
November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1B, dated
November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1C, dated
November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1D, dated
November 26, 1996.
Schedule II-1
<PAGE> 1
EXHIBIT 4.36
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-12]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 82
Registration No. N633AW
Leased by America West Airlines, Inc.
<PAGE> 2
TABLE OF CONTENTS
Page
GRANTING CLAUSE...................................................... 3
HABENDUM CLAUSE...................................................... 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions................................... 8
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes............................... 21
SECTION 2.02. Issuance and Terms of Equipment Notes................. 26
SECTION 2.03. Payments from Trust Indenture Estate
Only............................................ 29
SECTION 2.04. Method of Payment..................................... 31
SECTION 2.05. Application of Payments............................... 33
SECTION 2.06. Termination of Interest in Trust
Indenture Estate................................ 34
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes................................. 34
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes................................. 36
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation.................................... 36
SECTION 2.10. Mandatory Redemptions of Equipment
Notes........................................... 37
SECTION 2.11. Redemptions; Notice of Redemption..................... 37
SECTION 2.12. Option to Purchase Equipment Notes.................... 38
SECTION 2.13. Subordination......................................... 39
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions............................ 40
SECTION 3.02. Event of Loss and Replacement......................... 42
SECTION 3.03. Payment After Indenture Event of
Default, etc.................................... 43
SECTION 3.04. Certain Payments...................................... 46
SECTION 3.05. Other Payments........................................ 46
SECTION 3.06. Payments to Owner Trustee............................. 47
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee......................................... 47
(i)
<PAGE> 3
Page
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner
Trustee......................................... 48
SECTION 4.02. Indenture Events of Default........................... 49
SECTION 4.03. Certain Rights........................................ 52
SECTION 4.04. Remedies.............................................. 54
SECTION 4.05. Return of the Aircraft, etc........................... 57
SECTION 4.06. Remedies Cumulative................................... 59
SECTION 4.07. Discontinuance of Proceedings......................... 59
SECTION 4.08. Waiver of Past Indenture Defaults..................... 60
SECTION 4.09. Exercise of Remedies by Foreign Note
Holders......................................... 60
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default.................. 60
SECTION 5.02. Action Upon Instructions.............................. 62
SECTION 5.03. Indemnification....................................... 62
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions....................... 63
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions............ 63
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts................... 64
SECTION 5.07. Indenture Supplements for Replacements................ 67
SECTION 5.08. Effect of Replacement................................. 68
SECTION 5.09. Notices, etc.......................................... 68
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant............................... 68
SECTION 5.11. Evidence of Action Taken by Note Holder............... 71
SECTION 5.12. Right of Revocation of Action Taken................... 71
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties....................... 71
SECTION 6.02. Absence of Duties..................................... 72
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents........................... 72
SECTION 6.04. No Segregation of Moneys; No Interest................. 73
(ii)
<PAGE> 4
Page
SECTION 6.05. Reliance; Agents; Advice of Counsel................... 73
SECTION 6.06. Capacity in Which Acting.............................. 74
SECTION 6.07. Compensation.......................................... 74
SECTION 6.08. May Become Note Holder................................ 75
SECTION 6.09. Further Assurances; Financing State-
ments........................................... 75
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification.............................. 75
SECTION 7.02. Exculpation and Release of Liability.................. 76
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee..................... 77
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor............... 77
SECTION 8.03. Appointment of Separate Trustees...................... 78
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures...................................... 81
SECTION 9.02. Effect of Supplemental Indenture...................... 84
SECTION 9.03. Documents to Be Given to Trustee...................... 84
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures......................... 84
SECTION 9.05. Trustees Protected.................................... 84
SECTION 9.06. Documents Mailed to Note Holders...................... 84
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement.............. 85
SECTION 9.08. Notices to Liquidity Provider......................... 85
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture............................. 85
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders......................... 86
(iii)
<PAGE> 5
SECTION 10.03. Sale of Aircraft by Indenture Trustee
is Binding..................................... 86
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
Lessee and Note Holders........................ 86
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease................................ 86
SECTION 10.06. Notices.............................................. 87
SECTION 10.07. Severability......................................... 87
SECTION 10.08. No Oral Modifications or Continuing
Waivers........................................ 87
SECTION 10.09. Successors and Assigns............................... 88
SECTION 10.10. Headings............................................. 88
SECTION 10.11. Normal Commercial Relations.......................... 88
SECTION 10.12. Governing Law; Counterpart Form...................... 88
SECTION 10.13. Section 1110......................................... 88
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
(iv)
<PAGE> 6
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-12]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-12] (this "First Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank,
successor by merger to Manufacturers Hanover Trust Company), a New York
corporation, not in its individual capacity except as otherwise specifically set
forth herein, but solely as indenture trustee hereunder (in such capacity,
together with its successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company entered
into the Trust Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as
supplemented by Trust Agreement Supplement [GPA 1989 BN-12] No. 1 dated December
28, 1989, and as further supplemented by Trust Agreement Supplement [GPA 1989
BN-12] No. 2 dated the date hereof (as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof, hereof and of
the Refunding Agreement, the "Trust Agreement"), whereby, among other things,
Wilmington Trust Company has declared a certain trust for the use and benefit of
the Owner Participant, subject, however, to the Trust Indenture Estate created
pursuant hereto for the use and benefit of (to the extent set forth herein), and
with the priority of certain payments to, the Holders of Equipment Notes issued
hereunder, and the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered
into the Trust Indenture and Security Agreement [GPA 1989 BN-12] dated as of
December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 dated
December 28, 1989, which were recorded by the Federal Aviation Administration on
January 2, 1990 as one instrument and assigned Conveyance No. V78636 (as so
amended, supplemented or otherwise modified to the date hereof, the "Original
Indenture"), (ii) the Owner Trustee
Trust Indenture
<PAGE> 7
- 2 -
and the Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989
BN-12] dated as of December 19, 1989, as supplemented by Lease Supplement [GPA
1989 BN-12] No. 1 dated December 28, 1989, which were recorded by the Federal
Aviation Administration on January 2, 1990 as one instrument and assigned
Conveyance No. V78637, as further supplemented by Lease Supplement [GPA 1989
BN-12] No. 2 dated as of December 31, 1991, which was not filed for recordation
with the Federal Aviation Administration (collectively, as so amended,
supplemented or otherwise modified to the date hereof, the "Original Lease") and
(iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to
the Lenders (as defined in the Original Indenture) the Original Loan
Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and restate
the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease
Termination Agreement [GPA 1989 BN-12] dated as of the date hereof among the
Original Head Lessee, as assignor and the Original Sublessee, as assignee, the
Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft
Lease Agreement [GPA 1989 BN-12] dated as of the date hereof between the Owner
Trustee and the Lessee (as so assigned, amended and restated, the "Amended and
Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and
(ii) cause the implementation of the Refinancing Transaction pursuant to which,
among other things, the Original Loan Certificates issued pursuant to the
Original Indenture shall be prepaid and new Equipment Notes shall be issued to
the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's estate,
right, title and interest in and to the Aircraft and, except as hereinafter
expressly provided, all of the Owner Trustee's right, title and interest in, to
and under the Lease (as amended and restated to date and as the same may at any
time and from time to time be further amended, restated or otherwise modified in
accordance with the terms thereof and hereof) and all payments and other amounts
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable benefit and security of the Note Holders,
subject to Section 2.13 and Article III hereof;
Trust Indenture
<PAGE> 8
- 3 -
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee and authenticated, issued and delivered by the
Indenture Trustee hereunder, the legal, valid and binding obligations of the
Owner Trustee; and
WHEREAS, all things necessary to make this First Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Equipment Notes from time to time outstanding
hereunder and the performance and observance by the Owner Trustee of all the
agreements, covenants and provisions contained herein and in the Refunding
Agreement and the Equipment Notes, for the benefit of the Note Holders, and the
prompt payment of any and all amounts from time to time owing hereunder and
under the Refunding Agreement by the Owner Trustee, the Owner Participant and
the Lessee to the Note Holders and for the uses and purposes and subject to the
terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained, and of the acceptance of the 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, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture Supplement or any indenture supplemental hereto, are included within
the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and all
replacements thereof and substitutions therefor to which the Owner Trustee
shall from time to time
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acquire an interest under 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 and other documents to which the
Owner Trustee shall from time to time acquire an interest at any time
maintained by the Lessee with respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement, including the Consent and Guaranty
attached thereto (all to the extent assigned by the Purchase Agreement
Assignment and the Purchase Agreement Warranty Assignment); the Purchase
Agreement Warranty Assignment, with the Consents and Agreements attached
thereto; the Second Warranty Bill of Sale; the BFE Bill of Sale; and the
Bills of Sale; in each case including, without limitation, (x) all rights
of the Owner Trustee to exercise any election or option or to make any
decision or determination or to give any notice, consent, waiver or
approval or to take any other action under or in respect of any such
document or to accept surrender or redelivery of the Aircraft or any part
thereof, as well as all the rights, powers and remedies on the part of the
Owner Trustee, whether arising under any such document or by statute or at
law or in equity, or otherwise, arising out of any Lease Event of Default,
and (y) any right to restitution from the Lessee, the Manufacturer, the
Manufacturer's Subsidiary or any other Person in respect of any
determination of invalidity of any such document;
(3) each Sublease Assignment and each Assigned Sublease (to the
extent assigned under such Sublease Assignment), and including, without
limitation, all rents or other payments of any kind made under such
Assigned Sublease (to the extent assigned under such Sublease Assignment),
all collateral security or credit support (in the nature of a guarantee,
letter of credit, credit insurance, Lien on or security interest in any
property or otherwise) for the obligations of the Permitted Sublessee
thereunder (to the extent assigned under such Sublease Assignment) and all
rights of the Owner Trustee to exercise any election or option or to give
any notice, consent, waiver, or approval under or with respect of any
thereof 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
(in each case to the extent assigned to the Owner Trustee), whether
arising under any Assigned Sublease or any Sublease
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Assignment or by statute or at law or in equity, or otherwise, arising out
of any default under any Assigned Sublease;
(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, without limitation, 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 requisition proceeds with respect to the Aircraft or any
part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Aircraft or any part thereof, including but not limited to the insurance
required under Section 12 of the Lease or under any comparable provision
of any Assigned Sublease (but excluding any excess insurance maintained by
the Lessee and not required under Section 12 of the Lease or any Assigned
Sublease);
(6) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with the Indenture Trustee by or
for the account of the Owner Trustee pursuant to any term of any Operative
Document and held or required to be held by the Indenture Trustee
hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable by
the Lessee to the Owner Trustee under the Refunding Agreement and all
rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any other
Person in accordance with the provisions of this Agreement, AND SUBJECT TO
Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel paper original executed
counterparts of the Original Lease and Lease Supplement No. 1, certified copies
of the Purchase Agreement Warranty Assignment and the Consents and Agreements
attached thereto, and the original Second Aircraft Warranty Bill of Sale and the
BFE Bill of Sale. The Owner Trustee thereafter
Trust Indenture
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delivered to the Indenture Trustee the chattel paper original executed Lease
Supplement No. 2. Concurrently with the delivery of this Indenture, the Owner
Trustee is delivering to the Indenture Trustee the chattel paper original
executed counterparts of the Amended and Restated Lease and Lease Supplement No.
3. All property referred to in this Granting Clause, whenever acquired by the
Owner Trustee, shall secure all obligations under and with respect to the
Equipment Notes at any time outstanding. Any and all properties referred to in
this Granting Clause which are hereafter acquired by the Owner Trustee, shall,
without further conveyance, assignment or act by the Owner Trustee or the
Indenture Trustee thereby become and be subject to the security interest hereby
granted as fully and completely as though specifically described herein.
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 Note Holders from time to time, except as set forth in Section
2.13 and Article III hereof without any preference, distinction or priority of
any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, with full power (in
the name of the Owner Trustee or otherwise) to ask, require, demand, receive and
give acquittance for any and all moneys and claims for moneys (in each case
including insurance and requisition proceeds but excluding Excepted Payments and
Excepted Rights) due and to become due to
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the Owner Trustee under or arising out of the Indenture Documents and all other
property which now or hereafter constitutes part of the Trust Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceedings which
the Indenture Trustee may deem to be necessary or advisable in the premises.
Under the Lease, the Lessee is directed to make all payments of Rent (other than
Excepted Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excepted
Payments) directly to the Indenture Trustee at such address or addresses as the
Indenture Trustee shall specify, for application as provided in this Indenture.
Pursuant to each Sublease Assignment, each Permitted Sublessee will be directed
from and after (i) notice of the occurrence of a Lease Event of Default and (ii)
notice that the Lease is declared or deemed in default, to make all payments of
rent and all other amounts which are required to be paid to or deposited with
the Lessee pursuant to the related Assigned Sublease and which are assigned
thereunder directly to the Indenture Trustee at such address or addresses as the
Indenture Trustee shall specify, for application or to be held as provided in
this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it
will transfer to the Indenture Trustee any and all moneys from time to time
received by it constituting part of the Trust Indenture Estate, for distribution
by the Indenture Trustee pursuant to this Indenture, except (a) to the extent
the Owner Trustee is entitled to distribution of such moneys pursuant to this
Indenture and (b) that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement any amounts distributed to it by the Indenture Trustee
under this Indenture.
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge or
otherwise dispose of, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 10.01 hereof, any
of its estate, right, title or interest hereby assigned, to anyone other than
the Indenture Trustee, and that, with respect to such estate, right, title and
interest hereby assigned, subject to its rights pursuant to Section 5.10 hereof,
it will not, except as provided in this Indenture (including, without
limitation, Section 9.01) and except as to Excepted Payments and Excepted
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Rights, (i) accept any payment from the Lessee or any Permitted Sublessee under
any of the Indenture Documents, enter into any agreement amending, modifying or
supplementing any of the Indenture Documents, or execute any waiver or
modification of, or consent under, the terms of any of the Indenture Documents,
(ii) settle or compromise any claim arising under any of the Indenture
Documents, (iii) give any notice or exercise any right or take any action under
any of the Indenture Documents, or (iv) 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. For purposes of Section
4.02(e) hereof, this is the fourth paragraph following the Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations under
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
might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments and
Excepted Rights. Further, nothing in the Granting Clause or the preceding
paragraphs shall impair any of the rights of the Owner Trustee or the Owner
Participant under Section 5.10 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained in the
Lease shall apply for all purposes of this Indenture except that the following
terms shall have the following meanings (such definitions to be equally
applicable to both the singular and plural forms of the terms defined) for all
purposes of this Indenture. Except as otherwise indicated, all the agreements or
instruments defined herein or in the Lease shall mean such agreements or
instruments (including all annexes, appendices, exhibits, schedules and
supplements thereto) as the same may from time to time be supplemented or
amended or the terms thereof waived or modified to the extent permitted by, and
in accordance with, the terms thereof and of the other Operative Documents and
references to various Persons shall be deemed to be
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references to and include their respective permitted successors and assigns.
"Amortization Amount" means, with respect to any Principal Amount
Repayment Date, the amount set forth opposite such Principal Amount
Repayment Date on the Amortization Schedule.
"Amortization Schedule" means the amortization schedule for the
Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed shall be
the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Equipment
Note. "Remaining Weighted Average Life" of such Equipment Note, at the
redemption date of such Equipment Note, shall be the number of days equal
to the quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of
principal, including the payment due on the maturity date of such
Equipment Note, by (ii) the number of days from and including the
redemption date to but excluding the scheduled payment date of such
principal installment; by (b) the then unpaid Principal Amount of such
Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the United States
Code, 11 U.S.C. Sections 101 et seq., as amended.
"Bills of Sale" means the FAA Bills of Sale and the Warranty Bill of
Sale.
"BFE Bill of Sale" means the full warranty (as to title) bill of
sale covering the Buyer Furnished Equipment, executed by the Braniff,
Inc., a Nevada corporation in favor of the Owner Trustee, dated on or
prior to December 28, 1989.
"Business Day" means a day other than a Saturday, Sunday or a day on
which banks are required or authorized to close in either The City of New
York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all
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amounts drawn under one or more Liquidity Facilities pursuant to Section
3.6(c) or 3.6(i) of the Intercreditor Agreement shall be deposited.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consents and Agreements" means the confirmations by the
Manufacturer included in the Purchase Agreement Assignment and the
Purchase Agreement Warranties Assignment of the transfer of rights under
the Purchase Agreement.
"Continuous Stay Period" has the meaning specified in Section
4.04(a).
"Corporate Trust Office" means the principal corporate trust office
of the Indenture Trustee located at 450 West 33rd Street, New York, New
York 10001, Attention: Corporate Trust Department, or such other office at
which the Indenture Trustee's corporate trust business shall be
administered that the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Trustee and the Note Holders.
"Debt" means any liability for borrowed money, or any liability for
the payment of money in connection with any letter of credit transaction,
or other liabilities evidenced or to be evidenced by bonds, debentures,
notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series C and
Series D, the rate per annum specified for such Series under the heading
"Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means December 28, 1989.
"Dollars", "U.S. $" and "$" mean the lawful currency of the United
States of America.
"Downgrade Drawing" has the meaning assigned to such term in Section
3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the United States of America or any one of the states thereof or
the District of Columbia (or any U.S. branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the
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<PAGE> 16
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securities of such depository institution has a long-term unsecured debt
rating from each Rating Agency of at least A-3 or its equivalent.
"Eligible Institution" means (a) the corporate trust department of
the Subordination Agent or any Pass Through Trustee, as applicable, or (b)
a depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or
any U.S. branch of a foreign bank), which has a long-term unsecured debt
rating from each Rating Agency of at least A-3 or its equivalent.
"Equipment Notes" means the Equipment Notes, in substantially the
form set out in Section 2.01 hereof, issued by the Owner Trustee and
authenticated by the Indenture Trustee pursuant to the terms of this
Indenture.
"Equity Collateral" has the meaning assigned to such term in the
definition of "Excepted Payments."
"Excepted Payments" means (i) any and all indemnity payments and
interest in respect thereof paid or payable in respect of the Owner
Participant, the Trust Company, the Owner Trustee (and not in support of
any payment obligation of the Owner Trustee under any Indenture Document)
or any of their respective successors, permitted assigns (and, in the case
of a permitted assign of the Owner Participant that is a partnership, the
partners of such partnership), directors, officers, employees, servants,
agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to
the Lease (including, without limitation, Section 13 thereof and any
corresponding payment of Supplemental Rent under the Lease), (ii) any
proceeds of public liability insurance (or government indemnities in lieu
thereof) in respect of the Aircraft payable as a result of insurance
claims paid respecting, or losses suffered by, the Trust Company or the
Indenture Trustee in its individual capacity or the Owner Participant,
(iii) any proceeds of insurance maintained with respect to the Aircraft by
or for the benefit of the Owner Participant (whether directly or through
the Owner Trustee) and not required under Section 12 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts
payable to the Owner Participant, the Trust Company, the Owner Trustee
(and not in support of any payment obligation of the Owner Trustee under
any Indenture Document), or any of their respective successors, permitted
assigns (and, in the case of a permitted assign of the Owner Participant
that is a partnership, the partners of such partnership), directors,
officers, employees, servants, agents, subsidiaries, affiliates or
shareholders under
Trust Indenture
<PAGE> 17
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Section 10 of the Lease or by the Lessee or the Parent Guarantor under the
Tax Indemnification Agreement or the Amended and Restated Head Lease TIA
(as defined in the Refunding Agreement), as the case may be, (v)
Transaction Expenses paid or payable by the Lessee or the Parent Guarantor
to the Trust Company, the Owner Trustee, the Indenture Trustee or the
Owner Participant pursuant to Section 21 of the Refunding Agreement or the
Lease, (vi) any letter of credit pursuant to Section 8(l) of the Lease
(including, without limitation, any replacement letter of credit (the
"Equity Collateral")) and any payment or proceeds of any such Equity
Collateral to the extent retained or applied as provided in Section 8(l)
of the Lease, (vii) any amount payable to the Owner Participant by any
transferee as the purchase price of the Owner Participant's interest in
the Trust Estate (or a portion thereof), (viii) any amount payable to the
Owner Trustee, the Trust Company or the Owner Participant or any of their
respective successors, permitted assigns (and, in the case of a permitted
assign of the Owner Participant that is a partnership, the partners of
such partnership), directors, officers, employees, servants, agents,
subsidiaries, affiliates or shareholders attributable to the period prior
to or on the Restatement Date or under the Original Participation
Agreement, the Original Lease, the Parent Head Lease Guaranty, the
Sublease, the Amended and Restated Head Lease TIA or the Amended and
Restated Sublease TIA (as such terms are defined in the Refunding
Agreement) or Retained Head Lease Rights and Obligations (as such term is
defined in the Refunding Agreement), and (ix) subject to the last sentence
of Section 5.10 hereof, any and all rights of the Owner Trustee, the Owner
Participant or the Trust Company under the Operative Documents, whether or
not a Lease Event of Default, a Lease Default, an Indenture Default or an
Indenture Trustee Event has occurred and is continuing to demand, collect,
sue for, give notices, make determinations, enforce or exercise all rights
with respect to and otherwise obtain all amounts described in clauses (i)
through (viii) above and the proceeds thereof.
"Excepted Rights" means (i) those rights of the Owner Participant
and the Owner Trustee under Section 5.10 of this Indenture, (ii) all
rights under the Equity Collateral to make a claim for, collect and retain
all amounts payable with respect to any Equity Collateral, (iii) all
rights of the Owner Participant, the Trust Company or the Owner Trustee to
compromise or waive any such right or modify, amend or waive any provision
of any Operative Document conferring such rights with respect to Excepted
Payments, and (iv) all rights of the Owner Trustee to exercise any
election or option, or to make any decision or determina-
Trust Indenture
<PAGE> 18
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tion, or to give or receive any notice, consent, waiver or approval with
respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section 2.03(b) hereof.
"FAA" means the Federal Aviation Administration of the United States
Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such
Liquidity Facility in accordance with the provisions thereof other than a
Downgrade Drawing.
"Government Obligations" means direct obligations of the United
States of America that are not callable, redeemable or payable prior to
maturity, in whole or in part, directly or indirectly, by any Person.
"Indenture," "this Indenture," and "the Indenture" mean this First
Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented by
any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an event
or condition that, with the giving of notice or the lapse of time or both,
would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement, including the Consent and Guaranty attached
thereto (all to the extent assigned by the Purchase Agreement Assignment
and the Purchase Agreement Warranty Assignment); the Purchase Agreement
Warranty Assignment and the Consents and Agreements attached thereto; the
Second Aircraft Warranty Bill of Sale; the BFE Bill of Sale; and the Bills
of Sale.
"Indenture Event of Default" has the meaning set forth
in Section 4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and Security
Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same
may be amended,
Trust Indenture
<PAGE> 19
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supplemented or otherwise modified from time to time in accordance with
its terms.
"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Aircraft and any
Replacement Airframe and Replacement Engine included in the property of
the Owner Trustee covered by this Indenture, including, without
limitation, Trust Indenture Supplement No. 1 dated December 28, 1989,
which was recorded as one instrument by the FAA with the Original
Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996,
which is being filed for recordation as one instrument by the FAA with
this First Amended and Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes shall
have become due and payable pursuant to Section 4.04(b) or (c) of this
Indenture or (ii) the Indenture Trustee has taken action or notified the
Owner Trustee that it intends to take action to foreclose the Lien of this
Indenture or otherwise commence the exercise of any significant remedy
under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in Section
3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on deposit
in the Trust Accounts net of losses and investment expenses of the
Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as assigned, amended and restated by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-12] dated
as of the date hereof and Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-12] dated as of the date hereof and supplemented by Lease
Supplement [GPA 1989 BN-12] No. 3 dated November 26, 1996, which are being
filed for recordation as one instrument with the FAA contemporaneously
herewith.
"Lease Default" means an event or condition that, with the giving of
notice or the lapse of time or both, would become a Lease Event of
Default.
"Lease Event of Default" means any event or condition defined as an
"Event of Default" in Section 17 of the Lease.
Trust Indenture
<PAGE> 20
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"Lessee" means America West Airlines, Inc., a Delaware corporation,
in its capacity as lessee under the Amended and Restated Lease, and its
successors, and to the extent permitted by the Refunding Agreement, its
assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien, charge,
encumbrance, lease, exercise of rights, security interest, lease in the
nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Majority in Interest of Note Holders" means, as of a particular
date of determination and subject to Section 2.6 of the Intercreditor
Agreement, the Holders of more than 50% in aggregate unpaid Principal
Amount of all Equipment Notes outstanding as of such date. For purposes of
this definition, there shall be excluded any Equipment Notes held by the
Owner Trustee or the Owner Participant or any interests of the Owner
Participant therein by reason of subrogation pursuant to Section 4.03 of
the Indenture (unless all Equipment Notes then outstanding shall be held
by the Owner Trustee or the Owner Participant) or any Equipment Notes held
by the Lessee or any Affiliate of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note, the
amount (as determined by an independent investment banker selected by
Lessee and reasonably acceptable to the Indenture Trustee and the Owner
Participant) by which (a) the present value of the remaining scheduled
payments of principal and interest from the redemption date to maturity of
such Equipment Note computed by discounting each such payment on a
semiannual basis from its respective Payment Date (assuming a 360-day year
of twelve 30-day months) using a discount rate equal to (i) in the case of
Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield
and (ii) in the case of Series C Equipment Notes and Series D Equipment
Notes, the Treasury Yield plus 0.75% exceeds (b) the outstanding principal
amount of such Equipment Note plus accrued interest. For purposes of
determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Equipment Note means the interest rate
(expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield)
determined to be the per annum rate equal to the semiannual yield to
maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note and trading in the public securities
market
Trust Indenture
<PAGE> 21
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either as determined by interpolation between the most recent weekly
average yield to maturity for two series of United States Treasury
securities, trading in the public securities markets, (A) one maturing as
close as possible to, but earlier than, the Average Life Date of such
Equipment Note and (B) the other maturing as close as possible to, but
later than, the Average Life Date of such Equipment Note, in each case as
published in the most recent H.15(519) or, if a weekly average yield to
maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported on the most recent H.15(519),
such weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or
any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Amount
shall be the third Business Day prior to the applicable redemption date
and the "most recent H.15(519)" means the H.15(519) published prior to the
close of business on the third Business Day prior to the applicable
redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a
U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from time to
time of one or more Equipment Notes as reflected in the Register
maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the Lessee,
as the case may be, certifying as to the authority and signature of such
Responsible Officer, that is delivered to the Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel, who
in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such written
opinions or (ii) Latham & Watkins or other counsel designated by the
Lessee and reasonably satisfactory to the Indenture Trustee or, in the
case of legal counsel for the Owner Trustee, may be Morris, James,
Hitchens & Williams or other counsel designated by the Owner Trustee and
reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease.
Trust Indenture
<PAGE> 22
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"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1989 BN-12] dated as of December 19, 1989, as supplemented
by Trust Indenture Supplement No. 1 dated December 28, 1989, which were
recorded as one instrument by the FAA on January 2, 1990 and assigned
Conveyance No. V78636.
"Original Loan Certificates" means the Loan Certificates issued
under and as defined in the Original Indenture.
"Original Sublessee" means America West Airlines, Inc. ("AWA"), a
Delaware corporation, in its capacity as sublessee under the Aircraft
Sublease Agreement [GPA 1989 BN-12] dated as of September 21, 1990 between
the Original Head Lessee in its capacity as sublessor thereunder and AWA
in its capacity as sublessee.
"Owner Participant" means ____________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the four Pass Through Trusts
established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through Trust
Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a national banking
association, not in its individual capacity but solely as pass through
trustee under each of the four separate Pass Through Trust Agreements.
"Past Due Rate" means, with respect to any amount not paid when due
(whether at stated maturity, by acceleration or otherwise) under or in
respect of any Equipment Note, a rate of interest per annum (computed on
the basis of a year of 360 days comprised of twelve 30-day months) equal
to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Equipment Notes have been
paid in full.
Trust Indenture
<PAGE> 23
- 18 -
"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with respect
to all Equipment Notes, means the aggregate stated original principal
amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on which
any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [GPA 1989 BN-12], dated as of the Delivery Date, between the
Parent Guarantor and the Original Head Lessee, together with the Consents
and Agreements attached thereto, as the same may be amended, modified, or
supplemented from time to time in accordance with the terms hereof and
thereof.
"Purchase Agreement Warranty Assignment" means the Purchase
Agreement Warranty Assignment [GPA 1989 BN-12], dated as of the Delivery
Date, between the Original Head Lessee and the Owner Trustee together with
the Consents and Agreements attached thereto, as the same may be amended,
modified or supplemented from time to time in accordance with the terms
hereof and thereof.
"Rating Agencies" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates issued pursuant to the Pass Through Trust Agreements and
which shall then be rating the Certificates. Initially, the Rating
Agencies shall consist of Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated by the
Refunding Agreement and the other documents entered into on and in
connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1989 BN-12]
dated as of November 20, 1996, among the Lessee, the Original Head Lessee,
the Parent Guarantor, the Owner Trustee, the Pass Through Trustee, the
Owner Participant, the Subordination Agent and the Indenture Trustee.
"Register" has the meaning set forth in Section 2.07 hereof.
"Registrar" has the meaning set forth in Section 2.07 hereof.
Trust Indenture
<PAGE> 24
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"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice president
or, in the case of the Owner Trustee, an officer of the Owner Trustee in
its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date agreed
to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date of
the filing with the FAA of Trust Indenture Supplement No. 2.
"Second Aircraft Warranty Bill of Sale" means the full warranty (as
to title) bill of sale covering the Aircraft (excluding all of the Buyer
Furnished Equipment to be covered by the BFE Bill of Sale) executed by the
Original Head Lessee in favor of the Owner Trustee, dated December 28,
1989.
"Secured Obligations" has the meaning set forth in Section 2.06
hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount and
maturities and bearing interest as specified in Section 2.02 and Schedule
I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount and
maturities and bearing interest as specified in Section 2.02 and Schedule
I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount and
maturities and bearing interest as specified in Section 2.02 and Schedule
I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount and
maturities and bearing interest as specified in Section 2.02 and Schedule
I hereto under the heading "Series D."
"Sublease Assignment" means a sublease assignment by the Lessee in
favor of the Owner Trustee (including the
Trust Indenture
<PAGE> 25
- 20 -
consent thereto given by the sublessee thereunder) with respect to the
assignment of a Permitted Sublease pursuant to Section 6(a) of the Lease.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in Section
2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware banking
corporation, in its individual capacity and not as Owner Trustee, and its
successors under the Trust Agreement, in their respective individual
capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means all estate,
right, title and interest of the Owner Trustee in and to the properties,
rights and interests covered by the Granting Clause of the Indenture,
excluding, however, in each case, Excepted Payments and Excepted Rights.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section 7701(a)(9)
of the Code (for purposes of this definition, the "United States"), (ii) a
corporation, partnership or other entity created or organized under the
laws of the United States or any political subdivision thereof or therein
or (iii) any estate or trust that is subject to United States federal
income taxation regardless of the source of its income.
"Warranty Bill of Sale" means a full warranty (as to title) bill of
sale covering the Aircraft (excluding all Buyer Furnished Equipment)
executed by the Original Head Lessee in favor of the Owner Trustee dated
the Delivery Date.
Trust Indenture
<PAGE> 26
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be
substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1989 BN-12]
DATED AS OF DECEMBER 19, 1989, AS AMENDED.
SERIES [A/B/C/D] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING
UNITED STATES REGISTRATION NUMBER N633AW.
No.____________ Date: [________, 1996]
$___________________
DEBT RATE MATURITY DATE
[ ] [ , ]
WILMINGTON TRUST COMPANY, not in its individual capacity but solely
as Owner Trustee (herein in such capacity called the "Owner Trustee") under that
certain Trust Agreement [GPA 1989 BN-12], dated as of December 19, 1989, as
amended, between the Owner Participant named therein and Wilmington Trust
Company (herein as such Trust Agreement may be supplemented or amended from time
to time called the "Trust Agreement"), hereby promises to pay to Fleet National
Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $_______ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semi-annual installments commencing on January 2, 1997, and
thereafter
Trust Indenture
<PAGE> 27
- 22 -
on July 2 and January 2 of each year, to and including ___________, ____.
Notwithstanding the foregoing or anything to the contrary contained
herein, (i) the final payment made on this Equipment Note shall be in an amount
sufficient to discharge in full the unpaid Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, this Equipment Note; and
(ii) if any date on which a payment under this Equipment Note becomes due and
payable is not a Business Day, then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business Day and if such
payment is made on such next succeeding Business Day, no interest shall accrue
on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First Amended
and Restated Trust Indenture and Security Agreement [GPA 1989 BN-12], dated as
of November 26, 1996, between the Owner Trustee and The Chase Manhattan Bank
(formerly known as Chemical Bank, successor by merger to Manufacturers Hanover
Trust Company), a New York corporation (the "Indenture Trustee"), as the same
may be amended or supplemented from time to time. All other capitalized terms
used in this Equipment Note and not defined herein shall have the respective
meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at the
Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest and
any other amounts payable hereunder which are overdue, in each case for the
period the same is overdue. Amounts shall be overdue if not paid when due
(whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as above provided and that none of the Owner Participant, the
Owner Trustee and the
Trust Indenture
<PAGE> 28
- 23 -
Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of registering
transfers and exchanges of Equipment Notes at the Corporate Trust Office of the
Indenture Trustee or at the office of any successor in the manner provided in
Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and interest and
other amounts due hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise
provided in the Indenture. Each such payment shall be made on the date such
payment is due and without any presentment or surrender of this Equipment Note,
except that in the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter to the
Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note, agrees
that, except as provided in the Indenture, each payment received by it hereunder
shall be applied, first, to the payment of accrued interest on this Equipment
Note (as well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and to the extent permitted by law, any overdue
interest and any other overdue amounts hereunder) to the date of such payment,
second, to the payment of the portion of the Principal Amount of this Equipment
Note then due, third, to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under the Indenture, and fourth, the balance, if any,
remaining thereafter, to the payment of the portion of the Principal Amount of
this Equipment Note remaining unpaid in the inverse order of its normal
maturity.
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 Trust Indenture Estate is held by the Indenture
Trustee as security, in part, for the Equipment Notes. The provisions of this
Equipment Note are subject to the Indenture. Reference is hereby made to the
Indenture and the Refunding Agreement for a complete statement of the rights and
obligations of the Holder
Trust Indenture
<PAGE> 29
- 24 -
of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in Sections
2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the
Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration
by the Indenture Trustee as provided in Section 4.04 of the Indenture.
[The indebtedness evidenced by this Equipment Note is, to the extent
and in the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of [Series A Equipment Notes] (1) [Series B Equipment
Notes] (2) [Series C Equipment Notes] (3), and this Equipment Note is issued
subject to such provisions. The Note Holder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Indenture Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination as
- --------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
Trust Indenture
<PAGE> 30
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provided in the Indenture and (c) appoints the Indenture Trustee his
attorney-in-fact for such purpose.](4)
Unless the certificate of authentication hereon has been executed by
or on behalf of the Indenture Trustee by manual signature, this Equipment Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note
to be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:_______________________________
Name:
Title:
- --------
(4) To be inserted in the case of a Series B, Series C or Series D.
Trust Indenture
<PAGE> 31
- 26 -
SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment
Notes shall be dated the date of issuance thereof, shall be issued in four
separate series consisting of Series A, Series B, Series C and Series D and in
the maturities and principal amounts and shall bear interest as specified in
Schedule I hereto. On the date of the consummation of the Refinancing
Transaction, (i) each Equipment Note shall be issued to the Pass Through
Trustees (or their designee) under the Pass Through Trust Agreements set forth
in Schedule II to be attached hereto in connection therewith and (ii) the
Original Loan Certificates issued under the Original Indenture shall be
concurrently prepaid. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of each Series may be
in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate (calculated
on the basis of a year of 360 days comprised of twelve 30-day months) on the
unpaid Principal Amount thereof from time to time outstanding, payable in
arrears on January 2, 1997, and on each July 2 and January 2 thereafter until
maturity.
The Principal Amount of each Equipment Note shall be payable on the
dates and in the installments equal to the corresponding percentage of the
Principal Amount as set forth in Schedule I hereto which shall be attached as
Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
Trust Indenture
<PAGE> 32
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any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and Related
Charges, a fraction the numerator of which is the aggregate principal
balance then outstanding of the Equipment Notes issued hereunder and the
denominator of which is the aggregate principal balance then outstanding
of all "Equipment Notes" issued under the Indentures, and
Trust Indenture
<PAGE> 33
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(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default (as defined below) under any Equipment Note
a fraction, the numerator of which is the aggregate principal balance then
outstanding of the Equipment Notes issued hereunder and the denominator of
which is the aggregate principal balance then outstanding of all
"Equipment Notes" issued under the Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued under
the Indentures. As used in this Section 2.02, "Net Interest and Related Charges"
means (as determined by the Subordination Agent in consultation with the
Liquidity Providers and notified to the Indenture Trustee except that the Past
Due Rate shall be determined by the Indenture Trustee and notified to the
Subordination Agent) the sum of (i) the amount, if any, by which interest
payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or
Downgrade Drawing (other than a Downgrade Drawing that is not an Applied
Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount
which would be payable if such advances bore interest at the Designated Interest
Rate (as defined below) plus (ii) any amounts payable under Section 3.1, Section
3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity Facility (or
similar provisions of any succeeding liquidity facility) which result from any
Interest Drawing, Final Drawing or Downgrade Drawing. As used in this Section
2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as
defined in the applicable Indentures) in respect of "Series A Equipment Notes,"
"Series B Equipment Notes" and "Series C Equipment Notes" issued under the
Indentures, except with respect to that portion of any Final Drawing (or
Downgrade Drawing which becomes a Final Drawing) which remains in a Cash
Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" issued under the Indentures which has
not been cured other than solely because of acceleration. For purposes of
Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner Trustee
by its President or one of its Vice Presidents, Assistant Vice Presidents or
Assistant Secretaries or other authorized officer. Equipment Notes bearing the
signatures of individuals who were at any time the proper officers of the Owner
Trust Indenture
<PAGE> 34
- 29 -
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. The Owner Trustee may from time to time execute
and deliver Equipment Notes with respect to the Aircraft to the Indenture
Trustee for authentication upon original issue and such Equipment Notes shall
thereupon be authenticated and delivered by the Indenture Trustee upon the
written request of the Owner Trustee signed by a Vice President or Assistant
Vice President or other authorized officer of the Owner Trustee; provided,
however, that each such request shall specify the aggregate Principal Amount of
all Equipment Notes to be authenticated hereunder on original issue with respect
to the Aircraft. No Equipment Note shall be secured by or be entitled to any
benefit under this Indenture or be valid or obligatory for any purposes, unless
there appears on such Equipment Note a certificate of authentication in the form
provided for herein executed by the Indenture Trustee by the manual signature of
one of its authorized officers and such certificate upon any Equipment Notes
shall be conclusive evidence, and the only evidence, that such Equipment Note
has been duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without
impairing any of the other rights, powers, remedies, privileges or Liens of the
Note Holders under this Indenture, each Note Holder, by its acceptance of an
Equipment Note, agrees that, except as expressly provided in this Indenture, the
Refunding Agreement or any other Operative Document, (i) the obligation to make
all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such other
agreements to the contrary notwithstanding (except for any
Trust Indenture
<PAGE> 35
- 30 -
express provisions or representations that the Trust Company is responsible for,
or is making, for which there would be personal liability of the Trust Company),
no recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the property
of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means the
amount by which such payment exceeds the amount that would have been received by
a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee
or the Owner Participant had not become subject to the recourse liability
referred to in clause (ii) above. Nothing contained in this Section 2.03(b)
shall prevent a Note Holder or the Indenture
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Trustee from enforcing any personal recourse obligation (and retaining the
proceeds thereof) of the Trust Company, the Owner Trustee or the Owner
Participant under the Refunding Agreement, this Indenture (and any exhibits or
annexes hereto or thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such funds were received after
12:00 noon, New York City time, at the
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place of payment. Prior to the due presentment for registration of transfer of
any Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and
treat the Person in whose name any Equipment Note is registered on the Register
as the absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee
shall be affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee, shall
exclude and withhold at the appropriate rate from each payment of Principal
Amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Equipment Note (and such exclusion and withholding shall
constitute payment in respect of such Equipment Note) any and all United States
withholding taxes applicable thereto as required by law. The Indenture Trustee
agrees to act as such withholding agent and, in connection therewith, whenever
any present or future United States taxes or similar charges are required to be
withheld with respect to any amounts payable hereunder or in respect of the
Equipment Notes, to withhold such amounts (and such withholding shall constitute
payment in respect of such Equipment Note) and timely pay the same to the
appropriate authority in the name of and on behalf of the Note Holders, that it
will file any necessary United States withholding tax returns or statements when
due, and that as promptly as possible after the payment thereof it will deliver
to each Note Holder (with a copy to the Owner Trustee and the Lessee)
appropriate receipts showing the payment thereof, together with such additional
documentary evidence as any such Note Holder, the Owner Participant and the
Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to the
Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture
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Trustee has no reason to know that any information set forth in such form is
inaccurate), the Indenture Trustee shall withhold only the amount, if any,
required by law (after taking into account any applicable exemptions claimed by
the Note Holder) to be withheld from payments hereunder or under the Equipment
Notes held by such Holder in respect of United States federal income tax (and
such withholding shall constitute payment in respect of such Equipment Note). If
a Note Holder (x) which is a Non-U.S. Person has furnished to the Indenture
Trustee a properly completed and currently effective U.S. Internal Revenue
Service Form 4224 in duplicate (or such successor certificate, form or forms as
may be required by the United States Treasury Department as necessary in order
to avoid withholding of United States federal income tax), during the calendar
year in which the payment is made (but prior to the making of such payment) or
in either of the two preceding calendar years, and has not notified the
Indenture Trustee of the withdrawal or inaccuracy of such certificate or form
prior to the date of such payment (and the Indenture Trustee has no reason to
know that any information set forth in such form is inaccurate) or (y) which is
a U.S. Person has furnished to the Indenture Trustee a properly completed and
currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior
to a payment hereunder or under the Equipment Notes held by such Holder, no
amount shall be withheld from payments in respect of United States federal
income tax. If any Note Holder has notified the Indenture Trustee that any of
the foregoing forms or certificates is withdrawn or inaccurate, or if such
Holder has not filed a form claiming an exemption from United States withholding
tax or if the Code or the regulations thereunder or the administrative
interpretation thereof are at any time after the date hereof amended to require
such withholding of United States federal income taxes from payments under the
Equipment Notes held by such Holder, the Indenture Trustee agrees to withhold
from each payment due to the relevant Note Holder withholding taxes at the
appropriate rate under law (and such withholding shall constitute payment in
respect of such Equipment Notes) and will, on a timely basis as more fully
provided above, deposit such amounts with an authorized depository and make such
returns, statements, receipts and other documentary evidence in connection
therewith as required by applicable law.
None of the Owner Trustee, the Owner Participant or the Lessee shall
have any liability for the failure of the Indenture Trustee to withhold taxes in
the manner provided for herein or for any false, inaccurate or untrue evidence
provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of each Equipment
Note, each payment of Principal Amount, Make-Whole
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Amount, if any, and interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and, to the extent permitted by law, any
overdue interest and any other overdue amounts thereunder) to the date of
such payment;
Second: to the payment of the Principal Amount of such Equipment
Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Equipment Note remaining unpaid (provided
that such Equipment Note shall not be subject to redemption except as
provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture Estate. A
Note Holder shall not, as such, have any further interest in, or other right
with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request
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from the registered Holder thereof for the issuance of a new Equipment Note,
specifying, in the case of a surrender for transfer, the name and address of the
new Holder or Holders. Upon surrender for registration of transfer of any
Equipment Note, 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 unpaid portion
of the Principal Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate unpaid portion of the Principal
Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture
Trustee at the Corporate Trust Office. 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 Note
Holder making the exchange is entitled to receive. All Equipment Notes issued
upon any registration of transfer or exchange of Equipment Notes (whether under
this Section 2.07 or under Section 2.08 hereof or otherwise under this
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this 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 Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder
or such Holder's attorney duly authorized in writing, and the Indenture Trustee
shall require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act and the securities laws of any applicable
state. The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Principal Amount 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 on such old Equipment Note or Equipment
Notes has been paid. Interest shall be deemed to have been paid on such new
Equipment Note to the date on which interest shall have been paid on such old
Equipment Note, and all payments of the Principal Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been made thereon.
Neither the Indenture Trustee nor the Owner Trustee shall be required to
exchange any surrendered Equipment Notes as provided above during the ten-day
period preceding the Payment Date. The Indenture Trustee will promptly notify
the Owner Trustee, the Owner Participant and Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Refunding
Agreement applicable to Note Holders, and shall be deemed to have represented
and warranted to the parties to the Refunding
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Agreement as to the matters represented and warranted by the Subordination Agent
in its capacity as the initial Holder of the Equipment Notes. Subject to
compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee
shall use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
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 Holder of such Equipment
Note, execute and the Indenture Trustee shall authenticate and deliver in
replacement thereof a new Equipment Note, payable in the same Principal Amount
dated the same date and captioned as originally issued. If the Equipment Note
being replaced has become mutilated, such Equipment Note shall be surrendered to
the Indenture Trustee and a copy thereof shall be furnished to the Owner
Trustee. If the Equipment Note being replaced has been destroyed, lost or
stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such Person, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the
Indenture Trustee shall be accepted as satisfactory indemnity and security and
no further indemnity or security shall be required as a condition to the
execution and delivery of such new Equipment Note. Subject to compliance by the
Note Holder of the requirements set forth in this Section 2.08, the Indenture
Trustee and the Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No
service charge shall be made to a Note Holder for any registration of transfer
or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Equipment Notes; provided, however, that none of the Lessee, the
Owner Trustee,
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the Indenture Trustee or the Owner Participant shall bear costs of registration,
transfer or exchange in connection with the consummation of the Refinancing
Transaction.
(b) The Indenture Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any
redemption of any Equipment Note nor any purchase by the Owner Trustee of any
Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the Equipment
Notes shall be given by the Indenture Trustee by first-class mail, postage
prepaid, mailed not less than 15 nor more than 60 days prior to the applicable
redemption date, to each Note Holder of such Equipment Notes to be redeemed or
purchased, at such Note Holder's address appearing in the Register. All notices
of redemption or purchase shall state: (1) the redemption date, (2) the
applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any
Person on behalf of the Owner Trustee) shall, to the extent an amount equal to
the redemption price for the Equipment Notes to be redeemed or purchased on the
redemption date shall not then be held in the Trust Indenture Estate, deposit or
cause to be deposited with the Indenture Trustee by 12:00 noon, New York City
time, on the redemption date in
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immediately available funds the redemption price of the Equipment Notes to be
redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid,
the Equipment Notes to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee,
and from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Equipment Notes then outstanding shall
cease to bear interest. Upon surrender of any such Equipment Note for redemption
or purchase in accordance with said notice, such Equipment Note shall be
redeemed at the redemption price. If any Equipment Note called for redemption or
purchase shall not be so paid upon surrender thereof for redemption, the
principal amount thereof shall, until paid, continue to bear interest from the
applicable redemption date at the interest rate in effect for such Equipment
Note as of such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner
Trustee or the Owner Participant may, upon the events and subject to the terms
and conditions and for the price set forth in this Section 2.12, purchase all
but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised by the
Owner Trustee or the Owner Participant upon any of the following events, and, in
any such event, the purchase price thereof shall equal for each Equipment Note
the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest
thereon to, but not including, the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Refunding Agreement to the Holder thereof. Such
option to purchase the Equipment Notes may be exercised: (i) upon an Indenture
Trustee Event or (ii) in the event there shall have occurred and be continuing a
Lease Event of Default, provided that if such option is exercised pursuant to
this clause (ii) at a time when there shall have occurred and be continuing for
less than 120 days a Lease Event of Default (and there is no Indenture Trustee
Event), the purchase price thereof shall equal the price provided in the
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preceding sentence plus the Make-Whole Amount, if any; provided further, that
under no circumstances shall the Make-Whole Amount be payable by the Lessee.
Such option to purchase the Equipment Notes may be exercised by the
Owner Trustee or the Owner Participant giving written notice of its election of
such option to the Indenture Trustee, which notice shall specify a date for such
purchase not more than 30 days or less than 15 days after the date of such
notice. The Indenture Trustee shall not exercise any of the remedies hereunder
or, without the consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that a notice of exercise by the Owner
Participant of such option to purchase becomes irrevocable until the date on
which such purchase is required to occur pursuant to the terms of the preceding
sentence. Such election to purchase the Equipment Notes shall become irrevocable
upon the fifteenth day preceding the date specified in the written notice
described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the date
of such purchase shall so request, the Note Holders will comply with all the
provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series (other
than Series A), each Note Holder of such Series agrees that in the event that
such Note Holder, in its capacity as a Note Holder, shall receive any payment or
distribution on any Secured Obligations in respect of such Series which it is
not entitled to receive under this Section 2.13 or Article III hereof, it will
hold any amount so received in trust for the Senior Holder or Senior Holders (as
defined in Section 2.13(c) hereof) and will forthwith turn over such payment to
the Indenture Trustee in the form received to be applied as provided in Articles
II and III hereof.
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(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full and (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as rent
under any Assigned Sublease shall be promptly distributed in the following order
of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments of
Principal Amount, and interest and other amounts (as well as any interest
on overdue Principal Amount, and to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series A Equipment Notes shall be distributed
to the Note Holders of Series A ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments then
due under each Series A Equipment Note bears to the aggregate amount of
the payments then due under all Series A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall be distributed to the
Note Holders of Series B ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under
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each Series B Equipment Note bears to the aggregate amount of the payments
then due under all Series B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much of such
installment or payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series C Equipment Notes shall be distributed to the
Note Holders of Series C ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series C Equipment Note bears to the aggregate amount of the
payments then due under all Series C Equipment Notes; and
(iv) after giving effect to clause (iii) above, so much of such
installment or payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series D Equipment Notes shall be distributed to the
Note Holders of Series D ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series D Equipment Note bears to the aggregate amount of the
payments then due under all Series D Equipment Notes; and
second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that if
an Indenture Default shall have occurred and be continuing, then such
balance shall not be distributed as provided in this clause "second" but
shall be held by the Indenture Trustee as part of the Trust Indenture
Estate and invested in accordance with Section 3.07 hereof until whichever
of the following shall first occur: (i) all Indenture Defaults shall have
been cured or waived, in which event such balance shall be distributed as
provided in this clause "second", or (ii) Section 3.03 hereof shall be
applicable, in which event such balance shall be distributed in accordance
with the provisions of said Section 3.03, or (iii) the 180th day after
receipt of such payment, in which event such balance shall be distributed
as provided in this clause "second" without reference to this proviso.
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SECTION 3.02. Event of Loss and Replacement. (a) Any payment
received by the Indenture Trustee with respect to the Airframe or the Airframe
and one or both Engines as the result of an Event of Loss thereto shall be
applied to the redemption of the Equipment Notes and to all other amounts
payable hereunder by applying such funds in the following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event of
Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other amounts
(as well as any interest on overdue Principal Amount, and to the extent
permitted by applicable law, on any overdue interest and any other overdue
amounts) then due to the Note Holders under all Equipment Notes, all in
the order of priority specified in clause "first" of Section 3.01 hereof,
and
third, if and to the extent required to be paid to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) in reimbursement of
payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease,
to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and
otherwise as provided in clause "fourth" of Section 3.03 hereof;
provided that, if a Replacement Airframe or a Replacement Airframe and one or
more Replacement Engines are to be substituted for the Airframe or the Airframe
and one or both Engines subject to such Event of Loss as provided in Section 11
of the Lease and Section 5.06 hereof, any proceeds which result from such Event
of Loss and are paid to the Indenture Trustee shall be held by the Indenture
Trustee as part of the Trust Indenture Estate as security for the obligations of
the Lessee under the Operative Documents and invested in accordance with the
terms of Section 3.07 hereof and, unless theretofore applied in accordance with
the provisions of the Lease and this Indenture, such proceeds shall, to the
extent payable to the Lessee under the Lease, be released to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) upon or in connection with the
replacement thereof as provided in such Sections .
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Airframe or the Airframe and one or both Engines) shall be
applied as provided in the applicable provisions of the Lease; provided,
however, that to the extent that any portion of such amounts held for account
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of the Lessee are not at the time required to be paid to the Lessee (or any
Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12
of the Lease, shall be held by the Indenture Trustee as security for the
obligations of the Lessee under the Operative Documents and shall be invested in
accordance with the terms of Section 3.07 hereof and at such time as the
conditions specified in the Lease for payment of such amounts to the Lessee
shall be fulfilled, such portion, and the net proceeds of any investment
thereof, shall, unless theretofore applied in accordance with the provisions of
the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof,
and notwithstanding Section 2.05 hereof, all payments received and amounts held
or realized by the Indenture Trustee after an Indenture Event of Default shall
have occurred and be continuing or after the Indenture Trustee has given notice
to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a)
hereof regarding its exercise of remedies under Section 18 of the Lease or of
the foreclosure of this Indenture, or after the Equipment Notes shall have
become due and payable as provided herein, and all payments or amounts then held
by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long
as such Indenture Event of Default shall be continuing, be promptly distributed
by the Indenture Trustee in the following order of priority, without
duplication:
first, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for all amounts due to it pursuant to
Section 6.07 hereof, plus any tax, expense, charge or other loss
(including, without limitation, all amounts to be expended at the expense
of, or charged upon the tolls, rents, revenues, issues, products and
profits of, the property included in the Trust Indenture Estate pursuant
to Section 4.05(b) hereof) incurred by the Indenture Trustee (to the
extent not previously reimbursed) (including, without limitation, the
expenses of any sale, taking or other proceeding, 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 then existing or prior Note Holders for payments
made pursuant to Section 5.03
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hereof (to the extent not previously reimbursed) shall be distributed to
the then existing or prior Note 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 one over any other, in
accordance with the amount of the payment or payments made by each such
then existing or prior Note Holder pursuant to said Section 5.03 and
applicable (in the case of each such then existing Note Holder) to the
Equipment Notes held by such existing Note Holder at the time of
distribution by the Indenture Trustee;
third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal Amount of all
Series A Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect of the
Series A Equipment Notes (other than Make-Whole Amount, if any) to the
date of distribution, shall be distributed to the Note Holders of Series
A, and in case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably, without priority
of one over the other, in the proportion that the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by each Holder plus
the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Principal Amount of all Series
A Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series B Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series B Equipment Notes (other than
Make-Whole Amount, if any) to the date of distribution, shall be
distributed to the Note Holders of Series B, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all Series B
Equipment Notes held by each Holder plus the accrued but unpaid interest
and other amounts due hereunder or thereunder (other than Make-Whole
Amount, if any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series B Equipment Notes held by all such Holders
plus the accrued but unpaid interest and other amounts due thereon to the
date of distribution;
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(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series C Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series C Equipment Notes (other than
Make-Whole Amount, if any) to the date of distribution, shall be
distributed to the Note Holders of Series C, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all Series C
Equipment Notes held by each Holder plus the accrued but unpaid interest
and other amounts due hereunder or thereunder (other than Make-Whole
Amount, if any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series C Equipment Notes held by all such Holders
plus the accrued but unpaid interest and other amounts due thereon to the
date of distribution; and
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series D Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series D Equipment Notes (other than
Make-Whole Amount, if any) to the date of distribution, shall be
distributed to the Note Holders of Series D, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all Series D
Equipment Notes held by each Holder plus the accrued but unpaid interest
and other amounts due hereunder or thereunder (other than Make-Whole
Amount, if any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series D Equipment Notes held by all such Holders
plus the accrued but unpaid interest and other amounts due thereon to the
date of distribution; and
fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment Notes
as a consequence of the acceleration of the Equipment Notes.
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SECTION 3.04. Certain Payments. (a) Any payments received by the
Indenture Trustee for which provision as to the application thereof is made in
the Lease shall be applied forthwith to the purpose for which such payment was
made in accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or the Lessee in respect
of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through
Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the
Lease or Section 21 of the Refunding Agreement or as Supplemental Rent, directly
to the Person entitled thereto. Any payment received by the Indenture Trustee
under clause (b) of the fourth paragraph of Section 2.02 shall be distributed to
the Subordination Agent to be distributed in accordance with the terms of the
Intercreditor Agreement, and any payment received by the Indenture Trustee under
clause (c) of the fourth paragraph of Section 2.02 shall be distributed directly
to the Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04
hereof, any payments received by the Indenture Trustee for which no provision as
to the application thereof is made elsewhere in this Indenture shall be
distributed by the Indenture Trustee, unless otherwise agreed in writing,
subject to Section 6.07 hereof (i) to the extent received or realized at any
time prior to the payment in full of all obligations to the Note Holders secured
by the Lien of this Indenture, in the order of priority specified in Section
3.01 hereof, and (ii) to the extent received or realized at any time after
payment in full of all obligations to the Note Holders secured by the Lien of
this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause "first"
of Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify against
thereunder,
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in the manner provided in clause "first" of Section 3.03 hereof, and
second, in the manner provided in clause "fourth" of Section 3.03
hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of funds of the type received by the Indenture
Trustee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the Indenture Trustee receives notice to
the contrary from the Owner Trustee, all amounts to be distributed to the Owner
Trustee pursuant to clause "second" of Section 3.01 hereof shall be distributed
by wire transfer of funds of the type received by the Indenture Trustee to the
Owner Participant's account as may be specified pursuant to the Refunding
Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any
amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights
to hold moneys for security pursuant to Section 21(h) of the Lease shall be held
in accordance with the terms of such Section ; and the Indenture Trustee hereby
agrees to perform the duties of the Owner Trustee under such Section . Except as
provided in the preceding sentence, any amounts held by the Indenture Trustee
pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to
Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof,
pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease
Assignment, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Owner Trustee or, in the event the
Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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
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reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The
Trust Company hereby covenants and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Lien
attributable to it in its individual capacity with respect to any of the
properties or assets of the Trust Indenture Estate and shall, at its own cost
and expense promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Trust Company will cause restitution to be made to
the Trust Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) the Owner Trustee will duly and punctually pay the Principal
Amount of, Make-Whole Amount, if any, and interest on and other amounts
due under the Equipment Notes and hereunder in accordance with the terms
of the Equipment Notes and this Indenture and all amounts payable by it to
the Note Holders under the Refunding Agreement and the other Operative
Documents;
(ii) the Owner Trustee will not directly or indirectly create, incur,
assume or suffer to exist any Lessor's Liens attributable to it with
respect to any of the properties or assets of the Trust Indenture Estate,
and shall, at its own cost and expense, promptly take such action as may
be necessary duly to discharge any such Lessor's Lien, and the Owner
Trustee will cause restitution to be made to the Trust Indenture Estate in
the amount of any diminution of the value thereof as the result of any
Lessor's Liens attributable to it;
(iii) in the event an officer with responsibility for or familiarity
with the transactions contemplated hereunder or under the other Operative
Documents (or any Vice President) in the Corporate Trust Administration
Department of the
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Owner Trustee shall have actual knowledge of an Indenture Default or an
Event of Loss, the Owner Trustee will give prompt written notice of such
Indenture Default or Event of Loss to the Indenture Trustee, the Lessee
and the Owner Participant;
(iv) 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 12(f) of the Lease, to the extent that the same shall not have
been furnished, or is not required to be furnished by the Lessee, to the
Indenture Trustee pursuant to the Lease or otherwise;
(v) except as contemplated by the Operative Documents or with the
consent of the Indenture Trustee acting in accordance with Article IX
hereof, the Owner Trustee will not incur any indebtedness for borrowed
money; and
(vi) 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 Refunding Agreement, the Trust
Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing (other
than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, or interest on, any Equipment Note (other than as a
result of a Lease Default) and such failure shall have continued
unremedied for ten calendar days; or the failure of the Owner Trustee to
pay when due any other amount due and payable under any Equipment Note or
hereunder (other than as a result of a Lease Default) and such failure
shall have continued unremedied for 15 calendar days after notice thereof
being
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given to the Owner Trustee from the Indenture Trustee or any Note Holder;
or
(c) any Lessor's Lien required to be discharged by the Trust Company
pursuant to Section 4.01(a) hereof or Section 13 of the Refunding
Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section
4.01(b)(ii) hereof or Section 13 of the Refunding Agreement or any
Lessor's Lien required to be discharged by the Owner Participant pursuant
to Section 13 of the Refunding Agreement shall remain undischarged for a
period of 30 calendar days after, as the case may be, an officer with
responsibility for or familiarity with the transactions contemplated
hereunder or under the other Operative Documents (or any Vice President)
in the Corporate Trust Administration Department of the Trust Company or
an officer of the Owner Participant with responsibility for or familiarity
with the transactions contemplated hereunder and under the other Operative
Documents (or any Vice President) shall have actual knowledge of such
Lien; provided, that no Indenture Event of Default shall arise under this
Section 4.02(c) as a result of a failure by the Owner Trustee or the Owner
Participant to observe or perform any covenant referred to in this Section
4.02(c) if the Lessee shall have discharged all Lessor's Liens required to
be discharged by the Owner Trustee or the Owner Participant pursuant to
such covenants and compensated the Indenture Trustee and the Trust
Indenture Estate for all claims, losses and expenses arising from the
failure of the Owner Trustee or the Owner Participant, as the case may be,
to observe and perform any such covenant; or
(d) any representation or warranty made by the Owner Participant,
the Owner Trustee or the Trust Company herein or in the Refunding
Agreement or by any Person (if any) guaranteeing or supporting the
obligations of the Owner Participant under the Operative Documents or in
any related guarantee or support agreement shall prove to have been false
or incorrect when made in any respect materially adverse to the rights and
interests of the Note Holders; and if such misrepresentation is capable of
being corrected as of a subsequent date and if such correction is being
sought diligently, such misrepresentation shall not have been corrected as
of a day within 30 calendar days following notice thereof being given to
the Owner Participant, the Owner Trustee, the Trust Company or such Person
(if any), as the case may be, by the Indenture Trustee or a Majority in
Interest of Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any of
its covenants or agreements in the fourth paragraph following the Habendum
Clause hereof or in clauses
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(b)(v) and (b)(vi) of Section 4.01 hereof, or any failure by the Owner
Participant or the Trust Company to observe or perform any of its
respective covenants in Section 9(b)(11), 10 or 14 of the Refunding
Agreement; or
(f) except as provided in the following paragraph (j), any failure
by the Owner Trustee or the Trust Company to observe or perform any other
covenant or obligation of the Owner Trustee contained in this Indenture or
in the Refunding Agreement or any failure by the Owner Participant to
observe or perform any other covenant or obligation of the Owner
Participant contained in the Refunding Agreement or any failure of any
Person (if any) that may guarantee or support the obligations of an Owner
Participant not originally party to the Refunding Agreement under the
Operative Documents to observe or perform any covenant or obligation of
such Person contained in any such guarantee or support agreement, which
failure, in any case and either individually or together with other then
existing failures, shall have a material adverse effect on the rights and
interests of the Indenture Trustee or any Note Holder and is not remedied
within a period of 45 calendar days following notice being given to the
Owner Trustee, the Owner Participant or such Person, as the case may be,
by the Indenture Trustee or a Majority in Interest of Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant or
any Person (if any) that may guarantee or support the obligations of an
Owner Participant not originally party to the Refunding Agreement under
the Operative Documents shall (i) be unable to pay its debts generally as
they become due within the meaning of the Bankruptcy Code, (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 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 with respect thereto (and not in its individual
capacity) or the Owner Participant or any Person (if any) that may
guarantee or support the obligations of an Owner Participant not
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originally party to the Refunding Agreement under the Operative Documents,
as the case may be, a custodian, receiver, trustee or other officer with
similar powers with respect to it 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 with respect thereto
(and not in its individual capacity) or the Owner Participant or such
Person, as the case may be; or
(i) any petition for any relief specified in the foregoing paragraph
(h) shall be filed against the Trust Estate or the Owner Trustee with
respect thereto (and not in its individual capacity) or the Owner
Participant or any Person (if any) that may guarantee or support the
obligations of an Owner Participant not originally party to the Refunding
Agreement under the Operative Documents, as the case may be, and such
petition shall not be dismissed within 60 days; or
(j) at any time when the Aircraft shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid and
duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by the
Lessee in the payment of any installment of Basic Rent due under the Lease, the
Owner Participant may, within ten calendar days (or such longer period ending on
the second day after the expiry of the applicable grace period specified in the
Lease with respect to such default) after notice from the Indenture Trustee or
the Lessee of such default, without the consent or concurrence of any Note
Holder, pay, as provided in Section 2.04 hereof, for application in accordance
with Section 3.01 hereof, a sum equal to the amount of all (but not less than
all) of the Principal Amount and interest as shall then (without regard to any
acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on
the Equipment Notes. 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 Trustee shall have been furnished
by the Owner Participant with all funds necessary for remedying such default,
the Owner Participant may, within fifteen calendar days (or such longer period
ending on the second day after the expiry of any applicable grace period
specified in
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the Lease with respect to such default) after notice from the Indenture Trustee
or the Lessee of such default, without the consent or concurrence of any Note
Holder, instruct the Owner Trustee to exercise the Owner Trustee's rights under
Section 21(d) 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 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 due and payable under the Equipment Notes or hereunder, 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 default by the Lessee under the Lease to the same extent that
like performance by the Lessee itself would have remedied such default (but any
such payment or performance shall not 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, such Lease Event of Default shall have been
remedied, then any declaration pursuant to the Lease that the Lease is in
default, and any declaration pursuant to this Indenture that the Equipment Notes
are due and payable or that an Indenture Event of Default exists hereunder,
based upon such Lease Event of Default, shall be deemed to be rescinded, and the
Owner Participant or the Owner Trustee, as the case may be, shall (to the extent
of any such payments made by it) be subrogated to the rights of the Note Holders
hereunder to receive such payment of Rent from the Indenture Trustee (and the
payment of interest on account of such Rent being overdue), and shall be
entitled, so long as no other Indenture Default or Indenture Event of Default
shall have occurred and be continuing, to receive, subject to the terms 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 by commencing an action at
law against the Lessee and obtaining and enforcing a judgment against the Lessee
for the payment of such amount or taking appropriate action in a pending action
at law against the Lessee or by demanding Excepted Payments or Excepted Rights;
provided, however, that at no time while an Indenture 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 any amounts nevertheless received by the
Owner Participant in respect thereof shall be held in trust for the benefit of,
and promptly
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paid to, the Indenture Trustee for distribution as provided in Section 3.03
hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any default in
the payment of Basic Rent due under the Lease, if the Lessee itself shall
have theretofore failed to pay Basic Rent in the manner required under the
Lease (after giving effect to any applicable grace period) as to (i) each
of the three Basic Rent Payment Dates immediately preceding the date of
such default or (ii) in the aggregate more than six Basic Rent Payment
Dates,
(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 Lease Event of
Default for the purposes of this Indenture, if during the 12-month period
immediately preceding the relevant default by the Lessee there shall have
been expended by the Owner Participant pursuant to the second sentence of
this Section 4.03 (and shall have not been reimbursed by the Lessee or any
Permitted Sublessee themselves to the Owner Trustee for distribution to
the Owner Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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, and if the Equipment Notes shall have been accelerated pursuant to
Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture
Trustee may (subject to the rights of the Owner Participant or the Owner Trustee
to cure any such Indenture Event of Default set forth in Section 4.03 hereof and
the obligations of the Indenture Trustee set forth in this Section 4.04(a) and
subject to Section 10.05 hereof) 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
hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a
Majority in Interest of Note Holders, exercise any and all of the remedies
pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment and
may take possession of all or any
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part of the properties covered or intended to be covered by the Lien and
security interest created hereby or pursuant hereto but, in the case of the
Aircraft, only as permitted by Section 18 of the Lease, and may exclude the
Owner Participant, the Owner Trustee and the Lessee and all Persons claiming
under any of them or wholly or partly therefrom; provided, however, that the
Indenture Trustee shall give the Owner Trustee and the Owner Participant ten
days' prior written notice of the initial exercise of such remedies by the
Indenture Trustee under the Lease (if not stayed or otherwise precluded by
applicable law from giving such notice); provided, further, that the Indenture
Trustee shall give the Owner Trustee and the Owner Participant twenty days'
prior written notice of its intention to sell the Aircraft. Without limiting any
of the foregoing, it is understood and agreed that the Indenture Trustee may
exercise any right of sale of the Aircraft available to it, even though it shall
not have taken possession of the Aircraft and shall not have possession thereof
at the time of such sale.
Anything in this Indenture to the contrary notwithstanding, the
Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice
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to any Person (unless the Indenture Trustee is stayed or otherwise precluded by
applicable law from giving such notice). In the event that the applicability of
Section 1110 of the Bankruptcy Code to the Aircraft is being contested by the
Lessee in judicial proceedings, so long as the Indenture Trustee fails to
participate in such proceedings, the Owner Trustee shall have the right (without
affecting in any way any right or remedy of the Indenture Trustee hereunder) to
participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the avoidance
of doubt, it is expressly understood and agreed, subject only to the immediately
preceding paragraph, that 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 otherwise exercising all of its
rights, powers and remedies under this Indenture, including without limitation
this Article IV.
(b) If an Indenture Event of Default referred to in clause (g), (h)
or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default
under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred,
then and in every such case the unpaid Principal Amount of all Equipment Notes
then outstanding, together with accrued but unpaid interest and all other
amounts due thereunder and hereunder, shall immediately and without further act
become due and payable without presentment, demand, protest or notice, all of
which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the condition
that, if at any time after the Principal Amount of the Equipment Notes shall
have become so due and payable, and
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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 Amount of the Equipment Notes which by such declaration shall have
become payable) shall have been duly paid and every other Indenture Default and
Indenture Event of Default with respect to any covenant or provision of this
Indenture shall have been cured, then and in every such case a Majority in
Interest of Note Holders may (but shall not be obligated to), by written
instrument filed with the Indenture Trustee, rescind and annul the Indenture
Trustee's declaration and its consequences; but no such rescission or annulment
shall extend to or affect any subsequent Indenture Default or Indenture Event of
Default or impair any right consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
No Make-Whole Amount shall become payable on the Equipment Notes as
a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant to
Section 18 of the Lease, to credit against any purchase price bid at such sale
by such Note Holder all or any part of the unpaid obligations owing to such Note
Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner
Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Aircraft, etc. (a) Subject to the rights
of the Owner Trustee and the Owner Participant under Section 4.03 hereof and
unless the Owner Participant shall have theretofore purchased the Equipment
Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Equipment Notes shall have
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been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, at the request
of the Indenture Trustee the Owner Trustee shall promptly execute and deliver to
the Indenture Trustee such instruments of title and other documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Trust Indenture Estate; provided
that the Indenture Trustee shall at the time be entitled to obtain such
possession under Section 4.04(a) and the other applicable provisions of this
Indenture. If the Owner Trustee shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Trustee to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry of
which judgment the Owner Trustee hereby specifically consents to the fullest
extent it may lawfully do so, and (ii) to the extent permitted by law, pursue
all or part of the Trust Indenture Estate wherever it may be found (but not in
violation of Section 10.05 hereof or of the Lease) and may enter any of the
premises of the Lessee wherever such Trust Indenture Estate may be or be
supposed to be and search for and take possession of and remove the same (but
not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture
Trustee may, from time to time, at the expense of the Trust Indenture Estate,
make all such expenditures for maintenance, insurance, repairs, replacements,
alterations, additions and improvements to and of the Trust Indenture Estate, as
it may deem proper (it being understood and agreed that the provisions hereof
shall not be construed so as to expand the obligations of the Lessee under the
Lease, including Section 16 thereof). In each such case, the Indenture Trustee
shall have the right to maintain, use, operate, store, lease, control or manage
the Trust Indenture Estate and to carry on the business (without limiting the
express provisions of Section 5.10 hereof) and to exercise all rights and powers
of the Owner Participant and the Owner Trustee relating to the Trust Indenture
Estate, as the Indenture Trustee 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
Trust Indenture Estate or any part thereof as the Indenture Trustee may
determine; and the Indenture Trustee shall be entitled to collect and receive
directly all tolls, rents (including Rent), revenues, issues,
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income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder, except Excepted Payments. The Indenture Trustee shall,
pursuant to the exercise of its remedies under this Article IV, to the extent
permitted by applicable law, be entitled to the appointment of a receiver for
all or any part of the Trust Indenture Estate, whether such receivership be
incidental to a proposed sale of the Trust Indenture Estate or otherwise, and
the Owner Trustee hereby consents to the appointment of such receiver and will
not oppose any such appointment. Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, leasing, control, management or disposition of the
Trust Indenture Estate and of 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
Trust 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
that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case
the Indenture Trustee or any Note Holder shall have instituted
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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 or such Note Holder, then and in every such case the
Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall,
subject to any determination in such proceedings, be restored to their former
positions and rights hereunder with respect to the Trust Indenture Estate, and
all rights, remedies and powers of the Indenture Trustee and the Note Holders
shall continue as if no such proceedings had been instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right consequent thereon; provided,
however, that in the absence of written instructions from the Holders of all
Equipment Notes then outstanding, the Indenture Trustee shall not waive any
Indenture Default (i) in the payment of the Principal Amount of or interest on
any Equipment Note then outstanding, or (ii) in respect of a covenant or
provision hereof which, under Article IX hereof, cannot be modified or amended
without the consent of each Note Holder.
SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If the
Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time
when (i) the Aircraft is registered with the Federal Aviation Administration,
(ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes is
held by one or more Persons which are not a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii)
remedies are to be exercised pursuant to this Article IV as a result of the
occurrence of an Indenture Event of Default which is not a Lease Event of
Default, the Indenture Trustee shall make arrangements, if any, as may be
required by law so that such exercise of remedies shall not result in the
ineligibility of the Aircraft to be registered under the Federal Aviation Act.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default.
In the event the Indenture Trustee shall have knowledge of an
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Indenture Event of Default, or shall have knowledge of an Indenture Default
arising either from a failure to pay Rent or a Lease Default of the type
referred to in the second sentence of Section 4.03, the Indenture Trustee shall
give prompt notice thereof to the Owner Trustee, the Owner Participant and the
Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice
in the manner provided by Section 10.06 hereof), and to each Note Holder by
first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09,
5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee
shall take such action, or refrain from taking such action, with respect to any
Indenture Event of Default or Indenture Default (including with respect to the
exercise of any rights or remedies hereunder) as the Indenture Trustee shall be
instructed in writing by a Majority in Interest of Note Holders. Subject to the
provisions of Section 5.03 hereof, if the Indenture Trustee shall not have
received instructions as above provided within 20 calendar days after mailing
notice of such Indenture Default or Indenture Event of Default to the Note
Holders, the Indenture Trustee may, subject to instructions thereafter received
pursuant to the preceding provisions of this Section 5.01, take such action, or
refrain from taking such action, but shall be under no duty to take or refrain
from taking any action, with respect to such Indenture Default or Indenture
Event of Default as it shall determine to be advisable and in the best interests
of the Note Holders 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 its own affairs; provided that the Indenture Trustee may not sell
the Aircraft or any part thereof without the consent of a Majority in Interest
of Note Holders. In the event the Indenture Trustee shall at any time elect to
foreclose or otherwise enforce this Indenture, the Indenture Trustee shall
forthwith notify, to the extent (in the case of any such party) not stayed or
otherwise prohibited by applicable law, the Owner Participant, the Note Holders,
the Owner Trustee and the Lessee. For all purposes of this Indenture, in the
absence of actual knowledge on the part of an officer in the Corporate Trust
Office, in the case of the Indenture Trustee, or its Corporate Trust
Administration Department, 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 an Indenture Event of Default (except, in the case of the Indenture
Trustee, the failure of the Lessee to pay any installment of Rent when due, if
any portion of such installment was then required to be paid to the Indenture
Trustee, which failure shall constitute knowledge of an Indenture Default for
purposes of the first sentence of this Section 5.01) unless notified in writing
by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of
the Owner Trustee, by the Indenture Trustee.
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SECTION 5.02. Action Upon Instructions. Subject to the terms of
Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof,
upon the written instructions at any time and from time to time of a Majority in
Interest of Note Holders, 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 to take such other
action hereunder or under any other Indenture Document or in respect of any part
or all of the Trust Indenture Estate as shall be specified in such instructions;
(ii) take such action with respect to, or to preserve or protect, the Trust
Indenture Estate (including the discharge of Liens) as shall be specified in
such instructions and as are 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 of 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 interest created hereunder in the Trust Indenture Estate as may be
specified from time to time in written instructions of a Majority in Interest of
Note Holders (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may, but shall not be obligated to, execute and
file or cause to be filed any financing statement which it from time to time
deems appropriate or any continuation statement that the Lessee, in discharge of
its obligations under Section 3(v) of the Refunding Agreement or any other
Operative Document, may so request. Notwithstanding the foregoing or anything in
this Indenture to the contrary, the Indenture Trustee may, on the advice of its
counsel and without the consent or approval of any Note Holder, approve any
counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding
Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve
any opinion issued by such counsel. None of the Owner Participant, the Owner
Trustee or the Lessee have any liability for the failure of the Indenture
Trustee to discharge its obligations hereunder.
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 hereof unless the
Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained shall require the
Indenture
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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. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the first sentence
thereof) or 5.02 or Article IV hereof, nor shall any other provision of this
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 of the other Indenture Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Aircraft or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and obtain such instructions promptly so as not
unreasonably to delay the proposed action of Lessee in respect of which the
instructions are sought. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Article VII hereof or any
other Operative Document) promptly take such action as may be necessary to duly
discharge all Lenders' Liens on any part of the Trust Indenture Estate
attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding 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, or place Liens on, the Aircraft or any other part of the
Trust
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Indenture Estate except (i) as required or permitted by the terms of the Lease
or the Refunding Agreement, or (ii) in accordance with the powers granted to, or
the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Indenture and in accordance with the terms hereof.
SECTION 5.06. Replacement Airframes, Replacement Engines and
Replacement Parts. (a) If at any time and from time to time, the Airframe or
Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a),
11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s),
as the case may be, in accordance with the provisions of this Section 5.06 and
the provisions of said Sections of the Lease, the Owner Trustee shall, at such
time or times, but subject to compliance with the conditions to such replacement
set forth in the Lease, direct the Indenture Trustee to execute and deliver to
or as directed in writing by the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine(s) 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:
(1) A written request from the Owner Trustee, requesting such release and
specifically describing the Airframe and/or Engine(s) so to be released and the
Replacement Airframe and/or Replacement Engine(s).
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number (or other applicable
registration number) and manufacturer's serial number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number (or other applicable
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 hold legal title to such
Replacement Airframe free and clear of all Liens except Permitted Liens,
that such Replacement Airframe will on such date be in good operating
condition, and that such Replacement Airframe has been or, substantially
concurrently with such replacement, is in the
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process of being duly registered with the Owner Trustee as owner thereof
under the Federal Aviation Act or under the law then applicable to the
registration of the Aircraft and that an airworthiness certificate has
been duly issued under the Federal Aviation Act (or such other applicable
law) with respect to such Replacement Airframe, and that such registration
and certificate is in full force and effect, and the Lessee or a Permitted
Sublessee will have the full right and authority to use such Replacement
Airframe;
(iv) that the insurance required by Section 12 of the Lease is in full
force and effect with respect to such Replacement Airframe and all
premiums then due thereon have been paid in full;
(v) that the Replacement Airframe is of a like Airbus A320-231 model
airframe with equivalent or better modification status delivered by the
Manufacturer not earlier than June 30, 1988;
(vi) that no Lease 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 a Replacement Airframe;
(vii) an appraisal prepared in accordance with the Appraisal Procedure
(as defined in the Lease) confirms that the Replacement Airframe has a
value, utility and remaining useful life at least equal to that of the
Airframe which suffered the Event of Loss assuming that the same were
maintained in accordance with the requirements of the Lease whether or not
they are in fact so maintained; and
(viii) that each of the conditions specified in Section 11(a) and (c) of
the Lease with respect to such Replacement Airframe have been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) 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;
(iii) that on the date of the Indenture Supplement relating to the
Replacement Engine the Owner Trustee will hold title to such Replacement
Engine free and clear of all Liens except Permitted Liens, that such
Replacement Engine will on such date be in good operating condition, and
that
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such Replacement Engine is the same or an improved model as the Engine to
be released;
(iv) the value, remaining useful life and utility of the Replacement
Engine as of the date of such certificate (which value, remaining useful
life and utility shall not be less than the then value, remaining useful
life and utility of the Engine requested to be released, assuming such
Engine was in the condition and repair required to be maintained under the
Lease (but without regard to hours and cycles until overhaul));
(v) that no Lease 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 Engine; and
(vi) that each of the conditions specified in Section 11(b) of the
Lease with respect to such Replacement Engine have been satisfied.
(3) The appropriate instrument or 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, (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 (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Airframe or Replacement Engine to the Lien of this Indenture
and subjecting to any relevant Assigned Sublease and Sublease Assignment,
including, without limitation, an Indenture Supplement.
(4) With respect to a Replacement Airframe, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee confirming
the accuracy of the information
set forth in Section 5.06(a)2.A(vii) hereof.
(5) The opinion of counsel to the Lessee, satisfactory to the Indenture
Trustee, stating that:
(i) the certificates, opinions and other instruments and/or property
that have been or are therewith delivered to and deposited with the
Indenture Trustee conform to the requirements of this Indenture and the
Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with;
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(ii) the Replacement Airframe and/or Replacement Engine(s) have 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 Lien of this Indenture and the Lease, and subjecting to any
relevant Assigned Sublease and Sublease Assignment, as the case may be,
have been duly filed for recordation pursuant to the Federal Aviation Act
or any other law then applicable to the registration of the Aircraft, and
no further action, filing or recording of any document is necessary in
order to establish and perfect, in the United States and, if the Aircraft
is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Airframe and/or
Replacement Engine and the Lien of this Indenture on such Replacement
Airframe and/or Replacement Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as 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 to the
Replacement Airframe and, if an Event of Loss with respect to the Aircraft
has occurred, the Replacement Engines to the same extent as with respect
to the Airframe and Engines then installed thereon prior to such
replacement.
(b) Upon the acquisition by the Owner Trustee of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the event
of the substitution of a Replacement Airframe or Engine as contemplated by
Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for
the benefit of the Note Holders and the Lessee, subject to fulfillment of the
conditions precedent and compliance by the Lessee with its obligations set forth
in Section 11 of the Lease, to execute and deliver the appropriate instruments
as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee
(or any relevant Permitted Sublessee) an appropriate instrument releasing
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the Airframe and/or Engine(s) being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or Engine as contemplated by Section 11
of the Lease and Section 5.06 hereof, all provisions of this Indenture relating
to the Airframe or Engine(s) being replaced shall be applicable to such
Replacement Airframe or Replacement Engine(s) with the same force and effect as
if such Replacement Airframe or Replacement Engine(s) were the same airframe or
engine(s), as the case may be, as the Airframe or Engine(s) being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly provides
for notice to Note Holders, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Note Holder entitled thereto, at his last address as it
appears in the Register. In any case where notice to Note Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Note Holder shall affect the sufficiency of such
notice with respect to other Note Holders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Note Holders
shall be filed with the Indenture Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Note Holders when
such notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be satisfactory to the Indenture
Trustee shall be deemed to be a sufficient giving of such notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant.
Notwithstanding any other provisions of this Indenture, including the Granting
Clause, but subject always to the final paragraph of this Section 5.10, the
following rights shall be reserved to the Owner Trustee or Owner Participant, as
the case may be (as separate and independent rights) to the extent described
herein:
(a) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, sue for or otherwise
obtain all amounts included in Excepted Payments from the Lessee, exercise
any election or
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option or make any decision or determination or give or receive any
notice, consent, waiver or approval in respect of any Excepted Payment and
seek legal or equitable remedies to require the Lessee to maintain the
insurance coverage referred to in Section 12 of the Lease (or the
comparable provisions of any Assigned Sublease) and such specific
performance of the covenants of the Lessee under the Lease (or the
comparable provisions of any Assigned Sublease) relating to the
protection, maintenance, possession and use of the Aircraft; provided,
that the rights referred to in this clause (a) shall not be deemed to
include the exercise of any remedies provided for in Section 18 of the
Lease (or the comparable provisions of any Assigned Sublease) other than
the right to proceed by appropriate court action, either at law or in
equity, to enforce payment by the Lessee of such amounts included in
Excepted Payments or performance by the Lessee of such insurance covenant
or to recover damages for the breach thereof or for specific performance
of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent of the
Owner Trustee, enter into, execute and deliver amendments or modifications
in respect of any of the provisions of the Lease, any Assigned Sublease or
any Sublease Assignment and (ii) unless an Indenture Event of Default and
an Indenture Trustee Event shall have occurred and be continuing, the
Indenture Trustee shall not, without the consent of the Owner Trustee,
which consent shall not be withheld if no right or interest of the Owner
Trustee or the Owner Participant shall be materially diminished or
impaired thereby, (A) enter into, execute and deliver waivers or consents
in respect of any of the provisions of the Lease, any Assigned Sublease or
any Sublease Assignment, or (B) approve any accountants, engineers,
appraisers or counsel as satisfactory to render services for or issue
opinions to the Owner Trustee pursuant to the Operative Documents;
provided that, whether or not an Indenture Event of Default has occurred
and is continuing, the Owner Trustee's consent shall be required with
respect to any waivers or consents in respect of any of the provisions of
Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to
the extent such action shall affect (y) the amount or timing of, or the
right to enforce payment of any Excepted Payment or (z) the amount or
timing of any amounts payable by the Lessee under the Lease as originally
executed (or as subsequently modified with the consent of the Owner
Trustee) which, absent the occurrence and continuance of an Indenture
Event of Default hereunder, would be distributable to the Owner Trustee
under Article III hereof;
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(c) at all times whether or not an Indenture Event of Default has
occurred and is continuing, the Owner Trustee and the Owner Participant
shall have the right, together with the Indenture Trustee, (i) to receive
from the Lessee or any Permitted Sublessee all notices, certificates,
reports, filings, opinions of counsel and other documents and all
information which any thereof is permitted or required to give or furnish
to the Owner Trustee pursuant to any Operative Document (including
pursuant to Section 10 of the Lease), (ii) to exercise inspection rights
pursuant to Section 7 of the Lease, (iii) to retain all rights with
respect to insurance maintained for its own account which Section 12 of
the Lease specifically confers on the Owner Participant and (iv) to
exercise, to the extent necessary to enable it to exercise its rights
under Section 4.03 hereof, the rights of the Owner Trustee under Section
21(d) of the Lease and to give notices of default under Section 17 of the
Lease; and
(d) except as expressly provided to the contrary in clauses (a), (b)
and (c) above, so long as no Indenture Event of Default has occurred and
is continuing, all rights (including options, elections, determinations,
consents, approvals, waivers and the giving of notices) of the Owner
Trustee and the Owner Participant under the Lease shall be exercised by
the Owner Trustee and/or the Owner Participant, as the case may be, to the
exclusion of the Indenture Trustee and any Note Holder and without the
consent of the Indenture Trustee or any Note Holder; provided that the
foregoing shall not, nor shall any other provision of this Section 5.10,
limit (A) any rights separately and expressly granted to the Indenture
Trustee or any Note Holder under the Lease or the other Operative
Documents (including, without limitation, Section 15 of the Refunding
Agreement) or (B) the right of the Indenture Trustee or any Note Holder to
receive any funds to be delivered to the Owner Trustee under the Lease
(except with respect to Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10, but
subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be
in default under Section 18 thereof and (C) subject only to the provisions of
Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such
Section 18 (other than in connection with Excepted Payments) and in Article IV
hereof.
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SECTION 5.11. Evidence of Action Taken by Note Holder. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Note Holders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Note Holders in person or by agent duly appointed in writing,
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Indenture
Trustee and, if expressly required herein, to the Owner Trustee. Proof of
execution of any instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Sections 5.04,
5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner
Trustee if made in the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far as
concerns such Equipment Note. Except as aforesaid any such action taken by the
Note Holder shall be conclusive and binding upon such Note Holder and upon all
future Note Holders and owners of such Equipment Note and of any Equipment Notes
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Equipment Note. Any action
taken by the Note Holders of the percentage in aggregate Principal Amount of the
Equipment Notes specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee
in its individual capacity accepts the trust hereby created and agrees to
perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee shall be answerable or accountable under
any circumstances, except for their own willful misconduct or gross negligence
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(other than for the handling of funds, for which the standard of accountability
shall be negligence), or as provided in the fourth sentence of Section 2.04(a)
hereof and in the last sentence of Section 5.04 hereof, and except for
liabilities that may result, in the case of the Trust Company, from the
inaccuracy of any representation or warranty of the Trust Company in the
Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the
failure to perform any covenant of the Trust Company pursuant to Section 4.01(a)
hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of
the Indenture Trustee, from the inaccuracy of any representation or warranty, or
failure to perform any covenant, of the Indenture Trustee made in its individual
capacity herein, in the Refunding Agreement or in any other document. None of
the Owner Participant, the Trust Company or the Indenture Trustee shall be
liable for any action or inaction of any other one of such parties, except, in
the case of the Owner Participant, for any action or omission of the Owner
Trustee performed or omitted on the instructions of the Owner Participant. The
Owner Trustee shall not be deemed a trustee for the Note Holders for any
purpose.
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, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case
of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof
and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner
Trustee and the Indenture Trustee shall have no duty (i) to see to any
registration of the Aircraft or any recording or filing of the Lease or of this
Indenture or any other document, or to see to the maintenance of any such
registration, recording or filing, (ii) to see to any insurance on the Aircraft,
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 Trust 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 or any of the
Permitted Sublessee's covenants under any Assigned Sublease with respect to the
Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE)
NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE
MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP,
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COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY
ENGINE 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 ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
AIRCRAFT OR ANY ENGINE, except that the Trust Company warrants that (i) on the
Delivery Date for the Aircraft the Owner Trustee shall have received whatever
interest in the Aircraft was conveyed to it under the Second Aircraft Warranty
Bill of Sale subject to the rights of the parties to the Indenture Documents and
(ii) the Aircraft shall be free and clear of Lessor's Liens attributable to the
Trust Company. Neither the Trust Company nor the Indenture Trustee 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 Documents 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 in its individual capacity or as
Indenture Trustee made under this Indenture or in the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid
to or retained by the Indenture Trustee pursuant to any provision hereof and not
then required to be distributed to any Note Holder, the Lessee or the Owner
Trustee as provided in Article III hereof need not be segregated in any manner
except to the extent required by law, 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 hereof) 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 any liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the
Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of Equipment Notes outstanding
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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, but in the case of any such
certificate, the Owner Trustee and the Indenture Trustee shall be under a duty
to examine the same to determine whether or not it conforms to the requirements
of this Indenture. 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 except that any such execution or performance
shall not derogate from the Indenture Trustee's obligations under the third
sentence of Section 2.04(a), the Indenture Trustee and the Owner Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care hereunder. The Indenture Trustee may,
at the expense of the Trust Indenture Estate, consult with counsel, accountants
and other skilled Persons to be selected and retained by it, and the Owner
Trustee and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by them in accordance with the written advice
or written opinion of any such counsel, accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be entitled
to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held
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by it hereunder in the Trust Indenture Estate toward such payments. The
Indenture Trustee agrees that it shall have no right against any Note Holder or
the Owner Participant for any fee as compensation for its services as trustee
under this Indenture.
SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee from and after the
Restatement Date (whether or not also agreed to be
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indemnified against by any other Person under any other document) in any way
relating to or arising out of this Indenture, the Trust Agreement, the Equipment
Notes, the other Indenture Documents or the enforcement of any of the terms of
any thereof, or in any way relating to or arising out of the manufacture,
purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease,
sublease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft or any Engine (including, without limitation, latent
and other defects, whether or not discoverable, and any claim for patent,
trademark or copyright infringement), or in any way relating to or arising out
of the administration of the Trust Indenture Estate or the action or inaction of
the Indenture Trustee hereunder, except only (i) in the case of willful
misconduct or gross negligence (or negligence in the case of handling of funds)
of the Indenture Trustee in the performance of its duties hereunder, (ii) as may
result from the inaccuracy of any representation or warranty of the Indenture
Trustee made in the Refunding Agreement, (iii) as otherwise provided in Section
2.04(a) hereof or in the last sentence of Section 5.04 hereof or (iv) as
otherwise excluded by the terms of Sections 10(b) and 13 of the Lease from the
Lessee's indemnities to the Indenture Trustee, in its individual capacity and as
Indenture Trustee, and its successors, permitted assigns, agents and servants,
thereunder; provided that so long as the Lease is in effect, the Indenture
Trustee shall not make any claim under this Section 7.01 for any amount
indemnified against by the Lessee under the Lease without first (but only to the
extent not stayed or otherwise prevented by operation of law) making demand on
the Lessee for payment of such amount. The Indenture Trustee shall notify the
Owner Trustee and the Lessee promptly of any claim for which it may seek
indemnity. The Lessee shall be entitled to defend any claim by the Indenture
Trustee to the extent provided in Section 10 or 13 of the Lease. The Indenture
Trustee shall be entitled to indemnification from the Trust Indenture Estate for
any liability, obligation, loss, damage, penalty, claim, action, suit, cost,
expense or disbursement indemnified against pursuant to this Section 7.01 to the
extent not reimbursed by the Lessee or others, but without releasing any of them
from their respective agreements of reimbursement; and to secure the same the
Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. The
indemnities contained in this Section 7.01 shall survive the termination of this
Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in any
way affecting the limitations on liability set forth in the Operative Documents,
the Indenture Trustee, and each Note Holder by accepting any Equipment Note
hereunder, hereby acknowledge and agree that none of the Trust Company, the
Owner Participant or any director, officer, employee, stockholder, agent or
affiliate of the Trust Company or the Owner Participant
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(the "Exculpated Equity Persons") shall have any obligation, duty or liability
of any kind whatsoever to the Indenture Trustee or any such Note Holder in
connection with the exercise by any Exculpated Equity Person of any rights of
the Owner Trustee or the taking of any action or the failure to take any action
by any Exculpated Equity Person in connection with any rights of the Owner
Trustee under this Indenture or the Lease, and each such Note Holder hereby
waives and releases, to the extent permitted by applicable law, each Exculpated
Equity Person of any and all such obligations, duties or liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case of any
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement
or any merger, conversion, consolidation or sale of substantially all of the
corporate trust business of the Trust Company pursuant to the Trust Agreement,
the successor Owner Trustee shall give prompt written notice thereof to the
Indenture Trustee and to each Note Holder.
SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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
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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 and assuming such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Indenture Trustee, without further act, shall become vested with and
bound by all the estates, properties, rights, powers, duties and obligations of
the predecessor Indenture Trustee hereunder and under the other Indenture
Documents in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; but nevertheless upon the written
request of such successor Indenture Trustee, such predecessor Indenture Trustee
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor Indenture Trustee all moneys or other property then held by
such predecessor Indenture Trustee hereunder, subject nevertheless to its claim
provided for in Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall be a
"citizen of the United States" within the meaning of Section 40102(a)(15) of the
Federal Aviation Act and shall also be a bank or trust company having a combined
capital and surplus of at least $200,000,000 if there be such an institution
willing, able and legally qualified to perform the duties of the Indenture
Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be the Indenture Trustee under
this Indenture without further act. Notwithstanding the foregoing, upon the
request of the Owner Trustee or the Lessee, any such successor corporation
referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the
Lessee an instrument confirming its status as the Indenture Trustee hereunder
and under the other Indenture Documents.
SECTION 8.03. 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 Trust
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Indenture Estate may at the time be located or in which any action of the
Indenture Trustee may be required to be performed or taken, the Indenture
Trustee, by an instrument in writing signed by it, may appoint one or more
individuals or corporations to act as separate trustee or separate trustees or
co-trustee, acting jointly with the Indenture Trustee, of all or any part of the
Trust Indenture Estate to the full extent that local law makes it necessary for
such separate trustee or separate trustees or co-trustee acting jointly with the
Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust 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
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, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and
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act, and the Indenture Trustee shall act, subject to the following provisions
and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional
trustee or trustees and separate trustee or trustees jointly except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust Indenture Estate in any such jurisdiction) shall be exercised and
performed by such additional trustee or trustees or separate trustee or
trustees;
(iii) no power hereby given to, or with respect to which it is hereby
provided may be exercised by, any such additional trustee or separate
trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the
Indenture Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.03, the
powers of any additional trustee or separate trustee appointed pursuant to this
Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
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ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures. (a)
Except as otherwise provided in Section 5.10 hereof, and except with respect to
Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or supplement to the Lease, or execute and deliver any written
waiver or modification of, or consent under, the terms of the Lease, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee acting on instructions of a Majority in
Interest of Note Holders. Anything to the contrary contained in this Section
9.01 notwithstanding, without the necessity of the consent of any of the Note
Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i)
any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and
Lessee may, so long as no Indenture Event of Default has occurred and is
continuing, enter into amendments of or additions to the Lease to modify
Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such
amendment would adversely affect the rights or exercise of remedies under
Section 18 of the Lease) so long as such amendments, modifications and changes
do not and would not (A) affect the time of, or reduce the amount of, Basic Rent
or Stipulated Loss Value payments until after the payment in full of all Secured
Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the
value, utility or useful life of the Aircraft or any Engine or (D) otherwise
adversely affect the Note Holders in any material respect and (iii) the Lessee
may effect the re-registration of the Aircraft in accordance with but always
subject to the terms and conditions applicable thereto specified in Section 11
of the Refunding Agreement and Section 6(e) of the Lease and the Indenture
Trustee may approve any Permitted Sublessee as provided in clause (c) of the
definition of such term set forth in the Lease and may exercise the rights of
the Indenture Trustee under Section 15 of the Refunding Agreement. For the
avoidance of doubt, nothing in this Section 9.01 shall limit in any way the
rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d)
to exercise certain rights and powers under the Lease to the exclusion of the
Indenture Trustee and any Note Holder and without the consent of the Indenture
Trustee or any Note Holder.
The Indenture Trustee is hereby authorized to join in the execution
of any supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein
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contained and to accept the conveyance, transfer, assignment, mortgage or pledge
of any property thereunder, but the Indenture Trustee shall not be obligated to
enter into any such supplemental indenture which adversely affects the Indenture
Trustee's own rights, duties or immunities under this Indenture or otherwise,
whether in its official or individual capacity.
Any supplemental indenture authorized by the provisions of this
Section 9.01 may be executed without the consent of the Note Holders
notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof and
subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, or does not adversely affect the Note Holders in any
material respect. Upon the written request of a Majority in Interest of Note
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the
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Lease which would permit redemption of Equipment Notes earlier than permitted
under Section 2.10 hereof, (v) modify any of the provisions of Section 4(b) of
the Lease, or modify, amend or supplement the Lease, any Assigned Sublease or
any Sublease Assignment, or consent to any assignment of any thereof, in either
case releasing the Lessee (or Permitted Sublessee) from its obligations in
respect of the payment of Basic Rent or Stipulated Loss Value for the Aircraft
or altering the absolute and unconditional character of the obligations of
Lessee to pay Rent as set forth in Sections 4(b) and 4(d) of the Lease (or
comparable provisions in any Assigned Sublease) or (vi) permit the creation of
any Lien on the Trust Indenture Estate or any part thereof other than Permitted
Liens or deprive any Note Holder of the benefit of the Lien of this Indenture on
the Trust Indenture Estate, except as provided in connection with the exercise
of remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely as
Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Airframe or Engines or any
Replacement Airframe or Replacement Engine; (v) to add to the covenants of the
Owner Trustee for the benefit of the Note Holders, or to surrender any rights or
powers herein conferred upon the Owner Trustee, the Owner Participant or the
Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on
the Equipment Notes any legend as may be required by law.
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(d) Without the consent of the Lessee no amendment or supplement to
this Indenture or waiver or modification of the terms hereof shall adversely
affect the Lessee in any material respect or impose upon the Lessee any
additional indemnification obligations.
SECTION 9.02. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Indenture Trustee, the Owner Trustee and the Note
Holders shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be part
of the terms and conditions of this Indenture for all and any purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders.
Promptly after the execution by the Owner Trustee or the
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Indenture Trustee of any document entered into pursuant to this Article IX, the
Owner Trustee shall mail, by certified mail, postage prepaid, conformed copies
thereof to the Indenture Trustee (in such quantities as will permit the
Indenture Trustee to distribute one copy to each Note Holder, and the Indenture
Trustee shall mail one such copy to each Note Holder), but the failure of the
Owner Trustee or the Indenture Trustee to mail such conformed copies shall not
impair or affect the validity of such document. The Indenture Trustee will
furnish to each Note Holder, promptly upon receipt thereof, duplicates or copies
of all reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder to the extent
that the same were not required to have been furnished to such Note Holder
pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or Indenture
Supplement. Notwithstanding anything contained in this Article IX, no written
request or consent of the Indenture Trustee, any Note Holder or the Owner
Participant pursuant to this Article IX 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, any Engines or other property thereto or
to release the Aircraft, any Engine or other property therefrom or to execute
and deliver an Indenture Supplement, in each case pursuant to the terms hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made to any
Note Holder for consent to any amendment or supplement pursuant to this Article
IX shall be promptly furnished by the Indenture Trustee to each Liquidity
Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full of the
Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid
interest on and other amounts then due with respect to the Equipment Notes and
provided that there shall then be no other amounts then due to the Note Holders
and the Indenture Trustee hereunder or under the Lease or the Refunding
Agreement or otherwise secured hereby, the Lien of this Indenture shall be
deemed discharged and the security interests in favor of the Indenture Trustee
and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such
Lien and the termination of such security interest in the Aircraft and release
of the Indenture Documents
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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 Trustee to give effect to such
discharge, termination and 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 as expressly provided pursuant to Article X hereof or
upon any sale or other final disposition by the Indenture Trustee of all
property part of the Trust Indenture Estate and the final distribution by the
Indenture Trustee of all moneys or other property or proceeds constituting part
of the Trust Indenture Estate in accordance with the terms hereof. Except as
aforesaid otherwise provided, this Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note
Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any
sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant
to the terms of this Indenture or of the Lease shall bind the Note Holders and
shall be effective to transfer or convey all right, title and interest of the
Indenture Trustee, the Owner Trustee, the Owner Participant and such Holders in
and to the 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 10.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Lessee and Note Holders. Nothing in this Indenture,
whether express or implied, shall be construed to give to any Person other than
the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note
Holders, the Lessee and, with respect to any provisions hereof requiring payment
to any Permitted Sublessee, such Permitted Sublessee, any legal or equitable
right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease. Notwithstanding any of the provisions of this
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Indenture or the Trust Agreement to the contrary, each of the Note Holders, the
Indenture Trustee and the Owner Trustee agrees for the benefit of the Lessee
that it will not take any action contrary to the Lessee's rights under the
Lease, including the right of the Lessee to possession and use and quiet
enjoyment of the Aircraft, except in accordance with the provisions of the
Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified herein,
all notices, requests, demands, authorizations, directions, consents, waivers or
documents required or permitted by the terms of this Indenture shall be in
English and in writing, mailed by first-class registered or certified mail,
postage prepaid, or by confirmed telex or telecopy, and (i) if to the Owner
Trustee, addressed to it at its office at Rodney Square North, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration Department (telex:
835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the
Owner Participant at its address set forth in the Refunding Agreement, (ii) if
to the Indenture Trustee, addressed to it at its office at 450 West 33rd Street,
15th Floor, New York, New York 10001, Attention: Corporate Trust Department
(telecopy: (212) 946-8160) or (iii) if to the Owner Participant, the Lessee or
any Note Holder, addressed to such party at such address as such party shall
have furnished by notice to the Owner Trustee and the Indenture Trustee, or,
until an address is so furnished, addressed to the address of such party (if
any) set forth on the signature pages to the Refunding Agreement or in the
Register. Whenever any notice in writing is required to be given by the Owner
Trustee or the Indenture Trustee or any Note Holder to any of the other of them,
such notice shall be deemed and such requirement satisfied when such notice is
received. Any party hereto may change the address to which notices to such party
will be sent by giving notice of such change to the other parties to this
Indenture.
SECTION 10.07. 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 10.08. 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 waiver of the terms
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hereof or of any Equipment Note shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.09. 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 permitted assigns of each, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by any Note Holder shall bind the successors and assigns of such Note
Holder. This Indenture and the Trust Indenture Estate shall not be affected by
any amendment or supplement to the Trust Agreement or by any other action taken
under or in respect of the Trust Agreement, except that each reference in this
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby and thereby. Each
Note Holder by its acceptance of an Equipment Note agrees to be bound by this
Indenture and all provisions of the Refunding Agreement applicable to a Note
Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained in
this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner
Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate
of any of them may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with the Lessee or any Permitted
Sublessee fully to the same extent as if this Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to the Lessee for any purpose whatsoever, whether related to any of the
transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND
THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the parties that
the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as
assignee of the Owner Trustee's rights hereunder), shall be entitled to the
benefits of Section
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1110 of the Bankruptcy Code with respect to the right to take possession of the
Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a
case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in
any instance where more than one construction is possible of the terms and
conditions hereof or of any other pertinent Operative Document, each such party
agrees that a construction which would preserve such benefits shall control over
any construction which would not preserve such benefits.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture,
as amended and restated, to be duly executed by their respective officers
thereunto duly authorized, as of the day and year first above written, and
acknowledge that this Indenture has been made and delivered in The City of New
York.
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee
By______________________________________
Title:
THE CHASE MANHATTAN BANK,
not in its individual capacity,
except as expressly provided
herein, but solely as Indenture
Trustee
By______________________________________
Title:
Trust Indenture
<PAGE> 96
EXHIBIT A
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-12]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1989 BN-12]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1989 BN-12] dated
as of December 19, 1989 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1989 BN-12]
dated as of December 19, 1989, as amended and restated as of November 26, 1996
(as so amended and restated, the "Indenture") between the Owner Trustee and The
Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to
Manufacturers Hanover Trust Company), as Indenture Trustee (the "Indenture
Trustee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof which shall particularly describe the Aircraft
(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 Trust Indenture Estate, and shall specifically mortgage such Aircraft,
Replacement Airframe or Replacement Engine, as the case may be, to the Indenture
Trustee.
WHEREAS(1), the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated December 28, 1989, subjected to the Lien of
such Original Indenture the airframe and engines therein described, which
Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded
with the Federal Aviation Administration as one document on January 2, 1990 and
assigned Conveyance No. V78636.
WHEREAS(1), 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.
- --------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
<PAGE> 97
- 2 -
WHEREAS(2), the Owner Trustee has, as provided in the Indenture,
heretofore executed and delivered to the Indenture Trustee [(3)] Indenture
Supplement(s) for the purpose of specifically subjecting to the Lien of the
Indenture certain airframes and/or engines therein described, which Indenture
Supplement(s) is (are) dated and has (have) been duly recorded with the Federal
Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
---- ---------------- ----------------
NOW, THEREFORE, This Supplement Witnesseth, that, to secure the
prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if
any, and all other amounts due with respect to, all 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 contained in the
Indenture and the Refunding Agreement and the Equipment Notes, for the benefit
of the Note Holders, and the prompt payment of any and all amounts from time to
time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt 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, its
successors and assigns, for the security and benefit of the Note Holders from
time to time, in the trust created by the Indenture, a first priority security
interest in and mortgage Lien on all estate, right, title and interest of the
Owner Trustee in, to and under the following described property:
- --------
(2) This recital not to be included in the first Indenture Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 98
- 3 -
AIRFRAME(S)
( ) airframe(s) identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------ ----- ---------------- --------------
together with all 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.
AIRCRAFT ENGINES
( ) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as
follows:
Manufacturer's
Manufacturer Model Serial Number
------------ ----- --------------
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engines.
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 Note Holders from time to time, in the trust created
by the Indenture, all of the estate, right, title and interest of the Owner
Trustee in, to and under the Lease and Lease Supplement [GPA 1989 BN-12] No. 3
of even date herewith (other than Excepted Payments and Excepted Rights)
covering the property described above.
Form of Trust Indenture Supplement
<PAGE> 99
- 4 -
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 Note Holders from time to time for the uses and purposes and subject to the
terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the Indenture
and shall form a part of it, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 100
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to
be duly executed by one of its officers thereunto duly authorized on the day and
year first above written.
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
otherwise expressly provided herein,
but solely as Owner Trustee
By____________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 101
SCHEDULE I
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-12]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- ----------- ---------
<S> <C> <C> <C>
Series A $12,089,958 02-Jan-2009 6.85%
Series B $ 4,533,177 02-Jan-2008 6.93%
Series C $ 4,532,787 02-Jul-2004 6.86%
Series D $ 1,711,069 02-Jan-98 8.16%
</TABLE>
<PAGE> 102
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N633AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 103
- 2 -
SERIES B
Aircraft: N633AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 104
- 3 -
SERIES C
Aircraft: N633AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 105
- 4 -
SERIES D
Aircraft: N633AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 106
SCHEDULE II
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-12]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1D, dated November 26, 1996.
Schedule II
<PAGE> 1
EXHIBIT 4.37
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-13]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 091
Registration No. N634AW
Leased by America West Airlines, Inc.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GRANTING CLAUSE ....................................................... 3
HABENDUM CLAUSE ....................................................... 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions .................................... 8
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes ................................ 21
SECTION 2.02. Issuance and Terms of Equipment Notes .................. 26
SECTION 2.03. Payments from Trust Indenture Estate
Only ................................................. 29
SECTION 2.04. Method of Payment ...................................... 31
SECTION 2.05. Application of Payments ................................ 33
SECTION 2.06. Termination of Interest in Trust
Indenture Estate ..................................... 34
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes ...................................... 34
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes ...................................... 36
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation ......................................... 36
SECTION 2.10. Mandatory Redemptions of Equipment
Notes ................................................ 37
SECTION 2.11. Redemptions; Notice of Redemption ...................... 37
SECTION 2.12. Option to Purchase Equipment Notes ..................... 38
SECTION 2.13. Subordination .......................................... 39
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions ............................. 40
SECTION 3.02. Event of Loss and Replacement .......................... 42
SECTION 3.03. Payment After Indenture Event of
Default, etc ......................................... 43
SECTION 3.04. Certain Payments ....................................... 46
SECTION 3.05. Other Payments ......................................... 47
SECTION 3.06. Payments to Owner Trustee .............................. 47
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee ............................................. 48
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner
Trustee .............................................. 49
SECTION 4.02. Indenture Events of Default ............................ 50
SECTION 4.03. Certain Rights ......................................... 53
SECTION 4.04. Remedies ............................................... 55
SECTION 4.05. Return of the Aircraft, etc ............................ 58
SECTION 4.06. Remedies Cumulative .................................... 60
SECTION 4.07. Discontinuance of Proceedings .......................... 60
SECTION 4.08. Waiver of Past Indenture Defaults ...................... 61
SECTION 4.09. Exercise of Remedies by Foreign Note
Holders .............................................. 61
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default ................... 61
SECTION 5.02. Action Upon Instructions ............................... 62
SECTION 5.03. Indemnification ........................................ 63
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions ............................ 64
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions ................. 64
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts ........................ 64
SECTION 5.07. Indenture Supplements for Replacements ................. 68
SECTION 5.08. Effect of Replacement .................................. 68
SECTION 5.09. Notices, etc ........................................... 68
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant .................................... 69
SECTION 5.11. Evidence of Action Taken by Note Holder ................ 71
SECTION 5.12. Right of Revocation of Action Taken .................... 71
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties ........................ 72
SECTION 6.02. Absence of Duties ...................................... 73
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents ................................ 73
SECTION 6.04. No Segregation of Moneys; No Interest .................. 74
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6.05. Reliance; Agents; Advice of Counsel .................... 74
SECTION 6.06. Capacity in Which Acting ............................... 75
SECTION 6.07. Compensation ........................................... 75
SECTION 6.08. May Become Note Holder ................................. 75
SECTION 6.09. Further Assurances; Financing
Statements ........................................... 75
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification ............................... 76
SECTION 7.02. Exculpation and Release of Liability ................... 77
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee ...................... 77
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor .................... 78
SECTION 8.03. Appointment of Separate Trustees ....................... 79
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures ........................................... 81
SECTION 9.02. Effect of Supplemental Indenture ....................... 84
SECTION 9.03. Documents to Be Given to Trustee ....................... 84
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures .............................. 85
SECTION 9.05. Trustees Protected ..................................... 85
SECTION 9.06. Documents Mailed to Note Holders ....................... 85
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement ................... 85
SECTION 9.08. Notices to Liquidity Provider .......................... 86
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture .............................. 86
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders .............................. 86
SECTION 10.03. Sale of Aircraft by Indenture Trustee
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
is Binding .......................................... 87
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
Lessee and Note Holders ............................. 87
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease ..................................... 87
SECTION 10.06. Notices ............................................... 87
SECTION 10.07. Severability .......................................... 88
SECTION 10.08. No Oral Modifications or Continuing
Waivers ............................................. 88
SECTION 10.09. Successors and Assigns ................................ 88
SECTION 10.10. Headings .............................................. 88
SECTION 10.11. Normal Commercial Relations ........................... 89
SECTION 10.12. Governing Law; Counterpart Form ....................... 89
SECTION 10.13. Section 1110 .......................................... 89
</TABLE>
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
(iv)
<PAGE> 6
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-13]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA
1990 AWA-13] (this "First Amended and Restated Indenture" or this "Indenture")
dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank
of Connecticut, Shawmut Bank Connecticut, National Association, and The
Connecticut National Bank), a national banking association, not in its
individual capacity except as otherwise specifically set forth herein, but
solely as indenture trustee hereunder (in such capacity, together with its
successors, the "Indenture Trustee").
WITNESSETH:
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 Wilmington Trust Company entered
into the Trust Agreement [GPA 1990 AWA-13] dated as of September 21, 1990, as
supplemented by Trust Agreement Supplement [GPA 1990 AWA-13] No. 1 dated
September 28, 1990, and as further supplemented by Trust Agreement Supplement
[GPA 1990 AWA-13] No. 2 dated the date hereof (as amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof,
hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among
other things, Wilmington Trust Company has declared a certain trust for the use
and benefit of the Owner Participant, subject, however, to the Trust Indenture
Estate created pursuant hereto for the use and benefit of (to the extent set
forth herein), and with the priority of certain payments to, the Holders of
Equipment Notes issued hereunder, and the Owner Trustee is authorized and
directed to execute and deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into
the Trust Indenture and Security Agreement [GPA 1990 AWA-13] dated as of
September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated
September 28, 1990, which were recorded by the Federal Aviation Administration
on October 1, 1990 as one instrument and assigned Conveyance No. E10187, as
amended by Amendment No. 1 dated March 27, 1992,
Trust Indenture
<PAGE> 7
- 2 -
recorded by the Federal Aviation Administration on May 18, 1992 and assigned
Conveyance No. EE003014, and as further amended by Amendment No. 2 dated as of
July 29, 1993, recorded by the Federal Aviation Administration on August 4, 1993
and assigned Conveyance No. F59673 (collectively, as so amended, supplemented or
otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner
Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement
[GPA 1990 AWA-13] dated as of September 21, 1990, as supplemented by Lease
Supplement [GPA 1990 AWA-13] No. 1 dated September 28, 1990, which were recorded
by the Federal Aviation Administration on October 1, 1990 as one instrument and
assigned Conveyance No. E10188, and as further supplemented by Lease Supplement
No. 2 dated December 31, 1991, which was not filed for recordation with the
Federal Aviation Administration (collectively, as so amended, supplemented or
otherwise modified to the date hereof, the "Original Lease") and (iii) pursuant
to the Original Indenture, the Owner Trustee issued and sold to the Lenders (as
defined in the Original Indenture) the Original Loan Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and restate the
Original Lease pursuant to Assignment and Amendment No. 1 and Sublease
Termination Agreement [GPA 1990 AWA-13] dated as of the date hereof among the
Original Head Lessee, as assignor and the Original Sublessee, as assignee, the
Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft
Lease Agreement [GPA 1990 AWA-13] dated as of the date hereof between the Owner
Trustee and the Lessee (as so assigned, amended and restated, the "Amended and
Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and
(ii) cause the implementation of the Refinancing Transaction pursuant to which,
among other things, the Original Loan Certificates issued pursuant to the
Original Indenture shall be prepaid and new Equipment Notes shall be issued to
the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's estate,
right, title and interest in and to the Aircraft and, except as hereinafter
expressly provided, all of the Owner Trustee's right, title and interest in, to
and under the Lease (as amended and restated to date and as the same may at any
time and from time to time be further amended, restated or otherwise modified in
accordance with the terms thereof and hereof) and all payments and other amounts
Trust Indenture
<PAGE> 8
- 3 -
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable benefit and security of the Note Holders,
subject to Section 2.13 and Article III hereof;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee and authenticated, issued and delivered by the
Indenture Trustee hereunder, the legal, valid and binding obligations of the
Owner Trustee; and
WHEREAS, all things necessary to make this First Amended and Restated
Indenture the legal, valid and binding obligation of the Owner Trustee, for the
uses and purposes herein set forth, in accordance with its terms, have been done
and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Equipment Notes from time to time outstanding
hereunder and the performance and observance by the Owner Trustee of all the
agreements, covenants and provisions contained herein and in the Refunding
Agreement and the Equipment Notes, for the benefit of the Note Holders, and the
prompt payment of any and all amounts from time to time owing hereunder and
under the Refunding Agreement by the Owner Trustee, the Owner Participant and
the Lessee to the Note Holders and for the uses and purposes and subject to the
terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained, and of the acceptance of the 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, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture
Trust Indenture
<PAGE> 9
- 4 -
Supplement or any indenture supplemental hereto, are included within the Trust
Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and
all replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire an interest under 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 and other documents to which the Owner Trustee shall from time to
time acquire an interest at any time maintained by the Lessee with
respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement, including the Consent and Guaranty
attached thereto (all to the extent assigned by the Purchase Agreement
Assignment and the Purchase Agreement Warranties Assignment); the
Purchase Agreement Warranties Assignment, with the Consents and
Agreements attached thereto; and the Bills of Sale; in each case
including, without limitation, (x) all rights of the Owner Trustee to
exercise any election or option or to make any decision or
determination or to give any notice, consent, waiver or approval or to
take any other action under or in respect of any such document or to
accept surrender or redelivery of the Aircraft or any part thereof, as
well as all the rights, powers and remedies on the part of the Owner
Trustee, whether arising under any such document or by statute or at
law or in equity, or otherwise, arising out of any Lease Event of
Default, and (y) any right to restitution from the Lessee, the
Manufacturer, the Manufacturer's Subsidiary or any other Person in
respect of any determination of invalidity of any such document;
(3) each Sublease Assignment and each Assigned Sublease (to the
extent assigned under such Sublease Assignment), and including, without
limitation, all rents or other payments of any kind made under such
Assigned Sublease (to the extent assigned under such Sublease
Assignment), all collateral security or credit support (in the nature
of a guarantee, letter of credit, credit insurance, Lien on or security
interest in any property or otherwise) for the obligations of the
Permitted Sublessee thereunder (to the extent assigned under such
Sublease Assignment) and all rights of the Owner Trustee to exercise
any election or option or to give any notice, consent, waiver, or
approval
Trust Indenture
<PAGE> 10
- 5 -
under or with respect of any thereof 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 (in each case to the extent assigned
to the Owner Trustee), whether arising under any Assigned Sublease or
any Sublease Assignment or by statute or at law or in equity, or
otherwise, arising out of any default under any Assigned Sublease;
(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, without limitation, 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 requisition proceeds with respect to the Aircraft or any
part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Aircraft or any part thereof, including but not limited to the
insurance required under Section 12 of the Lease or under any
comparable provision of any Assigned Sublease (but excluding any excess
insurance maintained by the Lessee and not required under Section 12 of
the Lease or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or deposited
or required to be paid or deposited to or with the Indenture Trustee by
or for the account of the Owner Trustee pursuant to any term of any
Operative Document and held or required to be held by the Indenture
Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and
all rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any other
Person in accordance with the provisions of this Agreement, AND SUBJECT TO
Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel
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paper original executed counterparts of the Original Lease and Lease Supplement
No. 1, certified copies of the Purchase Agreement Warranties Assignment and the
Consents and Agreements attached thereto, and the original Warranty Bill of
Sale. The Owner Trustee thereafter delivered to the Indenture Trustee the
chattel paper original executed Lease Supplement No. 2. Concurrently with the
delivery of this Indenture, the Owner Trustee is delivering to the Indenture
Trustee the chattel paper original executed counterparts of the Amended and
Restated Lease and Lease Supplement No. 3. All property referred to in this
Granting Clause, whenever acquired by the Owner Trustee, shall secure all
obligations under and with respect to the Equipment Notes at any time
outstanding. Any and all properties referred to in this Granting Clause which
are hereafter acquired by the Owner Trustee, shall, without further conveyance,
assignment or act by the Owner Trustee or the Indenture Trustee thereby become
and be subject to the security interest hereby granted as fully and completely
as though specifically described herein.
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 Note Holders from time to time, except as set forth in Section
2.13 and Article III hereof without any preference, distinction or priority of
any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the true
and lawful attorney of the Owner Trustee, irrevocably, with full power (in the
name of the Owner Trustee or
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<PAGE> 12
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otherwise) to ask, require, demand, receive and give acquittance for any and all
moneys and claims for moneys (in each case including insurance and requisition
proceeds but excluding Excepted Payments and Excepted Rights) due and to become
due to the Owner Trustee under or arising out of the Indenture Documents and all
other property which now or hereafter constitutes part of the Trust Indenture
Estate, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings which the Indenture Trustee may deem to be necessary or advisable in
the premises. Under the Lease, the Lessee is directed to make all payments of
Rent (other than Excepted Payments) and all other amounts which are required to
be paid to or deposited with the Owner Trustee pursuant to the Lease (other than
Excepted Payments) directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application as provided in
this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee
will be directed from and after (i) notice of the occurrence of a Lease Event of
Default and (ii) notice that the Lease is declared or deemed in default, to make
all payments of rent and all other amounts which are required to be paid to or
deposited with the Lessee pursuant to the related Assigned Sublease and which
are assigned thereunder directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application or to be held
as provided in this Indenture. The Owner Trustee agrees that promptly on receipt
thereof, it will transfer to the Indenture Trustee any and all moneys from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Indenture, except (a) to
the extent the Owner Trustee is entitled to distribution of such moneys pursuant
to this Indenture and (b) that the Owner Trustee shall accept for distribution
pursuant to the Trust Agreement any amounts distributed to it by the Indenture
Trustee under this Indenture.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver or cause to be duly executed and delivered any and
all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge or
otherwise dispose of, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 10.01 hereof, any
of its estate, right, title or interest hereby assigned, to anyone other than
the Indenture Trustee, and that, with respect to such
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<PAGE> 13
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estate, right, title and interest hereby assigned, subject to its rights
pursuant to Section 5.10 hereof, it will not, except as provided in this
Indenture (including, without limitation, Section 9.01) and except as to
Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or
any Permitted Sublessee under any of the Indenture Documents, enter into any
agreement amending, modifying or supplementing any of the Indenture Documents,
or execute any waiver or modification of, or consent under, the terms of any of
the Indenture Documents, (ii) settle or compromise any claim arising under any
of the Indenture Documents, (iii) give any notice or exercise any right or take
any action under any of the Indenture Documents, or (iv) 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. For
purposes of Section 4.02(e) hereof, this is the fourth paragraph following the
Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations under
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
might 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.
Notwithstanding the Granting Clause or any of the preceding paragraphs,
there is hereby excluded from the foregoing sale, transfer, assignment, grant,
pledge and security interest all Excepted Payments and Excepted Rights. Further,
nothing in the Granting Clause or the preceding paragraphs shall impair any of
the rights of the Owner Trustee or the Owner Participant under Section 5.10
hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained in the
Lease shall apply for all purposes of this Indenture except that the following
terms shall have the following meanings (such definitions to be equally
applicable to both the singular and plural forms of the terms defined) for all
purposes of this Indenture. Except as otherwise indicated, all the agreements or
instruments defined herein or in the Lease shall mean such agreements or
instruments (including all annexes, appendices, exhibits, schedules and
supplements thereto) as the
Trust Indenture
<PAGE> 14
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same may from time to time be supplemented or amended or the terms thereof
waived or modified to the extent permitted by, and in accordance with, the terms
thereof and of the other Operative Documents and references to various Persons
shall be deemed to be references to and include their respective permitted
successors and assigns.
"Amortization Amount" means, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Principal
Amount Repayment Date on the Amortization Schedule.
"Amortization Schedule" means the amortization schedule for the
Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed shall
be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such
Equipment Note. "Remaining Weighted Average Life" of such Equipment
Note, at the redemption date of such Equipment Note, shall be the
number of days equal to the quotient obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then
remaining installment of principal, including the payment due on the
maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid
Principal Amount of such Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq., as amended.
"Bills of Sale" means the FAA Bills of Sale and the Warranty
Bill of Sale.
"Business Day" means a day other than a Saturday, Sunday or a
day on which banks are required or authorized to close in either The
City of New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities
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<PAGE> 15
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pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement
shall be deposited.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consents and Agreements" means the confirmations by the
Manufacturer included in the Purchase Agreement Assignment and the
Purchase Agreement Warranties Assignment of the transfer of rights
under the Purchase Agreement.
"Continuous Stay Period" has the meaning specified in Section
4.04(a).
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee located at 777 Main Street, Hartford,
Connecticut 06115, Attention: Corporate Trust Administration, or such
other office at which the Indenture Trustee's corporate trust business
shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Lessee, the Owner Trustee and the Note
Holders.
"Debt" means any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit
transaction, or other liabilities evidenced or to be evidenced by
bonds, debentures, notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series C,
Series D and Series E, the rate per annum specified for such Series
under the heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means September 28, 1990.
"Dollars", "U.S. $" and "$" mean the lawful currency of the
United States of America.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under
the laws of the United States of America or any one of the states
thereof or the District of Columbia (or any U.S. branch of a foreign
bank), having corporate trust powers and acting as trustee for funds
deposited in such account, so long as any of the securities of such
depository institution has a long-term
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<PAGE> 16
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unsecured debt rating from each Rating Agency of at least A-3 or its
equivalent.
"Eligible Institution" means (a) the corporate trust department
of the Subordination Agent or any Pass Through Trustee, as applicable,
or (b) a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which has a long-term
unsecured debt rating from each Rating Agency of at least A-3 or its
equivalent.
"Equipment Notes" means the Equipment Notes, in substantially
the form set out in Section 2.01 hereof, issued by the Owner Trustee
and authenticated by the Indenture Trustee pursuant to the terms of
this Indenture.
"Equity Collateral" has the meaning assigned to such term in the
definition of "Excepted Payments."
"Excepted Payments" means (i) any and all indemnity payments and
interest in respect thereof paid or payable in respect of the Owner
Participant, the Trust Company, the Owner Trustee (and not in support
of any payment obligation of the Owner Trustee under any Indenture
Document) or any of their respective successors, permitted assigns
(and, in the case of a permitted assign of the Owner Participant that
is a partnership, the partners of such partnership), directors,
officers, employees, servants, agents, subsidiaries, affiliates or
shareholders by the Lessee pursuant to the Lease (including, without
limitation, Section 13 thereof and any corresponding payment of
Supplemental Rent under the Lease), (ii) any proceeds of public
liability insurance (or government indemnities in lieu thereof) in
respect of the Aircraft payable as a result of insurance claims paid
respecting, or losses suffered by, the Trust Company or the Indenture
Trustee in its individual capacity or the Owner Participant, (iii) any
proceeds of insurance maintained with respect to the Aircraft by or for
the benefit of the Owner Participant (whether directly or through the
Owner Trustee) and not required under Section 12 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts
payable to the Owner Participant, the Trust Company, the Owner Trustee
(and not in support of any payment obligation of the Owner Trustee
under any Indenture Document), or any of their respective successors,
permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership),
directors, officers, employees, servants, agents, subsidiaries,
affiliates or shareholders under Section 10 of the Lease or by the
Lessee or the Parent
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<PAGE> 17
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Guarantor under the Tax Indemnification Agreement or the Amended and
Restated Head Lease TIA (as defined in the Refunding Agreement), as the
case may be, (v) Transaction Expenses paid or payable by the Lessee or
the Parent Guarantor to the Trust Company, the Owner Trustee, the
Indenture Trustee or the Owner Participant pursuant to Section 21 of
the Refunding Agreement or the Lease, (vi) any letter of credit
pursuant to Section 8(l) of the Lease (including, without limitation,
any replacement letter of credit (the "Equity Collateral")) and any
payment or proceeds of any such Equity Collateral to the extent
retained or applied as provided in Section 8(l) of the Lease, (vii) any
amount payable to the Owner Participant by any transferee as the
purchase price of the Owner Participant's interest in the Trust Estate
(or a portion thereof), (viii) any amount payable to the Owner Trustee,
the Trust Company or the Owner Participant or any of their respective
successors, permitted assigns (and, in the case of a permitted assign
of the Owner Participant that is a partnership, the partners of such
partnership), directors, officers, employees, servants, agents,
subsidiaries, affiliates or shareholders attributable to the period
prior to or on the Restatement Date or under the Original Participation
Agreement, the Original Lease, the Parent Head Lease Guaranty, the
Sublease, the Amended and Restated Head Lease TIA or the Amended and
Restated Sublease TIA (as such terms are defined in the Refunding
Agreement) or Retained Head Lease Rights and Obligations (as such term
is defined in the Refunding Agreement), and (ix) subject to the last
sentence of Section 5.10 hereof, any and all rights of the Owner
Trustee, the Owner Participant or the Trust Company under the Operative
Documents, whether or not a Lease Event of Default, a Lease Default, an
Indenture Default or an Indenture Trustee Event has occurred and is
continuing to demand, collect, sue for, give notices, make
determinations, enforce or exercise all rights with respect to and
otherwise obtain all amounts described in clauses (i) through (viii)
above and the proceeds thereof.
"Excepted Rights" means (i) those rights of the Owner
Participant and the Owner Trustee under Section 5.10 of this Indenture,
(ii) all rights under the Equity Collateral to make a claim for,
collect and retain all amounts payable with respect to any Equity
Collateral, (iii) all rights of the Owner Participant, the Trust
Company or the Owner Trustee to compromise or waive any such right or
modify, amend or waive any provision of any Operative Document
conferring such rights with respect to Excepted Payments, and (iv) all
rights of the Owner Trustee to exercise any election or option, or to
make any decision or determina-
Trust Indenture
<PAGE> 18
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tion, or to give or receive any notice, consent, waiver or approval
with respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section 2.03(b)
hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such
Liquidity Facility in accordance with the provisions thereof other than
a Downgrade Drawing.
"Government Obligations" means direct obligations of the United
States of America that are not callable, redeemable or payable prior to
maturity, in whole or in part, directly or indirectly, by any Person.
"Indenture," "this Indenture," and "the Indenture" mean this
First Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented
by any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement, including the Consent and Guaranty attached
thereto (all to the extent assigned by the Purchase Agreement
Assignment and the Purchase Agreement Warranties Assignment); the
Purchase Agreement Warranties Assignment and the Consents and
Agreements attached thereto; and the Bills of Sale.
"Indenture Event of Default" has the meaning set forth in
Section 4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and
Security Agreement listed on Schedule 1 to the Intercreditor Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
Trust Indenture
<PAGE> 19
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"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Aircraft and any
Replacement Airframe and Replacement Engine included in the property of
the Owner Trustee covered by this Indenture, including, without
limitation, Trust Indenture Supplement No. 1 dated September 28, 1990,
which was recorded as one instrument by the FAA with the Original
Indenture, and Trust Indenture Supplement No. 2 dated November 26,
1996, which is being filed for recordation as one instrument by the FAA
with this First Amended and Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as assigned, amended and restated by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-13]
dated as of the date hereof and Amended and Restated Aircraft Lease
Agreement [GPA 1990 AWA-13] dated as of the date hereof and
supplemented by Lease Supplement [GPA 1990 AWA-13] No. 3 dated November
26, 1996, which are being filed for recordation as one instrument with
the FAA contemporaneously herewith.
"Lease Default" means an event or condition that, with the
giving of notice or the lapse of time or both, would become a Lease
Event of Default.
"Lease Event of Default" means any event or condition defined as
an "Event of Default" in Section 17 of the Lease.
"Lessee" means America West Airlines, Inc., a Delaware
corporation, in its capacity as lessee under the Amended and
Trust Indenture
<PAGE> 20
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Restated Lease, and its successors, and to the extent permitted by the
Refunding Agreement, its assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or
claim of any kind, including any thereof arising under any conditional
sale agreement, equipment trust agreement or title retention agreement.
"Majority in Interest of Note Holders" means, as of a particular
date of determination and subject to Section 2.6 of the Intercreditor
Agreement, the Holders of more than 50% in aggregate unpaid Principal
Amount of all Equipment Notes outstanding as of such date. For purposes
of this definition, there shall be excluded any Equipment Notes held by
the Owner Trustee or the Owner Participant or any interests of the
Owner Participant therein by reason of subrogation pursuant to Section
4.03 of the Indenture (unless all Equipment Notes then outstanding
shall be held by the Owner Trustee or the Owner Participant) or any
Equipment Notes held by the Lessee or any Affiliate of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate
equal to (i) in the case of Series A Equipment Notes and Series B
Equipment Notes, the Treasury Yield and (ii) in the case of Series C
Equipment Notes, Series D Equipment Notes and Series E Equipment Notes,
the Treasury Yield plus 0.75% exceeds (b) the outstanding principal
amount of such Equipment Note plus accrued interest. For purposes of
determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Equipment Note means the interest
rate (expressed as a semiannual equivalent and as a decimal and, in the
case of United States Treasury bills, converted to a bond equivalent
yield) determined to be the per annum rate equal to the semiannual
yield to maturity for United States Treasury securities maturing on the
Average Life Date of such Equipment Note and trading in the public
securities market either as determined by interpolation between the
most recent weekly average yield to maturity for
Trust Indenture
<PAGE> 21
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two series of United States Treasury securities, trading in the public
securities markets, (A) one maturing as close as possible to, but
earlier than, the Average Life Date of such Equipment Note and (B) the
other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most
recent H.15(519) or, if a weekly average yield to maturity for United
States Treasury securities maturing on the Average Life Date of such
Equipment Note is reported on the most recent H.15(519), such weekly
average yield to maturity as published in such H.15(519). "H.15(519)"
means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole
Amount shall be the third Business Day prior to the applicable
redemption date and the "most recent H.15(519)" means the H.15(519)
published prior to the close of business on the third Business Day
prior to the applicable redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person other
than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from time
to time of one or more Equipment Notes as reflected in the Register
maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and
signature of such Responsible Officer, that is delivered to the
Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such
written opinions or (ii) Latham & Watkins or other counsel designated
by the Lessee and reasonably satisfactory to the Indenture Trustee or,
in the case of legal counsel for the Owner Trustee, may be Morris,
James, Hitchens & Williams or other counsel designated by the Owner
Trustee and reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease.
"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1990 AWA-13] dated as of September
Trust Indenture
<PAGE> 22
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21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated
September 28, 1990, which were recorded as one instrument by the FAA on
October 1, 1990 and assigned Conveyance No. E10187, as amended by
Amendment No. 1 dated March 27, 1992, recorded by the FAA on May 18,
1992 and assigned Conveyance No. EE003014, and as further amended by
Amendment No. 2 dated as of July 29, 1993, recorded by the FAA on
August 4, 1993 and assigned Conveyance No. F59673.
"Original Loan Certificates" means the Loan Certificates issued
under and as defined in the Original Indenture.
"Original Sublessee" means America West Airlines, Inc. ("AWA"),
a Delaware corporation, in its capacity as sublessee under the Aircraft
Sublease Agreement [GPA 1990 AWA-13] dated as of September 21, 1990
between the Original Head Lessee in its capacity as sublessor
thereunder and AWA in its capacity as sublessee.
"Owner Participant" means _______________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the five Pass Through Trusts
established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through Trust
Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a national
banking association, not in its individual capacity but solely as pass
through trustee under each of the five separate Pass Through Trust
Agreements.
"Past Due Rate" means, with respect to any amount not paid when
due (whether at stated maturity, by acceleration or otherwise) under or
in respect of any Equipment Note, a rate of interest per annum
(computed on the basis of a year of 360 days comprised of twelve 30-day
months) equal to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Equipment Notes have
been paid in full.
Trust Indenture
<PAGE> 23
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"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with
respect to all Equipment Notes, means the aggregate stated original
principal amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on
which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [GPA 1990 AWA-13], dated as of the Delivery Date, between
the Parent Guarantor and the Original Head Lessee, together with the
Consents and Agreements attached thereto, as the same may be amended,
modified, or supplemented from time to time in accordance with the
terms hereof and thereof.
"Purchase Agreement Warranties Assignment" means the Purchase
Agreement Warranties Assignment [GPA 1990 AWA-13], dated as of the
Delivery Date, between the Original Head Lessee and the Owner Trustee
together with the Consents and Agreements attached thereto, as the same
may be amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to
rate the Certificates issued pursuant to the Pass Through Trust
Agreements and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated by
the Refunding Agreement and the other documents entered into on and in
connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1990
AWA-13] dated as of November 20, 1996, among the Lessee, the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through
Trustee, the Owner Participant, the Subordination Agent and the
Indenture Trustee.
"Register" has the meaning set forth in Section 2.07 hereof.
"Registrar" has the meaning set forth in Section 2.07 hereof.
Trust Indenture
<PAGE> 24
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"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice
president or, in the case of the Owner Trustee, an officer of the Owner
Trustee in its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date
agreed to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date
of the filing with the FAA of Trust Indenture Supplement No. 2.
"Secured Obligations" has the meaning set forth in Section 2.06
hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series D."
"Series E" or "Series E Equipment Notes" means Equipment Notes
issued and designated as "Series E" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series E."
"Sublease Assignment" means a sublease assignment by the Lessee
in favor of the Owner Trustee (including the consent thereto given by
the sublessee thereunder) with
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<PAGE> 25
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respect to the assignment of a Permitted Sublease pursuant to Section
6(a) of the Lease.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity and not as Owner
Trustee, and its successors under the Trust Agreement, in their
respective individual capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means all estate,
right, title and interest of the Owner Trustee in and to the
properties, rights and interests covered by the Granting Clause of the
Indenture, excluding, however, in each case, Excepted Payments and
Excepted Rights.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code (for purposes of this definition, the "United
States"), (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political
subdivision thereof or therein or (iii) any estate or trust that is
subject to United States federal income taxation regardless of the
source of its income.
"Warranty Bill of Sale" means a full warranty (as to title) bill
of sale covering the Aircraft (excluding all Buyer Furnished Equipment)
executed by the Original Head Lessee in favor of the Owner Trustee
dated the Delivery Date.
Trust Indenture
<PAGE> 26
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be
substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1990 AWA-13]
DATED AS OF SEPTEMBER 21, 1990, AS AMENDED.
SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING
UNITED STATES REGISTRATION NUMBER N634AW.
No.____________ Date: [________, 1996]
$____________________
DEBT RATE MATURITY DATE
[_________] [_______,___]
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
Owner Trustee (herein in such capacity called the "Owner Trustee") under that
certain Trust Agreement [GPA 1990 AWA-13], dated as of September 21, 1990, as
amended, between the Owner Participant named therein and Wilmington Trust
Company (herein as such Trust Agreement may be supplemented or amended from time
to time called the "Trust Agreement"), hereby promises to pay to Fleet National
Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $_______ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semi-annual installments commencing on January 2, 1997, and
thereafter
Trust Indenture
<PAGE> 27
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on July 2 and January 2 of each year, to and including ____________, ____.
Notwithstanding the foregoing or anything to the contrary contained
herein, (i) the final payment made on this Equipment Note shall be in an amount
sufficient to discharge in full the unpaid Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, this Equipment Note; and
(ii) if any date on which a payment under this Equipment Note becomes due and
payable is not a Business Day, then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business Day and if such
payment is made on such next succeeding Business Day, no interest shall accrue
on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First Amended and
Restated Trust Indenture and Security Agreement [GPA 1990 AWA-13], dated as of
November 26, 1996, between the Owner Trustee and Fleet National Bank (formerly
known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut, National
Association, and The Connecticut National Bank) (the "Indenture Trustee"), as
the same may be amended or supplemented from time to time. All other capitalized
terms used in this Equipment Note and not defined herein shall have the
respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at the Past
Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest and
any other amounts payable hereunder which are overdue, in each case for the
period the same is overdue. Amounts shall be overdue if not paid when due
(whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount, interest,
Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner
Trustee hereunder and under the Indenture or the Refunding Agreement shall be
payable only from the income and proceeds from the Trust Estate to the extent
included in the Trust Indenture Estate and only to the extent that the Owner
Trustee shall have sufficient income or proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate to enable the Indenture Trustee to
make such payments in accordance with the terms of Section 2.03 and Article III
of the Indenture, and each Holder hereof, by its acceptance of this Equipment
Note, agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the Holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee and
the
Trust Indenture
<PAGE> 28
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Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of registering
transfers and exchanges of Equipment Notes at the Corporate Trust Office of the
Indenture Trustee or at the office of any successor in the manner provided in
Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and interest and
other amounts due hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise
provided in the Indenture. Each such payment shall be made on the date such
payment is due and without any presentment or surrender of this Equipment Note,
except that in the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter to the
Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note, agrees
that, except as provided in the Indenture, each payment received by it hereunder
shall be applied, first, to the payment of accrued interest on this Equipment
Note (as well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and to the extent permitted by law, any overdue
interest and any other overdue amounts hereunder) to the date of such payment,
second, to the payment of the portion of the Principal Amount of this Equipment
Note then due, third, to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under the Indenture, and fourth, the balance, if any,
remaining thereafter, to the payment of the portion of the Principal Amount of
this Equipment Note remaining unpaid in the inverse order of its normal
maturity.
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 Trust Indenture Estate is held by the Indenture
Trustee as security, in part, for the Equipment Notes. The provisions of this
Equipment Note are subject to the Indenture. Reference is hereby made to the
Indenture and the Refunding Agreement for a complete statement of the rights and
obligations of the Holder
Trust Indenture
<PAGE> 29
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of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain limitations therein
set forth, this Equipment Note is exchangeable for a like aggregate unpaid
portion of the Principal Amount of Equipment Notes of different authorized
denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this Equipment
Note, the Owner Trustee and the Indenture Trustee shall treat the Person in
whose name this Equipment Note is registered as the owner hereof for all
purposes whether or not this Equipment Note be overdue, and neither of the Owner
Trustee nor the Indenture Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections
2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the
Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration
by the Indenture Trustee as provided in Section 4.04 of the Indenture.
[The indebtedness evidenced by this Equipment Note is, to the extent
and in the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment
Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4), and this
Equipment Note is issued subject to such provisions. The Note Holder of this
Equipment Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate
- -----------------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
(4) To be inserted in the case of Series E Equipment Notes.
Trust Indenture
<PAGE> 30
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the subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.](5)
Unless the certificate of authentication hereon has been executed by or
on behalf of the Indenture Trustee by manual signature, this Equipment Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to
be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
FLEET NATIONAL BANK,
as Indenture Trustee
By:_______________________________
Name:
Title:
- -----------------
(5) To be inserted in the case of a Series B, Series C, Series D or Series
E Equipment Note.
Trust Indenture
<PAGE> 31
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SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment
Notes shall be dated the date of issuance thereof, shall be issued in five
separate series consisting of Series A, Series B, Series C, Series D and Series
E and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass
Through Trustees (or their designee) under the Pass Through Trust Agreements set
forth in Schedule II to be attached hereto in connection therewith and (ii) the
Original Loan Certificates issued under the Original Indenture shall be
concurrently prepaid. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of each Series may be
in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate (calculated on
the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid
Principal Amount thereof from time to time outstanding, payable in arrears on
January 2, 1997, and on each July 2 and January 2 thereafter until maturity.
The Principal Amount of each Equipment Note shall be payable on the
dates and in the installments equal to the corresponding percentage of the
Principal Amount as set forth in Schedule I hereto which shall be attached as
Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
Trust Indenture
<PAGE> 32
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any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
Trust Indenture
<PAGE> 33
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(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default (as defined below) under any Equipment
Note a fraction, the numerator of which is the aggregate principal
balance then outstanding of the Equipment Notes issued hereunder and
the denominator of which is the aggregate principal balance then
outstanding of all "Equipment Notes" issued under the Indentures under
which there exists a Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E
Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net
Interest and Related Charges" means (as determined by the Subordination Agent in
consultation with the Liquidity Providers and notified to the Indenture Trustee
except that the Past Due Rate shall be determined by the Indenture Trustee and
notified to the Subordination Agent) the sum of (i) the amount, if any, by which
interest payable to any Liquidity Provider on any Interest Drawing, Final
Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an
Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the
amount which would be payable if such advances bore interest at the Designated
Interest Rate (as defined below) plus (ii) any amounts payable under Section
3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity
Facility (or similar provisions of any succeeding liquidity facility) which
result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in
this Section 2.02, "Designated Interest Rate" means the weighted average Past
Due Rate (as defined in the applicable Indentures) in respect of "Series A
Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
issued under the Indentures, except with respect to that portion of any Final
Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a
Cash Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" or "Series E Equipment Note" issued
under the Indentures which has not been cured other than solely because of
acceleration. For purposes of Section 3.04(b) hereof, this is the fourth
paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner Trustee by
its President or one of its Vice Presidents, Assistant Vice Presidents or
Assistant Secretaries or other authorized officer. Equipment Notes bearing the
signatures of
Trust Indenture
<PAGE> 34
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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. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee
for authentication upon original issue and such Equipment Notes shall thereupon
be authenticated and delivered by the Indenture Trustee upon the written request
of the Owner Trustee signed by a Vice President or Assistant Vice President or
other authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Equipment Notes to
be authenticated hereunder on original issue with respect to the Aircraft. No
Equipment Note shall be secured by or be entitled to any benefit under this
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized officers and such certificate upon any Equipment Notes shall be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without
impairing any of the other rights, powers, remedies, privileges or Liens of the
Note Holders under this Indenture, each Note Holder, by its acceptance of an
Equipment Note, agrees that, except as expressly provided in this Indenture, the
Refunding Agreement or any other Operative Document, (i) the obligation to make
all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such
Trust Indenture
<PAGE> 35
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other agreements to the contrary notwithstanding (except for any express
provisions or representations that the Trust Company is responsible for, or is
making, for which there would be personal liability of the Trust Company), no
recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the property of,
or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means the amount
by which such payment exceeds the amount that would have been received by a Note
Holder or the Indenture Trustee if the Trust Company, the Owner Trustee or the
Owner Participant had not become subject to the recourse liability referred to
in clause (ii) above. Nothing contained in this
Trust Indenture
<PAGE> 36
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Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Trust Company, the Owner Trustee or the Owner Participant under the
Refunding Agreement, this Indenture (and any exhibits or annexes hereto or
thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of, interest
on, Make-Whole Amount, if any, and other amounts due under each Equipment Note
or hereunder will be payable in Dollars by wire transfer of immediately
available funds not later than 12:00 noon, New York City time, on the due date
of payment to the Indenture Trustee at the Corporate Trust Office for
distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such
Trust Indenture
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funds were received after 12:00 noon, New York City time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat
the Person in whose name any Equipment Note is registered on the Register as the
absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee, shall
exclude and withhold at the appropriate rate from each payment of Principal
Amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Equipment Note (and such exclusion and withholding shall
constitute payment in respect of such Equipment Note) any and all United States
withholding taxes applicable thereto as required by law. The Indenture Trustee
agrees to act as such withholding agent and, in connection therewith, whenever
any present or future United States taxes or similar charges are required to be
withheld with respect to any amounts payable hereunder or in respect of the
Equipment Notes, to withhold such amounts (and such withholding shall constitute
payment in respect of such Equipment Note) and timely pay the same to the
appropriate authority in the name of and on behalf of the Note Holders, that it
will file any necessary United States withholding tax returns or statements when
due, and that as promptly as possible after the payment thereof it will deliver
to each Note Holder (with a copy to the Owner Trustee and the Lessee)
appropriate receipts showing the payment thereof, together with such additional
documentary evidence as any such Note Holder, the Owner Participant and the
Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to the
Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of
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such form prior to the date of such payment (and the Indenture Trustee has no
reason to know that any information set forth in such form is inaccurate), the
Indenture Trustee shall withhold only the amount, if any, required by law (after
taking into account any applicable exemptions claimed by the Note Holder) to be
withheld from payments hereunder or under the Equipment Notes held by such
Holder in respect of United States federal income tax (and such withholding
shall constitute payment in respect of such Equipment Note). If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form 4224 in
duplicate (or such successor certificate, form or forms as may be required by
the United States Treasury Department as necessary in order to avoid withholding
of United States federal income tax), during the calendar year in which the
payment is made (but prior to the making of such payment) or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Equipment Notes held by such Holder, no amount shall be
withheld from payments in respect of United States federal income tax. If any
Note Holder has notified the Indenture Trustee that any of the foregoing forms
or certificates is withdrawn or inaccurate, or if such Holder has not filed a
form claiming an exemption from United States withholding tax or if the Code or
the regulations thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the Equipment Notes held by such
Holder, the Indenture Trustee agrees to withhold from each payment due to the
relevant Note Holder withholding taxes at the appropriate rate under law (and
such withholding shall constitute payment in respect of such Equipment Notes)
and will, on a timely basis as more fully provided above, deposit such amounts
with an authorized depository and make such returns, statements, receipts and
other documentary evidence in connection therewith as required by applicable
law.
None of the Owner Trustee, the Owner Participant or the Lessee shall
have any liability for the failure of the Indenture Trustee to withhold taxes in
the manner provided for herein or for any false, inaccurate or untrue evidence
provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of each Equipment
Note, each payment of Principal Amount, Make-Whole
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Amount, if any, and interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Equipment Note
(as well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and, to the extent permitted by law, any
overdue interest and any other overdue amounts thereunder) to the date
of such payment;
Second: to the payment of the Principal Amount of such Equipment
Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture Estate. A Note
Holder shall not, as such, have any further interest in, or other right with
respect to, the Trust Indenture Estate when the Principal Amount of, Make-Whole
Amount, if any, and interest on and other amounts due under all Equipment Notes
held by such Note Holder and all other sums then payable to such Note Holder
hereunder and under the Lease and the Refunding Agreement by the Lessee, the
Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment Notes.
The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request
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from the registered Holder thereof for the issuance of a new Equipment Note,
specifying, in the case of a surrender for transfer, the name and address of the
new Holder or Holders. Upon surrender for registration of transfer of any
Equipment Note, 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 unpaid portion
of the Principal Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate unpaid portion of the Principal
Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture
Trustee at the Corporate Trust Office. 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 Note
Holder making the exchange is entitled to receive. All Equipment Notes issued
upon any registration of transfer or exchange of Equipment Notes (whether under
this Section 2.07 or under Section 2.08 hereof or otherwise under this
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this 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 Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder
or such Holder's attorney duly authorized in writing, and the Indenture Trustee
shall require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act and the securities laws of any applicable
state. The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Principal Amount 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 on such old Equipment Note or Equipment
Notes has been paid. Interest shall be deemed to have been paid on such new
Equipment Note to the date on which interest shall have been paid on such old
Equipment Note, and all payments of the Principal Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been made thereon.
Neither the Indenture Trustee nor the Owner Trustee shall be required to
exchange any surrendered Equipment Notes as provided above during the ten-day
period preceding the Payment Date. The Indenture Trustee will promptly notify
the Owner Trustee, the Owner Participant and Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Refunding
Agreement applicable to Note Holders, and shall be deemed to have represented
and warranted to the parties to the Refunding
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Agreement as to the matters represented and warranted by the Subordination Agent
in its capacity as the initial Holder of the Equipment Notes. Subject to
compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee
shall use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
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 Holder of such Equipment Note,
execute and the Indenture Trustee shall authenticate and deliver in replacement
thereof a new Equipment Note, payable in the same Principal Amount dated the
same date and captioned as originally issued. If the Equipment Note being
replaced has become mutilated, such Equipment Note shall be surrendered to the
Indenture Trustee and a copy thereof shall be furnished to the Owner Trustee. If
the Equipment Note being replaced has been destroyed, lost or stolen, the Holder
of such Equipment Note shall furnish to the Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee such security or indemnity as may be
reasonably required by them to save the Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee harmless and evidence satisfactory to the
Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee of
the destruction, loss or theft of such Equipment Note and of the ownership
thereof. If a bank or trust company with a net worth of $200,000,000 or more is
the Holder of any such destroyed, lost or stolen Equipment Note, then the
written indemnity of such Person, signed by an authorized officer thereof, in
favor of, delivered to and in form reasonably satisfactory to the Lessee, the
Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted
as satisfactory indemnity and security and no further indemnity or security
shall be required as a condition to the execution and delivery of such new
Equipment Note. Subject to compliance by the Note Holder of the requirements set
forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall
use all reasonable efforts to issue new Equipment Notes within 10 Business Days
of the date of the written request therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No
service charge shall be made to a Note Holder for any registration of transfer
or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Equipment Notes; provided, however, that none of the Lessee, the
Owner Trustee,
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the Indenture Trustee or the Owner Participant shall bear costs of registration,
transfer or exchange in connection with the consummation of the Refinancing
Transaction.
(b) The Indenture Trustee shall cancel all Equipment Notes surrendered
for replacement, redemption, transfer, exchange, payment or cancellation and
shall destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The Equipment
Notes are subject to redemption as provided in this Section 2.10 and Section
2.11 and purchase as provided in Section 2.12. On the date on which Lessee is
required pursuant to Section 11(a) of the Lease to make payment for an Event of
Loss with respect to the Aircraft, all of the Equipment Notes shall be redeemed
in whole at a redemption price equal to 100% of the unpaid Principal Amount
thereof, together with all accrued interest thereon to, but not including, the
date of redemption and all other amounts payable hereunder or under the
Refunding Agreement to the Note Holders but without Make-Whole Amount, all in
the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any
redemption of any Equipment Note nor any purchase by the Owner Trustee of any
Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the Equipment
Notes shall be given by the Indenture Trustee by first-class mail, postage
prepaid, mailed not less than 15 nor more than 60 days prior to the applicable
redemption date, to each Note Holder of such Equipment Notes to be redeemed or
purchased, at such Note Holder's address appearing in the Register. All notices
of redemption or purchase shall state: (1) the redemption date, (2) the
applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any Person
on behalf of the Owner Trustee) shall, to the extent an amount equal to the
redemption price for the Equipment Notes to be redeemed or purchased on the
redemption date shall not then be held in the Trust Indenture Estate, deposit or
cause to be deposited with the Indenture Trustee by 12:00 noon, New York City
time, on the redemption date in
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immediately available funds the redemption price of the Equipment Notes to be
redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid,
the Equipment Notes to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee,
and from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Equipment Notes then outstanding shall
cease to bear interest. Upon surrender of any such Equipment Note for redemption
or purchase in accordance with said notice, such Equipment Note shall be
redeemed at the redemption price. If any Equipment Note called for redemption or
purchase shall not be so paid upon surrender thereof for redemption, the
principal amount thereof shall, until paid, continue to bear interest from the
applicable redemption date at the interest rate in effect for such Equipment
Note as of such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner
Trustee or the Owner Participant may, upon the events and subject to the terms
and conditions and for the price set forth in this Section 2.12, purchase all
but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised by the
Owner Trustee or the Owner Participant upon any of the following events, and, in
any such event, the purchase price thereof shall equal for each Equipment Note
the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest
thereon to, but not including, the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Refunding Agreement to the Holder thereof. Such
option to purchase the Equipment Notes may be exercised: (i) upon an Indenture
Trustee Event or (ii) in the event there shall have occurred and be continuing a
Lease Event of Default, provided that if such option is exercised pursuant to
this clause (ii) at a time when there shall have occurred and be continuing for
less than 120 days a Lease Event of Default (and there is no Indenture Trustee
Event), the purchase price thereof shall equal the price provided in the
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preceding sentence plus the Make-Whole Amount, if any; provided further, that
under no circumstances shall the Make-Whole Amount be payable by the Lessee.
Such option to purchase the Equipment Notes may be exercised by the
Owner Trustee or the Owner Participant giving written notice of its election of
such option to the Indenture Trustee, which notice shall specify a date for such
purchase not more than 30 days or less than 15 days after the date of such
notice. The Indenture Trustee shall not exercise any of the remedies hereunder
or, without the consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that a notice of exercise by the Owner
Participant of such option to purchase becomes irrevocable until the date on
which such purchase is required to occur pursuant to the terms of the preceding
sentence. Such election to purchase the Equipment Notes shall become irrevocable
upon the fifteenth day preceding the date specified in the written notice
described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the date of
such purchase shall so request, the Note Holders will comply with all the
provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by acceptance
of its Equipment Notes of any Series, each Note Holder of such Series, hereby
agree that no payment or distribution shall be made on or in respect of the
Secured Obligations owed to such Note Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 4.02(g), (h) or (i) hereof,
except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Note Holder of such Series agrees that in the event that such
Note Holder, in its capacity as a Note Holder, shall receive any payment or
distribution on any Secured Obligations in respect of such Series which it is
not entitled to receive under this Section 2.13 or Article III hereof, it will
hold any amount so received in trust for the Senior Holder or Senior Holders (as
defined in Section 2.13(c) hereof) and will forthwith turn over such payment to
the Indenture Trustee in the form received to be applied as provided in Articles
II and III hereof.
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(c) As used in this Section 2.13, the term "Senior Holder" or "Senior
Holders" shall mean, (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full, (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Note Holders of Series D until the Secured Obligations in respect of Series D
Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise provided
in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any payment of
Supplemental Rent, any payment received by the Indenture Trustee as contemplated
by the first sentence of Section 4.03 hereof, and any payment received by the
Indenture Trustee pursuant to any Sublease Assignment as rent under any Assigned
Sublease shall be promptly distributed in the following order of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments
of Principal Amount, and interest and other amounts (as well as any
interest on overdue Principal Amount, and to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts)
then due to the Note Holders under all Series A Equipment Notes shall
be distributed to the Note Holders of Series A ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then due under all Series
A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall
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be distributed to the Note Holders of Series B ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series B Equipment Note
bears to the aggregate amount of the payments then due under all Series
B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series C Equipment Notes shall be distributed to the
Note Holders of Series C ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series C Equipment Note bears to the aggregate
amount of the payments then due under all Series C Equipment Notes;
(iv) after giving effect to clause (iii) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series D Equipment Notes shall be distributed to the
Note Holders of Series D ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series D Equipment Note bears to the aggregate
amount of the payments then due under all Series D Equipment Notes; and
(v) after giving effect to clause (iv) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series E Equipment Notes shall be distributed to the
Note Holders of Series E ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series E Equipment Note bears to the aggregate
amount of the payments then due under all Series E Equipment Notes; and
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second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that
if an Indenture Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 3.07
hereof until whichever of the following shall first occur: (i) all
Indenture Defaults shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second", or
(ii) Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of said
Section 3.03, or (iii) the 180th day after receipt of such payment, in
which event such balance shall be distributed as provided in this
clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any payment received
by the Indenture Trustee with respect to the Airframe or the Airframe and one or
both Engines as the result of an Event of Loss thereto shall be applied to the
redemption of the Equipment Notes and to all other amounts payable hereunder by
applying such funds in the following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event
of Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other
amounts (as well as any interest on overdue Principal Amount, and to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due to the Note Holders under all Equipment
Notes, all in the order of priority specified in clause "first" of
Section 3.01 hereof, and
third, if and to the extent required to be paid to the Lessee
(or if directed by the Lessee, any Permitted Sublessee) in
reimbursement of payment of Stipulated Loss Value pursuant to Section
11(d) of the Lease, to the Lessee (or if directed by the Lessee, any
Permitted Sublessee), and otherwise as provided in clause "fourth" of
Section 3.03 hereof;
provided that, if a Replacement Airframe or a Replacement Airframe and one or
more Replacement Engines are to be substituted for the Airframe or the Airframe
and one or both Engines subject to such Event of Loss as provided in Section 11
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of the Lease and Section 5.06 hereof, any proceeds which result from such Event
of Loss and are paid to the Indenture Trustee shall be held by the Indenture
Trustee as part of the Trust Indenture Estate as security for the obligations of
the Lessee under the Operative Documents and invested in accordance with the
terms of Section 3.07 hereof and, unless theretofore applied in accordance with
the provisions of the Lease and this Indenture, such proceeds shall, to the
extent payable to the Lessee under the Lease, be released to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) upon or in connection with the
replacement thereof as provided in such Sections .
(b) Any amounts received directly or indirectly from any governmental
authority or insurer or other party pursuant to any provision of Section 11 or
12 of the Lease (other than as the result of an Event of Loss with respect to
the Airframe or the Airframe and one or both Engines) shall be applied as
provided in the applicable provisions of the Lease; provided, however, that to
the extent that any portion of such amounts held for account of the Lessee are
not at the time required to be paid to the Lessee (or any Permitted Sublessee)
pursuant to the applicable provisions of Section 11 or 12 of the Lease, shall be
held by the Indenture Trustee as security for the obligations of the Lessee
under the Operative Documents and shall be invested in accordance with the terms
of Section 3.07 hereof and at such time as the conditions specified in the Lease
for payment of such amounts to the Lessee shall be fulfilled, such portion, and
the net proceeds of any investment thereof, shall, unless theretofore applied in
accordance with the provisions of the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof, and
notwithstanding Section 2.05 hereof, all payments received and amounts held or
realized by the Indenture Trustee after an Indenture Event of Default shall have
occurred and be continuing or after the Indenture Trustee has given notice to
the Owner Trustee and the Owner Participant pursuant to Section 4.04(a) hereof
regarding its exercise of remedies under Section 18 of the Lease or of the
foreclosure of this Indenture, or after the Equipment Notes shall have become
due and payable as provided herein, and all payments or amounts then held by the
Indenture Trustee as part of the Trust Indenture Estate, shall, so long as such
Indenture Event of Default shall be continuing, be promptly distributed by the
Indenture Trustee in the following order of priority, without duplication:
first, so much of such payments or amounts as shall be required
to reimburse the Indenture Trustee for all amounts due to it pursuant
to Section 6.07 hereof, plus any tax,
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expense, charge or other loss (including, without limitation, all
amounts to be expended at the expense of, or charged upon the tolls,
rents, revenues, issues, products and profits of, the property included
in the Trust Indenture Estate pursuant to Section 4.05(b) hereof)
incurred by the Indenture Trustee (to the extent not previously
reimbursed) (including, without limitation, the expenses of any sale,
taking or other proceeding, 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 then existing or prior Note Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to the then existing or
prior Note 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 one over any other, in accordance with the
amount of the payment or payments made by each such then existing or
prior Note Holder pursuant to said Section 5.03 and applicable (in the
case of each such then existing Note Holder) to the Equipment Notes
held by such existing Note Holder at the time of distribution by the
Indenture Trustee;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid Principal Amount
of all Series A Equipment Notes, and the accrued but unpaid interest
and other amounts due thereon and all other Secured Obligations in
respect of the Series A Equipment Notes (other than Make-Whole Amount,
if any) to the date of distribution, shall be distributed to the Note
Holders of Series A, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series A Equipment Notes
held by each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount, if
any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
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(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series B Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series B Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series B, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series B Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series B Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series C Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series C Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series C, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series C Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series C
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution;
(iv) after giving effect to paragraph (iii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series D Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series D Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series D, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the
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other, in the proportion that the aggregate unpaid Principal Amount of
all Series D Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series D Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
(v) after giving effect to paragraph (iv) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series E Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series E Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series E, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series E Equipment Notes held by each holder plus the accrued but
unpaid interest and other amounts due hereunder and thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series E Equipment Notes
held by all such holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by the
Indenture Trustee for which provision as to the application thereof is made in
the Lease shall be applied forthwith to the purpose for which such payment was
made in accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon receipt
any indemnity payment received by it from the Owner Trustee or the Lessee in
respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass
Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and
(v) the Pass Through Trustees, in each case whether pursuant to Section 10 or 13
of the Lease or Section 21 of the Refunding Agreement or
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as Supplemental Rent, directly to the Person entitled thereto. Any payment
received by the Indenture Trustee under clause (b) of the fourth paragraph of
Section 2.02 shall be distributed to the Subordination Agent to be distributed
in accordance with the terms of the Intercreditor Agreement, and any payment
received by the Indenture Trustee under clause (c) of the fourth paragraph of
Section 2.02 shall be distributed directly to the Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04
hereof, any payments received by the Indenture Trustee for which no provision as
to the application thereof is made elsewhere in this Indenture shall be
distributed by the Indenture Trustee, unless otherwise agreed in writing,
subject to Section 6.07 hereof (i) to the extent received or realized at any
time prior to the payment in full of all obligations to the Note Holders secured
by the Lien of this Indenture, in the order of priority specified in Section
3.01 hereof, and (ii) to the extent received or realized at any time after
payment in full of all obligations to the Note Holders secured by the Lien of
this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause
"first" of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated to
indemnify against thereunder, in the manner provided in clause "first"
of Section 3.03 hereof, and
second, in the manner provided in clause "fourth" of Section
3.03 hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of funds of the type received by the Indenture
Trustee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the
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Indenture Trustee receives notice to the contrary from the Owner Trustee, all
amounts to be distributed to the Owner Trustee pursuant to clause "second" of
Section 3.01 hereof shall be distributed by wire transfer of funds of the type
received by the Indenture Trustee to the Owner Participant's account as may be
specified pursuant to the Refunding Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any
amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights
to hold moneys for security pursuant to Section 21(h) of the Lease shall be held
in accordance with the terms of such Section ; and the Indenture Trustee hereby
agrees to perform the duties of the Owner Trustee under such Section . Except as
provided in the preceding sentence, any amounts held by the Indenture Trustee
pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to
Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof,
pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease
Assignment, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Owner Trustee or, in the event the
Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
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ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a)
The Trust Company hereby covenants and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Lien
attributable to it in its individual capacity with respect to any of the
properties or assets of the Trust Indenture Estate and shall, at its own cost
and expense promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Trust Company will cause restitution to be made to
the Trust Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) the Owner Trustee will duly and punctually pay the Principal
Amount of, Make-Whole Amount, if any, and interest on and other amounts
due under the Equipment Notes and hereunder in accordance with the
terms of the Equipment Notes and this Indenture and all amounts payable
by it to the Note Holders under the Refunding Agreement and the other
Operative Documents;
(ii) the Owner Trustee will not directly or indirectly create,
incur, assume or suffer to exist any Lessor's Liens attributable to it
with respect to any of the properties or assets of the Trust Indenture
Estate, and shall, at its own cost and expense, promptly take such
action as may be necessary duly to discharge any such Lessor's Lien,
and the Owner Trustee will cause restitution to be made to the Trust
Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it;
(iii) in the event an officer with responsibility for or
familiarity with the transactions contemplated hereunder or under the
other Operative Documents (or any Vice President) in the Corporate
Trust Administration Department of the Owner Trustee shall have actual
knowledge of an Indenture Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Indenture Default or
Event of Loss to the Indenture Trustee, the Lessee and the Owner
Participant;
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(iv) 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 12(f) of the Lease, to the extent that the same
shall not have been furnished, or is not required to be furnished by
the Lessee, to the Indenture Trustee pursuant to the Lease or
otherwise;
(v) except as contemplated by the Operative Documents or with
the consent of the Indenture Trustee acting in accordance with Article
IX hereof, the Owner Trustee will not incur any indebtedness for
borrowed money; and
(vi) 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 Refunding Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing
(other than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any payment
of Principal Amount of, or interest on, any Equipment Note (other than
as a result of a Lease Default) and such failure shall have continued
unremedied for ten calendar days; or the failure of the Owner Trustee
to pay when due any other amount due and payable under any Equipment
Note or hereunder (other than as a result of a Lease Default) and such
failure shall have continued unremedied for 15 calendar days after
notice thereof being given to the Owner Trustee from the Indenture
Trustee or any Note Holder; or
(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 4.01(a) hereof or Section 13 of the
Refunding Agreement or by the Owner Trustee as the Owner Trustee
pursuant to Section 4.01(b)(ii) hereof or
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Section 13 of the Refunding Agreement or any Lessor's Lien required to
be discharged by the Owner Participant pursuant to Section 13 of the
Refunding Agreement shall remain undischarged for a period of 30
calendar days after, as the case may be, an officer with responsibility
for or familiarity with the transactions contemplated hereunder or
under the other Operative Documents (or any Vice President) in the
Corporate Trust Administration Department of the Trust Company or an
officer of the Owner Participant with responsibility for or familiarity
with the transactions contemplated hereunder and under the other
Operative Documents (or any Vice President) shall have actual knowledge
of such Lien; provided, that no Indenture Event of Default shall arise
under this Section 4.02(c) as a result of a failure by the Owner
Trustee or the Owner Participant to observe or perform any covenant
referred to in this Section 4.02(c) if the Lessee shall have discharged
all Lessor's Liens required to be discharged by the Owner Trustee or
the Owner Participant pursuant to such covenants and compensated the
Indenture Trustee and the Trust Indenture Estate for all claims, losses
and expenses arising from the failure of the Owner Trustee or the Owner
Participant, as the case may be, to observe and perform any such
covenant; or
(d) any representation or warranty made by the Owner
Participant, the Owner Trustee or the Trust Company herein or in the
Refunding Agreement or by any Person (if any) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Documents or in any related guarantee or support agreement shall prove
to have been false or incorrect when made in any respect materially
adverse to the rights and interests of the Note Holders; and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, such
misrepresentation shall not have been corrected as of a day within 30
calendar days following notice thereof being given to the Owner
Participant, the Owner Trustee, the Trust Company or such Person (if
any), as the case may be, by the Indenture Trustee or a Majority in
Interest of Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any
of its covenants or agreements in the fourth paragraph following the
Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01
hereof, or any failure by the Owner Participant or the Trust Company to
observe or perform any of its respective covenants in Section 9(b)(11),
10 or 14 of the Refunding Agreement; or
(f) except as provided in the following paragraph (j), any
failure by the Owner Trustee or the Trust Company to
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observe or perform any other covenant or obligation of the Owner
Trustee contained in this Indenture or in the Refunding Agreement or
any failure by the Owner Participant to observe or perform any other
covenant or obligation of the Owner Participant contained in the
Refunding Agreement or any failure of any Person (if any) that may
guarantee or support the obligations of an Owner Participant not
originally party to the Refunding Agreement under the Operative
Documents to observe or perform any covenant or obligation of such
Person contained in any such guarantee or support agreement, which
failure, in any case and either individually or together with other
then existing failures, shall have a material adverse effect on the
rights and interests of the Indenture Trustee or any Note Holder and is
not remedied within a period of 45 calendar days following notice being
given to the Owner Trustee, the Owner Participant or such Person, as
the case may be, by the Indenture Trustee or a Majority in Interest of
Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant
or any Person (if any) that may guarantee or support the obligations of
an Owner Participant not originally party to the Refunding Agreement
under the Operative Documents shall (i) be unable to pay its debts
generally as they become due within the meaning of the Bankruptcy Code,
(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 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 with respect thereto (and not in its individual
capacity) or the Owner Participant or any Person (if any) that may
guarantee or support the obligations of an Owner Participant not
originally party to the Refunding Agreement under the Operative
Documents, as the case may be, a custodian, receiver, trustee or other
officer with similar powers with respect to it 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
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bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or such Person, as the case may be; or
(i) any petition for any relief specified in the foregoing
paragraph (h) shall be filed against the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or any Person (if any) that may guarantee or
support the obligations of an Owner Participant not originally party to
the Refunding Agreement under the Operative Documents, as the case may
be, and such petition shall not be dismissed within 60 days; or
(j) at any time when the Aircraft shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid
and duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by the
Lessee in the payment of any installment of Basic Rent due under the Lease, the
Owner Participant may, within ten calendar days (or such longer period ending on
the second day after the expiry of the applicable grace period specified in the
Lease with respect to such default) after notice from the Indenture Trustee or
the Lessee of such default, without the consent or concurrence of any Note
Holder, pay, as provided in Section 2.04 hereof, for application in accordance
with Section 3.01 hereof, a sum equal to the amount of all (but not less than
all) of the Principal Amount and interest as shall then (without regard to any
acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on
the Equipment Notes. 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 Trustee shall have been furnished
by the Owner Participant with all funds necessary for remedying such default,
the Owner Participant may, within fifteen calendar days (or such longer period
ending on the second day after the expiry of any applicable grace period
specified in the Lease with respect to such default) after notice from the
Indenture Trustee or the Lessee of such default, without the consent or
concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner
Trustee's rights under Section 21(d) 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
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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 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 due and payable under
the Equipment Notes or hereunder, 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 default by the Lessee
under the Lease to the same extent that like performance by the Lessee itself
would have remedied such default (but any such payment or performance shall not
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, such Lease Event of Default shall have been remedied, then any
declaration pursuant to the Lease that the Lease is in default, and any
declaration pursuant to this Indenture that the Equipment Notes are due and
payable or that an Indenture Event of Default exists hereunder, based upon such
Lease Event of Default, shall be deemed to be rescinded, and the Owner
Participant or the Owner Trustee, as the case may be, shall (to the extent of
any such payments made by it) be subrogated to the rights of the Note Holders
hereunder to receive such payment of Rent from the Indenture Trustee (and the
payment of interest on account of such Rent being overdue), and shall be
entitled, so long as no other Indenture Default or Indenture Event of Default
shall have occurred and be continuing, to receive, subject to the terms 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 by commencing an action at
law against the Lessee and obtaining and enforcing a judgment against the Lessee
for the payment of such amount or taking appropriate action in a pending action
at law against the Lessee or by demanding Excepted Payments or Excepted Rights;
provided, however, that at no time while an Indenture 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 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 hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease (after giving effect to any applicable grace
period) as to (i) each
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of the three Basic Rent Payment Dates immediately preceding the date of
such default or (ii) in the aggregate more than six Basic Rent Payment
Dates,
(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 Lease Event of Default for the purposes of this Indenture,
if during the 12-month period immediately preceding the relevant
default by the Lessee there shall have been expended by the Owner
Participant pursuant to the second sentence of this Section 4.03 (and
shall have not been reimbursed by the Lessee or any Permitted Sublessee
themselves to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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, and if the Equipment Notes shall have been accelerated
pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the
Indenture Trustee may (subject to the rights of the Owner Participant or the
Owner Trustee to cure any such Indenture Event of Default set forth in Section
4.03 hereof and the obligations of the Indenture Trustee set forth in this
Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the
direction of a Majority in Interest of Note Holders, exercise any and all of the
remedies pursuant to Section 18 of the Lease and pursuant to any Sublease
Assignment 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 but, in the case of the Aircraft, only as permitted by Section
18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and
the Lessee and all Persons claiming under any of them or wholly or partly
therefrom; provided, however, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant ten days' prior written notice of the initial
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exercise of such remedies by the Indenture Trustee under the Lease (if not
stayed or otherwise precluded by applicable law from giving such notice);
provided, further, that the Indenture Trustee shall give the Owner Trustee and
the Owner Participant twenty days' prior written notice of its intention to sell
the Aircraft. Without limiting any of the foregoing, it is understood and agreed
that the Indenture Trustee may exercise any right of sale of the Aircraft
available to it, even though it shall not have taken possession of the Aircraft
and shall not have possession thereof at the time of such sale.
Anything in this Indenture to the contrary notwithstanding, the
Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails to participate in such proceedings, the Owner Trustee shall have
the right (without affecting in any way any right or remedy of
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the Indenture Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the avoidance
of doubt, it is expressly understood and agreed, subject only to the immediately
preceding paragraph, that 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 otherwise exercising all of its
rights, powers and remedies under this Indenture, including without limitation
this Article IV.
(b) If an Indenture Event of Default referred to in clause (g),
(h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment Notes
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the Equipment Notes
which by such declaration shall have become payable) shall have been duly paid
and every other Indenture Default and Indenture Event of Default with respect to
any
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covenant or provision of this Indenture shall have been cured, then and in every
such case a Majority in Interest of Note Holders may (but shall not be obligated
to), by written instrument filed with the Indenture Trustee, rescind and annul
the Indenture Trustee's declaration and its consequences; but no such rescission
or annulment shall extend to or affect any subsequent Indenture Default or
Indenture Event of Default or impair any right consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
No Make-Whole Amount shall become payable on the Equipment Notes
as a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant to
Section 18 of the Lease, to credit against any purchase price bid at such sale
by such Note Holder all or any part of the unpaid obligations owing to such Note
Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner
Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Aircraft, etc. (a) Subject to the
rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof
and unless the Owner Participant shall have theretofore purchased the Equipment
Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Equipment Notes shall have been
accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, at the request of the
Indenture Trustee the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such instruments of title and other documents as the Indenture
Trustee may deem necessary or advisable to enable the Indenture Trustee or an
agent or representative designated by the Indenture Trustee, at such time or
times and place or places as the
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Indenture Trustee may specify, to obtain possession of all or any part of the
Trust Indenture Estate; provided that the Indenture Trustee shall at the time be
entitled to obtain such possession under Section 4.04(a) and the other
applicable provisions of this Indenture. If the Owner Trustee shall for any
reason fail to execute and deliver such instruments and documents after such
request by the Indenture Trustee, the Indenture Trustee may (i) obtain a
judgment conferring on the Indenture Trustee the right to immediate possession
and requiring the Owner Trustee to execute and deliver such instruments and
documents to the Indenture Trustee, to the entry of which judgment the Owner
Trustee hereby specifically consents to the fullest extent it may lawfully do
so, and (ii) to the extent permitted by law, pursue all or part of the Trust
Indenture Estate wherever it may be found (but not in violation of Section 10.05
hereof or of the Lease) and may enter any of the premises of the Lessee wherever
such Trust Indenture Estate may be or be supposed to be and search for and take
possession of and remove the same (but not in violation of Section 10.05 hereof
or of the Lease). 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 a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that the
provisions hereof shall not be construed so as to expand the obligations of the
Lessee under the Lease, including Section 16 thereof). In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, lease,
control or manage the Trust Indenture Estate and to carry on the business
(without limiting the express provisions of Section 5.10 hereof) and to exercise
all rights and powers of the Owner Participant and the Owner Trustee relating to
the Trust Indenture Estate, as the Indenture Trustee 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 Trust Indenture Estate or any part thereof as the Indenture
Trustee may determine; and the Indenture Trustee shall be entitled to collect
and receive directly all tolls, rents (including Rent), revenues, issues,
income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder, except Excepted Payments. The Indenture Trustee shall,
pursuant to the exercise of its remedies under this
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Article IV, to the extent permitted by applicable law, be entitled to the
appointment of a receiver for all or any part of the Trust Indenture Estate,
whether such receivership be incidental to a proposed sale of the Trust
Indenture Estate or otherwise, and the Owner Trustee hereby consents to the
appointment of such receiver and will not oppose any such appointment. Such
tolls, rents (including Rent), revenues, issues, income, products and profits
shall be applied to pay the expenses of the use, operation, storage, leasing,
control, management or disposition of the Trust Indenture Estate and of
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 Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder 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 or
such Note Holder, then and in every such case the Owner Trustee, the Indenture
Trustee, the Note Holders and the Lessee shall, subject to any determination in
such proceedings,
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be restored to their former positions and rights hereunder with respect to the
Trust Indenture Estate, and all rights, remedies and powers of the Indenture
Trustee and the Note Holders shall continue as if no such proceedings had been
instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right consequent thereon; provided,
however, that in the absence of written instructions from the Holders of all
Equipment Notes then outstanding, the Indenture Trustee shall not waive any
Indenture Default (i) in the payment of the Principal Amount of or interest on
any Equipment Note then outstanding, or (ii) in respect of a covenant or
provision hereof which, under Article IX hereof, cannot be modified or amended
without the consent of each Note Holder.
SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If
the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a
time when (i) the Aircraft is registered with the Federal Aviation
Administration, (ii) 25% or more of the then unpaid Principal Amount of the
Equipment Notes is held by one or more Persons which are not a "citizen of the
United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV
as a result of the occurrence of an Indenture Event of Default which is not a
Lease Event of Default, the Indenture Trustee shall make arrangements, if any,
as may be required by law so that such exercise of remedies shall not result in
the ineligibility of the Aircraft to be registered under the Federal Aviation
Act.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the event
the Indenture Trustee shall have knowledge of an Indenture Event of Default, or
shall have knowledge of an Indenture Default arising either from a failure to
pay Rent or a Lease Default of the type referred to in the second sentence of
Section 4.03, the Indenture Trustee shall give prompt notice thereof to the
Owner Trustee, the Owner Participant and the Lessee by facsimile, telex,
telegraph or telephone (confirmed by written notice in the manner provided by
Section 10.06 hereof),
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and to each Note Holder by first-class mail. Subject to the terms of Sections
2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section
5.01, the Indenture Trustee shall take such action, or refrain from taking such
action, with respect to any Indenture Event of Default or Indenture Default
(including with respect to the exercise of any rights or remedies hereunder) as
the Indenture Trustee shall be instructed in writing by a Majority in Interest
of Note Holders. Subject to the provisions of Section 5.03 hereof, if the
Indenture Trustee shall not have received instructions as above provided within
20 calendar days after mailing notice of such Indenture Default or Indenture
Event of Default to the Note Holders, the Indenture Trustee may, subject to
instructions thereafter received pursuant to the preceding provisions of this
Section 5.01, take such action, or refrain from taking such action, but shall be
under no duty to take or refrain from taking any action, with respect to such
Indenture Default or Indenture Event of Default as it shall determine to be
advisable and in the best interests of the Note Holders 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 its own affairs; provided that the
Indenture Trustee may not sell the Aircraft or any part thereof without the
consent of a Majority in Interest of Note Holders. In the event the Indenture
Trustee shall at any time elect to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the
case of any such party) not stayed or otherwise prohibited by applicable law,
the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For
all purposes of this Indenture, in the absence of actual knowledge on the part
of an officer in the Corporate Trust Office, in the case of the Indenture
Trustee, or its Corporate Trust Administration Department, 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 an Indenture Event of Default (except,
in the case of the Indenture Trustee, the failure of the Lessee to pay any
installment of Rent when due, if any portion of such installment was then
required to be paid to the Indenture Trustee, which failure shall constitute
knowledge of an Indenture Default for purposes of the first sentence of this
Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one
or more Note Holders or, in the case of the Owner Trustee, by the Indenture
Trustee.
SECTION 5.02. Action Upon Instructions. Subject to the terms of
Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof,
upon the written instructions at any time and from time to time of a Majority in
Interest of Note Holders, 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,
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or give such notice, consent, waiver or approval or exercise such right, remedy
or power to take such other action hereunder or under any other Indenture
Document or in respect of any part or all of the Trust Indenture Estate as shall
be specified in such instructions; (ii) take such action with respect to, or to
preserve or protect, the Trust Indenture Estate (including the discharge of
Liens) as shall be specified in such instructions and as are 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 of 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 interest created hereunder in the
Trust Indenture Estate as may be specified from time to time in written
instructions of a Majority in Interest of Note Holders (which instructions may,
by their terms, be operative only at a future date and which shall be
accompanied by the execution form of such continuation statement so to be
filed); provided that, notwithstanding the foregoing, the Indenture Trustee may,
but shall not be obligated to, execute and file or cause to be filed any
financing statement which it from time to time deems appropriate or any
continuation statement that the Lessee, in discharge of its obligations under
Section 3(v) of the Refunding Agreement or any other Operative Document, may so
request. Notwithstanding the foregoing or anything in this Indenture to the
contrary, the Indenture Trustee may, on the advice of its counsel and without
the consent or approval of any Note Holder, approve any counsel asked to opine
on any matters under Section 11(b)(ii) of the Refunding Agreement, Section
6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by
such counsel. None of the Owner Participant, the Owner Trustee or the Lessee
have any liability for the failure of the Indenture Trustee to discharge its
obligations hereunder.
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 hereof unless
the Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the
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first sentence thereof) or 5.02 or Article IV hereof, 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 of the other Indenture
Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Aircraft or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and obtain such instructions promptly so as not
unreasonably to delay the proposed action of Lessee in respect of which the
instructions are sought. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Article VII hereof or any
other Operative Document) promptly take such action as may be necessary to duly
discharge all Lenders' Liens on any part of the Trust Indenture Estate
attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding 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, or place Liens on, the Aircraft or any other part of the
Trust Indenture Estate except (i) as required or permitted by the terms of the
Lease or the Refunding Agreement, or (ii) in accordance with the powers granted
to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Indenture and in accordance with the terms hereof.
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SECTION 5.06. Replacement Airframes, Replacement Engines and
Replacement Parts. (a) If at any time and from time to time, the Airframe or
Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a),
11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s),
as the case may be, in accordance with the provisions of this Section 5.06 and
the provisions of said Sections of the Lease, the Owner Trustee shall, at such
time or times, but subject to compliance with the conditions to such replacement
set forth in the Lease, direct the Indenture Trustee to execute and deliver to
or as directed in writing by the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine(s) 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:
(1) A written request from the Owner Trustee, requesting such
release and specifically describing the Airframe and/or Engine(s) so to be
released and the Replacement Airframe and/or Replacement Engine(s).
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified
by manufacturer, model, FAA registration number (or other applicable
registration number) and manufacturer's serial number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number (or other applicable
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 hold legal title to
such Replacement Airframe free and clear of all Liens except Permitted
Liens, that such Replacement Airframe will on such date be in good
operating condition, and that such Replacement Airframe has been or,
substantially concurrently with such replacement, is in the process of
being duly registered with the Owner Trustee as owner thereof under the
Federal Aviation Act or under the law then applicable to the
registration of the Aircraft and that an airworthiness certificate has
been duly issued under the Federal Aviation Act (or such other
applicable law) with respect to such Replacement Airframe, and that
such
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registration and certificate is in full force and effect, and the
Lessee or a Permitted Sublessee will have the full right and authority
to use such Replacement Airframe;
(iv) that the insurance required by Section 12 of the Lease is
in full force and effect with respect to such Replacement Airframe and
all premiums then due thereon have been paid in full;
(v) that the Replacement Airframe is of a like Airbus
A320-231 model airframe with equivalent or better modification status
delivered by the Manufacturer not earlier than June 30, 1988;
(vi) that no Lease 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 a Replacement Airframe;
(vii) an appraisal prepared in accordance with the Appraisal
Procedure (as defined in the Lease) confirms that the Replacement
Airframe has a value, utility and remaining useful life at least equal
to that of the Airframe which suffered the Event of Loss assuming that
the same were maintained in accordance with the requirements of the
Lease whether or not they are in fact so maintained; and
(viii) that each of the conditions specified in Section 11(a)
and (c) of the Lease with respect to such Replacement Airframe have
been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) 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;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Engine the Owner Trustee will hold title to such
Replacement Engine free and clear of all Liens except Permitted Liens,
that such Replacement Engine will on such date be in good operating
condition, and that such Replacement Engine is the same or an improved
model as the Engine to be released;
(iv) the value, remaining useful life and utility of the
Replacement Engine as of the date of such certificate (which value,
remaining useful life and utility shall not be
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less than the then value, remaining useful life and utility of the
Engine requested to be released, assuming such Engine was in the
condition and repair required to be maintained under the Lease (but
without regard to hours and cycles until overhaul));
(v) that no Lease 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 Engine; and
(vi) that each of the conditions specified in Section 11(b) of
the Lease with respect to such Replacement Engine have been satisfied.
(3) The appropriate instrument or 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, (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 (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Airframe or Replacement Engine to the Lien of this Indenture
and subjecting to any relevant Assigned Sublease and Sublease Assignment,
including, without limitation, an Indenture Supplement.
(4) With respect to a Replacement Airframe, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee confirming
the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof.
(5) The opinion of counsel to the Lessee, satisfactory to the
Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the requirements of this
Indenture and the Lease and, upon the basis of such application, the
property so sold or disposed of may be properly released from the Lien
of this Indenture and all conditions precedent herein provided for
relating to such release have been complied with;
(ii) the Replacement Airframe and/or Replacement Engine(s) have
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 Lien of this Indenture and the Lease, and
subjecting
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to any relevant Assigned Sublease and Sublease Assignment, as the case
may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of
the Aircraft, and no further action, filing or recording of any
document is necessary in order to establish and perfect, in the United
States and, if the Aircraft is registered outside the United States, in
the jurisdiction of registration, the legal title to such Replacement
Airframe and/or Replacement Engine and the Lien of this Indenture on
such Replacement Airframe and/or Replacement Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as 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 to the
Replacement Airframe and, if an Event of Loss with respect to the
Aircraft has occurred, the Replacement Engines to the same extent as
with respect to the Airframe and Engines then installed thereon prior
to such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Airframe or Engine as contemplated by
Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for
the benefit of the Note Holders and the Lessee, subject to fulfillment of the
conditions precedent and compliance by the Lessee with its obligations set forth
in Section 11 of the Lease, to execute and deliver the appropriate instruments
as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee
(or any relevant Permitted Sublessee) an appropriate instrument releasing the
Airframe and/or Engine(s) being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or Engine as
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contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions
of this Indenture relating to the Airframe or Engine(s) being replaced shall be
applicable to such Replacement Airframe or Replacement Engine(s) with the same
force and effect as if such Replacement Airframe or Replacement Engine(s) were
the same airframe or engine(s), as the case may be, as the Airframe or Engine(s)
being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Note Holder shall affect the sufficiency of
such notice with respect to other Note Holders. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Note Holders
shall be filed with the Indenture Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this Indenture, including
the Granting Clause, but subject always to the final paragraph of this Section
5.10, the following rights shall be reserved to the Owner Trustee or Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
(a) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, sue for or otherwise
obtain all amounts included in Excepted Payments from the Lessee,
exercise any election or option or make any decision or determination
or give or receive any notice, consent, waiver or approval in respect
of any Excepted Payment and seek legal or equitable remedies to require
the Lessee to maintain the insurance coverage referred to in Section 12
of the Lease (or the comparable
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provisions of any Assigned Sublease) and such specific performance of
the covenants of the Lessee under the Lease (or the comparable
provisions of any Assigned Sublease) relating to the protection,
maintenance, possession and use of the Aircraft; provided, that the
rights referred to in this clause (a) shall not be deemed to include
the exercise of any remedies provided for in Section 18 of the Lease
(or the comparable provisions of any Assigned Sublease) other than the
right to proceed by appropriate court action, either at law or in
equity, to enforce payment by the Lessee of such amounts included in
Excepted Payments or performance by the Lessee of such insurance
covenant or to recover damages for the breach thereof or for specific
performance of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent of
the Owner Trustee, enter into, execute and deliver amendments or
modifications in respect of any of the provisions of the Lease, any
Assigned Sublease or any Sublease Assignment and (ii) unless an
Indenture Event of Default and an Indenture Trustee Event shall have
occurred and be continuing, the Indenture Trustee shall not, without
the consent of the Owner Trustee, which consent shall not be withheld
if no right or interest of the Owner Trustee or the Owner Participant
shall be materially diminished or impaired thereby, (A) enter into,
execute and deliver waivers or consents in respect of any of the
provisions of the Lease, any Assigned Sublease or any Sublease
Assignment, or (B) approve any accountants, engineers, appraisers or
counsel as satisfactory to render services for or issue opinions to the
Owner Trustee pursuant to the Operative Documents; provided that,
whether or not an Indenture Event of Default has occurred and is
continuing, the Owner Trustee's consent shall be required with respect
to any waivers or consents in respect of any of the provisions of
Section 6, 12 or 16 of the Lease, or of any other Section of the Lease
to the extent such action shall affect (y) the amount or timing of, or
the right to enforce payment of any Excepted Payment or (z) the amount
or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of
the Owner Trustee) which, absent the occurrence and continuance of an
Indenture Event of Default hereunder, would be distributable to the
Owner Trustee under Article III hereof;
(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
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and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses (a),
(b) and (c) above, so long as no Indenture Event of Default has
occurred and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner Trustee and the Owner Participant under the Lease shall be
exercised by the Owner Trustee and/or the Owner Participant, as the
case may be, to the exclusion of the Indenture Trustee and any Note
Holder and without the consent of the Indenture Trustee or any Note
Holder; provided that the foregoing shall not, nor shall any other
provision of this Section 5.10, limit (A) any rights separately and
expressly granted to the Indenture Trustee or any Note Holder under the
Lease or the other Operative Documents (including, without limitation,
Section 15 of the Refunding Agreement) or (B) the right of the
Indenture Trustee or any Note Holder to receive any funds to be
delivered to the Owner Trustee under the Lease (except with respect to
Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be
in default under Section 18 thereof and (C) subject only to the provisions of
Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such
Section 18 (other than in connection with Excepted Payments) and in Article IV
hereof.
SECTION 5.11. Evidence of Action Taken by Note Holder. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Note Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such
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Note Holders in person or by agent duly appointed in writing, and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, if
expressly required herein, to the Owner Trustee. Proof of execution of any
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05)
conclusive in favor of the Indenture Trustee and the Owner Trustee if made in
the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far as
concerns such Equipment Note. Except as aforesaid any such action taken by the
Note Holder shall be conclusive and binding upon such Note Holder and upon all
future Note Holders and owners of such Equipment Note and of any Equipment Notes
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Equipment Note. Any action
taken by the Note Holders of the percentage in aggregate Principal Amount of the
Equipment Notes specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee in its individual capacity shall be
answerable or accountable under any circumstances, except for its own willful
misconduct or gross negligence (other than for the handling of funds, for which
the standard of accountability shall be negligence), or as provided in the
fourth sentence of Section 2.04(a) hereof and in the last sentence of Section
5.04 hereof, and except for liabilities that may result, in the case of the
Trust Company,
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from the inaccuracy of any representation or warranty of the Trust Company in
the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or
the failure to perform any covenant of the Trust Company pursuant to Section
4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the
case of the Indenture Trustee, from the inaccuracy of any representation or
warranty, or failure to perform any covenant, of the Indenture Trustee made in
its individual capacity herein, in the Refunding Agreement or in any other
document. None of the Owner Participant, the Trust Company or the Indenture
Trustee shall be liable for any action or inaction of any other one of such
parties, except, in the case of the Owner Participant, for any action or
omission of the Owner Trustee performed or omitted on the instructions of the
Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note
Holders for any purpose.
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, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case
of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof
and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner
Trustee and the Indenture Trustee shall have no duty (i) to see to any
registration of the Aircraft or any recording or filing of the Lease or of this
Indenture or any other document, or to see to the maintenance of any such
registration, recording or filing, (ii) to see to any insurance on the Aircraft,
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 Trust 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 or any of the
Permitted Sublessee's covenants under any Assigned Sublease with respect to the
Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE)
NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE
MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR ANY PART THEREOF, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
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DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY
ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for
the Aircraft the Owner Trustee shall have received whatever interest in the
Aircraft was conveyed to it under the Warranty Bill of Sale subject to the
rights of the parties to the Indenture Documents and (ii) the Aircraft shall be
free and clear of Lessor's Liens attributable to the Trust Company. Neither the
Trust Company nor the Indenture Trustee 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
Documents 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 in its individual capacity or as Indenture Trustee made under
this Indenture or in the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys
paid to or retained by the Indenture Trustee pursuant to any provision hereof
and not then required to be distributed to any Note Holder, the Lessee or the
Owner Trustee as provided in Article III hereof need not be segregated in any
manner except to the extent required by law, 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 hereof) 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 any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of
the Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of 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
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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, but in the case of any such certificate, the
Owner Trustee and the Indenture Trustee shall be under a duty to examine the
same to determine whether or not it conforms to the requirements of this
Indenture. 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 (except in
the case of the Indenture Trustee's obligations under the third sentence of
Section 2.04(a)) through agents or attorneys and shall not be responsible for
any misconduct or negligence on the part of any such agent or attorney appointed
with due care hereunder. The Indenture Trustee may, at the expense of the Trust
Indenture Estate, consult with counsel, accountants and other skilled Persons to
be selected and retained by it, and the Owner Trustee and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by them
in accordance with the written advice or written opinion of any such counsel,
accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against any Note Holder or the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
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SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee (in its individual
capacity and as trustee) from and after the Restatement Date (whether or not
also agreed to be indemnified against by any other Person under any other
document) in any way relating to or arising out of this Indenture, the Trust
Agreement, the Equipment Notes, the other Indenture Documents or the enforcement
of any of the terms of any thereof, or in any way relating to or arising out of
the manufacture, purchase,
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acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease,
possession, use, operation, condition, sale, return or other disposition of the
Aircraft or any Engine (including, without limitation, latent and other defects,
whether or not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder, except only (i) in the case of willful misconduct or gross negligence
(or negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the
Indenture Trustee, in its individual capacity and as Indenture Trustee, and its
successors, permitted assigns, agents and servants, thereunder; provided that so
long as the Lease is in effect, the Indenture Trustee shall not make any claim
under this Section 7.01 for any amount indemnified against by the Lessee under
the Lease without first (but only to the extent not stayed or otherwise
prevented by operation of law) making demand on the Lessee for payment of such
amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee
promptly of any claim for which it may seek indemnity. The Lessee shall be
entitled to defend any claim by the Indenture Trustee to the extent provided in
Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to
indemnification from the Trust Indenture Estate for any liability, obligation,
loss, damage, penalty, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7.01 to the extent not reimbursed
by the Lessee or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same the Indenture Trustee shall
have a prior Lien on the Trust Indenture Estate. The indemnities contained in
this Section 7.01 shall survive the termination of this Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
agent or affiliate of the Trust Company or the Owner Participant (the
"Exculpated Equity Persons") shall have any obligation, duty or liability of any
kind whatsoever to the Indenture Trustee or any such Note Holder in connection
with the exercise by any Exculpated Equity Person of any rights of the Owner
Trustee or the taking of any action or the failure to take any action by any
Exculpated Equity Person in connection with any rights of the
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Owner Trustee under this Indenture or the Lease, and each such Note Holder
hereby waives and releases, to the extent permitted by applicable law, each
Exculpated Equity Person of any and all such obligations, duties or liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case of
any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Trust Company pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to the Indenture Trustee and to each Note Holder.
SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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 and
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assuming such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Indenture Trustee,
without further act, shall become vested with and bound by all the estates,
properties, rights, powers, duties and obligations of the predecessor Indenture
Trustee hereunder and under the other Indenture Documents in the trusts
hereunder applicable to it with like effect as if originally named the Indenture
Trustee herein; but nevertheless upon the written request of such successor
Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver
an instrument transferring to such successor Indenture Trustee, upon the trusts
herein expressed applicable to it, all the estates, properties, rights and
powers of such predecessor Indenture Trustee, and such predecessor Indenture
Trustee shall duly assign, transfer, deliver and pay over to such successor
Indenture Trustee all moneys or other property then held by such predecessor
Indenture Trustee hereunder, subject nevertheless to its claim provided for in
Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall be
a "citizen of the United States" within the meaning of Section 40102(a)(15) of
the Federal Aviation Act and shall also be a bank or trust company having a
combined capital and surplus of at least $200,000,000 if there be such an
institution willing, able and legally qualified to perform the duties of the
Indenture Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the foregoing,
upon the request of the Owner Trustee or the Lessee, any such successor
corporation referred to in this Section 8.02(d) shall deliver to the Owner
Trustee and the Lessee an instrument confirming its status as the Indenture
Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate may at the time be located or in
which any action of the Indenture Trustee may be required to be performed or
taken, the Indenture Trustee, by an instrument in writing signed by it, may
appoint one or more individuals or corporations to act as separate trustee or
separate trustees or co-trustee, acting jointly with the Indenture Trustee, of
all or any part of
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the Trust Indenture Estate to the full extent that local law makes it necessary
for such separate trustee or separate trustees or co-trustee acting jointly with
the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust 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
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, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act, and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Indenture
Trustee;
(ii) all other rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be
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conferred or imposed and exercised or performed by the Indenture
Trustee and such additional trustee or trustees and separate trustee or
trustees jointly except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Indenture Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Indenture
Estate in any such jurisdiction) shall be exercised and performed by
such additional trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent
of, the Indenture Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.03,
the powers of any additional trustee or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures. (a)
Except as otherwise provided in Section 5.10 hereof, and except with respect to
Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or
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supplement to the Lease, or execute and deliver any written waiver or
modification of, or consent under, the terms of the Lease, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee acting on instructions of a Majority in
Interest of Note Holders. Anything to the contrary contained in this Section
9.01 notwithstanding, without the necessity of the consent of any of the Note
Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i)
any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and
Lessee may, so long as no Indenture Event of Default has occurred and is
continuing, enter into amendments of or additions to the Lease to modify
Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such
amendment would adversely affect the rights or exercise of remedies under
Section 18 of the Lease) so long as such amendments, modifications and changes
do not and would not (A) affect the time of, or reduce the amount of, Basic Rent
or Stipulated Loss Value payments until after the payment in full of all Secured
Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the
value, utility or useful life of the Aircraft or any Engine or (D) otherwise
adversely affect the Note Holders in any material respect and (iii) the Lessee
may effect the re-registration of the Aircraft in accordance with but always
subject to the terms and conditions applicable thereto specified in Section 11
of the Refunding Agreement and Section 6(e) of the Lease and the Indenture
Trustee may approve any Permitted Sublessee as provided in clause (c) of the
definition of such term set forth in the Lease and may exercise the rights of
the Indenture Trustee under Section 15 of the Refunding Agreement. For the
avoidance of doubt, nothing in this Section 9.01 shall limit in any way the
rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d)
to exercise certain rights and powers under the Lease to the exclusion of the
Indenture Trustee and any Note Holder and without the consent of the Indenture
Trustee or any Note Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise, whether in its
official or individual capacity.
Any supplemental indenture authorized by the provisions of this
Section 9.01 may be executed without the consent of the
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Note Holders notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, or does not adversely affect the Note Holders in any
material respect. Upon the written request of a Majority in Interest of Note
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the Lease which would permit redemption of
Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any
of the provisions of Section 4(b) of the Lease, or modify, amend or supplement
the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any
assignment of any thereof, in either case releasing the Lessee (or Permitted
Sublessee) from its obligations in respect of the payment of Basic Rent or
Stipulated Loss Value for the Aircraft or altering the absolute and
unconditional character of the obligations of Lessee to pay
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Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable
provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on
the Trust Indenture Estate or any part thereof other than Permitted Liens or
deprive any Note Holder of the benefit of the Lien of this Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely as
Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Airframe or Engines or any
Replacement Airframe or Replacement Engine; (v) to add to the covenants of the
Owner Trustee for the benefit of the Note Holders, or to surrender any rights or
powers herein conferred upon the Owner Trustee, the Owner Participant or the
Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on
the Equipment Notes any legend as may be required by law.
(d) Without the consent of the Lessee no amendment or supplement
to this Indenture or waiver or modification of the terms hereof shall adversely
affect the Lessee in any material respect or impose upon the Lessee any
additional indemnification obligations.
SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective
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rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for all and any purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such copy
to each Note Holder), but the failure of the Owner Trustee or the Indenture
Trustee to mail such conformed copies shall not impair or affect the validity of
such document. The Indenture Trustee will furnish to each Note Holder, promptly
upon receipt thereof, duplicates or copies of
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all reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder to the extent
that the same were not required to have been furnished to such Note Holder
pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX, no
written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX 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, any Engines or other property
thereto or to release the Aircraft, any Engine or other property therefrom or to
execute and deliver an Indenture Supplement, in each case pursuant to the terms
hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made to
any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full of
the Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid
interest on and other amounts then due with respect to the Equipment Notes and
provided that there shall then be no other amounts then due to the Note Holders
and the Indenture Trustee hereunder or under the Lease or the Refunding
Agreement or otherwise secured hereby, the Lien of this Indenture shall be
deemed discharged and the security interests in favor of the Indenture Trustee
and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such
Lien and the termination of such security interest in the Aircraft and release
of 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 Trustee to
give effect to such discharge, termination and 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 as expressly provided pursuant
to Article X hereof or upon any sale or other final disposition by the Indenture
Trustee of all property part
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of the Trust Indenture Estate and the final distribution by the Indenture
Trustee of all moneys or other property or proceeds constituting part of the
Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Indenture and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note
Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding.
Any sale or other conveyance of the Aircraft by the Indenture Trustee made
pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the 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 10.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Lessee and Note Holders. Nothing in this Indenture,
whether express or implied, shall be construed to give to any Person other than
the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note
Holders, the Lessee and, with respect to any provisions hereof requiring payment
to any Permitted Sublessee, such Permitted Sublessee, any legal or equitable
right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of the Aircraft, except in
accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations,
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directions, consents, waivers or documents required or permitted by the terms of
this Indenture shall be in English and in writing, mailed by first-class
registered or certified mail, postage prepaid, or by confirmed telex or
telecopy, and (i) if to the Owner Trustee, addressed to it at its office at
Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302)
651-8464/8882), with a copy to the Owner Participant at its address set forth in
the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at
its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate
Trust Administration (telex: 99339; answerback: CTNB- HTFD; telecopy: (203)
240-7920) or (iii) if to the Owner Participant, the Lessee or any Note Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Register. Whenever any
notice in writing is required to be given by the Owner Trustee or the Indenture
Trustee or any Note Holder to any of the other of them, such notice shall be
deemed and such requirement satisfied when such notice is received. Any party
hereto may change the address to which notices to such party will be sent by
giving notice of such change to the other parties to this Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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 permitted assigns of each, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Note Holder shall bind the successors and assigns of
such Note Holder. This Indenture and the Trust
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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. Each Note Holder by its acceptance of
an Equipment Note agrees to be bound by this Indenture and all provisions of the
Refunding Agreement applicable to a Note Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Indenture Trustee, the
Owner Trustee, the Owner Participant, any Note Holder or any bank or other
Affiliate of any of them may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Lessee or any Permitted Sublessee fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Lessee for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the parties
that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as
assignee of the Owner Trustee's rights hereunder), shall be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the right to
take possession of the Aircraft, Airframe, Engines and Parts as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor, and in any instance where more than one construction is
possible of the terms and conditions hereof or of any other pertinent Operative
Document, each such party agrees that a construction which would preserve such
benefits shall control over any construction which would not preserve such
benefits.
Trust Indenture
<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee
By_________________________________
Title:
FLEET NATIONAL BANK,
not in its individual capacity,
except as expressly provided
herein, but solely as Indenture
Trustee
By_________________________________
Title:
Trust Indenture
<PAGE> 96
EXHIBIT A
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-13]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1990 AWA-13]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1990 AWA-13] dated
as of September 21, 1990 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
WITNESSETH:
WHEREAS, the Trust Indenture and Security Agreement [GPA 1990
AWA-13] dated as of September 21, 1990, as amended and restated as of November
26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee
and Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut, National Association, and The Connecticut National
Bank), as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof
which shall particularly describe the Aircraft (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 Trust Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No.
1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of
July 29, 1993, subjected to the Lien of such Original Indenture the airframe and
engines therein described, which Original Indenture and Trust Indenture
Supplement No. 1 have been duly recorded with the Federal Aviation
Administration as one document on October 1, 1990 and assigned Conveyance No.
E10187, which Amendment No. 1 has been duly recorded with the Federal Aviation
Administration on May 18, 1992 and assigned Conveyance No. EE003014 and which
Amendment No. 2 has been duly recorded with the Federal Aviation Administration
on August 4, 1993 and assigned Conveyance No. F59673.
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WHEREAS(1), 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(2), the Owner Trustee has, as provided in the Indenture,
heretofore executed and delivered to the Indenture Trustee (3) Indenture
Supplement(s) for the purpose of specifically subjecting to the Lien of the
Indenture certain airframes and/or engines therein described, which Indenture
Supplement(s) is (are) dated and has (have) been duly recorded with the Federal
Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
NOW, THEREFORE, This Supplement Witnesseth, that, to secure the
prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if
any, and all other amounts due with respect to, all 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 contained in the
Indenture and the Refunding Agreement and the Equipment Notes, for the benefit
of the Note Holders, and the prompt payment of any and all amounts from time to
time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner
Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and
- -----------------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
(2) This recital not to be included in the first Indenture
Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 98
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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 Note Holders from time to time, in
the trust created by the Indenture, a first priority security interest in and
mortgage Lien on all estate, right, title and interest of the Owner Trustee in,
to and under the following described property:
AIRFRAME(S)
( ) airframe(s) identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
together with all 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.
AIRCRAFT ENGINES
( ) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as
follows:
Manufacturer's
Manufacturer Model Serial Number
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engines.
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,
Form of Trust Indenture Supplement
<PAGE> 99
- 4 -
sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture
Trustee, its successors and assigns, for the security and benefit of the Note
Holders from time to time, in the trust created by the Indenture, all of the
estate, right, title and interest of the Owner Trustee in, to and under the
Lease and Lease Supplement [GPA 1990 AWA-13] No. 3 of even date herewith (other
than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and subject to
the terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and shall form a part of it, and the Indenture is hereby incorporated
by reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 100
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement
to be duly executed by one of its officers thereunto duly authorized on the day
and year first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By____________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 101
SCHEDULE I
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-13]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- -------- ---------
<S> <C> <C> <C>
Series A $11,897,518 02-Jan-2009 6.85%
Series B $ 4,413,774 02-Jul-2005 6.93%
Series C $ 4,552,621 02-Jan-2002 6.86%
Series D $ 4,249,113 02-Jan-2002 8.16%
Series E $ 2,541,597 02-Jul-2002 10.50%
</TABLE>
<PAGE> 102
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N634AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 103
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SERIES B
Aircraft: N634AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 104
- 3 -
SERIES C
Aircraft: N634AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 105
- 4 -
SERIES D
Aircraft: N634AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 106
- 5 -
SERIES E
Aircraft: N634AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 107
SCHEDULE II
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-13]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1A, dated
November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1B, dated
November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1C, dated
November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1D, dated
November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1E, dated
November 26, 1996.
Schedule II
<PAGE> 1
EXHIBIT 4.38
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-14]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 092
Registration No. N635AW
Leased by America West Airlines, Inc.
<PAGE> 2
TABLE OF CONTENTS
Page
GRANTING CLAUSE................................................. 3
HABENDUM CLAUSE................................................. 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions.............................. 8
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes.......................... 21
SECTION 2.02. Issuance and Terms of Equipment Notes............ 26
SECTION 2.03. Payments from Trust Indenture Estate
Only.............................. 29
SECTION 2.04. Method of Payment................................ 31
SECTION 2.05. Application of Payments.......................... 33
SECTION 2.06. Termination of Interest in Trust
Indenture Estate.................. 34
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes................... 34
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes................... 36
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation...................... 36
SECTION 2.10. Mandatory Redemptions of Equipment
Notes............................. 37
SECTION 2.11. Redemptions; Notice of Redemption................ 37
SECTION 2.12. Option to Purchase Equipment Notes............... 38
SECTION 2.13. Subordination.................................... 39
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions....................... 40
SECTION 3.02. Event of Loss and Replacement.................... 42
SECTION 3.03. Payment After Indenture Event of
Default, etc...................... 43
SECTION 3.04. Certain Payments................................. 46
SECTION 3.05. Other Payments................................... 47
SECTION 3.06. Payments to Owner Trustee........................ 47
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee........................... 48
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
<S> <C>
SECTION 4.01. Covenants of Trust Company and Owner
Trustee.................................................................. 49
SECTION 4.02. Indenture Events of Default............................................................. 50
SECTION 4.03. Certain Rights.......................................................................... 53
SECTION 4.04. Remedies................................................................................ 55
SECTION 4.05. Return of the Aircraft, etc............................................................. 58
SECTION 4.06. Remedies Cumulative..................................................................... 60
SECTION 4.07. Discontinuance of Proceedings........................................................... 60
SECTION 4.08. Waiver of Past Indenture Defaults....................................................... 61
SECTION 4.09. Exercise of Remedies by Foreign Note
Holders.................................................................. 61
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default.................................................... 61
SECTION 5.02. Action Upon Instructions................................................................ 62
SECTION 5.03. Indemnification......................................................................... 63
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions................................................ 64
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions..................................... 64
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts............................................ 65
SECTION 5.07. Indenture Supplements for Replacements.................................................. 68
SECTION 5.08. Effect of Replacement................................................................... 68
SECTION 5.09. Notices, etc............................................................................ 69
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant........................................................ 69
SECTION 5.11. Evidence of Action Taken by Note Holder................................................. 71
SECTION 5.12. Right of Revocation of Action Taken..................................................... 72
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties......................................................... 72
SECTION 6.02. Absence of Duties....................................................................... 73
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents.................................................... 73
SECTION 6.04. No Segregation of Moneys; No Interest................................................... 74
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 6.05. Reliance; Agents; Advice of Counsel..................................................... 74
SECTION 6.06. Capacity in Which Acting................................................................ 75
SECTION 6.07. Compensation............................................................................ 75
SECTION 6.08. May Become Note Holder.................................................................. 76
SECTION 6.09. Further Assurances; Financing
Statements............................................................... 76
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification................................................................ 76
SECTION 7.02. Exculpation and Release of Liability.................................................... 77
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee....................................................... 78
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor........................................ 78
SECTION 8.03. Appointment of Separate Trustees........................................................ 79
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures............................................................... 81
SECTION 9.02. Effect of Supplemental Indenture........................................................ 84
SECTION 9.03. Documents to Be Given to Trustee........................................................ 85
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures.................................................. 85
SECTION 9.05. Trustees Protected...................................................................... 85
SECTION 9.06. Documents Mailed to Note Holders........................................................ 85
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement....................................... 86
SECTION 9.08. Notices to Liquidity Provider........................................................... 86
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture............................................................... 86
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders.................................................. 87
SECTION 10.03. Sale of Aircraft by Indenture Trustee
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C>
is Binding.............................................................. 87
SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant,
Lessee and Note Holders................................................. 87
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease......................................................... 87
SECTION 10.06. Notices................................................................................ 87
SECTION 10.07. Severability........................................................................... 88
SECTION 10.08. No Oral Modifications or Continuing
Waivers................................................................. 88
SECTION 10.09. Successors and Assigns................................................................. 88
SECTION 10.10. Headings............................................................................... 89
SECTION 10.11. Normal Commercial Relations............................................................ 89
SECTION 10.12. Governing Law; Counterpart Form........................................................ 89
SECTION 10.13. Section 1110........................................................................... 89
</TABLE>
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
(iv)
<PAGE> 6
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-14]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [GPA 1990 AWA-14] (this "First Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank
of Connecticut, Shawmut Bank Connecticut, National Association, and The
Connecticut National Bank), a national banking association, not in its
individual capacity except as otherwise specifically set forth herein, but
solely as indenture trustee hereunder (in such capacity, together with its
successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company
entered into the Trust Agreement [GPA 1990 AWA-14] dated as of September 21,
1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-14] No. 1
dated September 28, 1990, and as further supplemented by Trust Agreement
Supplement [GPA 1990 AWA-14] No. 2 dated the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"),
whereby, among other things, Wilmington Trust Company has declared a certain
trust for the use and benefit of the Owner Participant, subject, however, to the
Trust Indenture Estate created pursuant hereto for the use and benefit of (to
the extent set forth herein), and with the priority of certain payments to, the
Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized
and directed to execute and deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-14] dated
as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1
dated September 28, 1990, which were recorded by the Federal Aviation
Administration on September 28, 1990 as one instrument and assigned Conveyance
No. E10184, as amended by Amendment No. 1 dated March 27, 1992,
Trust Indenture
<PAGE> 7
- 2 -
recorded by the Federal Aviation Administration on May 18, 1992 and assigned
Conveyance No. EE003011, and as further amended by Amendment No. 2 dated as of
July 29, 1993, recorded by the Federal Aviation Administration on August 4, 1993
and assigned Conveyance No. F59674 (collectively, as so amended, supplemented or
otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner
Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement
[GPA 1990 AWA-14] dated as of September 21, 1990, as supplemented by Lease
Supplement [GPA 1990 AWA-14] No. 1 dated September 28, 1990, which were recorded
by the Federal Aviation Administration on September 28, 1990 as one instrument
and assigned Conveyance No. E10185, and as further supplemented by Lease
Supplement No. 2 dated December 31, 1991, which was not filed for recordation
with the Federal Aviation Administration (collectively, as so amended,
supplemented or otherwise modified to the date hereof, the "Original Lease") and
(iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to
the Lenders (as defined in the Original Indenture) the Original Loan
Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and
restate the Original Lease pursuant to Assignment and Amendment No. 1 and
Sublease Termination Agreement [GPA 1990 AWA-14] dated as of the date hereof
among the Original Head Lessee, as assignor and the Original Sublessee, as
assignee, the Owner Trustee and the Indenture Trustee and the Amended and
Restated Aircraft Lease Agreement [GPA 1990 AWA-14] dated as of the date hereof
between the Owner Trustee and the Lessee (as so assigned, amended and restated,
the "Amended and Restated Lease" or the "Lease") and to enter into Lease
Supplement No. 3 and (ii) cause the implementation of the Refinancing
Transaction pursuant to which, among other things, the Original Loan
Certificates issued pursuant to the Original Indenture shall be prepaid and new
Equipment Notes shall be issued to the Pass Through Trustees (or their
designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's estate,
right, title and interest in and to the Aircraft and, except as hereinafter
expressly provided, all of the Owner Trustee's right, title and interest in, to
and under the Lease (as amended and restated to date and as the same may at any
time and from time to time be further amended, restated or otherwise modified in
accordance with the terms thereof and hereof) and all payments and other amounts
Trust Indenture
<PAGE> 8
- 3 -
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable benefit and security of the Note Holders,
subject to Section 2.13 and Article III hereof;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner Trustee and authenticated, issued and
delivered by the Indenture Trustee hereunder, the legal, valid and binding
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this First Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment
of the Principal Amount of, interest on, Make- Whole Amount, if any, and all
other amounts due with respect to, all Equipment Notes from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions contained herein and in the
Refunding Agreement and the Equipment Notes, for the benefit of the Note
Holders, and the prompt payment of any and all amounts from time to time owing
hereunder and under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee to the Note Holders and for the uses and purposes and
subject to the terms and provisions hereof, and in consideration of the premises
and of the covenants herein contained, and of the acceptance of the 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, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture
Trust Indenture
<PAGE> 9
- 4 -
Supplement or any indenture supplemental hereto, are included within the Trust
Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and
all replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire an interest under 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 and other documents to which the Owner Trustee shall from time to
time acquire an interest at any time maintained by the Lessee with
respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement, including the Consent and Guaranty
attached thereto (all to the extent assigned by the Purchase Agreement
Assignment and the Purchase Agreement Warranties Assignment); the
Purchase Agreement Warranties Assignment, with the Consents and
Agreements attached thereto; and the Bills of Sale; in each case
including, without limitation, (x) all rights of the Owner Trustee to
exercise any election or option or to make any decision or
determination or to give any notice, consent, waiver or approval or to
take any other action under or in respect of any such document or to
accept surrender or redelivery of the Aircraft or any part thereof, as
well as all the rights, powers and remedies on the part of the Owner
Trustee, whether arising under any such document or by statute or at
law or in equity, or otherwise, arising out of any Lease Event of
Default, and (y) any right to restitution from the Lessee, the
Manufacturer, the Manufacturer's Subsidiary or any other Person in
respect of any determination of invalidity of any such document;
(3) each Sublease Assignment and each Assigned Sublease (to
the extent assigned under such Sublease Assignment), and including,
without limitation, all rents or other payments of any kind made under
such Assigned Sublease (to the extent assigned under such Sublease
Assignment), all collateral security or credit support (in the nature
of a guarantee, letter of credit, credit insurance, Lien on or security
interest in any property or otherwise) for the obligations of the
Permitted Sublessee thereunder (to the extent assigned under such
Sublease Assignment) and all rights of the Owner Trustee to exercise
any election or option or to give any notice, consent, waiver, or
approval
Trust Indenture
<PAGE> 10
- 5 -
under or with respect of any thereof 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 (in each case to the extent assigned
to the Owner Trustee), whether arising under any Assigned Sublease or
any Sublease Assignment or by statute or at law or in equity, or
otherwise, arising out of any default under any Assigned Sublease;
(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, without limitation, 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 requisition proceeds with respect to the Aircraft or
any part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Aircraft or any part thereof, including but not limited to the
insurance required under Section 12 of the Lease or under any
comparable provision of any Assigned Sublease (but excluding any excess
insurance maintained by the Lessee and not required under Section 12 of
the Lease or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and
all rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any other
Person in accordance with the provisions of this Agreement, AND SUBJECT TO
Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel
Trust Indenture
<PAGE> 11
- 6 -
paper original executed counterparts of the Original Lease and Lease Supplement
No. 1, certified copies of the Purchase Agreement Warranties Assignment and the
Consents and Agreements attached thereto, and the original Warranty Bill of
Sale. The Owner Trustee thereafter delivered to the Indenture Trustee the
chattel paper original executed Lease Supplement No. 2. Concurrently with the
delivery of this Indenture, the Owner Trustee is delivering to the Indenture
Trustee the chattel paper original executed counterparts of the Amended and
Restated Lease and Lease Supplement No. 3. All property referred to in this
Granting Clause, whenever acquired by the Owner Trustee, shall secure all
obligations under and with respect to the Equipment Notes at any time
outstanding. Any and all properties referred to in this Granting Clause which
are hereafter acquired by the Owner Trustee, shall, without further conveyance,
assignment or act by the Owner Trustee or the Indenture Trustee thereby become
and be subject to the security interest hereby granted as fully and completely
as though specifically described herein.
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 Note Holders from time to time, except as set forth in
Section 2.13 and Article III hereof without any preference, distinction or
priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or
Trust Indenture
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otherwise) to ask, require, demand, receive and give acquittance for any and all
moneys and claims for moneys (in each case including insurance and requisition
proceeds but excluding Excepted Payments and Excepted Rights) due and to become
due to the Owner Trustee under or arising out of the Indenture Documents and all
other property which now or hereafter constitutes part of the Trust Indenture
Estate, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings which the Indenture Trustee may deem to be necessary or advisable in
the premises. Under the Lease, the Lessee is directed to make all payments of
Rent (other than Excepted Payments) and all other amounts which are required to
be paid to or deposited with the Owner Trustee pursuant to the Lease (other than
Excepted Payments) directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application as provided in
this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee
will be directed from and after (i) notice of the occurrence of a Lease Event of
Default and (ii) notice that the Lease is declared or deemed in default, to make
all payments of rent and all other amounts which are required to be paid to or
deposited with the Lessee pursuant to the related Assigned Sublease and which
are assigned thereunder directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application or to be held
as provided in this Indenture. The Owner Trustee agrees that promptly on receipt
thereof, it will transfer to the Indenture Trustee any and all moneys from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Indenture, except (a) to
the extent the Owner Trustee is entitled to distribution of such moneys pursuant
to this Indenture and (b) that the Owner Trustee shall accept for distribution
pursuant to the Trust Agreement any amounts distributed to it by the Indenture
Trustee under this Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that it will not assign or
pledge or otherwise dispose of, so long as this Indenture shall remain in effect
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its estate, right, title or interest hereby assigned, to anyone
other than the Indenture Trustee, and that, with respect to such
Trust Indenture
<PAGE> 13
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estate, right, title and interest hereby assigned, subject to its rights
pursuant to Section 5.10 hereof, it will not, except as provided in this
Indenture (including, without limitation, Section 9.01) and except as to
Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or
any Permitted Sublessee under any of the Indenture Documents, enter into any
agreement amending, modifying or supplementing any of the Indenture Documents,
or execute any waiver or modification of, or consent under, the terms of any of
the Indenture Documents, (ii) settle or compromise any claim arising under any
of the Indenture Documents, (iii) give any notice or exercise any right or take
any action under any of the Indenture Documents, or (iv) 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. For
purposes of Section 4.02(e) hereof, this is the fourth paragraph following the
Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations
under 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 might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments and
Excepted Rights. Further, nothing in the Granting Clause or the preceding
paragraphs shall impair any of the rights of the Owner Trustee or the Owner
Participant under Section 5.10 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained
in the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments (including all annexes, appendices, exhibits,
schedules and supplements thereto) as the
Trust Indenture
<PAGE> 14
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same may from time to time be supplemented or amended or the terms thereof
waived or modified to the extent permitted by, and in accordance with, the terms
thereof and of the other Operative Documents and references to various Persons
shall be deemed to be references to and include their respective permitted
successors and assigns.
"Amortization Amount" means, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Principal
Amount Repayment Date on the Amortization Schedule.
"Amortization Schedule" means the amortization schedule for
the Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed
shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such
Equipment Note. "Remaining Weighted Average Life" of such Equipment
Note, at the redemption date of such Equipment Note, shall be the
number of days equal to the quotient obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then
remaining installment of principal, including the payment due on the
maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid
Principal Amount of such Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the
United States Code, 11 U.S.C. Section 101 et seq., as amended.
"Bills of Sale" means the FAA Bills of Sale and the
Warranty Bill of Sale.
"Business Day" means a day other than a Saturday, Sunday or a
day on which banks are required or authorized to close in either The
City of New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities
Trust Indenture
<PAGE> 15
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pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor
Agreement shall be deposited.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Consents and Agreements" means the confirmations by the
Manufacturer included in the Purchase Agreement Assignment and the
Purchase Agreement Warranties Assignment of the transfer of rights
under the Purchase Agreement.
"Continuous Stay Period" has the meaning specified in
Section 4.04(a).
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee located at 777 Main Street, Hartford,
Connecticut 06115, Attention: Corporate Trust Administration, or such
other office at which the Indenture Trustee's corporate trust business
shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Lessee, the Owner Trustee and the Note
Holders.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be evidenced
by bonds, debentures, notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series
C, Series D and Series E, the rate per annum specified for such Series
under the heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means September 28, 1990.
"Dollars", "U.S. $" and "$" mean the lawful currency of
the United States of America.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of
such depository institution has a long-term
Trust Indenture
<PAGE> 16
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unsecured debt rating from each Rating Agency of at least A-3 or its
equivalent.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has
a long-term unsecured debt rating from each Rating Agency of at least
A-3 or its equivalent.
"Equipment Notes" means the Equipment Notes, in substantially
the form set out in Section 2.01 hereof, issued by the Owner Trustee
and authenticated by the Indenture Trustee pursuant to the terms of
this Indenture.
"Equity Collateral" has the meaning assigned to such
term in the definition of "Excepted Payments."
"Excepted Payments" means (i) any and all indemnity payments
and interest in respect thereof paid or payable in respect of the Owner
Participant, the Trust Company, the Owner Trustee (and not in support
of any payment obligation of the Owner Trustee under any Indenture
Document) or any of their respective successors, permitted assigns
(and, in the case of a permitted assign of the Owner Participant that
is a partnership, the partners of such partnership), directors,
officers, employees, servants, agents, subsidiaries, affiliates or
shareholders by the Lessee pursuant to the Lease (including, without
limitation, Section 13 thereof and any corresponding payment of
Supplemental Rent under the Lease), (ii) any proceeds of public
liability insurance (or government indemnities in lieu thereof) in
respect of the Aircraft payable as a result of insurance claims paid
respecting, or losses suffered by, the Trust Company or the Indenture
Trustee in its individual capacity or the Owner Participant, (iii) any
proceeds of insurance maintained with respect to the Aircraft by or for
the benefit of the Owner Participant (whether directly or through the
Owner Trustee) and not required under Section 12 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts
payable to the Owner Participant, the Trust Company, the Owner Trustee
(and not in support of any payment obligation of the Owner Trustee
under any Indenture Document), or any of their respective successors,
permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership),
directors, officers, employees, servants, agents, subsidiaries,
affiliates or shareholders under Section 10 of the Lease or by the
Lessee or the Parent
Trust Indenture
<PAGE> 17
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Guarantor under the Tax Indemnification Agreement or the Amended and
Restated Head Lease TIA (as defined in the Refunding Agreement), as the
case may be, (v) Transaction Expenses paid or payable by the Lessee or
the Parent Guarantor to the Trust Company, the Owner Trustee, the
Indenture Trustee or the Owner Participant pursuant to Section 21 of
the Refunding Agreement or the Lease, (vi) any letter of credit
pursuant to Section 8(l) of the Lease (including, without limitation,
any replacement letter of credit (the "Equity Collateral")) and any
payment or proceeds of any such Equity Collateral to the extent
retained or applied as provided in Section 8(l) of the Lease, (vii) any
amount payable to the Owner Participant by any transferee as the
purchase price of the Owner Participant's interest in the Trust Estate
(or a portion thereof), (viii) any amount payable to the Owner Trustee,
the Trust Company or the Owner Participant or any of their respective
successors, permitted assigns (and, in the case of a permitted assign
of the Owner Participant that is a partnership, the partners of such
partnership), directors, officers, employees, servants, agents,
subsidiaries, affiliates or shareholders attributable to the period
prior to or on the Restatement Date or under the Original Participation
Agreement, the Original Lease, the Parent Head Lease Guaranty, the
Sublease, the Amended and Restated Head Lease TIA or the Amended and
Restated Sublease TIA (as such terms are defined in the Refunding
Agreement) or Retained Head Lease Rights and Obligations (as such term
is defined in the Refunding Agreement), and (ix) subject to the last
sentence of Section 5.10 hereof, any and all rights of the Owner
Trustee, the Owner Participant or the Trust Company under the Operative
Documents, whether or not a Lease Event of Default, a Lease Default, an
Indenture Default or an Indenture Trustee Event has occurred and is
continuing to demand, collect, sue for, give notices, make
determinations, enforce or exercise all rights with respect to and
otherwise obtain all amounts described in clauses (i) through (viii)
above and the proceeds thereof.
"Excepted Rights" means (i) those rights of the Owner
Participant and the Owner Trustee under Section 5.10 of this Indenture,
(ii) all rights under the Equity Collateral to make a claim for,
collect and retain all amounts payable with respect to any Equity
Collateral, (iii) all rights of the Owner Participant, the Trust
Company or the Owner Trustee to compromise or waive any such right or
modify, amend or waive any provision of any Operative Document
conferring such rights with respect to Excepted Payments, and (iv) all
rights of the Owner Trustee to exercise any election or option, or to
make any decision or determina-
Trust Indenture
<PAGE> 18
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tion, or to give or receive any notice, consent, waiver or approval
with respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section
2.03(b) hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such
Liquidity Facility in accordance with the provisions thereof other than
a Downgrade Drawing.
"Government Obligations" means direct obligations of the
United States of America that are not callable, redeemable or payable
prior to maturity, in whole or in part, directly or indirectly, by any
Person.
"Indenture," "this Indenture," and "the Indenture" mean this
First Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented
by any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement, including the Consent and Guaranty attached
thereto (all to the extent assigned by the Purchase Agreement
Assignment and the Purchase Agreement Warranties Assignment); the
Purchase Agreement Warranties Assignment and the Consents and
Agreements attached thereto; and the Bills of Sale.
"Indenture Event of Default" has the meaning set forth
in Section 4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and
Security Agreement listed on Schedule 1 to the Intercreditor Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
Trust Indenture
<PAGE> 19
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"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Aircraft and any
Replacement Airframe and Replacement Engine included in the property of
the Owner Trustee covered by this Indenture, including, without
limitation, Trust Indenture Supplement No. 1 dated September 28, 1990,
which was recorded as one instrument by the FAA with the Original
Indenture, and Trust Indenture Supplement No. 2 dated November 26,
1996, which is being filed for recordation as one instrument by the FAA
with this First Amended and Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as assigned, amended and restated by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-14]
dated as of the date hereof and Amended and Restated Aircraft Lease
Agreement [GPA 1990 AWA-14] dated as of the date hereof and
supplemented by Lease Supplement [GPA 1990 AWA-14] No. 3 dated November
26, 1996, which are being filed for recordation as one instrument with
the FAA contemporaneously herewith.
"Lease Default" means an event or condition that, with the
giving of notice or the lapse of time or both, would become a Lease
Event of Default.
"Lease Event of Default" means any event or condition defined
as an "Event of Default" in Section 17 of the Lease.
"Lessee" means America West Airlines, Inc., a Delaware
corporation, in its capacity as lessee under the Amended and
Trust Indenture
<PAGE> 20
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Restated Lease, and its successors, and to the extent permitted by the
Refunding Agreement, its assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or
claim of any kind, including any thereof arising under any conditional
sale agreement, equipment trust agreement or title retention agreement.
"Majority in Interest of Note Holders" means, as of a
particular date of determination and subject to Section 2.6 of the
Intercreditor Agreement, the Holders of more than 50% in aggregate
unpaid Principal Amount of all Equipment Notes outstanding as of such
date. For purposes of this definition, there shall be excluded any
Equipment Notes held by the Owner Trustee or the Owner Participant or
any interests of the Owner Participant therein by reason of subrogation
pursuant to Section 4.03 of the Indenture (unless all Equipment Notes
then outstanding shall be held by the Owner Trustee or the Owner
Participant) or any Equipment Notes held by the Lessee or any Affiliate
of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate
equal to (i) in the case of Series A Equipment Notes and Series B
Equipment Notes, the Treasury Yield and (ii) in the case of Series C
Equipment Notes, Series D Equipment Notes and Series E Equipment Notes,
the Treasury Yield plus 0.75% exceeds (b) the outstanding principal
amount of such Equipment Note plus accrued interest. For purposes of
determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Equipment Note means the interest
rate (expressed as a semiannual equivalent and as a decimal and, in the
case of United States Treasury bills, converted to a bond equivalent
yield) determined to be the per annum rate equal to the semiannual
yield to maturity for United States Treasury securities maturing on the
Average Life Date of such Equipment Note and trading in the public
securities market either as determined by interpolation between the
most recent weekly average yield to maturity for two series
Trust Indenture
<PAGE> 21
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of United States Treasury securities, trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than,
the Average Life Date of such Equipment Note and (B) the other maturing
as close as possible to, but later than, the Average Life Date of such
Equipment Note, in each case as published in the most recent H.15(519)
or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is
reported on the most recent H.15(519), such weekly average yield to
maturity as published in such H.15(519). "H.15(519)" means the weekly
statistical release designated as such, or any successor publication,
published by the Board of Governors of the Federal Reserve System. The
date of determination of a Make-Whole Amount shall be the third
Business Day prior to the applicable redemption date and the "most
recent H.15(519)" means the H.15(519) published prior to the close of
business on the third Business Day prior to the applicable redemption
date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person
other than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from
time to time of one or more Equipment Notes as reflected in the
Register maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and
signature of such Responsible Officer, that is delivered to the
Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such
written opinions or (ii) Latham & Watkins or other counsel designated
by the Lessee and reasonably satisfactory to the Indenture Trustee or,
in the case of legal counsel for the Owner Trustee, may be Morris,
James, Hitchens & Williams or other counsel designated by the Owner
Trustee and reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease.
Trust Indenture
<PAGE> 22
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"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1990 AWA-14] dated as of September 21, 1990, as
supplemented by Trust Indenture Supplement No. 1 dated September 28,
1990, which were recorded as one instrument by the FAA on September 28,
1990 and assigned Conveyance No. E10184, as amended by Amendment No. 1
dated March 27, 1992, recorded by the FAA on May 18, 1992 and assigned
Conveyance No. EE003011, and as further amended by Amendment No. 2
dated as of July 29, 1993, recorded by the FAA on August 4, 1993 and
assigned Conveyance No. F59674.
"Original Loan Certificates" means the Loan Certificates
issued under and as defined in the Original Indenture.
"Original Sublessee" means America West Airlines, Inc.
("AWA"), a Delaware corporation, in its capacity as sublessee under the
Aircraft Sublease Agreement [GPA 1990 AWA-14] dated as of September 21,
1990 between the Original Head Lessee in its capacity as sublessor
thereunder and AWA in its capacity as sublessee.
"Owner Participant" means _____________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the five Pass Through
Trusts established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through
Trust Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a national
banking association, not in its individual capacity but solely as pass
through trustee under each of the five separate Pass Through Trust
Agreements.
"Past Due Rate" means, with respect to any amount not paid
when due (whether at stated maturity, by acceleration or otherwise)
under or in respect of any Equipment Note, a rate of interest per annum
(computed on the basis of a year of 360 days comprised of twelve 30-day
months) equal to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a
Trust Indenture
<PAGE> 23
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Business Day, the immediately succeeding Business Day) until the
Equipment Notes have been paid in full.
"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with
respect to all Equipment Notes, means the aggregate stated original
principal amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on
which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [GPA 1990 AWA-14], dated as of the Delivery Date, between
the Parent Guarantor and the Original Head Lessee, together with the
Consents and Agreements attached thereto, as the same may be amended,
modified, or supplemented from time to time in accordance with the
terms hereof and thereof.
"Purchase Agreement Warranties Assignment" means the Purchase
Agreement Warranties Assignment [GPA 1990 AWA-14], dated as of the
Delivery Date, between the Original Head Lessee and the Owner Trustee
together with the Consents and Agreements attached thereto, as the same
may be amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to
rate the Certificates issued pursuant to the Pass Through Trust
Agreements and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated
by the Refunding Agreement and the other documents entered into on and
in connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1990
AWA-14] dated as of November 20, 1996, among the Lessee, the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through
Trustee, the Owner Participant, the Subordination Agent and the
Indenture Trustee.
"Register" has the meaning set forth in Section 2.07
hereof.
Trust Indenture
<PAGE> 24
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"Registrar" has the meaning set forth in Section 2.07
hereof.
"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice
president or, in the case of the Owner Trustee, an officer of the Owner
Trustee in its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date
agreed to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date
of the filing with the FAA of Trust Indenture Supplement No. 2.
"Secured Obligations" has the meaning set forth in
Section 2.06 hereof.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series D."
"Series E" or "Series E Equipment Notes" means Equipment Notes
issued and designated as "Series E" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series E."
Trust Indenture
<PAGE> 25
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"Sublease Assignment" means a sublease assignment by the
Lessee in favor of the Owner Trustee (including the consent thereto
given by the sublessee thereunder) with respect to the assignment of a
Permitted Sublease pursuant to Section 6(a) of the Lease.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity and not as Owner
Trustee, and its successors under the Trust Agreement, in their
respective individual capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means all
estate, right, title and interest of the Owner Trustee in and to the
properties, rights and interests covered by the Granting Clause of the
Indenture, excluding, however, in each case, Excepted Payments and
Excepted Rights.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code (for purposes of this definition, the "United
States"), (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political
subdivision thereof or therein or (iii) any estate or trust that is
subject to United States federal income taxation regardless of the
source of its income.
"Warranty Bill of Sale" means a full warranty (as to title)
bill of sale covering the Aircraft (excluding all Buyer Furnished
Equipment) executed by the Original Head Lessee in favor of the Owner
Trustee dated the Delivery Date.
Trust Indenture
<PAGE> 26
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes
shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1990 AWA-14]
DATED AS OF SEPTEMBER 21, 1990, AS AMENDED.
SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING
UNITED STATES REGISTRATION NUMBER N635AW.
No.____________ Date: [________, 1996]
$___________________
DEBT RATE MATURITY DATE
[ ] [ , ]
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement [GPA 1990 AWA-14], dated as of September 21,
1990, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to Fleet
National Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $_______ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semi-annual installments commencing on January 2, 1997, and
thereafter
Trust Indenture
<PAGE> 27
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on July 2 and January 2 of each year, to and including ___________, ____.
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and if
such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First
Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-14],
dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank) (the "Indenture
Trustee"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this Equipment Note and not defined herein shall
have the respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as above provided and that none of the Owner Participant, the
Owner Trustee and the
Trust Indenture
<PAGE> 28
- 23 -
Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Indenture Trustee or at the office of any successor in the manner
provided in Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and
interest and other amounts due hereunder shall be payable in Dollars in
immediately available funds at the Corporate Trust Office of the Indenture
Trustee, or as otherwise provided in the Indenture. Each such payment shall be
made on the date such payment is due and without any presentment or surrender of
this Equipment Note, except that in the case of any final payment with respect
to this Equipment Note, the Equipment Note shall be surrendered promptly
thereafter to the Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note,
agrees that, except as provided in the Indenture, each payment received by it
hereunder shall be applied, first, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by law, any
overdue interest and any other overdue amounts hereunder) to the date of such
payment, second, to the payment of the portion of the Principal Amount of this
Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Indenture, and fourth, the balance,
if any, remaining thereafter, to the payment of the portion of the Principal
Amount of this Equipment Note remaining unpaid in the inverse order of its
normal maturity.
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 Trust Indenture Estate is held by
the Indenture Trustee as security, in part, for the Equipment Notes. The
provisions of this Equipment Note are subject to the Indenture. Reference is
hereby made to the Indenture and the Refunding Agreement for a complete
statement of the rights and obligations of the Holder
Trust Indenture
<PAGE> 29
- 24 -
of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or
the Owner Trustee as provided in Section 2.12 of the Indenture and to
acceleration by the Indenture Trustee as provided in Section 4.04 of the
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B
Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4),
and this Equipment Note is issued subject to such provisions. The Note Holder of
this Equipment Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Indenture Trustee on his behalf
to take such action as may be necessary or appropriate to effectuate
- --------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
(4) To be inserted in the case of Series E Equipment Notes.
Trust Indenture
<PAGE> 30
- 25 -
the subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.](5)
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its officer thereunto
duly authorized on the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
FLEET NATIONAL BANK,
as Indenture Trustee
By:__________________________
Name:
Title:
________________
(5) To be inserted in the case of a Series B, Series C, Series D or Series
E Equipment Note.
Trust Indenture
<PAGE> 31
- 26 -
SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
five separate series consisting of Series A, Series B, Series C, Series D and
Series E and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass
Through Trustees (or their designee) under the Pass Through Trust Agreements set
forth in Schedule II to be attached hereto in connection therewith and (ii) the
Original Loan Certificates issued under the Original Indenture shall be
concurrently prepaid. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of each Series may be
in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity.
The Principal Amount of each Equipment Note shall be payable
on the dates and in the installments equal to the corresponding percentage of
the Principal Amount as set forth in Schedule I hereto which shall be attached
as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
Trust Indenture
<PAGE> 32
- 27 -
any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
Trust Indenture
<PAGE> 33
- 28 -
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default (as defined below) under any
Equipment Note a fraction, the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E
Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net
Interest and Related Charges" means (as determined by the Subordination Agent in
consultation with the Liquidity Providers and notified to the Indenture Trustee
except that the Past Due Rate shall be determined by the Indenture Trustee and
notified to the Subordination Agent) the sum of (i) the amount, if any, by which
interest payable to any Liquidity Provider on any Interest Drawing, Final
Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an
Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the
amount which would be payable if such advances bore interest at the Designated
Interest Rate (as defined below) plus (ii) any amounts payable under Section
3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity
Facility (or similar provisions of any succeeding liquidity facility) which
result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in
this Section 2.02, "Designated Interest Rate" means the weighted average Past
Due Rate (as defined in the applicable Indentures) in respect of "Series A
Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
issued under the Indentures, except with respect to that portion of any Final
Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a
Cash Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" or "Series E Equipment Note" issued
under the Indentures which has not been cured other than solely because of
acceleration. For purposes of Section 3.04(b) hereof, this is the fourth
paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Equipment Notes
bearing the signatures of
Trust Indenture
<PAGE> 34
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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. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee
for authentication upon original issue and such Equipment Notes shall thereupon
be authenticated and delivered by the Indenture Trustee upon the written request
of the Owner Trustee signed by a Vice President or Assistant Vice President or
other authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Equipment Notes to
be authenticated hereunder on original issue with respect to the Aircraft. No
Equipment Note shall be secured by or be entitled to any benefit under this
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized officers and such certificate upon any Equipment Notes shall be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a)
Without impairing any of the other rights, powers, remedies, privileges or Liens
of the Note Holders under this Indenture, each Note Holder, by its acceptance of
an Equipment Note, agrees that, except as expressly provided in this Indenture,
the Refunding Agreement or any other Operative Document, (i) the obligation to
make all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such
Trust Indenture
<PAGE> 35
- 30 -
other agreements to the contrary notwithstanding (except for any express
provisions or representations that the Trust Company is responsible for, or is
making, for which there would be personal liability of the Trust Company), no
recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means
the amount by which such payment exceeds the amount that would have been
received by a Note Holder or the Indenture Trustee if the Trust Company, the
Owner Trustee or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this
Trust Indenture
<PAGE> 36
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Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Trust Company, the Owner Trustee or the Owner Participant under the
Refunding Agreement, this Indenture (and any exhibits or annexes hereto or
thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such
Trust Indenture
<PAGE> 37
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funds were received after 12:00 noon, New York City time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat
the Person in whose name any Equipment Note is registered on the Register as the
absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Equipment Note (and such exclusion and withholding
shall constitute payment in respect of such Equipment Note) any and all United
States withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees to act as such withholding agent and, in connection therewith,
whenever any present or future United States taxes or similar charges are
required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts (and such withholding
shall constitute payment in respect of such Equipment Note) and timely pay the
same to the appropriate authority in the name of and on behalf of the Note
Holders, that it will file any necessary United States withholding tax returns
or statements when due, and that as promptly as possible after the payment
thereof it will deliver to each Note Holder (with a copy to the Owner Trustee
and the Lessee) appropriate receipts showing the payment thereof, together with
such additional documentary evidence as any such Note Holder, the Owner
Participant and the Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of
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such form prior to the date of such payment (and the Indenture Trustee has no
reason to know that any information set forth in such form is inaccurate), the
Indenture Trustee shall withhold only the amount, if any, required by law (after
taking into account any applicable exemptions claimed by the Note Holder) to be
withheld from payments hereunder or under the Equipment Notes held by such
Holder in respect of United States federal income tax (and such withholding
shall constitute payment in respect of such Equipment Note). If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form 4224 in
duplicate (or such successor certificate, form or forms as may be required by
the United States Treasury Department as necessary in order to avoid withholding
of United States federal income tax), during the calendar year in which the
payment is made (but prior to the making of such payment) or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Equipment Notes held by such Holder, no amount shall be
withheld from payments in respect of United States federal income tax. If any
Note Holder has notified the Indenture Trustee that any of the foregoing forms
or certificates is withdrawn or inaccurate, or if such Holder has not filed a
form claiming an exemption from United States withholding tax or if the Code or
the regulations thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the Equipment Notes held by such
Holder, the Indenture Trustee agrees to withhold from each payment due to the
relevant Note Holder withholding taxes at the appropriate rate under law (and
such withholding shall constitute payment in respect of such Equipment Notes)
and will, on a timely basis as more fully provided above, deposit such amounts
with an authorized depository and make such returns, statements, receipts and
other documentary evidence in connection therewith as required by applicable
law.
None of the Owner Trustee, the Owner Participant or the Lessee
shall have any liability for the failure of the Indenture Trustee to withhold
taxes in the manner provided for herein or for any false, inaccurate or untrue
evidence provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of
each Equipment Note, each payment of Principal Amount, Make-Whole
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Amount, if any, and interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and, to the extent permitted by law,
any overdue interest and any other overdue amounts thereunder) to the
date of such payment;
Second: to the payment of the Principal Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any,
and any other amount due hereunder or under such Equipment
Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture
Estate. A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request
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from the registered Holder thereof for the issuance of a new Equipment Note,
specifying, in the case of a surrender for transfer, the name and address of the
new Holder or Holders. Upon surrender for registration of transfer of any
Equipment Note, 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 unpaid portion
of the Principal Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate unpaid portion of the Principal
Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture
Trustee at the Corporate Trust Office. 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 Note
Holder making the exchange is entitled to receive. All Equipment Notes issued
upon any registration of transfer or exchange of Equipment Notes (whether under
this Section 2.07 or under Section 2.08 hereof or otherwise under this
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this 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 Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder
or such Holder's attorney duly authorized in writing, and the Indenture Trustee
shall require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act and the securities laws of any applicable
state. The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Principal Amount 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 on such old Equipment Note or Equipment
Notes has been paid. Interest shall be deemed to have been paid on such new
Equipment Note to the date on which interest shall have been paid on such old
Equipment Note, and all payments of the Principal Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been made thereon.
Neither the Indenture Trustee nor the Owner Trustee shall be required to
exchange any surrendered Equipment Notes as provided above during the ten-day
period preceding the Payment Date. The Indenture Trustee will promptly notify
the Owner Trustee, the Owner Participant and Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Refunding
Agreement applicable to Note Holders, and shall be deemed to have represented
and warranted to the parties to the Refunding
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Agreement as to the matters represented and warranted by the Subordination Agent
in its capacity as the initial Holder of the Equipment Notes. Subject to
compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee
shall use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
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 Holder of such
Equipment Note, execute and the Indenture Trustee shall authenticate and deliver
in replacement thereof a new Equipment Note, payable in the same Principal
Amount dated the same date and captioned as originally issued. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee and a copy thereof shall be furnished to
the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost
or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such Person, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the
Indenture Trustee shall be accepted as satisfactory indemnity and security and
no further indemnity or security shall be required as a condition to the
execution and delivery of such new Equipment Note. Subject to compliance by the
Note Holder of the requirements set forth in this Section 2.08, the Indenture
Trustee and the Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Note Holder for any registration of
transfer or exchange of Equipment Notes, but the Indenture Trustee, as
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes; provided, however, that none of the
Lessee, the Owner Trustee,
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the Indenture Trustee or the Owner Participant shall bear costs of registration,
transfer or exchange in connection with the consummation of the Refinancing
Transaction.
(b) The Indenture Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither
any redemption of any Equipment Note nor any purchase by the Owner Trustee of
any Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Equipment Notes shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Note Holder of such Equipment Notes to be
redeemed or purchased, at such Note Holder's address appearing in the Register.
All notices of redemption or purchase shall state: (1) the redemption date, (2)
the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any Person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Equipment Notes to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New
York City time, on the redemption date in
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immediately available funds the redemption price of the Equipment
Notes to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid, the Equipment Notes to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee, and from and after such redemption date (unless there shall
be a default in the payment of the redemption price) any such Equipment Notes
then outstanding shall cease to bear interest. Upon surrender of any such
Equipment Note for redemption or purchase in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any Equipment Note
called for redemption or purchase shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the
Owner Trustee or the Owner Participant may, upon the events and subject to the
terms and conditions and for the price set forth in this Section 2.12, purchase
all but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each
Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to, but not including, the date of purchase and all
other amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Refunding Agreement to the Holder
thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon
an Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default (and there is no
Indenture Trustee Event), the purchase price thereof shall equal the price
provided in the
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preceding sentence plus the Make-Whole Amount, if any; provided further, that
under no circumstances shall the Make-Whole Amount be payable by the Lessee.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant giving written notice of its
election of such option to the Indenture Trustee, which notice shall specify a
date for such purchase not more than 30 days or less than 15 days after the date
of such notice. The Indenture Trustee shall not exercise any of the remedies
hereunder or, without the consent of the Owner Trustee or the Owner Participant,
under the Lease, during the period from the time that a notice of exercise by
the Owner Participant of such option to purchase becomes irrevocable until the
date on which such purchase is required to occur pursuant to the terms of the
preceding sentence. Such election to purchase the Equipment Notes shall become
irrevocable upon the fifteenth day preceding the date specified in the written
notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Note Holders will comply with all
the provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Articles II and III hereof.
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(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full, (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Note Holders of Series D until the Secured Obligations in respect of Series D
Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as rent
under any Assigned Sublease shall be promptly distributed in the following order
of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments
of Principal Amount, and interest and other amounts (as well as any
interest on overdue Principal Amount, and to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts)
then due to the Note Holders under all Series A Equipment Notes shall
be distributed to the Note Holders of Series A ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then due under all Series
A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall
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be distributed to the Note Holders of Series B ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series B Equipment Note
bears to the aggregate amount of the payments then due under all Series
B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series C Equipment Notes shall be distributed to the
Note Holders of Series C ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series C Equipment Note bears to the aggregate
amount of the payments then due under all Series C Equipment Notes;
(iv) after giving effect to clause (iii) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series D Equipment Notes shall be distributed to the
Note Holders of Series D ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series D Equipment Note bears to the aggregate
amount of the payments then due under all Series D Equipment Notes; and
(v) after giving effect to clause (iv) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series E Equipment Notes shall be distributed to the
Note Holders of Series E ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series E Equipment Note bears to the aggregate
amount of the payments then due under all Series E Equipment Notes; and
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second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that
if an Indenture Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 3.07
hereof until whichever of the following shall first occur: (i) all
Indenture Defaults shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second", or
(ii) Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of said
Section 3.03, or (iii) the 180th day after receipt of such payment, in
which event such balance shall be distributed as provided in this
clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any payment
received by the Indenture Trustee with respect to the Airframe or the Airframe
and one or both Engines as the result of an Event of Loss thereto shall be
applied to the redemption of the Equipment Notes and to all other amounts
payable hereunder by applying such funds in the following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event
of Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other
amounts (as well as any interest on overdue Principal Amount, and to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due to the Note Holders under all Equipment
Notes, all in the order of priority specified in clause "first" of
Section 3.01 hereof, and
third, if and to the extent required to be paid to the Lessee
(or if directed by the Lessee, any Permitted Sublessee) in
reimbursement of payment of Stipulated Loss Value pursuant to Section
11(d) of the Lease, to the Lessee (or if directed by the Lessee, any
Permitted Sublessee), and otherwise as provided in clause "fourth" of
Section 3.03 hereof;
provided that, if a Replacement Airframe or a Replacement Airframe and one or
more Replacement Engines are to be substituted for the Airframe or the Airframe
and one or both Engines subject to such Event of Loss as provided in Section 11
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of the Lease and Section 5.06 hereof, any proceeds which result from such Event
of Loss and are paid to the Indenture Trustee shall be held by the Indenture
Trustee as part of the Trust Indenture Estate as security for the obligations of
the Lessee under the Operative Documents and invested in accordance with the
terms of Section 3.07 hereof and, unless theretofore applied in accordance with
the provisions of the Lease and this Indenture, such proceeds shall, to the
extent payable to the Lessee under the Lease, be released to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) upon or in connection with the
replacement thereof as provided in such Sections.
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Airframe or the Airframe and one or both Engines) shall be
applied as provided in the applicable provisions of the Lease; provided,
however, that to the extent that any portion of such amounts held for account of
the Lessee are not at the time required to be paid to the Lessee (or any
Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12
of the Lease, shall be held by the Indenture Trustee as security for the
obligations of the Lessee under the Operative Documents and shall be invested in
accordance with the terms of Section 3.07 hereof and at such time as the
conditions specified in the Lease for payment of such amounts to the Lessee
shall be fulfilled, such portion, and the net proceeds of any investment
thereof, shall, unless theretofore applied in accordance with the provisions of
the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07
hereof, and notwithstanding Section 2.05 hereof, all payments received and
amounts held or realized by the Indenture Trustee after an Indenture Event of
Default shall have occurred and be continuing or after the Indenture Trustee has
given notice to the Owner Trustee and the Owner Participant pursuant to Section
4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease
or of the foreclosure of this Indenture, or after the Equipment Notes shall have
become due and payable as provided herein, and all payments or amounts then held
by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long
as such Indenture Event of Default shall be continuing, be promptly distributed
by the Indenture Trustee in the following order of priority, without
duplication:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for all amounts due to it
pursuant to Section 6.07 hereof, plus any tax,
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expense, charge or other loss (including, without limitation, all
amounts to be expended at the expense of, or charged upon the tolls,
rents, revenues, issues, products and profits of, the property included
in the Trust Indenture Estate pursuant to Section 4.05(b) hereof)
incurred by the Indenture Trustee (to the extent not previously
reimbursed) (including, without limitation, the expenses of any sale,
taking or other proceeding, 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 then existing or prior Note Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to the then existing or
prior Note 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 one over any other, in accordance with the
amount of the payment or payments made by each such then existing or
prior Note Holder pursuant to said Section 5.03 and applicable (in the
case of each such then existing Note Holder) to the Equipment Notes
held by such existing Note Holder at the time of distribution by the
Indenture Trustee;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid Principal Amount
of all Series A Equipment Notes, and the accrued but unpaid interest
and other amounts due thereon and all other Secured Obligations in
respect of the Series A Equipment Notes (other than Make-Whole Amount,
if any) to the date of distribution, shall be distributed to the Note
Holders of Series A, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series A Equipment Notes
held by each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount, if
any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
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(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series B Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series B Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series B, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series B Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series B Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series C Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series C Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series C, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series C Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series C Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution;
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series D Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series D Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series D, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
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other, in the proportion that the aggregate unpaid Principal Amount of
all Series D Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series D Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
(v) after giving effect to paragraph (iv) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series E Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series E Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series E, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series E Equipment Notes held by each holder plus the accrued but
unpaid interest and other amounts due hereunder and thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series E Equipment Notes
held by all such holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by
the Indenture Trustee for which provision as to the application thereof is made
in the Lease shall be applied forthwith to the purpose for which such payment
was made in accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or the
Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii)
any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity
Providers, and (v) the Pass Through Trustees, in each case whether pursuant to
Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or
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as Supplemental Rent, directly to the Person entitled thereto. Any payment
received by the Indenture Trustee under clause (b) of the fourth paragraph of
Section 2.02 shall be distributed to the Subordination Agent to be distributed
in accordance with the terms of the Intercreditor Agreement, and any payment
received by the Indenture Trustee under clause (c) of the fourth paragraph of
Section 2.02 shall be distributed directly to the Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and
3.04 hereof, any payments received by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture
shall be distributed by the Indenture Trustee, unless otherwise agreed in
writing, subject to Section 6.07 hereof (i) to the extent received or realized
at any time prior to the payment in full of all obligations to the Note Holders
secured by the Lien of this Indenture, in the order of priority specified in
Section 3.01 hereof, and (ii) to the extent received or realized at any time
after payment in full of all obligations to the Note Holders secured by the Lien
of this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause
"first" of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated to
indemnify against thereunder, in the manner provided in clause "first"
of Section 3.03 hereof, and
second, in the manner provided in clause "fourth" of
Section 3.03 hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts
distributed hereunder by the Indenture Trustee to the Owner Trustee shall be
paid to the Owner Trustee by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the
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Indenture Trustee receives notice to the contrary from the Owner Trustee, all
amounts to be distributed to the Owner Trustee pursuant to clause "second" of
Section 3.01 hereof shall be distributed by wire transfer of funds of the type
received by the Indenture Trustee to the Owner Participant's account as may be
specified pursuant to the Refunding Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's
rights to hold moneys for security pursuant to Section 21(h) of the Lease shall
be held in accordance with the terms of such Section; and the Indenture Trustee
hereby agrees to perform the duties of the Owner Trustee under such Section.
Except as provided in the preceding sentence, any amounts held by the Indenture
Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof,
pursuant to Section 3.02 hereof, pursuant to the second sentence of Section
3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant
to a Sublease Assignment, or pursuant to any provision of any other Operative
Document providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Owner Trustee or, in the event the
Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
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ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee.
(a) The Trust Company hereby covenants and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Lien
attributable to it in its individual capacity with respect to any of the
properties or assets of the Trust Indenture Estate and shall, at its own cost
and expense promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Trust Company will cause restitution to be made to
the Trust Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it.
(b) The Owner Trustee hereby covenants and agrees as
follows:
(i) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Equipment Notes and hereunder in accordance
with the terms of the Equipment Notes and this Indenture and all
amounts payable by it to the Note Holders under the Refunding Agreement
and the other Operative Documents;
(ii) the Owner Trustee will not directly or indirectly create,
incur, assume or suffer to exist any Lessor's Liens attributable to it
with respect to any of the properties or assets of the Trust Indenture
Estate, and shall, at its own cost and expense, promptly take such
action as may be necessary duly to discharge any such Lessor's Lien,
and the Owner Trustee will cause restitution to be made to the Trust
Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it;
(iii) in the event an officer with responsibility for or familiarity
with the transactions contemplated hereunder or under the other
Operative Documents (or any Vice President) in the Corporate Trust
Administration Department of the Owner Trustee shall have actual
knowledge of an Indenture Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Indenture Default or
Event of Loss to the Indenture Trustee, the Lessee and the Owner
Participant;
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(iv) 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 12(f) of the Lease, to the extent that the same
shall not have been furnished, or is not required to be furnished by
the Lessee, to the Indenture Trustee pursuant to the Lease or
otherwise;
(v) except as contemplated by the Operative Documents or with the
consent of the Indenture Trustee acting in accordance with Article IX
hereof, the Owner Trustee will not incur any indebtedness for borrowed
money; and
(vi) 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 Refunding Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing
(other than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, or interest on, any Equipment Note
(other than as a result of a Lease Default) and such failure shall have
continued unremedied for ten calendar days; or the failure of the Owner
Trustee to pay when due any other amount due and payable under any
Equipment Note or hereunder (other than as a result of a Lease Default)
and such failure shall have continued unremedied for 15 calendar days
after notice thereof being given to the Owner Trustee from the
Indenture Trustee or any Note Holder; or
(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 4.01(a) hereof or Section 13 of the
Refunding Agreement or by the Owner Trustee as the Owner Trustee
pursuant to Section 4.01(b)(ii) hereof or
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Section 13 of the Refunding Agreement or any Lessor's Lien required to
be discharged by the Owner Participant pursuant to Section 13 of the
Refunding Agreement shall remain undischarged for a period of 30
calendar days after, as the case may be, an officer with responsibility
for or familiarity with the transactions contemplated hereunder or
under the other Operative Documents (or any Vice President) in the
Corporate Trust Administration Department of the Trust Company or an
officer of the Owner Participant with responsibility for or familiarity
with the transactions contemplated hereunder and under the other
Operative Documents (or any Vice President) shall have actual knowledge
of such Lien; provided, that no Indenture Event of Default shall arise
under this Section 4.02(c) as a result of a failure by the Owner
Trustee or the Owner Participant to observe or perform any covenant
referred to in this Section 4.02(c) if the Lessee shall have discharged
all Lessor's Liens required to be discharged by the Owner Trustee or
the Owner Participant pursuant to such covenants and compensated the
Indenture Trustee and the Trust Indenture Estate for all claims, losses
and expenses arising from the failure of the Owner Trustee or the Owner
Participant, as the case may be, to observe and perform any such
covenant; or
(d) any representation or warranty made by the Owner
Participant, the Owner Trustee or the Trust Company herein or in the
Refunding Agreement or by any Person (if any) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Documents or in any related guarantee or support agreement shall prove
to have been false or incorrect when made in any respect materially
adverse to the rights and interests of the Note Holders; and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, such
misrepresentation shall not have been corrected as of a day within 30
calendar days following notice thereof being given to the Owner
Participant, the Owner Trustee, the Trust Company or such Person (if
any), as the case may be, by the Indenture Trustee or a Majority in
Interest of Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any
of its covenants or agreements in the fourth paragraph following the
Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01
hereof, or any failure by the Owner Participant or the Trust Company to
observe or perform any of its respective covenants in Section 9(b)(11),
10 or 14 of the Refunding Agreement; or
(f) except as provided in the following paragraph (j), any
failure by the Owner Trustee or the Trust Company to
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observe or perform any other covenant or obligation of the Owner
Trustee contained in this Indenture or in the Refunding Agreement or
any failure by the Owner Participant to observe or perform any other
covenant or obligation of the Owner Participant contained in the
Refunding Agreement or any failure of any Person (if any) that may
guarantee or support the obligations of an Owner Participant not
originally party to the Refunding Agreement under the Operative
Documents to observe or perform any covenant or obligation of such
Person contained in any such guarantee or support agreement, which
failure, in any case and either individually or together with other
then existing failures, shall have a material adverse effect on the
rights and interests of the Indenture Trustee or any Note Holder and is
not remedied within a period of 45 calendar days following notice being
given to the Owner Trustee, the Owner Participant or such Person, as
the case may be, by the Indenture Trustee or a Majority in Interest of
Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant
or any Person (if any) that may guarantee or support the obligations of
an Owner Participant not originally party to the Refunding Agreement
under the Operative Documents shall (i) be unable to pay its debts
generally as they become due within the meaning of the Bankruptcy Code,
(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 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 with respect thereto (and not in its
individual capacity) or the Owner Participant or any Person (if any)
that may guarantee or support the obligations of an Owner Participant
not originally party to the Refunding Agreement under the Operative
Documents, as the case may be, a custodian, receiver, trustee or other
officer with similar powers with respect to it 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
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bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or such Person, as the case may be; or
(i) any petition for any relief specified in the foregoing
paragraph (h) shall be filed against the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or any Person (if any) that may guarantee or
support the obligations of an Owner Participant not originally party to
the Refunding Agreement under the Operative Documents, as the case may
be, and such petition shall not be dismissed within 60 days; or
(j) at any time when the Aircraft shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid
and duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by
the Lessee in the payment of any installment of Basic Rent due under the Lease,
the Owner Participant may, within ten calendar days (or such longer period
ending on the second day after the expiry of the applicable grace period
specified in the Lease with respect to such default) after notice from the
Indenture Trustee or the Lessee of such default, without the consent or
concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for
application in accordance with Section 3.01 hereof, a sum equal to the amount of
all (but not less than all) of the Principal Amount and interest as shall then
(without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof)
be due and payable on the Equipment Notes. 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 Trustee
shall have been furnished by the Owner Participant with all funds necessary for
remedying such default, the Owner Participant may, within fifteen calendar days
(or such longer period ending on the second day after the expiry of any
applicable grace period specified in the Lease with respect to such default)
after notice from the Indenture Trustee or the Lessee of such default, without
the consent or concurrence of any Note Holder, instruct the Owner Trustee to
exercise the Owner Trustee's rights under Section 21(d) 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
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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 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 due and payable under
the Equipment Notes or hereunder, 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 default by the Lessee
under the Lease to the same extent that like performance by the Lessee itself
would have remedied such default (but any such payment or performance shall not
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, such Lease Event of Default shall have been remedied, then any
declaration pursuant to the Lease that the Lease is in default, and any
declaration pursuant to this Indenture that the Equipment Notes are due and
payable or that an Indenture Event of Default exists hereunder, based upon such
Lease Event of Default, shall be deemed to be rescinded, and the Owner
Participant or the Owner Trustee, as the case may be, shall (to the extent of
any such payments made by it) be subrogated to the rights of the Note Holders
hereunder to receive such payment of Rent from the Indenture Trustee (and the
payment of interest on account of such Rent being overdue), and shall be
entitled, so long as no other Indenture Default or Indenture Event of Default
shall have occurred and be continuing, to receive, subject to the terms 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 by commencing an action at
law against the Lessee and obtaining and enforcing a judgment against the Lessee
for the payment of such amount or taking appropriate action in a pending action
at law against the Lessee or by demanding Excepted Payments or Excepted Rights;
provided, however, that at no time while an Indenture 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 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 hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease (after giving effect to any applicable grace
period) as to (i) each
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of the three Basic Rent Payment Dates immediately preceding the date of
such default or (ii) in the aggregate more than six Basic Rent Payment
Dates,
(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 Lease Event of Default for the purposes of this Indenture,
if during the 12-month period immediately preceding the relevant
default by the Lessee there shall have been expended by the Owner
Participant pursuant to the second sentence of this Section 4.03 (and
shall have not been reimbursed by the Lessee or any Permitted Sublessee
themselves to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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, and if the Equipment Notes shall have been accelerated
pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the
Indenture Trustee may (subject to the rights of the Owner Participant or the
Owner Trustee to cure any such Indenture Event of Default set forth in Section
4.03 hereof and the obligations of the Indenture Trustee set forth in this
Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the
direction of a Majority in Interest of Note Holders, exercise any and all of the
remedies pursuant to Section 18 of the Lease and pursuant to any Sublease
Assignment 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 but, in the case of the Aircraft, only as permitted by Section
18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and
the Lessee and all Persons claiming under any of them or wholly or partly
therefrom; provided, however, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant ten days' prior written notice of the initial
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exercise of such remedies by the Indenture Trustee under the Lease (if not
stayed or otherwise precluded by applicable law from giving such notice);
provided, further, that the Indenture Trustee shall give the Owner Trustee and
the Owner Participant twenty days' prior written notice of its intention to sell
the Aircraft. Without limiting any of the foregoing, it is understood and agreed
that the Indenture Trustee may exercise any right of sale of the Aircraft
available to it, even though it shall not have taken possession of the Aircraft
and shall not have possession thereof at the time of such sale.
Anything in this Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails to participate in such proceedings, the Owner Trustee shall have
the right (without affecting in any way any right or remedy of
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the Indenture Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the avoidance
of doubt, it is expressly understood and agreed, subject only to the immediately
preceding paragraph, that 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 otherwise exercising all of its
rights, powers and remedies under this Indenture, including without limitation
this Article IV.
(b) If an Indenture Event of Default referred to in clause
(g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment Notes
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the Equipment Notes
which by such declaration shall have become payable) shall have been duly paid
and every other Indenture Default and Indenture Event of Default with respect to
any
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covenant or provision of this Indenture shall have been cured, then and in every
such case a Majority in Interest of Note Holders may (but shall not be obligated
to), by written instrument filed with the Indenture Trustee, rescind and annul
the Indenture Trustee's declaration and its consequences; but no such rescission
or annulment shall extend to or affect any subsequent Indenture Default or
Indenture Event of Default or impair any right consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
No Make-Whole Amount shall become payable on the Equipment
Notes as a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Indenture. The Owner Trustee or
Owner Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Aircraft, etc. (a) Subject to
the rights of the Owner Trustee and the Owner Participant under Section 4.03
hereof and unless the Owner Participant shall have theretofore purchased the
Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of
Default shall have occurred and be continuing and the Equipment Notes shall have
been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, at the request
of the Indenture Trustee the Owner Trustee shall promptly execute and deliver to
the Indenture Trustee such instruments of title and other documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the
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Indenture Trustee may specify, to obtain possession of all or any part of the
Trust Indenture Estate; provided that the Indenture Trustee shall at the time be
entitled to obtain such possession under Section 4.04(a) and the other
applicable provisions of this Indenture. If the Owner Trustee shall for any
reason fail to execute and deliver such instruments and documents after such
request by the Indenture Trustee, the Indenture Trustee may (i) obtain a
judgment conferring on the Indenture Trustee the right to immediate possession
and requiring the Owner Trustee to execute and deliver such instruments and
documents to the Indenture Trustee, to the entry of which judgment the Owner
Trustee hereby specifically consents to the fullest extent it may lawfully do
so, and (ii) to the extent permitted by law, pursue all or part of the Trust
Indenture Estate wherever it may be found (but not in violation of Section 10.05
hereof or of the Lease) and may enter any of the premises of the Lessee wherever
such Trust Indenture Estate may be or be supposed to be and search for and take
possession of and remove the same (but not in violation of Section 10.05 hereof
or of the Lease). 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 a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that the
provisions hereof shall not be construed so as to expand the obligations of the
Lessee under the Lease, including Section 16 thereof). In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, lease,
control or manage the Trust Indenture Estate and to carry on the business
(without limiting the express provisions of Section 5.10 hereof) and to exercise
all rights and powers of the Owner Participant and the Owner Trustee relating to
the Trust Indenture Estate, as the Indenture Trustee 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 Trust Indenture Estate or any part thereof as the Indenture
Trustee may determine; and the Indenture Trustee shall be entitled to collect
and receive directly all tolls, rents (including Rent), revenues, issues,
income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder, except Excepted Payments. The Indenture Trustee shall,
pursuant to the exercise of its remedies under this
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Article IV, to the extent permitted by applicable law, be entitled to the
appointment of a receiver for all or any part of the Trust Indenture Estate,
whether such receivership be incidental to a proposed sale of the Trust
Indenture Estate or otherwise, and the Owner Trustee hereby consents to the
appointment of such receiver and will not oppose any such appointment. Such
tolls, rents (including Rent), revenues, issues, income, products and profits
shall be applied to pay the expenses of the use, operation, storage, leasing,
control, management or disposition of the Trust Indenture Estate and of
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 Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder 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 or
such Note Holder, then and in every such case the Owner Trustee, the Indenture
Trustee, the Note Holders and the Lessee shall, subject to any determination in
such proceedings,
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be restored to their former positions and rights hereunder with respect to the
Trust Indenture Estate, and all rights, remedies and powers of the Indenture
Trustee and the Note Holders shall continue as if no such proceedings had been
instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right consequent thereon; provided,
however, that in the absence of written instructions from the Holders of all
Equipment Notes then outstanding, the Indenture Trustee shall not waive any
Indenture Default (i) in the payment of the Principal Amount of or interest on
any Equipment Note then outstanding, or (ii) in respect of a covenant or
provision hereof which, under Article IX hereof, cannot be modified or amended
without the consent of each Note Holder.
SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If
the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a
time when (i) the Aircraft is registered with the Federal Aviation
Administration, (ii) 25% or more of the then unpaid Principal Amount of the
Equipment Notes is held by one or more Persons which are not a "citizen of the
United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV
as a result of the occurrence of an Indenture Event of Default which is not a
Lease Event of Default, the Indenture Trustee shall make arrangements, if any,
as may be required by law so that such exercise of remedies shall not result in
the ineligibility of the Aircraft to be registered under the Federal Aviation
Act.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the
event the Indenture Trustee shall have knowledge of an Indenture Event of
Default, or shall have knowledge of an Indenture Default arising either from a
failure to pay Rent or a Lease Default of the type referred to in the second
sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof
to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex,
telegraph or telephone (confirmed by written notice in the manner provided by
Section 10.06 hereof),
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and to each Note Holder by first-class mail. Subject to the terms of Sections
2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section
5.01, the Indenture Trustee shall take such action, or refrain from taking such
action, with respect to any Indenture Event of Default or Indenture Default
(including with respect to the exercise of any rights or remedies hereunder) as
the Indenture Trustee shall be instructed in writing by a Majority in Interest
of Note Holders. Subject to the provisions of Section 5.03 hereof, if the
Indenture Trustee shall not have received instructions as above provided within
20 calendar days after mailing notice of such Indenture Default or Indenture
Event of Default to the Note Holders, the Indenture Trustee may, subject to
instructions thereafter received pursuant to the preceding provisions of this
Section 5.01, take such action, or refrain from taking such action, but shall be
under no duty to take or refrain from taking any action, with respect to such
Indenture Default or Indenture Event of Default as it shall determine to be
advisable and in the best interests of the Note Holders 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 its own affairs; provided that the
Indenture Trustee may not sell the Aircraft or any part thereof without the
consent of a Majority in Interest of Note Holders. In the event the Indenture
Trustee shall at any time elect to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the
case of any such party) not stayed or otherwise prohibited by applicable law,
the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For
all purposes of this Indenture, in the absence of actual knowledge on the part
of an officer in the Corporate Trust Office, in the case of the Indenture
Trustee, or its Corporate Trust Administration Department, 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 an Indenture Event of Default (except,
in the case of the Indenture Trustee, the failure of the Lessee to pay any
installment of Rent when due, if any portion of such installment was then
required to be paid to the Indenture Trustee, which failure shall constitute
knowledge of an Indenture Default for purposes of the first sentence of this
Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one
or more Note Holders or, in the case of the Owner Trustee, by the Indenture
Trustee.
SECTION 5.02. Action Upon Instructions. Subject to the terms
of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, 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,
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or give such notice, consent, waiver or approval or exercise such right, remedy
or power to take such other action hereunder or under any other Indenture
Document or in respect of any part or all of the Trust Indenture Estate as shall
be specified in such instructions; (ii) take such action with respect to, or to
preserve or protect, the Trust Indenture Estate (including the discharge of
Liens) as shall be specified in such instructions and as are 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 of 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 interest created hereunder in the
Trust Indenture Estate as may be specified from time to time in written
instructions of a Majority in Interest of Note Holders (which instructions may,
by their terms, be operative only at a future date and which shall be
accompanied by the execution form of such continuation statement so to be
filed); provided that, notwithstanding the foregoing, the Indenture Trustee may,
but shall not be obligated to, execute and file or cause to be filed any
financing statement which it from time to time deems appropriate or any
continuation statement that the Lessee, in discharge of its obligations under
Section 3(v) of the Refunding Agreement or any other Operative Document, may so
request. Notwithstanding the foregoing or anything in this Indenture to the
contrary, the Indenture Trustee may, on the advice of its counsel and without
the consent or approval of any Note Holder, approve any counsel asked to opine
on any matters under Section 11(b)(ii) of the Refunding Agreement, Section
6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by
such counsel. None of the Owner Participant, the Owner Trustee or the Lessee
have any liability for the failure of the Indenture Trustee to discharge its
obligations hereunder.
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 hereof unless
the Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the
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first sentence thereof) or 5.02 or Article IV hereof, 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 of the other Indenture
Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Aircraft or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and obtain such instructions promptly so as not
unreasonably to delay the proposed action of Lessee in respect of which the
instructions are sought. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Article VII hereof or any
other Operative Document) promptly take such action as may be necessary to duly
discharge all Lenders' Liens on any part of the Trust Indenture Estate
attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding
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, or place Liens on, the Aircraft or any
other part of the Trust Indenture Estate except (i) as required or permitted by
the terms of the Lease or the Refunding Agreement, or (ii) in accordance with
the powers granted to, or the authority conferred upon, the Owner Trustee and
the Indenture Trustee pursuant to this Indenture and in accordance with the
terms hereof.
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SECTION 5.06. Replacement Airframes, Replacement Engines and
Replacement Parts. (a) If at any time and from time to time, the Airframe or
Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a),
11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s),
as the case may be, in accordance with the provisions of this Section 5.06 and
the provisions of said Sections of the Lease, the Owner Trustee shall, at such
time or times, but subject to compliance with the conditions to such replacement
set forth in the Lease, direct the Indenture Trustee to execute and deliver to
or as directed in writing by the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine(s) 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:
(1) A written request from the Owner Trustee, requesting such release
and specifically describing the Airframe and/or Engine(s) so to be released and
the Replacement Airframe and/or Replacement Engine(s).
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number (or other applicable
registration number) and manufacturer's serial number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number (or other applicable
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 hold legal title to such
Replacement Airframe free and clear of all Liens except Permitted
Liens, that such Replacement Airframe will on such date be in good
operating condition, and that such Replacement Airframe has been or,
substantially concurrently with such replacement, is in the process of
being duly registered with the Owner Trustee as owner thereof under the
Federal Aviation Act or under the law then applicable to the
registration of the Aircraft and that an airworthiness certificate has
been duly issued under the Federal Aviation Act (or such other
applicable law) with respect to such Replacement Airframe, and that
such
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registration and certificate is in full force and effect, and the
Lessee or a Permitted Sublessee will have the full right and authority
to use such Replacement Airframe;
(iv) that the insurance required by Section 12 of the Lease is in
full force and effect with respect to such Replacement Airframe and all
premiums then due thereon have been paid in full;
(v) that the Replacement Airframe is of a like Airbus A320-231
model airframe with equivalent or better modification status delivered
by the Manufacturer not earlier than June 30, 1988;
(vi) that no Lease 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 a Replacement Airframe;
(vii) an appraisal prepared in accordance with the Appraisal
Procedure (as defined in the Lease) confirms that the Replacement
Airframe has a value, utility and remaining useful life at least equal
to that of the Airframe which suffered the Event of Loss assuming that
the same were maintained in accordance with the requirements of the
Lease whether or not they are in fact so maintained; and
(viii) that each of the conditions specified in Section 11(a) and
(c) of the Lease with respect to such Replacement Airframe have been
satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) 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;
(iii) that on the date of the Indenture Supplement relating to the
Replacement Engine the Owner Trustee will hold title to such
Replacement Engine free and clear of all Liens except Permitted Liens,
that such Replacement Engine will on such date be in good operating
condition, and that such Replacement Engine is the same or an improved
model as the Engine to be released;
(iv) the value, remaining useful life and utility of the
Replacement Engine as of the date of such certificate (which value,
remaining useful life and utility shall not be
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less than the then value, remaining useful life and utility of the
Engine requested to be released, assuming such Engine was in the
condition and repair required to be maintained under the Lease (but
without regard to hours and cycles until overhaul));
(v) that no Lease 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 Engine; and
(vi) that each of the conditions specified in Section 11(b) of the
Lease with respect to such Replacement Engine have been satisfied.
(3) The appropriate instrument or 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, (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 (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Airframe or Replacement Engine to the Lien of this Indenture
and subjecting to any relevant Assigned Sublease and Sublease Assignment,
including, without limitation, an Indenture Supplement.
(4) With respect to a Replacement Airframe, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee confirming
the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof.
(5) The opinion of counsel to the Lessee, satisfactory to the Indenture
Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the requirements of this
Indenture and the Lease and, upon the basis of such application, the
property so sold or disposed of may be properly released from the Lien
of this Indenture and all conditions precedent herein provided for
relating to such release have been complied with;
(ii) the Replacement Airframe and/or Replacement Engine(s)
have 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 Lien of this Indenture and the Lease, and
subjecting
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to any relevant Assigned Sublease and Sublease Assignment, as the case
may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of
the Aircraft, and no further action, filing or recording of any
document is necessary in order to establish and perfect, in the United
States and, if the Aircraft is registered outside the United States, in
the jurisdiction of registration, the legal title to such Replacement
Airframe and/or Replacement Engine and the Lien of this Indenture on
such Replacement Airframe and/or Replacement Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as 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 to the
Replacement Airframe and, if an Event of Loss with respect to the
Aircraft has occurred, the Replacement Engines to the same extent as
with respect to the Airframe and Engines then installed thereon prior
to such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Airframe or Engine as contemplated by
Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for
the benefit of the Note Holders and the Lessee, subject to fulfillment of the
conditions precedent and compliance by the Lessee with its obligations set forth
in Section 11 of the Lease, to execute and deliver the appropriate instruments
as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee
(or any relevant Permitted Sublessee) an appropriate instrument releasing the
Airframe and/or Engine(s) being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of
the substitution of a Replacement Airframe or Engine as
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contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions
of this Indenture relating to the Airframe or Engine(s) being replaced shall be
applicable to such Replacement Airframe or Replacement Engine(s) with the same
force and effect as if such Replacement Airframe or Replacement Engine(s) were
the same airframe or engine(s), as the case may be, as the Airframe or Engine(s)
being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Note Holder shall affect the sufficiency of
such notice with respect to other Note Holders. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Note Holders
shall be filed with the Indenture Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this Indenture, including
the Granting Clause, but subject always to the final paragraph of this Section
5.10, the following rights shall be reserved to the Owner Trustee or Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
(a) the Owner Trustee or the Owner Participant may, without
the consent of the Indenture Trustee, demand, collect, sue for or
otherwise obtain all amounts included in Excepted Payments from the
Lessee, exercise any election or option or make any decision or
determination or give or receive any notice, consent, waiver or
approval in respect of any Excepted Payment and seek legal or equitable
remedies to require the Lessee to maintain the insurance coverage
referred to in Section 12 of the Lease (or the comparable
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provisions of any Assigned Sublease) and such specific performance of
the covenants of the Lessee under the Lease (or the comparable
provisions of any Assigned Sublease) relating to the protection,
maintenance, possession and use of the Aircraft; provided, that the
rights referred to in this clause (a) shall not be deemed to include
the exercise of any remedies provided for in Section 18 of the Lease
(or the comparable provisions of any Assigned Sublease) other than the
right to proceed by appropriate court action, either at law or in
equity, to enforce payment by the Lessee of such amounts included in
Excepted Payments or performance by the Lessee of such insurance
covenant or to recover damages for the breach thereof or for specific
performance of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent
of the Owner Trustee, enter into, execute and deliver amendments or
modifications in respect of any of the provisions of the Lease, any
Assigned Sublease or any Sublease Assignment and (ii) unless an
Indenture Event of Default and an Indenture Trustee Event shall have
occurred and be continuing, the Indenture Trustee shall not, without
the consent of the Owner Trustee, which consent shall not be withheld
if no right or interest of the Owner Trustee or the Owner Participant
shall be materially diminished or impaired thereby, (A) enter into,
execute and deliver waivers or consents in respect of any of the
provisions of the Lease, any Assigned Sublease or any Sublease
Assignment, or (B) approve any accountants, engineers, appraisers or
counsel as satisfactory to render services for or issue opinions to the
Owner Trustee pursuant to the Operative Documents; provided that,
whether or not an Indenture Event of Default has occurred and is
continuing, the Owner Trustee's consent shall be required with respect
to any waivers or consents in respect of any of the provisions of
Section 6, 12 or 16 of the Lease, or of any other Section of the Lease
to the extent such action shall affect (y) the amount or timing of, or
the right to enforce payment of any Excepted Payment or (z) the amount
or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of
the Owner Trustee) which, absent the occurrence and continuance of an
Indenture Event of Default hereunder, would be distributable to the
Owner Trustee under Article III hereof;
(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
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and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses
(a), (b) and (c) above, so long as no Indenture Event of Default has
occurred and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner Trustee and the Owner Participant under the Lease shall be
exercised by the Owner Trustee and/or the Owner Participant, as the
case may be, to the exclusion of the Indenture Trustee and any Note
Holder and without the consent of the Indenture Trustee or any Note
Holder; provided that the foregoing shall not, nor shall any other
provision of this Section 5.10, limit (A) any rights separately and
expressly granted to the Indenture Trustee or any Note Holder under the
Lease or the other Operative Documents (including, without limitation,
Section 15 of the Refunding Agreement) or (B) the right of the
Indenture Trustee or any Note Holder to receive any funds to be
delivered to the Owner Trustee under the Lease (except with respect to
Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be
in default under Section 18 thereof and (C) subject only to the provisions of
Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such
Section 18 (other than in connection with Excepted Payments) and in Article IV
hereof.
SECTION 5.11. Evidence of Action Taken by Note Holder. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Note Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such
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Note Holders in person or by agent duly appointed in writing, and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, if
expressly required herein, to the Owner Trustee. Proof of execution of any
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05)
conclusive in favor of the Indenture Trustee and the Owner Trustee if made in
the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far as
concerns such Equipment Note. Except as aforesaid any such action taken by the
Note Holder shall be conclusive and binding upon such Note Holder and upon all
future Note Holders and owners of such Equipment Note and of any Equipment Notes
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Equipment Note. Any action
taken by the Note Holders of the percentage in aggregate Principal Amount of the
Equipment Notes specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee in its individual capacity shall be
answerable or accountable under any circumstances, except for its own willful
misconduct or gross negligence (other than for the handling of funds, for which
the standard of accountability shall be negligence), or as provided in the
fourth sentence of Section 2.04(a) hereof and in the last sentence of Section
5.04 hereof, and except for liabilities that may result, in the case of the
Trust Company,
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from the inaccuracy of any representation or warranty of the Trust Company in
the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or
the failure to perform any covenant of the Trust Company pursuant to Section
4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the
case of the Indenture Trustee, from the inaccuracy of any representation or
warranty, or failure to perform any covenant, of the Indenture Trustee made in
its individual capacity herein, in the Refunding Agreement or in any other
document. None of the Owner Participant, the Trust Company or the Indenture
Trustee shall be liable for any action or inaction of any other one of such
parties, except, in the case of the Owner Participant, for any action or
omission of the Owner Trustee performed or omitted on the instructions of the
Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note
Holders for any purpose.
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, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case
of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof
and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner
Trustee and the Indenture Trustee shall have no duty (i) to see to any
registration of the Aircraft or any recording or filing of the Lease or of this
Indenture or any other document, or to see to the maintenance of any such
registration, recording or filing, (ii) to see to any insurance on the Aircraft,
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 Trust 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 or any of the
Permitted Sublessee's covenants under any Assigned Sublease with respect to the
Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft
or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE
TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO
HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR ANY PART THEREOF, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
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DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY
ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for
the Aircraft the Owner Trustee shall have received whatever interest in the
Aircraft was conveyed to it under the Warranty Bill of Sale subject to the
rights of the parties to the Indenture Documents and (ii) the Aircraft shall be
free and clear of Lessor's Liens attributable to the Trust Company. Neither the
Trust Company nor the Indenture Trustee 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
Documents 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 in its individual capacity or as Indenture Trustee made under
this Indenture or in the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any
moneys paid to or retained by the Indenture Trustee pursuant to any provision
hereof and not then required to be distributed to any Note Holder, the Lessee or
the Owner Trustee as provided in Article III hereof need not be segregated in
any manner except to the extent required by law, 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 hereof) 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 any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of
the Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of 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
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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, but in the case of any such certificate, the
Owner Trustee and the Indenture Trustee shall be under a duty to examine the
same to determine whether or not it conforms to the requirements of this
Indenture. 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 (except in
the case of the Indenture Trustee's obligations under the third sentence of
Section 2.04(a)) through agents or attorneys and shall not be responsible for
any misconduct or negligence on the part of any such agent or attorney appointed
with due care hereunder. The Indenture Trustee may, at the expense of the Trust
Indenture Estate, consult with counsel, accountants and other skilled Persons to
be selected and retained by it, and the Owner Trustee and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by them
in accordance with the written advice or written opinion of any such counsel,
accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against any Note Holder or the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
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SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee (in its individual
capacity and as trustee) from and after the Restatement Date (whether or not
also agreed to be indemnified against by any other Person under any other
document) in any way relating to or arising out of this Indenture, the Trust
Agreement, the Equipment Notes, the other Indenture Documents or the enforcement
of any of the terms of any thereof, or in any way relating to or arising out of
the manufacture, purchase,
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acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease,
possession, use, operation, condition, sale, return or other disposition of the
Aircraft or any Engine (including, without limitation, latent and other defects,
whether or not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder, except only (i) in the case of willful misconduct or gross negligence
(or negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the
Indenture Trustee, in its individual capacity and as Indenture Trustee, and its
successors, permitted assigns, agents and servants, thereunder; provided that so
long as the Lease is in effect, the Indenture Trustee shall not make any claim
under this Section 7.01 for any amount indemnified against by the Lessee under
the Lease without first (but only to the extent not stayed or otherwise
prevented by operation of law) making demand on the Lessee for payment of such
amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee
promptly of any claim for which it may seek indemnity. The Lessee shall be
entitled to defend any claim by the Indenture Trustee to the extent provided in
Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to
indemnification from the Trust Indenture Estate for any liability, obligation,
loss, damage, penalty, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7.01 to the extent not reimbursed
by the Lessee or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same the Indenture Trustee shall
have a prior Lien on the Trust Indenture Estate. The indemnities contained in
this Section 7.01 shall survive the termination of this Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
agent or affiliate of the Trust Company or the Owner Participant (the
"Exculpated Equity Persons") shall have any obligation, duty or liability of any
kind whatsoever to the Indenture Trustee or any such Note Holder in connection
with the exercise by any Exculpated Equity Person of any rights of the Owner
Trustee or the taking of any action or the failure to take any action by any
Exculpated Equity Person in connection with any rights of the
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Owner Trustee under this Indenture or the Lease, and each such Note Holder
hereby waives and releases, to the extent permitted by applicable law, each
Exculpated Equity Person of any and all such obligations, duties or liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case
of any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Trust Company pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to the Indenture Trustee and to each Note Holder.
SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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 and
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assuming such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Indenture Trustee,
without further act, shall become vested with and bound by all the estates,
properties, rights, powers, duties and obligations of the predecessor Indenture
Trustee hereunder and under the other Indenture Documents in the trusts
hereunder applicable to it with like effect as if originally named the Indenture
Trustee herein; but nevertheless upon the written request of such successor
Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver
an instrument transferring to such successor Indenture Trustee, upon the trusts
herein expressed applicable to it, all the estates, properties, rights and
powers of such predecessor Indenture Trustee, and such predecessor Indenture
Trustee shall duly assign, transfer, deliver and pay over to such successor
Indenture Trustee all moneys or other property then held by such predecessor
Indenture Trustee hereunder, subject nevertheless to its claim provided for in
Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall
be a "citizen of the United States" within the meaning of Section 40102(a)(15)
of the Federal Aviation Act and shall also be a bank or trust company having a
combined capital and surplus of at least $200,000,000 if there be such an
institution willing, able and legally qualified to perform the duties of the
Indenture Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the foregoing,
upon the request of the Owner Trustee or the Lessee, any such successor
corporation referred to in this Section 8.02(d) shall deliver to the Owner
Trustee and the Lessee an instrument confirming its status as the Indenture
Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate may at the time be
located or in which any action of the Indenture Trustee may be required to be
performed or taken, the Indenture Trustee, by an instrument in writing signed by
it, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee, acting jointly with the Indenture
Trustee, of all or any part of
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the Trust Indenture Estate to the full extent that local law makes it necessary
for such separate trustee or separate trustees or co-trustee acting jointly with
the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust 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
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, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act, and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Indenture
Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be
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conferred or imposed and exercised or performed by the Indenture
Trustee and such additional trustee or trustees and separate trustee or
trustees jointly except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Indenture Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Indenture
Estate in any such jurisdiction) shall be exercised and performed by
such additional trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent
of, the Indenture Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.03,
the powers of any additional trustee or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures.
(a) Except as otherwise provided in Section 5.10 hereof, and except with respect
to Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or
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supplement to the Lease, or execute and deliver any written waiver or
modification of, or consent under, the terms of the Lease, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee acting on instructions of a Majority in
Interest of Note Holders. Anything to the contrary contained in this Section
9.01 notwithstanding, without the necessity of the consent of any of the Note
Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i)
any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and
Lessee may, so long as no Indenture Event of Default has occurred and is
continuing, enter into amendments of or additions to the Lease to modify
Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such
amendment would adversely affect the rights or exercise of remedies under
Section 18 of the Lease) so long as such amendments, modifications and changes
do not and would not (A) affect the time of, or reduce the amount of, Basic Rent
or Stipulated Loss Value payments until after the payment in full of all Secured
Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the
value, utility or useful life of the Aircraft or any Engine or (D) otherwise
adversely affect the Note Holders in any material respect and (iii) the Lessee
may effect the re-registration of the Aircraft in accordance with but always
subject to the terms and conditions applicable thereto specified in Section 11
of the Refunding Agreement and Section 6(e) of the Lease and the Indenture
Trustee may approve any Permitted Sublessee as provided in clause (c) of the
definition of such term set forth in the Lease and may exercise the rights of
the Indenture Trustee under Section 15 of the Refunding Agreement. For the
avoidance of doubt, nothing in this Section 9.01 shall limit in any way the
rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d)
to exercise certain rights and powers under the Lease to the exclusion of the
Indenture Trustee and any Note Holder and without the consent of the Indenture
Trustee or any Note Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise, whether in its
official or individual capacity.
Any supplemental indenture authorized by the provisions
of this Section 9.01 may be executed without the consent of the
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Note Holders notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, or does not adversely affect the Note Holders in any
material respect. Upon the written request of a Majority in Interest of Note
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the Lease which would permit redemption of
Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any
of the provisions of Section 4(b) of the Lease, or modify, amend or supplement
the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any
assignment of any thereof, in either case releasing the Lessee (or Permitted
Sublessee) from its obligations in respect of the payment of Basic Rent or
Stipulated Loss Value for the Aircraft or altering the absolute and
unconditional character of the obligations of Lessee to pay
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Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable
provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on
the Trust Indenture Estate or any part thereof other than Permitted Liens or
deprive any Note Holder of the benefit of the Lien of this Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely as
Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Airframe or Engines or any
Replacement Airframe or Replacement Engine; (v) to add to the covenants of the
Owner Trustee for the benefit of the Note Holders, or to surrender any rights or
powers herein conferred upon the Owner Trustee, the Owner Participant or the
Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on
the Equipment Notes any legend as may be required by law.
(d) Without the consent of the Lessee no amendment or
supplement to this Indenture or waiver or modification of the terms hereof shall
adversely affect the Lessee in any material respect or impose upon the Lessee
any additional indemnification obligations.
SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective
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rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for all and any purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such copy
to each Note Holder), but the failure of the Owner Trustee or the Indenture
Trustee to mail such conformed copies shall not impair or affect the validity of
such document. The Indenture Trustee will furnish to each Note Holder, promptly
upon receipt thereof, duplicates or copies of
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all reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder to the extent
that the same were not required to have been furnished to such Note Holder
pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX, no
written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX 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, any Engines or other property
thereto or to release the Aircraft, any Engine or other property therefrom or to
execute and deliver an Indenture Supplement, in each case pursuant to the terms
hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge
of such Lien and the termination of such security interest in the Aircraft and
release of 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
Trustee to give effect to such discharge, termination and 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 as expressly
provided pursuant to Article X hereof or upon any sale or other final
disposition by the Indenture Trustee of all property part
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of the Trust Indenture Estate and the final distribution by the Indenture
Trustee of all moneys or other property or proceeds constituting part of the
Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Indenture and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Note Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is
Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee
made pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the 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 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of the Aircraft, except in
accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly
specified herein, all notices, requests, demands, authorizations,
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directions, consents, waivers or documents required or permitted by the terms of
this Indenture shall be in English and in writing, mailed by first-class
registered or certified mail, postage prepaid, or by confirmed telex or
telecopy, and (i) if to the Owner Trustee, addressed to it at its office at
Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302)
651-8464/8882), with a copy to the Owner Participant at its address set forth in
the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at
its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate
Trust Administration (telex: 99339; answerback: CTNB-HTFD; telecopy: (203)
240-7920) or (iii) if to the Owner Participant, the Lessee or any Note Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Register. Whenever any
notice in writing is required to be given by the Owner Trustee or the Indenture
Trustee or any Note Holder to any of the other of them, such notice shall be
deemed and such requirement satisfied when such notice is received. Any party
hereto may change the address to which notices to such party will be sent by
giving notice of such change to the other parties to this Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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 permitted assigns of each, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Note Holder shall bind the successors and assigns of
such Note Holder. This Indenture and the Trust
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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. Each Note Holder by its acceptance of
an Equipment Note agrees to be bound by this Indenture and all provisions of the
Refunding Agreement applicable to a Note Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Indenture Trustee, the
Owner Trustee, the Owner Participant, any Note Holder or any bank or other
Affiliate of any of them may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Lessee or any Permitted Sublessee fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Lessee for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the
parties that the Owner Trustee, as lessor under the Lease (and the Indenture
Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled
to the benefits of Section 1110 of the Bankruptcy Code with respect to the right
to take possession of the Aircraft, Airframe, Engines and Parts as provided in
the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in
which Lessee is a debtor, and in any instance where more than one construction
is possible of the terms and conditions hereof or of any other pertinent
Operative Document, each such party agrees that a construction which would
preserve such benefits shall control over any construction which would not
preserve such benefits.
Trust Indenture
<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee
By
-------------------------------
Title:
FLEET NATIONAL BANK,
not in its individual capacity,
except as expressly provided
herein, but solely as Indenture
Trustee
By
-------------------------------
Title:
Trust Indenture
<PAGE> 96
EXHIBIT A
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-14]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1990 AWA-14]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1990 AWA-14] dated
as of September 21, 1990 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1990
AWA-14] dated as of September 21, 1990, as amended and restated as of November
26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee
and Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut, National Association, and The Connecticut National
Bank), as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof
which shall particularly describe the Aircraft (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 Trust Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No.
1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of
July 29, 1993, subjected to the Lien of such Original Indenture the airframe and
engines therein described, which Original Indenture and Trust Indenture
Supplement No. 1 have been duly recorded with the Federal Aviation
Administration as one document on September 28, 1990 and assigned Conveyance No.
E10184, which Amendment No. 1 has been duly recorded with the Federal Aviation
Administration on May 18, 1992 and assigned Conveyance No. EE003011 and which
Amendment No. 2 has been duly recorded with the Federal Aviation Administration
on August 4, 1993 and assigned Conveyance No. F59674.
<PAGE> 97
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WHEREAS(1), 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(2), the Owner Trustee has, as provided in the
Indenture, heretofore executed and delivered to the Indenture Trustee [(3)]
Indenture Supplement(s) for the purpose of specifically subjecting to the Lien
of the Indenture certain airframes and/or engines therein described, which
Indenture Supplement(s) is (are) dated and has (have) been duly recorded with
the Federal Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
NOW, THEREFORE, This Supplement Witnesseth, that, to secure
the prompt payment of the Principal Amount of, interest on, Make-Whole Amount,
if any, and all other amounts due with respect to, all 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 contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner
Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and
- --------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
(2) This recital not to be included in the first Indenture
Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 98
- 3 -
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 Note Holders from time to time, in
the trust created by the Indenture, a first priority security interest in and
mortgage Lien on all estate, right, title and interest of the Owner Trustee in,
to and under the following described property:
AIRFRAME(S)
( ) airframe(s) identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
together with all 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.
AIRCRAFT ENGINES
( ) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as
follows:
Manufacturer's
Manufacturer Model Serial Number
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engines.
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,
Form of Trust Indenture Supplement
<PAGE> 99
- 4 -
sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture
Trustee, its successors and assigns, for the security and benefit of the Note
Holders from time to time, in the trust created by the Indenture, all of the
estate, right, title and interest of the Owner Trustee in, to and under the
Lease and Lease Supplement [GPA 1990 AWA-14] No. 3 of even date herewith (other
than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and
subject to the terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and shall form a part of it, and the Indenture is hereby incorporated
by reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 100
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this
Supplement to be duly executed by one of its officers thereunto duly authorized
on the day and year first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By____________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 101
SCHEDULE I
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-14]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- -------- ---------
<S> <C> <C> <C>
Series A $11,897,518 02-Jan-2009 6.85%
Series B $ 4,413,774 02-Jul-2005 6.93%
Series C $ 4,552,621 02-Jan-2002 6.86%
Series D $ 4,249,113 02-Jan-2002 8.16%
Series E $ 2,541,597 02-Jul-2002 10.50%
</TABLE>
<PAGE> 102
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N635AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 103
- 2 -
SERIES B
Aircraft: N635AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 104
- 3 -
SERIES C
Aircraft: N635AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 105
- 4 -
SERIES D
Aircraft: N635AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 106
- 5 -
SERIES E
Aircraft: N635AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<PAGE> 107
SCHEDULE II
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-14]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1A, dated
November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1B, dated
November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1C, dated
November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1D, dated
November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1E, dated
November 26, 1996.
Schedule II
<PAGE> 1
EXHIBIT 4.39
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-15]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 098
Registration No. N636AW
Leased by America West Airlines, Inc.
<PAGE> 2
TABLE OF CONTENTS
Page
----
GRANTING CLAUSE...................................................... 3
HABENDUM CLAUSE...................................................... 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions................................... 8
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes............................... 21
SECTION 2.02. Issuance and Terms of Equipment Notes................. 26
SECTION 2.03. Payments from Trust Indenture Estate
Only............................................ 29
SECTION 2.04. Method of Payment..................................... 31
SECTION 2.05. Application of Payments............................... 33
SECTION 2.06. Termination of Interest in Trust
Indenture Estate................................ 34
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes................................. 34
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes................................. 36
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation.................................... 36
SECTION 2.10. Mandatory Redemptions of Equipment
Notes........................................... 37
SECTION 2.11. Redemptions; Notice of Redemption..................... 37
SECTION 2.12. Option to Purchase Equipment Notes.................... 38
SECTION 2.13. Subordination......................................... 39
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions............................ 40
SECTION 3.02. Event of Loss and Replacement......................... 42
SECTION 3.03. Payment After Indenture Event of
Default, etc.................................... 43
SECTION 3.04. Certain Payments...................................... 46
SECTION 3.05. Other Payments........................................ 47
SECTION 3.06. Payments to Owner Trustee............................. 47
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee......................................... 48
(i)
<PAGE> 3
Page
----
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner
Trustee......................................... 49
SECTION 4.02. Indenture Events of Default........................... 50
SECTION 4.03. Certain Rights........................................ 53
SECTION 4.04. Remedies.............................................. 55
SECTION 4.05. Return of the Aircraft, etc........................... 58
SECTION 4.06. Remedies Cumulative................................... 60
SECTION 4.07. Discontinuance of Proceedings......................... 60
SECTION 4.08. Waiver of Past Indenture Defaults..................... 61
SECTION 4.09. Exercise of Remedies by Foreign Note
Holders......................................... 61
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default.................. 61
SECTION 5.02. Action Upon Instructions.............................. 62
SECTION 5.03. Indemnification....................................... 63
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions....................... 64
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions............ 64
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts................... 64
SECTION 5.07. Indenture Supplements for Replacements................ 68
SECTION 5.08. Effect of Replacement................................. 68
SECTION 5.09. Notices, etc.......................................... 68
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant............................... 69
SECTION 5.11. Evidence of Action Taken by Note Holder............... 71
SECTION 5.12. Right of Revocation of Action Taken................... 71
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties....................... 72
SECTION 6.02. Absence of Duties..................................... 73
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents........................... 73
SECTION 6.04. No Segregation of Moneys; No Interest................. 74
(ii)
<PAGE> 4
Page
----
SECTION 6.05. Reliance; Agents; Advice of Counsel................... 74
SECTION 6.06. Capacity in Which Acting.............................. 75
SECTION 6.07. Compensation.......................................... 75
SECTION 6.08. May Become Note Holder................................ 75
SECTION 6.09. Further Assurances; Financing
Statements...................................... 75
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification.............................. 76
SECTION 7.02. Exculpation and Release of Liability.................. 77
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee..................... 77
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor............... 78
SECTION 8.03. Appointment of Separate Trustees...................... 79
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures...................................... 81
SECTION 9.02. Effect of Supplemental Indenture...................... 84
SECTION 9.03. Documents to Be Given to Trustee...................... 84
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures......................... 85
SECTION 9.05. Trustees Protected.................................... 85
SECTION 9.06. Documents Mailed to Note Holders...................... 85
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement.............. 85
SECTION 9.08. Notices to Liquidity Provider......................... 86
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture............................. 86
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders......................... 86
SECTION 10.03. Sale of Aircraft by Indenture Trustee
(iii)
<PAGE> 5
Page
----
is Binding..................................... 87
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
Lessee and Note Holders........................ 87
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease................................ 87
SECTION 10.06. Notices.............................................. 87
SECTION 10.07. Severability......................................... 88
SECTION 10.08. No Oral Modifications or Continuing
Waivers........................................ 88
SECTION 10.09. Successors and Assigns............................... 88
SECTION 10.10. Headings............................................. 88
SECTION 10.11. Normal Commercial Relations.......................... 89
SECTION 10.12. Governing Law; Counterpart Form...................... 89
SECTION 10.13. Section 1110......................................... 89
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
(iv)
<PAGE> 6
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-15]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-15] (this "First Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank
of Connecticut, Shawmut Bank Connecticut, National Association, and The
Connecticut National Bank), a national banking association, not in its
individual capacity except as otherwise specifically set forth herein, but
solely as indenture trustee hereunder (in such capacity, together with its
successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company entered
into the Trust Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as
supplemented by Trust Agreement Supplement [GPA 1990 AWA-15] No. 1 dated
September 28, 1990, and as further supplemented by Trust Agreement Supplement
[GPA 1990 AWA-15] No. 2 dated the date hereof (as amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof,
hereof and of the Refunding Agreement, the "Trust Agreement"), whereby, among
other things, Wilmington Trust Company has declared a certain trust for the use
and benefit of the Owner Participant, subject, however, to the Trust Indenture
Estate created pursuant hereto for the use and benefit of (to the extent set
forth herein), and with the priority of certain payments to, the Holders of
Equipment Notes issued hereunder, and the Owner Trustee is authorized and
directed to execute and deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered
into the Trust Indenture and Security Agreement [GPA 1990 AWA-15] dated as of
September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated
September 28, 1990, which were recorded by the Federal Aviation Administration
on September 28, 1990 as one instrument and assigned Conveyance No. L61291, as
amended by Amendment No. 1 dated March 27, 1992,
Trust Indenture
<PAGE> 7
- 2 -
recorded by the Federal Aviation Administration on May 18, 1992 and assigned
Conveyance No. EE003013, and as further amended by Amendment No. 2 dated as of
July 29, 1993, recorded by the Federal Aviation Administration on August 4, 1993
and assigned Conveyance No. F59675 (collectively, as so amended, supplemented or
otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner
Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement
[GPA 1990 AWA-15] dated as of September 21, 1990, as supplemented by Lease
Supplement [GPA 1990 AWA-15] No. 1 dated September 28, 1990, which were recorded
by the Federal Aviation Administration on September 28, 1990 as one instrument
and assigned Conveyance No. L61292, and as further supplemented by Lease
Supplement No. 2 dated December 31, 1991, which was not filed for recordation
with the Federal Aviation Administration (collectively, as so amended,
supplemented or otherwise modified to the date hereof, the "Original Lease") and
(iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to
the Lenders (as defined in the Original Indenture) the Original Loan
Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and restate
the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease
Termination Agreement [GPA 1990 AWA-13] dated as of the date hereof among the
Original Head Lessee, as assignor and the Original Sublessee, as assignee, the
Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft
Lease Agreement [GPA 1990 AWA-15] dated as of the date hereof between the Owner
Trustee and the Lessee (as so assigned, amended and restated, the "Amended and
Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and
(ii) cause the implementation of the Refinancing Transaction pursuant to which,
among other things, the Original Loan Certificates issued pursuant to the
Original Indenture shall be prepaid and new Equipment Notes shall be issued to
the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's estate,
right, title and interest in and to the Aircraft and, except as hereinafter
expressly provided, all of the Owner Trustee's right, title and interest in, to
and under the Lease (as amended and restated to date and as the same may at any
time and from time to time be further amended, restated or otherwise modified in
accordance with the terms thereof and hereof) and all payments and other amounts
Trust Indenture
<PAGE> 8
- 3 -
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable benefit and security of the Note Holders,
subject to Section 2.13 and Article III hereof;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee and authenticated, issued and delivered by the
Indenture Trustee hereunder, the legal, valid and binding obligations of the
Owner Trustee; and
WHEREAS, all things necessary to make this First Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE AND
SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Equipment Notes from time to time outstanding
hereunder and the performance and observance by the Owner Trustee of all the
agreements, covenants and provisions contained herein and in the Refunding
Agreement and the Equipment Notes, for the benefit of the Note Holders, and the
prompt payment of any and all amounts from time to time owing hereunder and
under the Refunding Agreement by the Owner Trustee, the Owner Participant and
the Lessee to the Note Holders and for the uses and purposes and subject to the
terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained, and of the acceptance of the 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, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture
Trust Indenture
<PAGE> 9
- 4 -
Supplement or any indenture supplemental hereto, are included within the Trust
Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and all
replacements thereof and substitutions therefor to which the Owner Trustee
shall from time to time acquire an interest under 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 and other
documents to which the Owner Trustee shall from time to time acquire an
interest at any time maintained by the Lessee with respect to the
foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement, including the Consent and Guaranty
attached thereto (all to the extent assigned by the Purchase Agreement
Assignment and the Purchase Agreement Warranties Assignment); the Purchase
Agreement Warranties Assignment, with the Consents and Agreements attached
thereto; and the Bills of Sale; in each case including, without
limitation, (x) all rights of the Owner Trustee to exercise any election
or option or to make any decision or determination or to give any notice,
consent, waiver or approval or to take any other action under or in
respect of any such document or to accept surrender or redelivery of the
Aircraft or any part thereof, as well as all the rights, powers and
remedies on the part of the Owner Trustee, whether arising under any such
document or by statute or at law or in equity, or otherwise, arising out
of any Lease Event of Default, and (y) any right to restitution from the
Lessee, the Manufacturer, the Manufacturer's Subsidiary or any other
Person in respect of any determination of invalidity of any such document;
(3) each Sublease Assignment and each Assigned Sublease (to the
extent assigned under such Sublease Assignment), and including, without
limitation, all rents or other payments of any kind made under such
Assigned Sublease (to the extent assigned under such Sublease Assignment),
all collateral security or credit support (in the nature of a guarantee,
letter of credit, credit insurance, Lien on or security interest in any
property or otherwise) for the obligations of the Permitted Sublessee
thereunder (to the extent assigned under such Sublease Assignment) and all
rights of the Owner Trustee to exercise any election or option or to give
any notice, consent, waiver, or approval
Trust Indenture
<PAGE> 10
- 5 -
under or with respect of any thereof 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 (in each case to the extent assigned to the
Owner Trustee), whether arising under any Assigned Sublease or any
Sublease Assignment or by statute or at law or in equity, or otherwise,
arising out of any default under any Assigned Sublease;
(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, without limitation, 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 requisition proceeds with respect to the Aircraft or any
part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Aircraft or any part thereof, including but not limited to the insurance
required under Section 12 of the Lease or under any comparable provision
of any Assigned Sublease (but excluding any excess insurance maintained by
the Lessee and not required under Section 12 of the Lease or any Assigned
Sublease);
(6) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with the Indenture Trustee by or
for the account of the Owner Trustee pursuant to any term of any Operative
Document and held or required to be held by the Indenture Trustee
hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable by
the Lessee to the Owner Trustee under the Refunding Agreement and all
rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any other
Person in accordance with the provisions of this Agreement, AND SUBJECT TO
Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel
Trust Indenture
<PAGE> 11
- 6 -
paper original executed counterparts of the Original Lease and Lease Supplement
No. 1, certified copies of the Purchase Agreement Warranties Assignment and the
Consents and Agreements attached thereto, and the original Warranty Bill of
Sale. The Owner Trustee thereafter delivered to the Indenture Trustee the
chattel paper original executed Lease Supplement No. 2. Concurrently with the
delivery of this Indenture, the Owner Trustee is delivering to the Indenture
Trustee the chattel paper original executed counterparts of the Amended and
Restated Lease and Lease Supplement No. 3. All property referred to in this
Granting Clause, whenever acquired by the Owner Trustee, shall secure all
obligations under and with respect to the Equipment Notes at any time
outstanding. Any and all properties referred to in this Granting Clause which
are hereafter acquired by the Owner Trustee, shall, without further conveyance,
assignment or act by the Owner Trustee or the Indenture Trustee thereby become
and be subject to the security interest hereby granted as fully and completely
as though specifically described herein.
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 Note Holders from time to time, except as set forth in Section
2.13 and Article III hereof without any preference, distinction or priority of
any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, with full power (in
the name of the Owner Trustee or
Trust Indenture
<PAGE> 12
- 7 -
otherwise) to ask, require, demand, receive and give acquittance for any and all
moneys and claims for moneys (in each case including insurance and requisition
proceeds but excluding Excepted Payments and Excepted Rights) due and to become
due to the Owner Trustee under or arising out of the Indenture Documents and all
other property which now or hereafter constitutes part of the Trust Indenture
Estate, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings which the Indenture Trustee may deem to be necessary or advisable in
the premises. Under the Lease, the Lessee is directed to make all payments of
Rent (other than Excepted Payments) and all other amounts which are required to
be paid to or deposited with the Owner Trustee pursuant to the Lease (other than
Excepted Payments) directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application as provided in
this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee
will be directed from and after (i) notice of the occurrence of a Lease Event of
Default and (ii) notice that the Lease is declared or deemed in default, to make
all payments of rent and all other amounts which are required to be paid to or
deposited with the Lessee pursuant to the related Assigned Sublease and which
are assigned thereunder directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application or to be held
as provided in this Indenture. The Owner Trustee agrees that promptly on receipt
thereof, it will transfer to the Indenture Trustee any and all moneys from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Indenture, except (a) to
the extent the Owner Trustee is entitled to distribution of such moneys pursuant
to this Indenture and (b) that the Owner Trustee shall accept for distribution
pursuant to the Trust Agreement any amounts distributed to it by the Indenture
Trustee under this Indenture.
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge or
otherwise dispose of, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to Section 10.01 hereof, any
of its estate, right, title or interest hereby assigned, to anyone other than
the Indenture Trustee, and that, with respect to such
Trust Indenture
<PAGE> 13
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estate, right, title and interest hereby assigned, subject to its rights
pursuant to Section 5.10 hereof, it will not, except as provided in this
Indenture (including, without limitation, Section 9.01) and except as to
Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or
any Permitted Sublessee under any of the Indenture Documents, enter into any
agreement amending, modifying or supplementing any of the Indenture Documents,
or execute any waiver or modification of, or consent under, the terms of any of
the Indenture Documents, (ii) settle or compromise any claim arising under any
of the Indenture Documents, (iii) give any notice or exercise any right or take
any action under any of the Indenture Documents, or (iv) 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. For
purposes of Section 4.02(e) hereof, this is the fourth paragraph following the
Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations under
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
might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments and
Excepted Rights. Further, nothing in the Granting Clause or the preceding
paragraphs shall impair any of the rights of the Owner Trustee or the Owner
Participant under Section 5.10 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained in the
Lease shall apply for all purposes of this Indenture except that the following
terms shall have the following meanings (such definitions to be equally
applicable to both the singular and plural forms of the terms defined) for all
purposes of this Indenture. Except as otherwise indicated, all the agreements or
instruments defined herein or in the Lease shall mean such agreements or
instruments (including all annexes, appendices, exhibits, schedules and
supplements thereto) as the
Trust Indenture
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same may from time to time be supplemented or amended or the terms thereof
waived or modified to the extent permitted by, and in accordance with, the terms
thereof and of the other Operative Documents and references to various Persons
shall be deemed to be references to and include their respective permitted
successors and assigns.
"Amortization Amount" means, with respect to any Principal Amount
Repayment Date, the amount set forth opposite such Principal Amount
Repayment Date on the Amortization Schedule.
"Amortization Schedule" means the amortization schedule for the
Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed shall be
the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Equipment
Note. "Remaining Weighted Average Life" of such Equipment Note, at the
redemption date of such Equipment Note, shall be the number of days equal
to the quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of
principal, including the payment due on the maturity date of such
Equipment Note, by (ii) the number of days from and including the
redemption date to but excluding the scheduled payment date of such
principal installment; by (b) the then unpaid Principal Amount of such
Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the United States
Code, 11 U.S.C. Sections 101 et seq., as amended.
"Bills of Sale" means the FAA Bills of Sale and the Warranty Bill of
Sale.
"Business Day" means a day other than a Saturday, Sunday or a day on
which banks are required or authorized to close in either The City of New
York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities
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pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement shall
be deposited.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consents and Agreements" means the confirmations by the
Manufacturer included in the Purchase Agreement Assignment and the
Purchase Agreement Warranties Assignment of the transfer of rights under
the Purchase Agreement.
"Continuous Stay Period" has the meaning specified in Section
4.04(a).
"Corporate Trust Office" means the principal corporate trust office
of the Indenture Trustee located at 777 Main Street, Hartford, Connecticut
06115, Attention: Corporate Trust Administration, or such other office at
which the Indenture Trustee's corporate trust business shall be
administered that the Indenture Trustee shall have specified by notice in
writing to the Lessee, the Owner Trustee and the Note Holders.
"Debt" means any liability for borrowed money, or any liability for
the payment of money in connection with any letter of credit transaction,
or other liabilities evidenced or to be evidenced by bonds, debentures,
notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series C,
Series D and Series E, the rate per annum specified for such Series under
the heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means September 28, 1990.
"Dollars", "U.S. $" and "$" mean the lawful currency of the United
States of America.
"Downgrade Drawing" has the meaning assigned to such term in Section
3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the United States of America or any one of the states thereof or
the District of Columbia (or any U.S. branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution
has a long-term
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unsecured debt rating from each Rating Agency of at least A- 3 or its
equivalent.
"Eligible Institution" means (a) the corporate trust department of
the Subordination Agent or any Pass Through Trustee, as applicable, or (b)
a depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or
any U.S. branch of a foreign bank), which has a long-term unsecured debt
rating from each Rating Agency of at least A-3 or its equivalent.
"Equipment Notes" means the Equipment Notes, in substantially the
form set out in Section 2.01 hereof, issued by the Owner Trustee and
authenticated by the Indenture Trustee pursuant to the terms of this
Indenture.
"Equity Collateral" has the meaning assigned to such term in the
definition of "Excepted Payments."
"Excepted Payments" means (i) any and all indemnity payments and
interest in respect thereof paid or payable in respect of the Owner
Participant, the Trust Company, the Owner Trustee (and not in support of
any payment obligation of the Owner Trustee under any Indenture Document)
or any of their respective successors, permitted assigns (and, in the case
of a permitted assign of the Owner Participant that is a partnership, the
partners of such partnership), directors, officers, employees, servants,
agents, subsidiaries, affiliates or shareholders by the Lessee pursuant to
the Lease (including, without limitation, Section 13 thereof and any
corresponding payment of Supplemental Rent under the Lease), (ii) any
proceeds of public liability insurance (or government indemnities in lieu
thereof) in respect of the Aircraft payable as a result of insurance
claims paid respecting, or losses suffered by, the Trust Company or the
Indenture Trustee in its individual capacity or the Owner Participant,
(iii) any proceeds of insurance maintained with respect to the Aircraft by
or for the benefit of the Owner Participant (whether directly or through
the Owner Trustee) and not required under Section 12 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts
payable to the Owner Participant, the Trust Company, the Owner Trustee
(and not in support of any payment obligation of the Owner Trustee under
any Indenture Document), or any of their respective successors, permitted
assigns (and, in the case of a permitted assign of the Owner Participant
that is a partnership, the partners of such partnership), directors,
officers, employees, servants, agents, subsidiaries, affiliates or
shareholders under Section 10 of the Lease or by the Lessee or the Parent
Trust Indenture
<PAGE> 17
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Guarantor under the Tax Indemnification Agreement or the Amended and
Restated Head Lease TIA (as defined in the Refunding Agreement), as the
case may be, (v) Transaction Expenses paid or payable by the Lessee or the
Parent Guarantor to the Trust Company, the Owner Trustee, the Indenture
Trustee or the Owner Participant pursuant to Section 21 of the Refunding
Agreement or the Lease, (vi) any letter of credit pursuant to Section 8(l)
of the Lease (including, without limitation, any replacement letter of
credit (the "Equity Collateral")) and any payment or proceeds of any such
Equity Collateral to the extent retained or applied as provided in Section
8(l) of the Lease, (vii) any amount payable to the Owner Participant by
any transferee as the purchase price of the Owner Participant's interest
in the Trust Estate (or a portion thereof), (viii) any amount payable to
the Owner Trustee, the Trust Company or the Owner Participant or any of
their respective successors, permitted assigns (and, in the case of a
permitted assign of the Owner Participant that is a partnership, the
partners of such partnership), directors, officers, employees, servants,
agents, subsidiaries, affiliates or shareholders attributable to the
period prior to or on the Restatement Date or under the Original
Participation Agreement, the Original Lease, the Parent Head Lease
Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the
Amended and Restated Sublease TIA (as such terms are defined in the
Refunding Agreement) or Retained Head Lease Rights and Obligations (as
such term is defined in the Refunding Agreement), and (ix) subject to the
last sentence of Section 5.10 hereof, any and all rights of the Owner
Trustee, the Owner Participant or the Trust Company under the Operative
Documents, whether or not a Lease Event of Default, a Lease Default, an
Indenture Default or an Indenture Trustee Event has occurred and is
continuing to demand, collect, sue for, give notices, make determinations,
enforce or exercise all rights with respect to and otherwise obtain all
amounts described in clauses (i) through (viii) above and the proceeds
thereof.
"Excepted Rights" means (i) those rights of the Owner Participant
and the Owner Trustee under Section 5.10 of this Indenture, (ii) all
rights under the Equity Collateral to make a claim for, collect and retain
all amounts payable with respect to any Equity Collateral, (iii) all
rights of the Owner Participant, the Trust Company or the Owner Trustee to
compromise or waive any such right or modify, amend or waive any provision
of any Operative Document conferring such rights with respect to Excepted
Payments, and (iv) all rights of the Owner Trustee to exercise any
election or option, or to make any decision or
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<PAGE> 18
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determination, or to give or receive any notice, consent, waiver or
approval with respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section 2.03(b) hereof.
"FAA" means the Federal Aviation Administration of the United States
Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such
Liquidity Facility in accordance with the provisions thereof other than a
Downgrade Drawing.
"Government Obligations" means direct obligations of the United
States of America that are not callable, redeemable or payable prior to
maturity, in whole or in part, directly or indirectly, by any Person.
"Indenture," "this Indenture," and "the Indenture" mean this First
Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented by
any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an event
or condition that, with the giving of notice or the lapse of time or both,
would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement, including the Consent and Guaranty attached
thereto (all to the extent assigned by the Purchase Agreement Assignment
and the Purchase Agreement Warranties Assignment); the Purchase Agreement
Warranties Assignment and the Consents and Agreements attached thereto;
and the Bills of Sale.
"Indenture Event of Default" has the meaning set forth in Section
4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and Security
Agreement listed on Schedule 1 to the Intercreditor Agreement, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
Trust Indenture
<PAGE> 19
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"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Aircraft and any
Replacement Airframe and Replacement Engine included in the property of
the Owner Trustee covered by this Indenture, including, without
limitation, Trust Indenture Supplement No. 1 dated September 28, 1990,
which was recorded as one instrument by the FAA with the Original
Indenture, and Trust Indenture Supplement No. 2 dated November 26, 1996,
which is being filed for recordation as one instrument by the FAA with
this First Amended and Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes shall
have become due and payable pursuant to Section 4.04(b) or (c) of this
Indenture or (ii) the Indenture Trustee has taken action or notified the
Owner Trustee that it intends to take action to foreclose the Lien of this
Indenture or otherwise commence the exercise of any significant remedy
under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in Section
3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on deposit
in the Trust Accounts net of losses and investment expenses of the
Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as assigned, amended and restated by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-13] dated
as of the date hereof and Amended and Restated Aircraft Lease Agreement
[GPA 1990 AWA-15] dated as of the date hereof and supplemented by Lease
Supplement [GPA 1990 AWA-15] No. 3 dated November 26, 1996, which are
being filed for recordation as one instrument with the FAA
contemporaneously herewith.
"Lease Default" means an event or condition that, with the giving of
notice or the lapse of time or both, would become a Lease Event of
Default.
"Lease Event of Default" means any event or condition defined as an
"Event of Default" in Section 17 of the Lease.
"Lessee" means America West Airlines, Inc., a Delaware corporation,
in its capacity as lessee under the Amended and
Trust Indenture
<PAGE> 20
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Restated Lease, and its successors, and to the extent permitted by the
Refunding Agreement, its assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien, charge,
encumbrance, lease, exercise of rights, security interest, lease in the
nature of a security interest, statutory right in rem, or claim of any
kind, including any thereof arising under any conditional sale agreement,
equipment trust agreement or title retention agreement.
"Majority in Interest of Note Holders" means, as of a particular
date of determination and subject to Section 2.6 of the Intercreditor
Agreement, the Holders of more than 50% in aggregate unpaid Principal
Amount of all Equipment Notes outstanding as of such date. For purposes of
this definition, there shall be excluded any Equipment Notes held by the
Owner Trustee or the Owner Participant or any interests of the Owner
Participant therein by reason of subrogation pursuant to Section 4.03 of
the Indenture (unless all Equipment Notes then outstanding shall be held
by the Owner Trustee or the Owner Participant) or any Equipment Notes held
by the Lessee or any Affiliate of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note, the
amount (as determined by an independent investment banker selected by
Lessee and reasonably acceptable to the Indenture Trustee and the Owner
Participant) by which (a) the present value of the remaining scheduled
payments of principal and interest from the redemption date to maturity of
such Equipment Note computed by discounting each such payment on a
semiannual basis from its respective Payment Date (assuming a 360-day year
of twelve 30-day months) using a discount rate equal to (i) in the case of
Series A Equipment Notes and Series B Equipment Notes, the Treasury Yield
and (ii) in the case of Series C Equipment Notes, Series D Equipment Notes
and Series E Equipment Notes, the Treasury Yield plus 0.75% exceeds (b)
the outstanding principal amount of such Equipment Note plus accrued
interest. For purposes of determining the Make-Whole Amount, "Treasury
Yield" at the time of determination with respect to any Equipment Note
means the interest rate (expressed as a semiannual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a
bond equivalent yield) determined to be the per annum rate equal to the
semiannual yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note and trading in
the public securities market either as determined by interpolation
Trust Indenture
<PAGE> 21
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between the most recent weekly average yield to maturity for two series of
United States Treasury securities, trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note and (B) the other maturing as
close as possible to, but later than, the Average Life Date of such
Equipment Note, in each case as published in the most recent H.15(519) or,
if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is
reported on the most recent H.15(519), such weekly average yield to
maturity as published in such H.15(519). "H.15(519)" means the weekly
statistical release designated as such, or any successor publication,
published by the Board of Governors of the Federal Reserve System. The
date of determination of a Make-Whole Amount shall be the third Business
Day prior to the applicable redemption date and the "most recent
H.15(519)" means the H.15(519) published prior to the close of business on
the third Business Day prior to the applicable redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person other than a
U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from time to
time of one or more Equipment Notes as reflected in the Register
maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the Lessee,
as the case may be, certifying as to the authority and signature of such
Responsible Officer, that is delivered to the Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel, who
in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such written
opinions or (ii) Latham & Watkins or other counsel designated by the
Lessee and reasonably satisfactory to the Indenture Trustee or, in the
case of legal counsel for the Owner Trustee, may be Morris, James,
Hitchens & Williams or other counsel designated by the Owner Trustee and
reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease.
Trust Indenture
<PAGE> 22
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"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1990 AWA-15] dated as of September 21, 1990, as
supplemented by Trust Indenture Supplement No. 1 dated September 28, 1990,
which were recorded as one instrument by the FAA on September 28, 1990 and
assigned Conveyance No. L61291, as amended by Amendment No. 1 dated March
27, 1992, recorded by the FAA on May 18, 1992 and assigned Conveyance No.
EE003013, and as further amended by Amendment No. 2 dated as of July 29,
1993, recorded by the FAA on August 4, 1993 and assigned Conveyance No.
F59675.
"Original Loan Certificates" means the Loan Certificates issued
under and as defined in the Original Indenture.
"Original Sublessee" means America West Airlines, Inc. ("AWA"), a
Delaware corporation, in its capacity as sublessee under the Aircraft
Sublease Agreement [GPA 1990 AWA-15] dated as of September 21, 1990
between the Original Head Lessee in its capacity as sublessor thereunder
and AWA in its capacity as sublessee.
"Owner Participant" means _____________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited company
organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the five Pass Through Trusts
established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through Trust
Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a national banking
association, not in its individual capacity but solely as pass through
trustee under each of the five separate Pass Through Trust Agreements.
"Past Due Rate" means, with respect to any amount not paid when due
(whether at stated maturity, by acceleration or otherwise) under or in
respect of any Equipment Note, a rate of interest per annum (computed on
the basis of a year of 360 days comprised of twelve 30-day months) equal
to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a
Trust Indenture
<PAGE> 23
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Business Day, the immediately succeeding Business Day) until the Equipment
Notes have been paid in full.
"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with respect
to all Equipment Notes, means the aggregate stated original principal
amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on which
any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [GPA 1990 AWA-15], dated as of the Delivery Date, between the
Parent Guarantor and the Original Head Lessee, together with the Consents
and Agreements attached thereto, as the same may be amended, modified, or
supplemented from time to time in accordance with the terms hereof and
thereof.
"Purchase Agreement Warranties Assignment" means the Purchase
Agreement Warranties Assignment [GPA 1990 AWA-15], dated as of the
Delivery Date, between the Original Head Lessee and the Owner Trustee
together with the Consents and Agreements attached thereto, as the same
may be amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
"Rating Agencies" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates issued pursuant to the Pass Through Trust Agreements and
which shall then be rating the Certificates. Initially, the Rating
Agencies shall consist of Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated by the
Refunding Agreement and the other documents entered into on and in
connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1990
AWA-15] dated as of November 20, 1996, among the Lessee, the Original Head
Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through Trustee,
the Owner Participant, the Subordination Agent and the Indenture
Trustee.
Trust Indenture
<PAGE> 24
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"Register" has the meaning set forth in Section 2.07 hereof.
"Registrar" has the meaning set forth in Section 2.07 hereof.
"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice president
or, in the case of the Owner Trustee, an officer of the Owner Trustee in
its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date agreed
to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date of
the filing with the FAA of Trust Indenture Supplement No. 2.
"Secured Obligations" has the meaning set forth in Section 2.06
hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount and
maturities and bearing interest as specified in Section 2.02 and Schedule
I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount and
maturities and bearing interest as specified in Section 2.02 and Schedule
I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount and
maturities and bearing interest as specified in Section 2.02 and Schedule
I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount and
maturities and bearing interest as specified in Section 2.02 and Schedule
I hereto under the heading "Series D."
"Series E" or "Series E Equipment Notes" means Equipment Notes
issued and designated as "Series E" hereunder, in the Principal Amount and
maturities and
Trust Indenture
<PAGE> 25
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bearing interest as specified in Section 2.02 and Schedule I hereto under
the heading "Series E."
"Sublease Assignment" means a sublease assignment by the Lessee in
favor of the Owner Trustee (including the consent thereto given by the
sublessee thereunder) with respect to the assignment of a Permitted
Sublease pursuant to Section 6(a) of the Lease.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in Section
2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware banking
corporation, in its individual capacity and not as Owner Trustee, and its
successors under the Trust Agreement, in their respective individual
capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means all estate,
right, title and interest of the Owner Trustee in and to the properties,
rights and interests covered by the Granting Clause of the Indenture,
excluding, however, in each case, Excepted Payments and Excepted Rights.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section 7701(a)(9)
of the Code (for purposes of this definition, the "United States"), (ii) a
corporation, partnership or other entity created or organized under the
laws of the United States or any political subdivision thereof or therein
or (iii) any estate or trust that is subject to United States federal
income taxation regardless of the source of its income.
"Warranty Bill of Sale" means a full warranty (as to title) bill of
sale covering the Aircraft (excluding all Buyer Furnished Equipment)
executed by the Original Head Lessee in favor of the Owner Trustee dated
the Delivery Date.
Trust Indenture
<PAGE> 26
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes shall be
substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1990 AWA-15]
DATED AS OF SEPTEMBER 21, 1990, AS AMENDED.
SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING
UNITED STATES REGISTRATION NUMBER N636AW.
No.____________ Date: [________, 1996]
$___________________
DEBT RATE MATURITY DATE
[ ] [ , ]
WILMINGTON TRUST COMPANY, not in its individual capacity but solely
as Owner Trustee (herein in such capacity called the "Owner Trustee") under that
certain Trust Agreement [GPA 1990 AWA-15], dated as of September 21, 1990, as
amended, between the Owner Participant named therein and Wilmington Trust
Company (herein as such Trust Agreement may be supplemented or amended from time
to time called the "Trust Agreement"), hereby promises to pay to Fleet National
Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $_______ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semiannual installments commencing on January 2, 1997, and
Trust Indenture
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thereafter on July 2 and January 2 of each year, to and including ___________,
____.
Notwithstanding the foregoing or anything to the contrary contained
herein, (i) the final payment made on this Equipment Note shall be in an amount
sufficient to discharge in full the unpaid Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, this Equipment Note; and
(ii) if any date on which a payment under this Equipment Note becomes due and
payable is not a Business Day, then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business Day and if such
payment is made on such next succeeding Business Day, no interest shall accrue
on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First Amended
and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-15], dated as
of November 26, 1996, between the Owner Trustee and Fleet National Bank
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank) (the "Indenture
Trustee"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this Equipment Note and not defined herein shall
have the respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at the
Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest and
any other amounts payable hereunder which are overdue, in each case for the
period the same is overdue. Amounts shall be overdue if not paid when due
(whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as above provided and that none of the Owner Participant, the
Owner Trustee and the
Trust Indenture
<PAGE> 28
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Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of registering
transfers and exchanges of Equipment Notes at the Corporate Trust Office of the
Indenture Trustee or at the office of any successor in the manner provided in
Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and interest and
other amounts due hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise
provided in the Indenture. Each such payment shall be made on the date such
payment is due and without any presentment or surrender of this Equipment Note,
except that in the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter to the
Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note, agrees
that, except as provided in the Indenture, each payment received by it hereunder
shall be applied, first, to the payment of accrued interest on this Equipment
Note (as well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and to the extent permitted by law, any overdue
interest and any other overdue amounts hereunder) to the date of such payment,
second, to the payment of the portion of the Principal Amount of this Equipment
Note then due, third, to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under the Indenture, and fourth, the balance, if any,
remaining thereafter, to the payment of the portion of the Principal Amount of
this Equipment Note remaining unpaid in the inverse order of its normal
maturity.
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 Trust Indenture Estate is held by the Indenture
Trustee as security, in part, for the Equipment Notes. The provisions of this
Equipment Note are subject to the Indenture. Reference is hereby made to the
Indenture and the Refunding Agreement for a complete statement of the rights and
obligations of the Holder
Trust Indenture
<PAGE> 29
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of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in Sections
2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or the
Owner Trustee as provided in Section 2.12 of the Indenture and to acceleration
by the Indenture Trustee as provided in Section 4.04 of the Indenture.
[The indebtedness evidenced by this Equipment Note is, to the extent
and in the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of [Series A Equipment Notes](1) [Series B Equipment
Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4), and this
Equipment Note is issued subject to such provisions. The Note Holder of this
Equipment Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate
- --------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
(4) To be inserted in the case of Series E Equipment Notes.
Trust Indenture
<PAGE> 30
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the subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.](5)
Unless the certificate of authentication hereon has been executed by
or on behalf of the Indenture Trustee by manual signature, this Equipment Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note
to be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
FLEET NATIONAL BANK,
as Indenture Trustee
By:_______________________________
Name:
Title:
- --------
(5) To be inserted in the case of a Series B, Series C, Series D or Series E
Equipment Note.
Trust Indenture
<PAGE> 31
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SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The Equipment
Notes shall be dated the date of issuance thereof, shall be issued in five
separate series consisting of Series A, Series B, Series C, Series D and Series
E and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass
Through Trustees (or their designee) under the Pass Through Trust Agreements set
forth in Schedule II to be attached hereto in connection therewith and (ii) the
Original Loan Certificates issued under the Original Indenture shall be
concurrently prepaid. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of each Series may be
in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate (calculated
on the basis of a year of 360 days comprised of twelve 30-day months) on the
unpaid Principal Amount thereof from time to time outstanding, payable in
arrears on January 2, 1997, and on each July 2 and January 2 thereafter until
maturity.
The Principal Amount of each Equipment Note shall be payable on the
dates and in the installments equal to the corresponding percentage of the
Principal Amount as set forth in Schedule I hereto which shall be attached as
Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
Trust Indenture
<PAGE> 32
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any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and Related
Charges, a fraction the numerator of which is the aggregate principal
balance then outstanding of the Equipment Notes issued hereunder and the
denominator of which is the aggregate principal balance then outstanding
of all "Equipment Notes" issued under the Indentures, and
Trust Indenture
<PAGE> 33
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(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default (as defined below) under any Equipment Note
a fraction, the numerator of which is the aggregate principal balance then
outstanding of the Equipment Notes issued hereunder and the denominator of
which is the aggregate principal balance then outstanding of all
"Equipment Notes" issued under the Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E
Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net
Interest and Related Charges" means (as determined by the Subordination Agent in
consultation with the Liquidity Providers and notified to the Indenture Trustee
except that the Past Due Rate shall be determined by the Indenture Trustee and
notified to the Subordination Agent) the sum of (i) the amount, if any, by which
interest payable to any Liquidity Provider on any Interest Drawing, Final
Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an
Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the
amount which would be payable if such advances bore interest at the Designated
Interest Rate (as defined below) plus (ii) any amounts payable under Section
3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity
Facility (or similar provisions of any succeeding liquidity facility) which
result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in
this Section 2.02, "Designated Interest Rate" means the weighted average Past
Due Rate (as defined in the applicable Indentures) in respect of "Series A
Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
issued under the Indentures, except with respect to that portion of any Final
Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a
Cash Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" or "Series E Equipment Note" issued
under the Indentures which has not been cured other than solely because of
acceleration. For purposes of Section 3.04(b) hereof, this is the fourth
paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner Trustee
by its President or one of its Vice Presidents, Assistant Vice Presidents or
Assistant Secretaries or other authorized officer. Equipment Notes bearing the
signatures of
Trust Indenture
<PAGE> 34
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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. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee
for authentication upon original issue and such Equipment Notes shall thereupon
be authenticated and delivered by the Indenture Trustee upon the written request
of the Owner Trustee signed by a Vice President or Assistant Vice President or
other authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Equipment Notes to
be authenticated hereunder on original issue with respect to the Aircraft. No
Equipment Note shall be secured by or be entitled to any benefit under this
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized officers and such certificate upon any Equipment Notes shall be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a) Without
impairing any of the other rights, powers, remedies, privileges or Liens of the
Note Holders under this Indenture, each Note Holder, by its acceptance of an
Equipment Note, agrees that, except as expressly provided in this Indenture, the
Refunding Agreement or any other Operative Document, (i) the obligation to make
all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such
Trust Indenture
<PAGE> 35
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other agreements to the contrary notwithstanding (except for any express
provisions or representations that the Trust Company is responsible for, or is
making, for which there would be personal liability of the Trust Company), no
recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the property
of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means the
amount by which such payment exceeds the amount that would have been received by
a Note Holder or the Indenture Trustee if the Trust Company, the Owner Trustee
or the Owner Participant had not become subject to the recourse liability
referred to in clause (ii) above. Nothing contained in this
Trust Indenture
<PAGE> 36
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Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Trust Company, the Owner Trustee or the Owner Participant under the
Refunding Agreement, this Indenture (and any exhibits or annexes hereto or
thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such
Trust Indenture
<PAGE> 37
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funds were received after 12:00 noon, New York City time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat
the Person in whose name any Equipment Note is registered on the Register as the
absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee, shall
exclude and withhold at the appropriate rate from each payment of Principal
Amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Equipment Note (and such exclusion and withholding shall
constitute payment in respect of such Equipment Note) any and all United States
withholding taxes applicable thereto as required by law. The Indenture Trustee
agrees to act as such withholding agent and, in connection therewith, whenever
any present or future United States taxes or similar charges are required to be
withheld with respect to any amounts payable hereunder or in respect of the
Equipment Notes, to withhold such amounts (and such withholding shall constitute
payment in respect of such Equipment Note) and timely pay the same to the
appropriate authority in the name of and on behalf of the Note Holders, that it
will file any necessary United States withholding tax returns or statements when
due, and that as promptly as possible after the payment thereof it will deliver
to each Note Holder (with a copy to the Owner Trustee and the Lessee)
appropriate receipts showing the payment thereof, together with such additional
documentary evidence as any such Note Holder, the Owner Participant and the
Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to the
Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of
Trust Indenture
<PAGE> 38
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such form prior to the date of such payment (and the Indenture Trustee has no
reason to know that any information set forth in such form is inaccurate), the
Indenture Trustee shall withhold only the amount, if any, required by law (after
taking into account any applicable exemptions claimed by the Note Holder) to be
withheld from payments hereunder or under the Equipment Notes held by such
Holder in respect of United States federal income tax (and such withholding
shall constitute payment in respect of such Equipment Note). If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form 4224 in
duplicate (or such successor certificate, form or forms as may be required by
the United States Treasury Department as necessary in order to avoid withholding
of United States federal income tax), during the calendar year in which the
payment is made (but prior to the making of such payment) or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Equipment Notes held by such Holder, no amount shall be
withheld from payments in respect of United States federal income tax. If any
Note Holder has notified the Indenture Trustee that any of the foregoing forms
or certificates is withdrawn or inaccurate, or if such Holder has not filed a
form claiming an exemption from United States withholding tax or if the Code or
the regulations thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the Equipment Notes held by such
Holder, the Indenture Trustee agrees to withhold from each payment due to the
relevant Note Holder withholding taxes at the appropriate rate under law (and
such withholding shall constitute payment in respect of such Equipment Notes)
and will, on a timely basis as more fully provided above, deposit such amounts
with an authorized depository and make such returns, statements, receipts and
other documentary evidence in connection therewith as required by applicable
law.
None of the Owner Trustee, the Owner Participant or the Lessee shall
have any liability for the failure of the Indenture Trustee to withhold taxes in
the manner provided for herein or for any false, inaccurate or untrue evidence
provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of each Equipment
Note, each payment of Principal Amount, Make-Whole
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Amount, if any, and interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and, to the extent permitted by law, any
overdue interest and any other overdue amounts thereunder) to the date of
such payment;
Second: to the payment of the Principal Amount of such Equipment
Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Equipment Note remaining unpaid (provided
that such Equipment Note shall not be subject to redemption except as
provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture Estate. A
Note Holder shall not, as such, have any further interest in, or other right
with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request
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from the registered Holder thereof for the issuance of a new Equipment Note,
specifying, in the case of a surrender for transfer, the name and address of the
new Holder or Holders. Upon surrender for registration of transfer of any
Equipment Note, 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 unpaid portion
of the Principal Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate unpaid portion of the Principal
Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture
Trustee at the Corporate Trust Office. 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 Note
Holder making the exchange is entitled to receive. All Equipment Notes issued
upon any registration of transfer or exchange of Equipment Notes (whether under
this Section 2.07 or under Section 2.08 hereof or otherwise under this
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this 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 Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder
or such Holder's attorney duly authorized in writing, and the Indenture Trustee
shall require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act and the securities laws of any applicable
state. The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Principal Amount 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 on such old Equipment Note or Equipment
Notes has been paid. Interest shall be deemed to have been paid on such new
Equipment Note to the date on which interest shall have been paid on such old
Equipment Note, and all payments of the Principal Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been made thereon.
Neither the Indenture Trustee nor the Owner Trustee shall be required to
exchange any surrendered Equipment Notes as provided above during the ten-day
period preceding the Payment Date. The Indenture Trustee will promptly notify
the Owner Trustee, the Owner Participant and Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Refunding
Agreement applicable to Note Holders, and shall be deemed to have represented
and warranted to the parties to the Refunding
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Agreement as to the matters represented and warranted by the Subordination Agent
in its capacity as the initial Holder of the Equipment Notes. Subject to
compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee
shall use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
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 Holder of such Equipment
Note, execute and the Indenture Trustee shall authenticate and deliver in
replacement thereof a new Equipment Note, payable in the same Principal Amount
dated the same date and captioned as originally issued. If the Equipment Note
being replaced has become mutilated, such Equipment Note shall be surrendered to
the Indenture Trustee and a copy thereof shall be furnished to the Owner
Trustee. If the Equipment Note being replaced has been destroyed, lost or
stolen, the Holder of such Equipment Note shall furnish to the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such Person, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the
Indenture Trustee shall be accepted as satisfactory indemnity and security and
no further indemnity or security shall be required as a condition to the
execution and delivery of such new Equipment Note. Subject to compliance by the
Note Holder of the requirements set forth in this Section 2.08, the Indenture
Trustee and the Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation. (a) No
service charge shall be made to a Note Holder for any registration of transfer
or exchange of Equipment Notes, but the Indenture Trustee, as Registrar, may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Equipment Notes; provided, however, that none of the Lessee, the
Owner Trustee,
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the Indenture Trustee or the Owner Participant shall bear costs of registration,
transfer or exchange in connection with the consummation of the Refinancing
Transaction.
(b) The Indenture Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither any
redemption of any Equipment Note nor any purchase by the Owner Trustee of any
Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the Equipment
Notes shall be given by the Indenture Trustee by first-class mail, postage
prepaid, mailed not less than 15 nor more than 60 days prior to the applicable
redemption date, to each Note Holder of such Equipment Notes to be redeemed or
purchased, at such Note Holder's address appearing in the Register. All notices
of redemption or purchase shall state: (1) the redemption date, (2) the
applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any
Person on behalf of the Owner Trustee) shall, to the extent an amount equal to
the redemption price for the Equipment Notes to be redeemed or purchased on the
redemption date shall not then be held in the Trust Indenture Estate, deposit or
cause to be deposited with the Indenture Trustee by 12:00 noon, New York City
time, on the redemption date in
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immediately available funds the redemption price of the Equipment Notes to be
redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid,
the Equipment Notes to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee,
and from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Equipment Notes then outstanding shall
cease to bear interest. Upon surrender of any such Equipment Note for redemption
or purchase in accordance with said notice, such Equipment Note shall be
redeemed at the redemption price. If any Equipment Note called for redemption or
purchase shall not be so paid upon surrender thereof for redemption, the
principal amount thereof shall, until paid, continue to bear interest from the
applicable redemption date at the interest rate in effect for such Equipment
Note as of such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the Owner
Trustee or the Owner Participant may, upon the events and subject to the terms
and conditions and for the price set forth in this Section 2.12, purchase all
but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised by the
Owner Trustee or the Owner Participant upon any of the following events, and, in
any such event, the purchase price thereof shall equal for each Equipment Note
the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest
thereon to, but not including, the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Refunding Agreement to the Holder thereof. Such
option to purchase the Equipment Notes may be exercised: (i) upon an Indenture
Trustee Event or (ii) in the event there shall have occurred and be continuing a
Lease Event of Default, provided that if such option is exercised pursuant to
this clause (ii) at a time when there shall have occurred and be continuing for
less than 120 days a Lease Event of Default (and there is no Indenture Trustee
Event), the purchase price thereof shall equal the price provided in the
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preceding sentence plus the Make-Whole Amount, if any; provided further, that
under no circumstances shall the Make-Whole Amount be payable by the Lessee.
Such option to purchase the Equipment Notes may be exercised by the
Owner Trustee or the Owner Participant giving written notice of its election of
such option to the Indenture Trustee, which notice shall specify a date for such
purchase not more than 30 days or less than 15 days after the date of such
notice. The Indenture Trustee shall not exercise any of the remedies hereunder
or, without the consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that a notice of exercise by the Owner
Participant of such option to purchase becomes irrevocable until the date on
which such purchase is required to occur pursuant to the terms of the preceding
sentence. Such election to purchase the Equipment Notes shall become irrevocable
upon the fifteenth day preceding the date specified in the written notice
described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the date
of such purchase shall so request, the Note Holders will comply with all the
provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series (other
than Series A), each Note Holder of such Series agrees that in the event that
such Note Holder, in its capacity as a Note Holder, shall receive any payment or
distribution on any Secured Obligations in respect of such Series which it is
not entitled to receive under this Section 2.13 or Article III hereof, it will
hold any amount so received in trust for the Senior Holder or Senior Holders (as
defined in Section 2.13(c) hereof) and will forthwith turn over such payment to
the Indenture Trustee in the form received to be applied as provided in Articles
II and III hereof.
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(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full, (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Note Holders of Series D until the Secured Obligations in respect of Series D
Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as rent
under any Assigned Sublease shall be promptly distributed in the following order
of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments of
Principal Amount, and interest and other amounts (as well as any interest
on overdue Principal Amount, and to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series A Equipment Notes shall be distributed
to the Note Holders of Series A ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments then
due under each Series A Equipment Note bears to the aggregate amount of
the payments then due under all Series A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall
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be distributed to the Note Holders of Series B ratably, without priority
of one over the other, in the proportion that the amount of such payment
or payments then due under each Series B Equipment Note bears to the
aggregate amount of the payments then due under all Series B Equipment
Notes;
(iii) after giving effect to clause (ii) above, so much of such
installment or payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series C Equipment Notes shall be distributed to the
Note Holders of Series C ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series C Equipment Note bears to the aggregate amount of the
payments then due under all Series C Equipment Notes;
(iv) after giving effect to clause (iii) above, so much of such
installment or payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series D Equipment Notes shall be distributed to the
Note Holders of Series D ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series D Equipment Note bears to the aggregate amount of the
payments then due under all Series D Equipment Notes; and
(v) after giving effect to clause (iv) above, so much of such
installment or payment remaining as shall be required to pay in full the
aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series E Equipment Notes shall be distributed to the
Note Holders of Series E ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series E Equipment Note bears to the aggregate amount of the
payments then due under all Series E Equipment Notes; and
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second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that if
an Indenture Default shall have occurred and be continuing, then such
balance shall not be distributed as provided in this clause "second" but
shall be held by the Indenture Trustee as part of the Trust Indenture
Estate and invested in accordance with Section 3.07 hereof until whichever
of the following shall first occur: (i) all Indenture Defaults shall have
been cured or waived, in which event such balance shall be distributed as
provided in this clause "second", or (ii) Section 3.03 hereof shall be
applicable, in which event such balance shall be distributed in accordance
with the provisions of said Section 3.03, or (iii) the 180th day after
receipt of such payment, in which event such balance shall be distributed
as provided in this clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any payment
received by the Indenture Trustee with respect to the Airframe or the Airframe
and one or both Engines as the result of an Event of Loss thereto shall be
applied to the redemption of the Equipment Notes and to all other amounts
payable hereunder by applying such funds in the following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event of
Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other amounts
(as well as any interest on overdue Principal Amount, and to the extent
permitted by applicable law, on any overdue interest and any other overdue
amounts) then due to the Note Holders under all Equipment Notes, all in
the order of priority specified in clause "first" of Section 3.01 hereof,
and
third, if and to the extent required to be paid to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) in reimbursement of
payment of Stipulated Loss Value pursuant to Section 11(d) of the Lease,
to the Lessee (or if directed by the Lessee, any Permitted Sublessee), and
otherwise as provided in clause "fourth" of Section 3.03 hereof;
provided that, if a Replacement Airframe or a Replacement Airframe and one or
more Replacement Engines are to be substituted for the Airframe or the Airframe
and one or both Engines subject to such Event of Loss as provided in Section 11
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of the Lease and Section 5.06 hereof, any proceeds which result from such Event
of Loss and are paid to the Indenture Trustee shall be held by the Indenture
Trustee as part of the Trust Indenture Estate as security for the obligations of
the Lessee under the Operative Documents and invested in accordance with the
terms of Section 3.07 hereof and, unless theretofore applied in accordance with
the provisions of the Lease and this Indenture, such proceeds shall, to the
extent payable to the Lessee under the Lease, be released to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) upon or in connection with the
replacement thereof as provided in such Sections .
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Airframe or the Airframe and one or both Engines) shall be
applied as provided in the applicable provisions of the Lease; provided,
however, that to the extent that any portion of such amounts held for account of
the Lessee are not at the time required to be paid to the Lessee (or any
Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12
of the Lease, shall be held by the Indenture Trustee as security for the
obligations of the Lessee under the Operative Documents and shall be invested in
accordance with the terms of Section 3.07 hereof and at such time as the
conditions specified in the Lease for payment of such amounts to the Lessee
shall be fulfilled, such portion, and the net proceeds of any investment
thereof, shall, unless theretofore applied in accordance with the provisions of
the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07 hereof,
and notwithstanding Section 2.05 hereof, all payments received and amounts held
or realized by the Indenture Trustee after an Indenture Event of Default shall
have occurred and be continuing or after the Indenture Trustee has given notice
to the Owner Trustee and the Owner Participant pursuant to Section 4.04(a)
hereof regarding its exercise of remedies under Section 18 of the Lease or of
the foreclosure of this Indenture, or after the Equipment Notes shall have
become due and payable as provided herein, and all payments or amounts then held
by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long
as such Indenture Event of Default shall be continuing, be promptly distributed
by the Indenture Trustee in the following order of priority, without
duplication:
first, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for all amounts due to it pursuant to
Section 6.07 hereof, plus any tax,
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expense, charge or other loss (including, without limitation, all amounts
to be expended at the expense of, or charged upon the tolls, rents,
revenues, issues, products and profits of, the property included in the
Trust Indenture Estate pursuant to Section 4.05(b) hereof) incurred by the
Indenture Trustee (to the extent not previously reimbursed) (including,
without limitation, the expenses of any sale, taking or other proceeding,
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 then existing or prior Note Holders for payments
made pursuant to Section 5.03 hereof (to the extent not previously
reimbursed) shall be distributed to the then existing or prior Note
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 one over any other, in accordance with the amount of the
payment or payments made by each such then existing or prior Note Holder
pursuant to said Section 5.03 and applicable (in the case of each such
then existing Note Holder) to the Equipment Notes held by such existing
Note Holder at the time of distribution by the Indenture Trustee;
third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal Amount of all
Series A Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect of the
Series A Equipment Notes (other than Make-Whole Amount, if any) to the
date of distribution, shall be distributed to the Note Holders of Series
A, and in case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably, without priority
of one over the other, in the proportion that the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by each Holder plus
the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Principal Amount of all Series
A Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution;
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(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series B Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series B Equipment Notes (other than
Make-Whole Amount, if any) to the date of distribution, shall be
distributed to the Note Holders of Series B, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all Series B
Equipment Notes held by each Holder plus the accrued but unpaid interest
and other amounts due hereunder or thereunder (other than Make-Whole
Amount, if any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series B Equipment Notes held by all such Holders
plus the accrued but unpaid interest and other amounts due thereon to the
date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series C Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series C Equipment Notes (other than
Make-Whole Amount, if any) to the date of distribution, shall be
distributed to the Note Holders of Series C, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all Series C
Equipment Notes held by each Holder plus the accrued but unpaid interest
and other amounts due hereunder or thereunder (other than Make-Whole
Amount, if any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series C Equipment Notes held by all such Holders
plus the accrued but unpaid interest and other amounts due thereon to the
date of distribution;
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series D Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series D Equipment Notes (other than
Make-Whole Amount, if any) to the date of distribution, shall be
distributed to the Note Holders of Series D, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the
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other, in the proportion that the aggregate unpaid Principal Amount of all
Series D Equipment Notes held by each Holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series D Equipment Notes held by
all such Holders plus the accrued but unpaid interest and other amounts
due thereon to the date of distribution; and
(v) after giving effect to paragraph (iv) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series E Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series E Equipment Notes (other than
Make-Whole Amount, if any) to the date of distribution, shall be
distributed to the Note Holders of Series E, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all Series E
Equipment Notes held by each holder plus the accrued but unpaid interest
and other amounts due hereunder and thereunder (other than Make-Whole
Amount, if any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series E Equipment Notes held by all such holders
plus the accrued but unpaid interest and other amounts due thereon to the
date of distribution; and
fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment Notes
as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by the
Indenture Trustee for which provision as to the application thereof is made in
the Lease shall be applied forthwith to the purpose for which such payment was
made in accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or the Lessee in respect
of (i) the Indenture Trustee in its individual capacity, (ii) any Pass Through
Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 10 or 13 of the
Lease or Section 21 of the Refunding Agreement or
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as Supplemental Rent, directly to the Person entitled thereto. Any payment
received by the Indenture Trustee under clause (b) of the fourth paragraph of
Section 2.02 shall be distributed to the Subordination Agent to be distributed
in accordance with the terms of the Intercreditor Agreement, and any payment
received by the Indenture Trustee under clause (c) of the fourth paragraph of
Section 2.02 shall be distributed directly to the Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and 3.04
hereof, any payments received by the Indenture Trustee for which no provision as
to the application thereof is made elsewhere in this Indenture shall be
distributed by the Indenture Trustee, unless otherwise agreed in writing,
subject to Section 6.07 hereof (i) to the extent received or realized at any
time prior to the payment in full of all obligations to the Note Holders secured
by the Lien of this Indenture, in the order of priority specified in Section
3.01 hereof, and (ii) to the extent received or realized at any time after
payment in full of all obligations to the Note Holders secured by the Lien of
this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause "first"
of Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify against
thereunder, in the manner provided in clause "first" of Section 3.03
hereof, and
second, in the manner provided in clause "fourth" of Section 3.03
hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of funds of the type received by the Indenture
Trustee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the
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Indenture Trustee receives notice to the contrary from the Owner Trustee, all
amounts to be distributed to the Owner Trustee pursuant to clause "second" of
Section 3.01 hereof shall be distributed by wire transfer of funds of the type
received by the Indenture Trustee to the Owner Participant's account as may be
specified pursuant to the Refunding Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee. Any
amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights
to hold moneys for security pursuant to Section 21(h) of the Lease shall be held
in accordance with the terms of such Section ; and the Indenture Trustee hereby
agrees to perform the duties of the Owner Trustee under such Section . Except as
provided in the preceding sentence, any amounts held by the Indenture Trustee
pursuant to the proviso to clause "second" of Section 3.01 hereof, pursuant to
Section 3.02 hereof, pursuant to the second sentence of Section 3.04(c) hereof,
pursuant to the fourth sentence of Section 4.03 hereof, pursuant to a Sublease
Assignment, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Owner Trustee or, in the event the
Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
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ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee. (a) The
Trust Company hereby covenants and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Lien
attributable to it in its individual capacity with respect to any of the
properties or assets of the Trust Indenture Estate and shall, at its own cost
and expense promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Trust Company will cause restitution to be made to
the Trust Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) the Owner Trustee will duly and punctually pay the Principal
Amount of, Make-Whole Amount, if any, and interest on and other amounts
due under the Equipment Notes and hereunder in accordance with the terms
of the Equipment Notes and this Indenture and all amounts payable by it to
the Note Holders under the Refunding Agreement and the other Operative
Documents;
(ii) the Owner Trustee will not directly or indirectly create, incur,
assume or suffer to exist any Lessor's Liens attributable to it with
respect to any of the properties or assets of the Trust Indenture Estate,
and shall, at its own cost and expense, promptly take such action as may
be necessary duly to discharge any such Lessor's Lien, and the Owner
Trustee will cause restitution to be made to the Trust Indenture Estate in
the amount of any diminution of the value thereof as the result of any
Lessor's Liens attributable to it;
(iii) in the event an officer with responsibility for or familiarity
with the transactions contemplated hereunder or under the other Operative
Documents (or any Vice President) in the Corporate Trust Administration
Department of the Owner Trustee shall have actual knowledge of an
Indenture Default or an Event of Loss, the Owner Trustee will give prompt
written notice of such Indenture Default or Event of Loss to the Indenture
Trustee, the Lessee and the Owner Participant;
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(iv) 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 12(f) of the Lease, to the extent that the same shall not have
been furnished, or is not required to be furnished by the Lessee, to the
Indenture Trustee pursuant to the Lease or otherwise;
(v) except as contemplated by the Operative Documents or with the
consent of the Indenture Trustee acting in accordance with Article IX
hereof, the Owner Trustee will not incur any indebtedness for borrowed
money; and
(vi) 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 Refunding Agreement, the Trust
Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing (other
than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, or interest on, any Equipment Note (other than as a
result of a Lease Default) and such failure shall have continued
unremedied for ten calendar days; or the failure of the Owner Trustee to
pay when due any other amount due and payable under any Equipment Note or
hereunder (other than as a result of a Lease Default) and such failure
shall have continued unremedied for 15 calendar days after notice thereof
being given to the Owner Trustee from the Indenture Trustee or any Note
Holder; or
(c) any Lessor's Lien required to be discharged by the Trust Company
pursuant to Section 4.01(a) hereof or Section 13 of the Refunding
Agreement or by the Owner Trustee as the Owner Trustee pursuant to Section
4.01(b)(ii) hereof or
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Section 13 of the Refunding Agreement or any Lessor's Lien required to be
discharged by the Owner Participant pursuant to Section 13 of the
Refunding Agreement shall remain undischarged for a period of 30 calendar
days after, as the case may be, an officer with responsibility for or
familiarity with the transactions contemplated hereunder or under the
other Operative Documents (or any Vice President) in the Corporate Trust
Administration Department of the Trust Company or an officer of the Owner
Participant with responsibility for or familiarity with the transactions
contemplated hereunder and under the other Operative Documents (or any
Vice President) shall have actual knowledge of such Lien; provided, that
no Indenture Event of Default shall arise under this Section 4.02(c) as a
result of a failure by the Owner Trustee or the Owner Participant to
observe or perform any covenant referred to in this Section 4.02(c) if the
Lessee shall have discharged all Lessor's Liens required to be discharged
by the Owner Trustee or the Owner Participant pursuant to such covenants
and compensated the Indenture Trustee and the Trust Indenture Estate for
all claims, losses and expenses arising from the failure of the Owner
Trustee or the Owner Participant, as the case may be, to observe and
perform any such covenant; or
(d) any representation or warranty made by the Owner Participant,
the Owner Trustee or the Trust Company herein or in the Refunding
Agreement or by any Person (if any) guaranteeing or supporting the
obligations of the Owner Participant under the Operative Documents or in
any related guarantee or support agreement shall prove to have been false
or incorrect when made in any respect materially adverse to the rights and
interests of the Note Holders; and if such misrepresentation is capable of
being corrected as of a subsequent date and if such correction is being
sought diligently, such misrepresentation shall not have been corrected as
of a day within 30 calendar days following notice thereof being given to
the Owner Participant, the Owner Trustee, the Trust Company or such Person
(if any), as the case may be, by the Indenture Trustee or a Majority in
Interest of Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any of
its covenants or agreements in the fourth paragraph following the Habendum
Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01 hereof, or
any failure by the Owner Participant or the Trust Company to observe or
perform any of its respective covenants in Section 9(b)(11), 10 or 14 of
the Refunding Agreement; or
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(f) except as provided in the following paragraph (j), any failure
by the Owner Trustee or the Trust Company to observe or perform any other
covenant or obligation of the Owner Trustee contained in this Indenture or
in the Refunding Agreement or any failure by the Owner Participant to
observe or perform any other covenant or obligation of the Owner
Participant contained in the Refunding Agreement or any failure of any
Person (if any) that may guarantee or support the obligations of an Owner
Participant not originally party to the Refunding Agreement under the
Operative Documents to observe or perform any covenant or obligation of
such Person contained in any such guarantee or support agreement, which
failure, in any case and either individually or together with other then
existing failures, shall have a material adverse effect on the rights and
interests of the Indenture Trustee or any Note Holder and is not remedied
within a period of 45 calendar days following notice being given to the
Owner Trustee, the Owner Participant or such Person, as the case may be,
by the Indenture Trustee or a Majority in Interest of Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant or
any Person (if any) that may guarantee or support the obligations of an
Owner Participant not originally party to the Refunding Agreement under
the Operative Documents shall (i) be unable to pay its debts generally as
they become due within the meaning of the Bankruptcy Code, (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 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 with respect thereto (and not in its individual
capacity) or the Owner Participant or any Person (if any) that may
guarantee or support the obligations of an Owner Participant not
originally party to the Refunding Agreement under the Operative Documents,
as the case may be, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part
of its
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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 with respect thereto (and not in
its individual capacity) or the Owner Participant or such Person, as the
case may be; or
(i) any petition for any relief specified in the foregoing paragraph
(h) shall be filed against the Trust Estate or the Owner Trustee with
respect thereto (and not in its individual capacity) or the Owner
Participant or any Person (if any) that may guarantee or support the
obligations of an Owner Participant not originally party to the Refunding
Agreement under the Operative Documents, as the case may be, and such
petition shall not be dismissed within 60 days; or
(j) at any time when the Aircraft shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid and
duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by the
Lessee in the payment of any installment of Basic Rent due under the Lease, the
Owner Participant may, within ten calendar days (or such longer period ending on
the second day after the expiry of the applicable grace period specified in the
Lease with respect to such default) after notice from the Indenture Trustee or
the Lessee of such default, without the consent or concurrence of any Note
Holder, pay, as provided in Section 2.04 hereof, for application in accordance
with Section 3.01 hereof, a sum equal to the amount of all (but not less than
all) of the Principal Amount and interest as shall then (without regard to any
acceleration pursuant to Section 4.04(b) or (c) hereof) be due and payable on
the Equipment Notes. 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 Trustee shall have been furnished
by the Owner Participant with all funds necessary for remedying such default,
the Owner Participant may, within fifteen calendar days (or such longer period
ending on the second day after the expiry of any applicable grace period
specified in the Lease with respect to such default) after notice from the
Indenture Trustee or the Lessee of such default, without the consent or
concurrence of any Note Holder, instruct the Owner Trustee to exercise the Owner
Trustee's rights under Section
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21(d) 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 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 due and payable under the Equipment Notes or hereunder, 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 default by the Lessee under the Lease to the same extent that
like performance by the Lessee itself would have remedied such default (but any
such payment or performance shall not 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, such Lease Event of Default shall have been
remedied, then any declaration pursuant to the Lease that the Lease is in
default, and any declaration pursuant to this Indenture that the Equipment Notes
are due and payable or that an Indenture Event of Default exists hereunder,
based upon such Lease Event of Default, shall be deemed to be rescinded, and the
Owner Participant or the Owner Trustee, as the case may be, shall (to the extent
of any such payments made by it) be subrogated to the rights of the Note Holders
hereunder to receive such payment of Rent from the Indenture Trustee (and the
payment of interest on account of such Rent being overdue), and shall be
entitled, so long as no other Indenture Default or Indenture Event of Default
shall have occurred and be continuing, to receive, subject to the terms 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 by commencing an action at
law against the Lessee and obtaining and enforcing a judgment against the Lessee
for the payment of such amount or taking appropriate action in a pending action
at law against the Lessee or by demanding Excepted Payments or Excepted Rights;
provided, however, that at no time while an Indenture 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 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 hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any default in
the payment of Basic Rent due under the
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Lease, if the Lessee itself shall have theretofore failed to pay Basic
Rent in the manner required under the Lease (after giving effect to any
applicable grace period) as to (i) each of the three Basic Rent Payment
Dates immediately preceding the date of such default or (ii) in the
aggregate more than six Basic Rent Payment Dates,
(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 Lease Event of
Default for the purposes of this Indenture, if during the 12-month period
immediately preceding the relevant default by the Lessee there shall have
been expended by the Owner Participant pursuant to the second sentence of
this Section 4.03 (and shall have not been reimbursed by the Lessee or any
Permitted Sublessee themselves to the Owner Trustee for distribution to
the Owner Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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, and if the Equipment Notes shall have been accelerated pursuant to
Section 4.04(b) or 4.04(c) hereof, then and in every such case the Indenture
Trustee may (subject to the rights of the Owner Participant or the Owner Trustee
to cure any such Indenture Event of Default set forth in Section 4.03 hereof and
the obligations of the Indenture Trustee set forth in this Section 4.04(a) and
subject to Section 10.05 hereof) 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
hereof, the Indenture Trustee may (subject as aforesaid), at the direction of a
Majority in Interest of Note Holders, exercise any and all of the remedies
pursuant to Section 18 of the Lease and pursuant to any Sublease Assignment 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
but, in the case of the Aircraft, only as permitted by Section 18 of the Lease,
and may exclude the Owner Participant, the Owner Trustee and the Lessee and all
Persons claiming under any of them
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or wholly or partly therefrom; provided, however, that the Indenture Trustee
shall give the Owner Trustee and the Owner Participant ten days' prior written
notice of the initial exercise of such remedies by the Indenture Trustee under
the Lease (if not stayed or otherwise precluded by applicable law from giving
such notice); provided, further, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant twenty days' prior written notice of its
intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Indenture Trustee may exercise any right of sale
of the Aircraft available to it, even though it shall not have taken possession
of the Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Indenture to the contrary notwithstanding, the
Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails
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to participate in such proceedings, the Owner Trustee shall have the right
(without affecting in any way any right or remedy of the Indenture Trustee
hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the avoidance
of doubt, it is expressly understood and agreed, subject only to the immediately
preceding paragraph, that 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 otherwise exercising all of its
rights, powers and remedies under this Indenture, including without limitation
this Article IV.
(b) If an Indenture Event of Default referred to in clause (g), (h)
or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of Default
under clause (e), (f) or (g) of Section 17 of the Lease shall have occurred,
then and in every such case the unpaid Principal Amount of all Equipment Notes
then outstanding, together with accrued but unpaid interest and all other
amounts due thereunder and hereunder, shall immediately and without further act
become due and payable without presentment, demand, protest or notice, all of
which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the condition
that, if at any time after the Principal Amount of the Equipment Notes shall
have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the Equipment Notes
which by such declaration shall have become
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payable) shall have been duly paid and every other Indenture Default and
Indenture Event of Default with respect to any covenant or provision of this
Indenture shall have been cured, then and in every such case a Majority in
Interest of Note Holders may (but shall not be obligated to), by written
instrument filed with the Indenture Trustee, rescind and annul the Indenture
Trustee's declaration and its consequences; but no such rescission or annulment
shall extend to or affect any subsequent Indenture Default or Indenture Event of
Default or impair any right consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
No Make-Whole Amount shall become payable on the Equipment Notes as
a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant to
Section 18 of the Lease, to credit against any purchase price bid at such sale
by such Note Holder all or any part of the unpaid obligations owing to such Note
Holder and secured by the Lien of this Indenture. The Owner Trustee or Owner
Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Aircraft, etc. (a) Subject to the rights
of the Owner Trustee and the Owner Participant under Section 4.03 hereof and
unless the Owner Participant shall have theretofore purchased the Equipment
Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Equipment Notes shall have been
accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, at the request of the
Indenture Trustee the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such instruments of title and other documents as the Indenture
Trustee may deem necessary or advisable to enable the
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Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Trust Indenture Estate;
provided that the Indenture Trustee shall at the time be entitled to obtain such
possession under Section 4.04(a) and the other applicable provisions of this
Indenture. If the Owner Trustee shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession and requiring the Owner Trustee to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry of
which judgment the Owner Trustee hereby specifically consents to the fullest
extent it may lawfully do so, and (ii) to the extent permitted by law, pursue
all or part of the Trust Indenture Estate wherever it may be found (but not in
violation of Section 10.05 hereof or of the Lease) and may enter any of the
premises of the Lessee wherever such Trust Indenture Estate may be or be
supposed to be and search for and take possession of and remove the same (but
not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the Indenture
Trustee may, from time to time, at the expense of the Trust Indenture Estate,
make all such expenditures for maintenance, insurance, repairs, replacements,
alterations, additions and improvements to and of the Trust Indenture Estate, as
it may deem proper (it being understood and agreed that the provisions hereof
shall not be construed so as to expand the obligations of the Lessee under the
Lease, including Section 16 thereof). In each such case, the Indenture Trustee
shall have the right to maintain, use, operate, store, lease, control or manage
the Trust Indenture Estate and to carry on the business (without limiting the
express provisions of Section 5.10 hereof) and to exercise all rights and powers
of the Owner Participant and the Owner Trustee relating to the Trust Indenture
Estate, as the Indenture Trustee 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
Trust Indenture Estate or any part thereof as the Indenture Trustee may
determine; and the Indenture Trustee shall be entitled to collect and receive
directly all tolls, rents (including Rent), revenues, issues, income, products
and profits of the Trust Indenture Estate and every part thereof, except
Excepted Payments, without prejudice, however, to the right of the Indenture
Trustee under any provision of this Indenture to collect and receive all cash
held by, or required to be deposited with, the Indenture Trustee
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hereunder, except Excepted Payments. The Indenture Trustee shall, pursuant to
the exercise of its remedies under this Article IV, to the extent permitted by
applicable law, be entitled to the appointment of a receiver for all or any part
of the Trust Indenture Estate, whether such receivership be incidental to a
proposed sale of the Trust Indenture Estate or otherwise, and the Owner Trustee
hereby consents to the appointment of such receiver and will not oppose any such
appointment. Such tolls, rents (including Rent), revenues, issues, income,
products and profits shall be applied to pay the expenses of the use, operation,
storage, leasing, control, management or disposition of the Trust Indenture
Estate and of 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 Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the Indenture
Trustee or any Note Holder 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 or such Note
Holder, then and in every such case the
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Owner Trustee, the Indenture Trustee, the Note Holders and the Lessee shall,
subject to any determination in such proceedings, be restored to their former
positions and rights hereunder with respect to the Trust Indenture Estate, and
all rights, remedies and powers of the Indenture Trustee and the Note Holders
shall continue as if no such proceedings had been instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right consequent thereon; provided,
however, that in the absence of written instructions from the Holders of all
Equipment Notes then outstanding, the Indenture Trustee shall not waive any
Indenture Default (i) in the payment of the Principal Amount of or interest on
any Equipment Note then outstanding, or (ii) in respect of a covenant or
provision hereof which, under Article IX hereof, cannot be modified or amended
without the consent of each Note Holder.
SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If the
Indenture Trustee shall exercise remedies pursuant to this Article IV, at a time
when (i) the Aircraft is registered with the Federal Aviation Administration,
(ii) 25% or more of the then unpaid Principal Amount of the Equipment Notes is
held by one or more Persons which are not a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal Aviation Act and (iii)
remedies are to be exercised pursuant to this Article IV as a result of the
occurrence of an Indenture Event of Default which is not a Lease Event of
Default, the Indenture Trustee shall make arrangements, if any, as may be
required by law so that such exercise of remedies shall not result in the
ineligibility of the Aircraft to be registered under the Federal Aviation Act.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the event the
Indenture Trustee shall have knowledge of an Indenture Event of Default, or
shall have knowledge of an Indenture Default arising either from a failure to
pay Rent or a Lease Default of the type referred to in the second sentence of
Section 4.03, the Indenture Trustee shall give prompt notice thereof to the
Owner Trustee, the Owner Participant and the
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Lessee by facsimile, telex, telegraph or telephone (confirmed by written notice
in the manner provided by Section 10.06 hereof), and to each Note Holder by
first-class mail. Subject to the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09,
5.03, 5.10 and 10.05 hereof and of this Section 5.01, the Indenture Trustee
shall take such action, or refrain from taking such action, with respect to any
Indenture Event of Default or Indenture Default (including with respect to the
exercise of any rights or remedies hereunder) as the Indenture Trustee shall be
instructed in writing by a Majority in Interest of Note Holders. Subject to the
provisions of Section 5.03 hereof, if the Indenture Trustee shall not have
received instructions as above provided within 20 calendar days after mailing
notice of such Indenture Default or Indenture Event of Default to the Note
Holders, the Indenture Trustee may, subject to instructions thereafter received
pursuant to the preceding provisions of this Section 5.01, take such action, or
refrain from taking such action, but shall be under no duty to take or refrain
from taking any action, with respect to such Indenture Default or Indenture
Event of Default as it shall determine to be advisable and in the best interests
of the Note Holders 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 its own affairs; provided that the Indenture Trustee may not sell
the Aircraft or any part thereof without the consent of a Majority in Interest
of Note Holders. In the event the Indenture Trustee shall at any time elect to
foreclose or otherwise enforce this Indenture, the Indenture Trustee shall
forthwith notify, to the extent (in the case of any such party) not stayed or
otherwise prohibited by applicable law, the Owner Participant, the Note Holders,
the Owner Trustee and the Lessee. For all purposes of this Indenture, in the
absence of actual knowledge on the part of an officer in the Corporate Trust
Office, in the case of the Indenture Trustee, or its Corporate Trust
Administration Department, 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 an Indenture Event of Default (except, in the case of the Indenture
Trustee, the failure of the Lessee to pay any installment of Rent when due, if
any portion of such installment was then required to be paid to the Indenture
Trustee, which failure shall constitute knowledge of an Indenture Default for
purposes of the first sentence of this Section 5.01) unless notified in writing
by the Lessee, the Owner Trustee or one or more Note Holders or, in the case of
the Owner Trustee, by the Indenture Trustee.
SECTION 5.02. Action Upon Instructions. Subject to the terms of
Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05 hereof,
upon the written instructions at any time and from time to time of a Majority in
Interest of Note Holders, the Indenture Trustee shall take such of the following
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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 to take such other
action hereunder or under any other Indenture Document or in respect of any part
or all of the Trust Indenture Estate as shall be specified in such instructions;
(ii) take such action with respect to, or to preserve or protect, the Trust
Indenture Estate (including the discharge of Liens) as shall be specified in
such instructions and as are 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 of 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 interest created hereunder in the Trust Indenture Estate as may be
specified from time to time in written instructions of a Majority in Interest of
Note Holders (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may, but shall not be obligated to, execute and
file or cause to be filed any financing statement which it from time to time
deems appropriate or any continuation statement that the Lessee, in discharge of
its obligations under Section 3(v) of the Refunding Agreement or any other
Operative Document, may so request. Notwithstanding the foregoing or anything in
this Indenture to the contrary, the Indenture Trustee may, on the advice of its
counsel and without the consent or approval of any Note Holder, approve any
counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding
Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve
any opinion issued by such counsel. None of the Owner Participant, the Owner
Trustee or the Lessee have any liability for the failure of the Indenture
Trustee to discharge its obligations hereunder.
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 hereof unless the
Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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
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is not reasonably assured to it. The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this 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 of the other Indenture Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Aircraft or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and obtain such instructions promptly so as not
unreasonably to delay the proposed action of Lessee in respect of which the
instructions are sought. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Article VII hereof or any
other Operative Document) promptly take such action as may be necessary to duly
discharge all Lenders' Liens on any part of the Trust Indenture Estate
attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding 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, or place Liens on, the Aircraft or any other part of the
Trust Indenture Estate except (i) as required or permitted by the terms of the
Lease or the Refunding Agreement, or (ii) in accordance with the powers granted
to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Indenture and in accordance with the terms hereof.
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SECTION 5.06. Replacement Airframes, Replacement Engines and
Replacement Parts. (a) If at any time and from time to time, the Airframe or
Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a),
11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s),
as the case may be, in accordance with the provisions of this Section 5.06 and
the provisions of said Sections of the Lease, the Owner Trustee shall, at such
time or times, but subject to compliance with the conditions to such replacement
set forth in the Lease, direct the Indenture Trustee to execute and deliver to
or as directed in writing by the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine(s) 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:
(1) A written request from the Owner Trustee, requesting such release and
specifically describing the Airframe and/or Engine(s) so to be released and the
Replacement Airframe and/or Replacement Engine(s).
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number (or other applicable
registration number) and manufacturer's serial number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number (or other applicable
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 hold legal title to such
Replacement Airframe free and clear of all Liens except Permitted Liens,
that such Replacement Airframe will on such date be in good operating
condition, and that such Replacement Airframe has been or, substantially
concurrently with such replacement, is in the process of being duly
registered with the Owner Trustee as owner thereof under the Federal
Aviation Act or under the law then applicable to the registration of the
Aircraft and that an airworthiness certificate has been duly issued under
the Federal Aviation Act (or such other applicable law) with respect to
such Replacement Airframe, and that such
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registration and certificate is in full force and effect, and the Lessee
or a Permitted Sublessee will have the full right and authority to use
such Replacement Airframe;
(iv) that the insurance required by Section 12 of the Lease is in
full force and effect with respect to such Replacement Airframe and all
premiums then due thereon have been paid in full;
(v) that the Replacement Airframe is of a like Airbus A320-231 model
airframe with equivalent or better modification status delivered by the
Manufacturer not earlier than June 30, 1988;
(vi) that no Lease 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 a Replacement Airframe;
(vii) an appraisal prepared in accordance with the Appraisal
Procedure (as defined in the Lease) confirms that the Replacement Airframe
has a value, utility and remaining useful life at least equal to that of
the Airframe which suffered the Event of Loss assuming that the same were
maintained in accordance with the requirements of the Lease whether or not
they are in fact so maintained; and
(viii) that each of the conditions specified in Section 11(a) and
(c) of the Lease with respect to such Replacement Airframe have been
satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) 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;
(iii) that on the date of the Indenture Supplement relating to the
Replacement Engine the Owner Trustee will hold title to such Replacement
Engine free and clear of all Liens except Permitted Liens, that such
Replacement Engine will on such date be in good operating condition, and
that such Replacement Engine is the same or an improved model as the
Engine to be released;
(iv) the value, remaining useful life and utility of the Replacement
Engine as of the date of such certificate (which value, remaining useful
life and utility shall not be
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less than the then value, remaining useful life and utility of the Engine
requested to be released, assuming such Engine was in the condition and
repair required to be maintained under the Lease (but without regard to
hours and cycles until overhaul));
(v) that no Lease 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 Engine; and
(vi) that each of the conditions specified in Section 11(b) of the
Lease with respect to such Replacement Engine have been satisfied.
(3) The appropriate instrument or 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, (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 (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Airframe or Replacement Engine to the Lien of this Indenture
and subjecting to any relevant Assigned Sublease and Sublease Assignment,
including, without limitation, an Indenture Supplement.
(4) With respect to a Replacement Airframe, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee confirming
the accuracy of the information
set forth in Section 5.06(a)2.A(vii) hereof.
(5) The opinion of counsel to the Lessee, satisfactory to the Indenture
Trustee, stating that:
(i) the certificates, opinions and other instruments and/or property
that have been or are therewith delivered to and deposited with the
Indenture Trustee conform to the requirements of this Indenture and the
Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with;
(ii) the Replacement Airframe and/or Replacement Engine(s) have 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 Lien of this Indenture and the Lease, and subjecting
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to any relevant Assigned Sublease and Sublease Assignment, as the case may
be, have been duly filed for recordation pursuant to the Federal Aviation
Act or any other law then applicable to the registration of the Aircraft,
and no further action, filing or recording of any document is necessary in
order to establish and perfect, in the United States and, if the Aircraft
is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Airframe and/or
Replacement Engine and the Lien of this Indenture on such Replacement
Airframe and/or Replacement Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as 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 to the
Replacement Airframe and, if an Event of Loss with respect to the Aircraft
has occurred, the Replacement Engines to the same extent as with respect
to the Airframe and Engines then installed thereon prior to such
replacement.
(b) Upon the acquisition by the Owner Trustee of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the event
of the substitution of a Replacement Airframe or Engine as contemplated by
Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for
the benefit of the Note Holders and the Lessee, subject to fulfillment of the
conditions precedent and compliance by the Lessee with its obligations set forth
in Section 11 of the Lease, to execute and deliver the appropriate instruments
as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee
(or any relevant Permitted Sublessee) an appropriate instrument releasing the
Airframe and/or Engine(s) being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or Engine as
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contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions
of this Indenture relating to the Airframe or Engine(s) being replaced shall be
applicable to such Replacement Airframe or Replacement Engine(s) with the same
force and effect as if such Replacement Airframe or Replacement Engine(s) were
the same airframe or engine(s), as the case may be, as the Airframe or Engine(s)
being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly provides
for notice to Note Holders, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Note Holder entitled thereto, at his last address as it
appears in the Register. In any case where notice to Note Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Note Holder shall affect the sufficiency of such
notice with respect to other Note Holders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Note Holders
shall be filed with the Indenture Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Note Holders when
such notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be satisfactory to the Indenture
Trustee shall be deemed to be a sufficient giving of such notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant.
Notwithstanding any other provisions of this Indenture, including the Granting
Clause, but subject always to the final paragraph of this Section 5.10, the
following rights shall be reserved to the Owner Trustee or Owner Participant, as
the case may be (as separate and independent rights) to the extent described
herein:
(a) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, sue for or otherwise
obtain all amounts included in Excepted Payments from the Lessee, exercise
any election or option or make any decision or determination or give or
receive any notice, consent, waiver or approval in respect of any Excepted
Payment and seek legal or equitable remedies to require the Lessee to
maintain the insurance coverage referred to in Section 12 of the Lease (or
the comparable
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provisions of any Assigned Sublease) and such specific performance of the
covenants of the Lessee under the Lease (or the comparable provisions of
any Assigned Sublease) relating to the protection, maintenance, possession
and use of the Aircraft; provided, that the rights referred to in this
clause (a) shall not be deemed to include the exercise of any remedies
provided for in Section 18 of the Lease (or the comparable provisions of
any Assigned Sublease) other than the right to proceed by appropriate
court action, either at law or in equity, to enforce payment by the Lessee
of such amounts included in Excepted Payments or performance by the Lessee
of such insurance covenant or to recover damages for the breach thereof or
for specific performance of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent of the
Owner Trustee, enter into, execute and deliver amendments or modifications
in respect of any of the provisions of the Lease, any Assigned Sublease or
any Sublease Assignment and (ii) unless an Indenture Event of Default and
an Indenture Trustee Event shall have occurred and be continuing, the
Indenture Trustee shall not, without the consent of the Owner Trustee,
which consent shall not be withheld if no right or interest of the Owner
Trustee or the Owner Participant shall be materially diminished or
impaired thereby, (A) enter into, execute and deliver waivers or consents
in respect of any of the provisions of the Lease, any Assigned Sublease or
any Sublease Assignment, or (B) approve any accountants, engineers,
appraisers or counsel as satisfactory to render services for or issue
opinions to the Owner Trustee pursuant to the Operative Documents;
provided that, whether or not an Indenture Event of Default has occurred
and is continuing, the Owner Trustee's consent shall be required with
respect to any waivers or consents in respect of any of the provisions of
Section 6, 12 or 16 of the Lease, or of any other Section of the Lease to
the extent such action shall affect (y) the amount or timing of, or the
right to enforce payment of any Excepted Payment or (z) the amount or
timing of any amounts payable by the Lessee under the Lease as originally
executed (or as subsequently modified with the consent of the Owner
Trustee) which, absent the occurrence and continuance of an Indenture
Event of Default hereunder, would be distributable to the Owner Trustee
under Article III hereof;
(c) at all times whether or not an Indenture Event of Default has
occurred and is continuing, the Owner Trustee and the Owner Participant
shall have the right, together with the Indenture Trustee, (i) to receive
from the Lessee or any Permitted Sublessee all notices, certificates,
reports, filings, opinions of counsel and other documents
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and all information which any thereof is permitted or required to give or
furnish to the Owner Trustee pursuant to any Operative Document (including
pursuant to Section 10 of the Lease), (ii) to exercise inspection rights
pursuant to Section 7 of the Lease, (iii) to retain all rights with
respect to insurance maintained for its own account which Section 12 of
the Lease specifically confers on the Owner Participant and (iv) to
exercise, to the extent necessary to enable it to exercise its rights
under Section 4.03 hereof, the rights of the Owner Trustee under Section
21(d) of the Lease and to give notices of default under Section 17 of the
Lease; and
(d) except as expressly provided to the contrary in clauses (a), (b)
and (c) above, so long as no Indenture Event of Default has occurred and
is continuing, all rights (including options, elections, determinations,
consents, approvals, waivers and the giving of notices) of the Owner
Trustee and the Owner Participant under the Lease shall be exercised by
the Owner Trustee and/or the Owner Participant, as the case may be, to the
exclusion of the Indenture Trustee and any Note Holder and without the
consent of the Indenture Trustee or any Note Holder; provided that the
foregoing shall not, nor shall any other provision of this Section 5.10,
limit (A) any rights separately and expressly granted to the Indenture
Trustee or any Note Holder under the Lease or the other Operative
Documents (including, without limitation, Section 15 of the Refunding
Agreement) or (B) the right of the Indenture Trustee or any Note Holder to
receive any funds to be delivered to the Owner Trustee under the Lease
(except with respect to Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10, but
subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be
in default under Section 18 thereof and (C) subject only to the provisions of
Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such
Section 18 (other than in connection with Excepted Payments) and in Article IV
hereof.
SECTION 5.11. Evidence of Action Taken by Note Holder. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Note Holders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such
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Note Holders in person or by agent duly appointed in writing, and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, if
expressly required herein, to the Owner Trustee. Proof of execution of any
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05)
conclusive in favor of the Indenture Trustee and the Owner Trustee if made in
the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far as
concerns such Equipment Note. Except as aforesaid any such action taken by the
Note Holder shall be conclusive and binding upon such Note Holder and upon all
future Note Holders and owners of such Equipment Note and of any Equipment Notes
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Equipment Note. Any action
taken by the Note Holders of the percentage in aggregate Principal Amount of the
Equipment Notes specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture Trustee
in its individual capacity accepts the trust hereby created and agrees to
perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee in its individual capacity shall be
answerable or accountable under any circumstances, except for its own willful
misconduct or gross negligence (other than for the handling of funds, for which
the standard of accountability shall be negligence), or as provided in the
fourth sentence of Section 2.04(a) hereof and in the last sentence of Section
5.04 hereof, and except for liabilities that may result, in the case of the
Trust Company,
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from the inaccuracy of any representation or warranty of the Trust Company in
the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or
the failure to perform any covenant of the Trust Company pursuant to Section
4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the
case of the Indenture Trustee, from the inaccuracy of any representation or
warranty, or failure to perform any covenant, of the Indenture Trustee made in
its individual capacity herein, in the Refunding Agreement or in any other
document. None of the Owner Participant, the Trust Company or the Indenture
Trustee shall be liable for any action or inaction of any other one of such
parties, except, in the case of the Owner Participant, for any action or
omission of the Owner Trustee performed or omitted on the instructions of the
Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note
Holders for any purpose.
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, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case
of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof
and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner
Trustee and the Indenture Trustee shall have no duty (i) to see to any
registration of the Aircraft or any recording or filing of the Lease or of this
Indenture or any other document, or to see to the maintenance of any such
registration, recording or filing, (ii) to see to any insurance on the Aircraft,
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 Trust 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 or any of the
Permitted Sublessee's covenants under any Assigned Sublease with respect to the
Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE)
NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE
MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR ANY PART THEREOF, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
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DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY
ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for
the Aircraft the Owner Trustee shall have received whatever interest in the
Aircraft was conveyed to it under the Warranty Bill of Sale subject to the
rights of the parties to the Indenture Documents and (ii) the Aircraft shall be
free and clear of Lessor's Liens attributable to the Trust Company. Neither the
Trust Company nor the Indenture Trustee 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
Documents 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 in its individual capacity or as Indenture Trustee made under
this Indenture or in the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys paid
to or retained by the Indenture Trustee pursuant to any provision hereof and not
then required to be distributed to any Note Holder, the Lessee or the Owner
Trustee as provided in Article III hereof need not be segregated in any manner
except to the extent required by law, 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 hereof) 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 any liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the
Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of 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
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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, but in the case of any such certificate, the
Owner Trustee and the Indenture Trustee shall be under a duty to examine the
same to determine whether or not it conforms to the requirements of this
Indenture. 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 (except in
the case of the Indenture Trustee's obligations under the third sentence of
Section 2.04(a)) through agents or attorneys and shall not be responsible for
any misconduct or negligence on the part of any such agent or attorney appointed
with due care hereunder. The Indenture Trustee may, at the expense of the Trust
Indenture Estate, consult with counsel, accountants and other skilled Persons to
be selected and retained by it, and the Owner Trustee and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by them
in accordance with the written advice or written opinion of any such counsel,
accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be entitled
to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against any Note Holder or the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
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SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee (in its individual
capacity and as trustee) from and after the Restatement Date (whether or not
also agreed to be indemnified against by any other Person under any other
document) in any way relating to or arising out of this Indenture, the Trust
Agreement, the Equipment Notes, the other Indenture Documents or the enforcement
of any of the terms of any thereof, or in any way relating to or arising out of
the manufacture, purchase,
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acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease,
possession, use, operation, condition, sale, return or other disposition of the
Aircraft or any Engine (including, without limitation, latent and other defects,
whether or not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder, except only (i) in the case of willful misconduct or gross negligence
(or negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the
Indenture Trustee, in its individual capacity and as Indenture Trustee, and its
successors, permitted assigns, agents and servants, thereunder; provided that so
long as the Lease is in effect, the Indenture Trustee shall not make any claim
under this Section 7.01 for any amount indemnified against by the Lessee under
the Lease without first (but only to the extent not stayed or otherwise
prevented by operation of law) making demand on the Lessee for payment of such
amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee
promptly of any claim for which it may seek indemnity. The Lessee shall be
entitled to defend any claim by the Indenture Trustee to the extent provided in
Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to
indemnification from the Trust Indenture Estate for any liability, obligation,
loss, damage, penalty, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7.01 to the extent not reimbursed
by the Lessee or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same the Indenture Trustee shall
have a prior Lien on the Trust Indenture Estate. The indemnities contained in
this Section 7.01 shall survive the termination of this Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in any
way affecting the limitations on liability set forth in the Operative Documents,
the Indenture Trustee, and each Note Holder by accepting any Equipment Note
hereunder, hereby acknowledge and agree that none of the Trust Company, the
Owner Participant or any director, officer, employee, stockholder, agent or
affiliate of the Trust Company or the Owner Participant (the "Exculpated Equity
Persons") shall have any obligation, duty or liability of any kind whatsoever to
the Indenture Trustee or any such Note Holder in connection with the exercise by
any Exculpated Equity Person of any rights of the Owner Trustee or the taking of
any action or the failure to take any action by any Exculpated Equity Person in
connection with any rights of the
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Owner Trustee under this Indenture or the Lease, and each such Note Holder
hereby waives and releases, to the extent permitted by applicable law, each
Exculpated Equity Person of any and all such obligations, duties or liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case of any
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement
or any merger, conversion, consolidation or sale of substantially all of the
corporate trust business of the Trust Company pursuant to the Trust Agreement,
the successor Owner Trustee shall give prompt written notice thereof to the
Indenture Trustee and to each Note Holder.
SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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 and
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assuming such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Indenture Trustee,
without further act, shall become vested with and bound by all the estates,
properties, rights, powers, duties and obligations of the predecessor Indenture
Trustee hereunder and under the other Indenture Documents in the trusts
hereunder applicable to it with like effect as if originally named the Indenture
Trustee herein; but nevertheless upon the written request of such successor
Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver
an instrument transferring to such successor Indenture Trustee, upon the trusts
herein expressed applicable to it, all the estates, properties, rights and
powers of such predecessor Indenture Trustee, and such predecessor Indenture
Trustee shall duly assign, transfer, deliver and pay over to such successor
Indenture Trustee all moneys or other property then held by such predecessor
Indenture Trustee hereunder, subject nevertheless to its claim provided for in
Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall be a
"citizen of the United States" within the meaning of Section 40102(a)(15) of the
Federal Aviation Act and shall also be a bank or trust company having a combined
capital and surplus of at least $200,000,000 if there be such an institution
willing, able and legally qualified to perform the duties of the Indenture
Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be the Indenture Trustee under
this Indenture without further act. Notwithstanding the foregoing, upon the
request of the Owner Trustee or the Lessee, any such successor corporation
referred to in this Section 8.02(d) shall deliver to the Owner Trustee and the
Lessee an instrument confirming its status as the Indenture Trustee hereunder
and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate may at the time be located or in
which any action of the Indenture Trustee may be required to be performed or
taken, the Indenture Trustee, by an instrument in writing signed by it, may
appoint one or more individuals or corporations to act as separate trustee or
separate trustees or co-trustee, acting jointly with the Indenture Trustee, of
all or any part of
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the Trust Indenture Estate to the full extent that local law makes it necessary
for such separate trustee or separate trustees or co-trustee acting jointly with
the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust 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
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, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act, and the Indenture Trustee
shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be
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conferred or imposed and exercised or performed by the Indenture Trustee
and such additional trustee or trustees and separate trustee or trustees
jointly except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, the Indenture
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including the
holding of title to the Trust Indenture Estate in any such jurisdiction)
shall be exercised and performed by such additional trustee or trustees or
separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is hereby
provided may be exercised by, any such additional trustee or separate
trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the
Indenture Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.03, the
powers of any additional trustee or separate trustee appointed pursuant to this
Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures. (a)
Except as otherwise provided in Section 5.10 hereof, and except with respect to
Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or
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supplement to the Lease, or execute and deliver any written waiver or
modification of, or consent under, the terms of the Lease, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee acting on instructions of a Majority in
Interest of Note Holders. Anything to the contrary contained in this Section
9.01 notwithstanding, without the necessity of the consent of any of the Note
Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i)
any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and
Lessee may, so long as no Indenture Event of Default has occurred and is
continuing, enter into amendments of or additions to the Lease to modify
Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such
amendment would adversely affect the rights or exercise of remedies under
Section 18 of the Lease) so long as such amendments, modifications and changes
do not and would not (A) affect the time of, or reduce the amount of, Basic Rent
or Stipulated Loss Value payments until after the payment in full of all Secured
Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the
value, utility or useful life of the Aircraft or any Engine or (D) otherwise
adversely affect the Note Holders in any material respect and (iii) the Lessee
may effect the re-registration of the Aircraft in accordance with but always
subject to the terms and conditions applicable thereto specified in Section 11
of the Refunding Agreement and Section 6(e) of the Lease and the Indenture
Trustee may approve any Permitted Sublessee as provided in clause (c) of the
definition of such term set forth in the Lease and may exercise the rights of
the Indenture Trustee under Section 15 of the Refunding Agreement. For the
avoidance of doubt, nothing in this Section 9.01 shall limit in any way the
rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d)
to exercise certain rights and powers under the Lease to the exclusion of the
Indenture Trustee and any Note Holder and without the consent of the Indenture
Trustee or any Note Holder.
The Indenture Trustee is hereby authorized to join in the execution
of any supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties or
immunities under this Indenture or otherwise, whether in its official or
individual capacity.
Any supplemental indenture authorized by the provisions of this
Section 9.01 may be executed without the consent of the
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Note Holders notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof and
subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, or does not adversely affect the Note Holders in any
material respect. Upon the written request of a Majority in Interest of Note
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the Lease which would permit redemption of
Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any
of the provisions of Section 4(b) of the Lease, or modify, amend or supplement
the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any
assignment of any thereof, in either case releasing the Lessee (or Permitted
Sublessee) from its obligations in respect of the payment of Basic Rent or
Stipulated Loss Value for the Aircraft or altering the absolute and
unconditional character of the obligations of Lessee to pay
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Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable
provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on
the Trust Indenture Estate or any part thereof other than Permitted Liens or
deprive any Note Holder of the benefit of the Lien of this Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely as
Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Airframe or Engines or any
Replacement Airframe or Replacement Engine; (v) to add to the covenants of the
Owner Trustee for the benefit of the Note Holders, or to surrender any rights or
powers herein conferred upon the Owner Trustee, the Owner Participant or the
Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on
the Equipment Notes any legend as may be required by law.
(d) Without the consent of the Lessee no amendment or supplement to
this Indenture or waiver or modification of the terms hereof shall adversely
affect the Lessee in any material respect or impose upon the Lessee any
additional indemnification obligations.
SECTION 9.02. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective
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rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for all and any purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after the
execution by the Owner Trustee or the Indenture Trustee of any document entered
into pursuant to this Article IX, the Owner Trustee shall mail, by certified
mail, postage prepaid, conformed copies thereof to the Indenture Trustee (in
such quantities as will permit the Indenture Trustee to distribute one copy to
each Note Holder, and the Indenture Trustee shall mail one such copy to each
Note Holder), but the failure of the Owner Trustee or the Indenture Trustee to
mail such conformed copies shall not impair or affect the validity of such
document. The Indenture Trustee will furnish to each Note Holder, promptly upon
receipt thereof, duplicates or copies of
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all reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder to the extent
that the same were not required to have been furnished to such Note Holder
pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or Indenture
Supplement. Notwithstanding anything contained in this Article IX, no written
request or consent of the Indenture Trustee, any Note Holder or the Owner
Participant pursuant to this Article IX 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, any Engines or other property thereto or
to release the Aircraft, any Engine or other property therefrom or to execute
and deliver an Indenture Supplement, in each case pursuant to the terms hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made to any
Note Holder for consent to any amendment or supplement pursuant to this Article
IX shall be promptly furnished by the Indenture Trustee to each Liquidity
Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full of the
Principal Amount of, Make-Whole Amount, if any, and all accrued and unpaid
interest on and other amounts then due with respect to the Equipment Notes and
provided that there shall then be no other amounts then due to the Note Holders
and the Indenture Trustee hereunder or under the Lease or the Refunding
Agreement or otherwise secured hereby, the Lien of this Indenture shall be
deemed discharged and the security interests in favor of the Indenture Trustee
and the Note Holders hereunder shall terminate, and 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 evidencing the discharge of such
Lien and the termination of such security interest in the Aircraft and release
of 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 Trustee to
give effect to such discharge, termination and 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 as expressly provided pursuant
to Article X hereof or upon any sale or other final disposition by the Indenture
Trustee of all property part
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of the Trust Indenture Estate and the final distribution by the Indenture
Trustee of all moneys or other property or proceeds constituting part of the
Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Indenture and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note
Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding. Any
sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant
to the terms of this Indenture or of the Lease shall bind the Note Holders and
shall be effective to transfer or convey all right, title and interest of the
Indenture Trustee, the Owner Trustee, the Owner Participant and such Holders in
and to the 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 10.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Lessee and Note Holders. Nothing in this Indenture,
whether express or implied, shall be construed to give to any Person other than
the Owner Trustee, the Indenture Trustee, the Owner Participant, the Note
Holders, the Lessee and, with respect to any provisions hereof requiring payment
to any Permitted Sublessee, such Permitted Sublessee, any legal or equitable
right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of the Aircraft, except in
accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified herein,
all notices, requests, demands, authorizations,
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directions, consents, waivers or documents required or permitted by the terms of
this Indenture shall be in English and in writing, mailed by first-class
registered or certified mail, postage prepaid, or by confirmed telex or
telecopy, and (i) if to the Owner Trustee, addressed to it at its office at
Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302)
651-8464/8882), with a copy to the Owner Participant at its address set forth in
the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at
its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate
Trust Administration (telex: 99339; answerback: CTNB-HTFD; telecopy: (203)
240-7920) or (iii) if to the Owner Participant, the Lessee or any Note Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Register. Whenever any
notice in writing is required to be given by the Owner Trustee or the Indenture
Trustee or any Note Holder to any of the other of them, such notice shall be
deemed and such requirement satisfied when such notice is received. Any party
hereto may change the address to which notices to such party will be sent by
giving notice of such change to the other parties to this Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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 permitted assigns of each, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by any Note Holder shall bind the successors and assigns of such Note
Holder. This Indenture and the Trust
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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. Each Note Holder by its acceptance of
an Equipment Note agrees to be bound by this Indenture and all provisions of the
Refunding Agreement applicable to a Note Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained in
this Indenture to the contrary notwithstanding, the Indenture Trustee, the Owner
Trustee, the Owner Participant, any Note Holder or any bank or other Affiliate
of any of them may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with the Lessee or any Permitted
Sublessee fully to the same extent as if this Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to the Lessee for any purpose whatsoever, whether related to any of the
transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE AND
THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the parties that
the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as
assignee of the Owner Trustee's rights hereunder), shall be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the right to
take possession of the Aircraft, Airframe, Engines and Parts as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor, and in any instance where more than one construction is
possible of the terms and conditions hereof or of any other pertinent Operative
Document, each such party agrees that a construction which would preserve such
benefits shall control over any construction which would not preserve such
benefits.
Trust Indenture
<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have caused this Indenture,
as amended and restated, to be duly executed by their respective officers
thereunto duly authorized, as of the day and year first above written, and
acknowledge that this Indenture has been made and delivered in The City of New
York.
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee
By______________________________________
Title:
FLEET NATIONAL BANK,
not in its individual capacity,
except as expressly provided
herein, but solely as Indenture
Trustee
By______________________________________
Title:
Trust Indenture
<PAGE> 96
EXHIBIT A
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-15]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1990 AWA-15]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1990 AWA-15] dated
as of September 21, 1990 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1990
AWA-15] dated as of September 21, 1990, as amended and restated as of November
26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee
and Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut, National Association, and The Connecticut National
Bank), as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof
which shall particularly describe the Aircraft (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 Trust Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust Indenture
Supplement No. 1 dated September 28, 1990, as amended by Amendment No. 1 dated
March 27, 1992, and as further amended by Amendment No. 2 dated as of July 29,
1993, subjected to the Lien of such Original Indenture the airframe and engines
therein described, which Original Indenture and Trust Indenture Supplement No. 1
have been duly recorded with the Federal Aviation Administration as one document
on September 28, 1990 and assigned Conveyance No. L61291 which Amendment No. 1
has been duly recorded with the Federal Aviation Administration on May 18, 1992
and assigned Conveyance No. EE003013 and which Amendment No. 2 has been duly
recorded with the Federal Aviation Administration on August 4, 1993 and assigned
Conveyance No. F59675.
<PAGE> 97
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WHEREAS(1), 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(2), the Owner Trustee has, as provided in the Indenture,
heretofore executed and delivered to the Indenture Trustee [(3)] Indenture
Supplement(s) for the purpose of specifically subjecting to the Lien of the
Indenture certain airframes and/or engines therein described, which Indenture
Supplement(s) is (are) dated and has (have) been duly recorded with the Federal
Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
---- ---------------- ----------------
NOW, THEREFORE, This Supplement Witnesseth, that, to secure the
prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if
any, and all other amounts due with respect to, all 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 contained in the
Indenture and the Refunding Agreement and the Equipment Notes, for the benefit
of the Note Holders, and the prompt payment of any and all amounts from time to
time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner
Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and
- --------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
(2) This recital not to be included in the first Indenture
Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 98
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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 Note Holders from time to time, in
the trust created by the Indenture, a first priority security interest in and
mortgage Lien on all estate, right, title and interest of the Owner Trustee in,
to and under the following described property:
AIRFRAME(S)
( ) airframe(s) identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------ ----- ---------------- --------------
together with all 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.
AIRCRAFT ENGINES
( ) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as
follows:
Manufacturer's
Manufacturer Model Serial Number
------------ ----- --------------
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engines.
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,
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<PAGE> 99
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sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture
Trustee, its successors and assigns, for the security and benefit of the Note
Holders from time to time, in the trust created by the Indenture, all of the
estate, right, title and interest of the Owner Trustee in, to and under the
Lease and Lease Supplement [GPA 1990 AWA-15] No. 3 of even date herewith (other
than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and subject to the
terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the Indenture
and shall form a part of it, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 100
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to
be duly executed by one of its officers thereunto duly authorized on the day and
year first above written.
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
otherwise expressly provided herein,
but solely as Owner Trustee
By____________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 101
SCHEDULE I
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-15]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- ----------- ---------
<S> <C> <C> <C>
Series A $11,897,518 02-Jan-2009 6.85%
Series B $ 4,413,774 02-Jul-2005 6.93%
Series C $ 4,552,621 02-Jan-2002 6.86%
Series D $ 4,249,113 02-Jan-2002 8.16%
Series E $ 2,541,597 02-Jul-2002 10.50%
</TABLE>
<PAGE> 102
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N636AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 103
- 2 -
SERIES B
Aircraft: N636AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 104
- 3 -
SERIES C
Aircraft: N636AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 105
- 4 -
SERIES D
Aircraft: N636AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 106
- 5 -
SERIES E
Aircraft: N636AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 107
SCHEDULE II
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-15]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1D, dated November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1E, dated November 26, 1996.
Schedule II
<PAGE> 1
EXHIBIT 4.40
- --------------------------------------------------------------------------------
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-16]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 099
Registration No. N637AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GRANTING CLAUSE....................................................... 3
HABENDUM CLAUSE....................................................... 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions.................................... 8
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes................................ 21
SECTION 2.02. Issuance and Terms of Equipment Notes.................. 26
SECTION 2.03. Payments from Trust Indenture Estate
Only................................................. 29
SECTION 2.04. Method of Payment...................................... 31
SECTION 2.05. Application of Payments................................ 33
SECTION 2.06. Termination of Interest in Trust
Indenture Estate..................................... 34
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes...................................... 34
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes...................................... 36
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation......................................... 36
SECTION 2.10. Mandatory Redemptions of Equipment
Notes................................................ 37
SECTION 2.11. Redemptions; Notice of Redemption...................... 37
SECTION 2.12. Option to Purchase Equipment Notes..................... 38
SECTION 2.13. Subordination.......................................... 39
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions............................. 40
SECTION 3.02. Event of Loss and Replacement.......................... 42
SECTION 3.03. Payment After Indenture Event of
Default, etc......................................... 43
SECTION 3.04. Certain Payments....................................... 46
SECTION 3.05. Other Payments......................................... 47
SECTION 3.06. Payments to Owner Trustee.............................. 47
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee.............................................. 48
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
<S> <C>
SECTION 4.01. Covenants of Trust Company and Owner
Trustee.............................................. 49
SECTION 4.02. Indenture Events of Default............................ 50
SECTION 4.03. Certain Rights......................................... 53
SECTION 4.04. Remedies............................................... 55
SECTION 4.05. Return of the Aircraft, etc............................ 58
SECTION 4.06. Remedies Cumulative.................................... 60
SECTION 4.07. Discontinuance of Proceedings.......................... 60
SECTION 4.08. Waiver of Past Indenture Defaults...................... 61
SECTION 4.09. Exercise of Remedies by Foreign Note
Holders.............................................. 61
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default................... 61
SECTION 5.02. Action Upon Instructions............................... 62
SECTION 5.03. Indemnification........................................ 63
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions............................ 64
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions................. 64
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts........................ 64
SECTION 5.07. Indenture Supplements for Replacements................. 68
SECTION 5.08. Effect of Replacement.................................. 68
SECTION 5.09. Notices, etc........................................... 68
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant.................................... 69
SECTION 5.11. Evidence of Action Taken by Note Holder................ 71
SECTION 5.12. Right of Revocation of Action Taken.................... 71
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties........................ 72
SECTION 6.02. Absence of Duties...................................... 73
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents................................ 73
SECTION 6.04. No Segregation of Moneys; No Interest.................. 74
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6.05. Reliance; Agents; Advice of Counsel.................... 74
SECTION 6.06. Capacity in Which Acting............................... 75
SECTION 6.07. Compensation........................................... 75
SECTION 6.08. May Become Note Holder................................. 75
SECTION 6.09. Further Assurances; Financing
Statements........................................... 75
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification............................... 76
SECTION 7.02. Exculpation and Release of Liability................... 77
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee...................... 77
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor.................... 78
SECTION 8.03. Appointment of Separate Trustees....................... 79
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures........................................... 81
SECTION 9.02. Effect of Supplemental Indenture....................... 84
SECTION 9.03. Documents to Be Given to Trustee....................... 84
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures.............................. 85
SECTION 9.05. Trustees Protected..................................... 85
SECTION 9.06. Documents Mailed to Note Holders....................... 85
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement................... 85
SECTION 9.08. Notices to Liquidity Provider.......................... 86
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture.............................. 86
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders.............................. 86
SECTION 10.03. Sale of Aircraft by Indenture Trustee
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
is Binding........................................... 87
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
Lessee and Note Holders.............................. 87
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease...................................... 87
SECTION 10.06. Notices................................................ 87
SECTION 10.07. Severability........................................... 88
SECTION 10.08. No Oral Modifications or Continuing
Waivers.............................................. 88
SECTION 10.09. Successors and Assigns................................. 88
SECTION 10.10. Headings............................................... 88
SECTION 10.11. Normal Commercial Relations............................ 89
SECTION 10.12. Governing Law; Counterpart Form........................ 89
SECTION 10.13. Section 1110........................................... 89
</TABLE>
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
(iv)
<PAGE> 6
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-16]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [GPA 1990 AWA-16] (this "First Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank
of Connecticut, Shawmut Bank Connecticut, National Association, and The
Connecticut National Bank), a national banking association, not in its
individual capacity except as otherwise specifically set forth herein, but
solely as indenture trustee hereunder (in such capacity, together with its
successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company
entered into the Trust Agreement [GPA 1990 AWA-16] dated as of September 21,
1990, as supplemented by Trust Agreement Supplement [GPA 1990 AWA-16] No. 1
dated September 28, 1990, and as further supplemented by Trust Agreement
Supplement [GPA 1990 AWA-16] No. 2 dated the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, hereof and of the Refunding Agreement, the "Trust Agreement"),
whereby, among other things, Wilmington Trust Company has declared a certain
trust for the use and benefit of the Owner Participant, subject, however, to the
Trust Indenture Estate created pursuant hereto for the use and benefit of (to
the extent set forth herein), and with the priority of certain payments to, the
Holders of Equipment Notes issued hereunder, and the Owner Trustee is authorized
and directed to execute and deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [GPA 1990 AWA-16] dated
as of September 21, 1990, as supplemented by Trust Indenture Supplement No. 1
dated September 28, 1990, which were recorded by the Federal Aviation
Administration on September 28, 1990 as one instrument and assigned Conveyance
No. P92334, as amended by Amendment No. 1 dated March 27, 1992,
Trust Indenture
<PAGE> 7
- 2 -
recorded by the Federal Aviation Administration on May 18, 1992 and assigned
Conveyance No. EE003012, and as further amended by Amendment No. 2 dated as of
July 29, 1993, recorded by the Federal Aviation Administration on August 4, 1993
and assigned Conveyance No. F59676 (collectively, as so amended, supplemented or
otherwise modified to the date hereof, the "Original Indenture"), (ii) the Owner
Trustee and the Original Head Lessee entered into the Aircraft Lease Agreement
[GPA 1990 AWA-16] dated as of September 21, 1990, as supplemented by Lease
Supplement [GPA 1990 AWA-16] No. 1 dated September 28, 1990, which were recorded
by the Federal Aviation Administration on September 28, 1990 as one instrument
and assigned Conveyance No. P92335, and as further supplemented by Lease
Supplement No. 2 dated December 31, 1991, which was not filed for recordation
with the Federal Aviation Administration (collectively, as so amended,
supplemented or otherwise modified to the date hereof, the "Original Lease") and
(iii) pursuant to the Original Indenture, the Owner Trustee issued and sold to
the Lenders (as defined in the Original Indenture) the Original Loan
Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and
restate the Original Lease pursuant to Assignment and Amendment No. 1 and
Sublease Termination Agreement [GPA 1990 AWA-16] dated as of the date hereof
among the Original Head Lessee, as assignor and the Original Sublessee, as
assignee, the Owner Trustee and the Indenture Trustee and the Amended and
Restated Aircraft Lease Agreement [GPA 1990 AWA-16] dated as of the date hereof
between the Owner Trustee and the Lessee (as so assigned, amended and restated,
the "Amended and Restated Lease" or the "Lease") and to enter into Lease
Supplement No. 3 and (ii) cause the implementation of the Refinancing
Transaction pursuant to which, among other things, the Original Loan
Certificates issued pursuant to the Original Indenture shall be prepaid and new
Equipment Notes shall be issued to the Pass Through Trustees (or their
designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's estate,
right, title and interest in and to the Aircraft and, except as hereinafter
expressly provided, all of the Owner Trustee's right, title and interest in, to
and under the Lease (as amended and restated to date and as the same may at any
time and from time to time be further amended, restated or otherwise modified in
accordance with the terms thereof and hereof) and all payments and other amounts
Trust Indenture
<PAGE> 8
- 3 -
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable benefit and security of the Note Holders,
subject to Section 2.13 and Article III hereof;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner Trustee and authenticated, issued and
delivered by the Indenture Trustee hereunder, the legal, valid and binding
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this First Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment
of the Principal Amount of, interest on, MakeWhole Amount, if any, 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 contained herein and in the Refunding
Agreement and the Equipment Notes, for the benefit of the Note Holders, and the
prompt payment of any and all amounts from time to time owing hereunder and
under the Refunding Agreement by the Owner Trustee, the Owner Participant and
the Lessee to the Note Holders and for the uses and purposes and subject to the
terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained, and of the acceptance of the 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, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture
Trust Indenture
<PAGE> 9
- 4 -
Supplement or any indenture supplemental hereto, are included within the Trust
Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and
all replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire an interest under 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 and other documents to which the Owner Trustee shall from time to
time acquire an interest at any time maintained by the Lessee with
respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement, including the Consent and Guaranty
attached thereto (all to the extent assigned by the Purchase Agreement
Assignment and the Purchase Agreement Warranties Assignment); the
Purchase Agreement Warranties Assignment, with the Consents and
Agreements attached thereto; and the Bills of Sale; in each case
including, without limitation, (x) all rights of the Owner Trustee to
exercise any election or option or to make any decision or
determination or to give any notice, consent, waiver or approval or to
take any other action under or in respect of any such document or to
accept surrender or redelivery of the Aircraft or any part thereof, as
well as all the rights, powers and remedies on the part of the Owner
Trustee, whether arising under any such document or by statute or at
law or in equity, or otherwise, arising out of any Lease Event of
Default, and (y) any right to restitution from the Lessee, the
Manufacturer, the Manufacturer's Subsidiary or any other Person in
respect of any determination of invalidity of any such document;
(3) each Sublease Assignment and each Assigned Sublease (to
the extent assigned under such Sublease Assignment), and including,
without limitation, all rents or other payments of any kind made under
such Assigned Sublease (to the extent assigned under such Sublease
Assignment), all collateral security or credit support (in the nature
of a guarantee, letter of credit, credit insurance, Lien on or security
interest in any property or otherwise) for the obligations of the
Permitted Sublessee thereunder (to the extent assigned under such
Sublease Assignment) and all rights of the Owner Trustee to exercise
any election or option or to give any notice, consent, waiver, or
approval
Trust Indenture
<PAGE> 10
- 5 -
under or with respect of any thereof 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 (in each case to the extent assigned
to the Owner Trustee), whether arising under any Assigned Sublease or
any Sublease Assignment or by statute or at law or in equity, or
otherwise, arising out of any default under any Assigned Sublease;
(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, without limitation, 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 requisition proceeds with respect to the Aircraft or
any part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Aircraft or any part thereof, including but not limited to the
insurance required under Section 12 of the Lease or under any
comparable provision of any Assigned Sublease (but excluding any excess
insurance maintained by the Lessee and not required under Section 12 of
the Lease or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and
all rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any other
Person in accordance with the provisions of this Agreement, AND SUBJECT TO
Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel
Trust Indenture
<PAGE> 11
- 6 -
paper original executed counterparts of the Original Lease and Lease Supplement
No. 1, certified copies of the Purchase Agreement Warranties Assignment and the
Consents and Agreements attached thereto, and the original Warranty Bill of
Sale. The Owner Trustee thereafter delivered to the Indenture Trustee the
chattel paper original executed Lease Supplement No. 2. Concurrently with the
delivery of this Indenture, the Owner Trustee is delivering to the Indenture
Trustee the chattel paper original executed counterparts of the Amended and
Restated Lease and Lease Supplement No. 3. All property referred to in this
Granting Clause, whenever acquired by the Owner Trustee, shall secure all
obligations under and with respect to the Equipment Notes at any time
outstanding. Any and all properties referred to in this Granting Clause which
are hereafter acquired by the Owner Trustee, shall, without further conveyance,
assignment or act by the Owner Trustee or the Indenture Trustee thereby become
and be subject to the security interest hereby granted as fully and completely
as though specifically described herein.
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 Note Holders from time to time, except as set forth in
Section 2.13 and Article III hereof without any preference, distinction or
priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or
Trust Indenture
<PAGE> 12
- 7 -
otherwise) to ask, require, demand, receive and give acquittance for any and all
moneys and claims for moneys (in each case including insurance and requisition
proceeds but excluding Excepted Payments and Excepted Rights) due and to become
due to the Owner Trustee under or arising out of the Indenture Documents and all
other property which now or hereafter constitutes part of the Trust Indenture
Estate, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings which the Indenture Trustee may deem to be necessary or advisable in
the premises. Under the Lease, the Lessee is directed to make all payments of
Rent (other than Excepted Payments) and all other amounts which are required to
be paid to or deposited with the Owner Trustee pursuant to the Lease (other than
Excepted Payments) directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application as provided in
this Indenture. Pursuant to each Sublease Assignment, each Permitted Sublessee
will be directed from and after (i) notice of the occurrence of a Lease Event of
Default and (ii) notice that the Lease is declared or deemed in default, to make
all payments of rent and all other amounts which are required to be paid to or
deposited with the Lessee pursuant to the related Assigned Sublease and which
are assigned thereunder directly to the Indenture Trustee at such address or
addresses as the Indenture Trustee shall specify, for application or to be held
as provided in this Indenture. The Owner Trustee agrees that promptly on receipt
thereof, it will transfer to the Indenture Trustee any and all moneys from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Indenture, except (a) to
the extent the Owner Trustee is entitled to distribution of such moneys pursuant
to this Indenture and (b) that the Owner Trustee shall accept for distribution
pursuant to the Trust Agreement any amounts distributed to it by the Indenture
Trustee under this Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that it will not assign or
pledge or otherwise dispose of, so long as this Indenture shall remain in effect
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its estate, right, title or interest hereby assigned, to anyone
other than the Indenture Trustee, and that, with respect to such
Trust Indenture
<PAGE> 13
- 8 -
estate, right, title and interest hereby assigned, subject to its rights
pursuant to Section 5.10 hereof, it will not, except as provided in this
Indenture (including, without limitation, Section 9.01) and except as to
Excepted Payments and Excepted Rights, (i) accept any payment from the Lessee or
any Permitted Sublessee under any of the Indenture Documents, enter into any
agreement amending, modifying or supplementing any of the Indenture Documents,
or execute any waiver or modification of, or consent under, the terms of any of
the Indenture Documents, (ii) settle or compromise any claim arising under any
of the Indenture Documents, (iii) give any notice or exercise any right or take
any action under any of the Indenture Documents, or (iv) 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. For
purposes of Section 4.02(e) hereof, this is the fourth paragraph following the
Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations
under 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 might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments and
Excepted Rights. Further, nothing in the Granting Clause or the preceding
paragraphs shall impair any of the rights of the Owner Trustee or the Owner
Participant under Section 5.10 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained
in the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments (including all annexes, appendices, exhibits,
schedules and supplements thereto) as the
Trust Indenture
<PAGE> 14
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same may from time to time be supplemented or amended or the terms thereof
waived or modified to the extent permitted by, and in accordance with, the terms
thereof and of the other Operative Documents and references to various Persons
shall be deemed to be references to and include their respective permitted
successors and assigns.
"Amortization Amount" means, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Principal
Amount Repayment Date on the Amortization Schedule.
"Amortization Schedule" means the amortization schedule for
the Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed
shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such
Equipment Note. "Remaining Weighted Average Life" of such Equipment
Note, at the redemption date of such Equipment Note, shall be the
number of days equal to the quotient obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then
remaining installment of principal, including the payment due on the
maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid
Principal Amount of such Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the United
States Code, 11 U.S.C. Section 101 et seq., as amended.
"Bills of Sale" means the FAA Bills of Sale and the Warranty
Bill of Sale.
"Business Day" means a day other than a Saturday, Sunday or a
day on which banks are required or authorized to close in either The
City of New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities
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<PAGE> 15
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pursuant to Section 3.6(c) or 3.6(i) of the Intercreditor Agreement
shall be deposited.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consents and Agreements" means the confirmations by the
Manufacturer included in the Purchase Agreement Assignment and the
Purchase Agreement Warranties Assignment of the transfer of rights
under the Purchase Agreement.
"Continuous Stay Period" has the meaning specified in Section
4.04(a).
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee located at 777 Main Street, Hartford,
Connecticut 06115, Attention: Corporate Trust Administration, or such
other office at which the Indenture Trustee's corporate trust business
shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Lessee, the Owner Trustee and the Note
Holders.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be evidenced
by bonds, debentures, notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series
C, Series D and Series E, the rate per annum specified for such Series
under the heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means September 28, 1990.
"Dollars", "U.S. $" and "$" mean the lawful currency of the
United States of America.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of
such depository institution has a long-term
Trust Indenture
<PAGE> 16
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unsecured debt rating from each Rating Agency of at least A- 3 or its
equivalent.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has
a long-term unsecured debt rating from each Rating Agency of at least
A-3 or its equivalent.
"Equipment Notes" means the Equipment Notes, in substantially
the form set out in Section 2.01 hereof, issued by the Owner Trustee
and authenticated by the Indenture Trustee pursuant to the terms of
this Indenture.
"Equity Collateral" has the meaning assigned to such term in
the definition of "Excepted Payments."
"Excepted Payments" means (i) any and all indemnity payments
and interest in respect thereof paid or payable in respect of the Owner
Participant, the Trust Company, the Owner Trustee (and not in support
of any payment obligation of the Owner Trustee under any Indenture
Document) or any of their respective successors, permitted assigns
(and, in the case of a permitted assign of the Owner Participant that
is a partnership, the partners of such partnership), directors,
officers, employees, servants, agents, subsidiaries, affiliates or
shareholders by the Lessee pursuant to the Lease (including, without
limitation, Section 13 thereof and any corresponding payment of
Supplemental Rent under the Lease), (ii) any proceeds of public
liability insurance (or government indemnities in lieu thereof) in
respect of the Aircraft payable as a result of insurance claims paid
respecting, or losses suffered by, the Trust Company or the Indenture
Trustee in its individual capacity or the Owner Participant, (iii) any
proceeds of insurance maintained with respect to the Aircraft by or for
the benefit of the Owner Participant (whether directly or through the
Owner Trustee) and not required under Section 12 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts
payable to the Owner Participant, the Trust Company, the Owner Trustee
(and not in support of any payment obligation of the Owner Trustee
under any Indenture Document), or any of their respective successors,
permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership),
directors, officers, employees, servants, agents, subsidiaries,
affiliates or shareholders under Section 10 of the Lease or by the
Lessee or the Parent
Trust Indenture
<PAGE> 17
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Guarantor under the Tax Indemnification Agreement or the Amended and
Restated Head Lease TIA (as defined in the Refunding Agreement), as the
case may be, (v) Transaction Expenses paid or payable by the Lessee or
the Parent Guarantor to the Trust Company, the Owner Trustee, the
Indenture Trustee or the Owner Participant pursuant to Section 21 of
the Refunding Agreement or the Lease, (vi) any letter of credit
pursuant to Section 8(l) of the Lease (including, without limitation,
any replacement letter of credit (the "Equity Collateral")) and any
payment or proceeds of any such Equity Collateral to the extent
retained or applied as provided in Section 8(l) of the Lease, (vii) any
amount payable to the Owner Participant by any transferee as the
purchase price of the Owner Participant's interest in the Trust Estate
(or a portion thereof), (viii) any amount payable to the Owner Trustee,
the Trust Company or the Owner Participant or any of their respective
successors, permitted assigns (and, in the case of a permitted assign
of the Owner Participant that is a partnership, the partners of such
partnership), directors, officers, employees, servants, agents,
subsidiaries, affiliates or shareholders attributable to the period
prior to or on the Restatement Date or under the Original Participation
Agreement, the Original Lease, the Parent Head Lease Guaranty, the
Sublease, the Amended and Restated Head Lease TIA or the Amended and
Restated Sublease TIA (as such terms are defined in the Refunding
Agreement) or Retained Head Lease Rights and Obligations (as such term
is defined in the Refunding Agreement), and (ix) subject to the last
sentence of Section 5.10 hereof, any and all rights of the Owner
Trustee, the Owner Participant or the Trust Company under the Operative
Documents, whether or not a Lease Event of Default, a Lease Default, an
Indenture Default or an Indenture Trustee Event has occurred and is
continuing to demand, collect, sue for, give notices, make
determinations, enforce or exercise all rights with respect to and
otherwise obtain all amounts described in clauses (i) through (viii)
above and the proceeds thereof.
"Excepted Rights" means (i) those rights of the Owner
Participant and the Owner Trustee under Section 5.10 of this Indenture,
(ii) all rights under the Equity Collateral to make a claim for,
collect and retain all amounts payable with respect to any Equity
Collateral, (iii) all rights of the Owner Participant, the Trust
Company or the Owner Trustee to compromise or waive any such right or
modify, amend or waive any provision of any Operative Document
conferring such rights with respect to Excepted Payments, and (iv) all
rights of the Owner Trustee to exercise any election or option, or to
make any decision or determina-
Trust Indenture
<PAGE> 18
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tion, or to give or receive any notice, consent, waiver or approval
with respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section 2.03(b)
hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such
Liquidity Facility in accordance with the provisions thereof other than
a Downgrade Drawing.
"Government Obligations" means direct obligations of the
United States of America that are not callable, redeemable or payable
prior to maturity, in whole or in part, directly or indirectly, by any
Person.
"Indenture," "this Indenture," and "the Indenture" mean this
First Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented
by any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement, including the Consent and Guaranty attached
thereto (all to the extent assigned by the Purchase Agreement
Assignment and the Purchase Agreement Warranties Assignment); the
Purchase Agreement Warranties Assignment and the Consents and
Agreements attached thereto; and the Bills of Sale.
"Indenture Event of Default" has the meaning set forth in
Section 4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and
Security Agreement listed on Schedule 1 to the Intercreditor Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
Trust Indenture
<PAGE> 19
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"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Aircraft and any
Replacement Airframe and Replacement Engine included in the property of
the Owner Trustee covered by this Indenture, including, without
limitation, Trust Indenture Supplement No. 1 dated September 28, 1990,
which was recorded as one instrument by the FAA with the Original
Indenture, and Trust Indenture Supplement No. 2 dated November 26,
1996, which is being filed for recordation as one instrument by the FAA
with this First Amended and Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as assigned, amended and restated by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1990 AWA-16]
dated as of the date hereof and Amended and Restated Aircraft Lease
Agreement [GPA 1990 AWA-16] dated as of the date hereof and
supplemented by Lease Supplement [GPA 1990 AWA-16] No. 3 dated November
26, 1996, which are being filed for recordation as one instrument with
the FAA contemporaneously herewith.
"Lease Default" means an event or condition that, with the
giving of notice or the lapse of time or both, would become a Lease
Event of Default.
"Lease Event of Default" means any event or condition defined
as an "Event of Default" in Section 17 of the Lease.
"Lessee" means America West Airlines, Inc., a Delaware
corporation, in its capacity as lessee under the Amended and
Trust Indenture
<PAGE> 20
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Restated Lease, and its successors, and to the extent permitted by the
Refunding Agreement, its assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or
claim of any kind, including any thereof arising under any conditional
sale agreement, equipment trust agreement or title retention agreement.
"Majority in Interest of Note Holders" means, as of a
particular date of determination and subject to Section 2.6 of the
Intercreditor Agreement, the Holders of more than 50% in aggregate
unpaid Principal Amount of all Equipment Notes outstanding as of such
date. For purposes of this definition, there shall be excluded any
Equipment Notes held by the Owner Trustee or the Owner Participant or
any interests of the Owner Participant therein by reason of subrogation
pursuant to Section 4.03 of the Indenture (unless all Equipment Notes
then outstanding shall be held by the Owner Trustee or the Owner
Participant) or any Equipment Notes held by the Lessee or any Affiliate
of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate
equal to (i) in the case of Series A Equipment Notes and Series B
Equipment Notes, the Treasury Yield and (ii) in the case of Series C
Equipment Notes, Series D Equipment Notes and Series E Equipment Notes,
the Treasury Yield plus 0.75% exceeds (b) the outstanding principal
amount of such Equipment Note plus accrued interest. For purposes of
determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Equipment Note means the interest
rate (expressed as a semiannual equivalent and as a decimal and, in the
case of United States Treasury bills, converted to a bond equivalent
yield) determined to be the per annum rate equal to the semiannual
yield to maturity for United States Treasury securities maturing on the
Average Life Date of such Equipment Note and trading in the public
securities market either as determined by interpolation between the
most recent weekly average yield to maturity for
Trust Indenture
<PAGE> 21
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two series of United States Treasury securities, trading in the public
securities markets, (A) one maturing as close as possible to, but
earlier than, the Average Life Date of such Equipment Note and (B) the
other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most
recent H.15(519) or, if a weekly average yield to maturity for United
States Treasury securities maturing on the Average Life Date of such
Equipment Note is reported on the most recent H.15(519), such weekly
average yield to maturity as published in such H.15(519). "H.15(519)"
means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole
Amount shall be the third Business Day prior to the applicable
redemption date and the "most recent H.15(519)" means the H.15(519)
published prior to the close of business on the third Business Day
prior to the applicable redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person other
than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from
time to time of one or more Equipment Notes as reflected in the
Register maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and
signature of such Responsible Officer, that is delivered to the
Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such
written opinions or (ii) Latham & Watkins or other counsel designated
by the Lessee and reasonably satisfactory to the Indenture Trustee or,
in the case of legal counsel for the Owner Trustee, may be Morris,
James, Hitchens & Williams or other counsel designated by the Owner
Trustee and reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease.
"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1990 AWA-16] dated as of September
Trust Indenture
<PAGE> 22
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21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated
September 28, 1990, which were recorded as one instrument by the FAA on
September 28, 1990 and assigned Conveyance No. P92334, as amended by
Amendment No. 1 dated March 27, 1992, recorded by the FAA on May 18,
1992 and assigned Conveyance No. EE003012, and as further amended by
Amendment No. 2 dated as of July 29, 1993, recorded by the FAA on
August 4, 1993 and assigned Conveyance No. F59676.
"Original Loan Certificates" means the Loan Certificates
issued under and as defined in the Original Indenture.
"Original Sublessee" means America West Airlines, Inc.
("AWA"), a Delaware corporation, in its capacity as sublessee under the
Aircraft Sublease Agreement [GPA 1990 AWA-16] dated as of September 21,
1990 between the Original Head Lessee in its capacity as sublessor
thereunder and AWA in its capacity as sublessee.
"Owner Participant" means ________________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the five Pass Through
Trusts established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through Trust
Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a national
banking association, not in its individual capacity but solely as pass
through trustee under each of the five separate Pass Through Trust
Agreements.
"Past Due Rate" means, with respect to any amount not paid
when due (whether at stated maturity, by acceleration or otherwise)
under or in respect of any Equipment Note, a rate of interest per annum
(computed on the basis of a year of 360 days comprised of twelve 30-day
months) equal to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Equipment Notes have
been paid in full.
Trust Indenture
<PAGE> 23
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"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with
respect to all Equipment Notes, means the aggregate stated original
principal amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on
which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [GPA 1990 AWA-16], dated as of the Delivery Date, between
the Parent Guarantor and the Original Head Lessee, together with the
Consents and Agreements attached thereto, as the same may be amended,
modified, or supplemented from time to time in accordance with the
terms hereof and thereof.
"Purchase Agreement Warranties Assignment" means the Purchase
Agreement Warranties Assignment [GPA 1990 AWA-16], dated as of the
Delivery Date, between the Original Head Lessee and the Owner Trustee
together with the Consents and Agreements attached thereto, as the same
may be amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to
rate the Certificates issued pursuant to the Pass Through Trust
Agreements and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated
by the Refunding Agreement and the other documents entered into on and
in connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1990
AWA-16] dated as of November 20, 1996, among the Lessee, the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through
Trustee, the Owner Participant, the Subordination Agent and the
Indenture Trustee.
"Register" has the meaning set forth in Section 2.07 hereof.
"Registrar" has the meaning set forth in Section 2.07 hereof.
Trust Indenture
<PAGE> 24
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"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice
president or, in the case of the Owner Trustee, an officer of the Owner
Trustee in its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date
agreed to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date
of the filing with the FAA of Trust Indenture Supplement No. 2.
"Secured Obligations" has the meaning set forth in Section
2.06 hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series D."
"Series E" or "Series E Equipment Notes" means Equipment Notes
issued and designated as "Series E" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series E."
"Sublease Assignment" means a sublease assignment by the
Lessee in favor of the Owner Trustee (including the consent thereto
given by the sublessee thereunder) with
Trust Indenture
<PAGE> 25
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respect to the assignment of a Permitted Sublease pursuant to Section
6(a) of the Lease.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity and not as Owner
Trustee, and its successors under the Trust Agreement, in their
respective individual capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means all
estate, right, title and interest of the Owner Trustee in and to the
properties, rights and interests covered by the Granting Clause of the
Indenture, excluding, however, in each case, Excepted Payments and
Excepted Rights.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code (for purposes of this definition, the "United
States"), (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political
subdivision thereof or therein or (iii) any estate or trust that is
subject to United States federal income taxation regardless of the
source of its income.
"Warranty Bill of Sale" means a full warranty (as to title)
bill of sale covering the Aircraft (excluding all Buyer Furnished
Equipment) executed by the Original Head Lessee in favor of the Owner
Trustee dated the Delivery Date.
Trust Indenture
<PAGE> 26
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes
shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1990 AWA-16]
DATED AS OF SEPTEMBER 21, 1990, AS AMENDED.
SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE AIRBUS 320-231 AIRCRAFT BEARING
UNITED STATES REGISTRATION NUMBER N637AW.
No.____________ Date: [________, 1996]
$___________________
DEBT RATE MATURITY DATE
[_________] [_______,___]
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement [GPA 1990 AWA-16], dated as of September 21,
1990, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to Fleet
National Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $_______ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semi-annual installments commencing on January 2, 1997, and
thereafter
Trust Indenture
<PAGE> 27
- 22 -
on July 2 and January 2 of each year, to and including
___________, ____.
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and if
such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First
Amended and Restated Trust Indenture and Security Agreement [GPA 1990 AWA-16],
dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank) (the "Indenture
Trustee"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this Equipment Note and not defined herein shall
have the respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as above provided and that none of the Owner Participant, the
Owner Trustee and the
Trust Indenture
<PAGE> 28
- 23 -
Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Indenture Trustee or at the office of any successor in the manner
provided in Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and
interest and other amounts due hereunder shall be payable in Dollars in
immediately available funds at the Corporate Trust Office of the Indenture
Trustee, or as otherwise provided in the Indenture. Each such payment shall be
made on the date such payment is due and without any presentment or surrender of
this Equipment Note, except that in the case of any final payment with respect
to this Equipment Note, the Equipment Note shall be surrendered promptly
thereafter to the Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note,
agrees that, except as provided in the Indenture, each payment received by it
hereunder shall be applied, first, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by law, any
overdue interest and any other overdue amounts hereunder) to the date of such
payment, second, to the payment of the portion of the Principal Amount of this
Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Indenture, and fourth, the balance,
if any, remaining thereafter, to the payment of the portion of the Principal
Amount of this Equipment Note remaining unpaid in the inverse order of its
normal maturity.
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 Trust Indenture Estate is held by
the Indenture Trustee as security, in part, for the Equipment Notes. The
provisions of this Equipment Note are subject to the Indenture. Reference is
hereby made to the Indenture and the Refunding Agreement for a complete
statement of the rights and obligations of the Holder
Trust Indenture
<PAGE> 29
- 24 -
of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or
the Owner Trustee as provided in Section 2.12 of the Indenture and to
acceleration by the Indenture Trustee as provided in Section 4.04 of the
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B
Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4),
and this Equipment Note is issued subject to such provisions. The Note Holder of
this Equipment Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Indenture Trustee on his behalf
to take such action as may be necessary or appropriate to effectuate
- --------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
(4) To be inserted in the case of Series E Equipment Notes.
Trust Indenture
<PAGE> 30
- 25 -
the subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.]5
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its officer thereunto
duly authorized on the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
FLEET NATIONAL BANK,
as Indenture Trustee
By:_______________________________
Name:
Title:
- --------
5 To be inserted in the case of a Series B, Series C, Series D or Series
E Equipment Note.
Trust Indenture
<PAGE> 31
- 26 -
SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
five separate series consisting of Series A, Series B, Series C, Series D and
Series E and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass
Through Trustees (or their designee) under the Pass Through Trust Agreements set
forth in Schedule II to be attached hereto in connection therewith and (ii) the
Original Loan Certificates issued under the Original Indenture shall be
concurrently prepaid. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of each Series may be
in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity.
The Principal Amount of each Equipment Note shall be payable
on the dates and in the installments equal to the corresponding percentage of
the Principal Amount as set forth in Schedule I hereto which shall be attached
as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
Trust Indenture
<PAGE> 32
- 27 -
any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
Trust Indenture
<PAGE> 33
- 28 -
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default (as defined below) under any
Equipment Note a fraction, the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E
Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net
Interest and Related Charges" means (as determined by the Subordination Agent in
consultation with the Liquidity Providers and notified to the Indenture Trustee
except that the Past Due Rate shall be determined by the Indenture Trustee and
notified to the Subordination Agent) the sum of (i) the amount, if any, by which
interest payable to any Liquidity Provider on any Interest Drawing, Final
Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an
Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the
amount which would be payable if such advances bore interest at the Designated
Interest Rate (as defined below) plus (ii) any amounts payable under Section
3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity
Facility (or similar provisions of any succeeding liquidity facility) which
result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in
this Section 2.02, "Designated Interest Rate" means the weighted average Past
Due Rate (as defined in the applicable Indentures) in respect of "Series A
Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
issued under the Indentures, except with respect to that portion of any Final
Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a
Cash Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" or "Series E Equipment Note" issued
under the Indentures which has not been cured other than solely because of
acceleration. For purposes of Section 3.04(b) hereof, this is the fourth
paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Equipment Notes
bearing the signatures of
Trust Indenture
<PAGE> 34
- 29 -
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. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Aircraft to the Indenture Trustee
for authentication upon original issue and such Equipment Notes shall thereupon
be authenticated and delivered by the Indenture Trustee upon the written request
of the Owner Trustee signed by a Vice President or Assistant Vice President or
other authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Equipment Notes to
be authenticated hereunder on original issue with respect to the Aircraft. No
Equipment Note shall be secured by or be entitled to any benefit under this
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized officers and such certificate upon any Equipment Notes shall be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a)
Without impairing any of the other rights, powers, remedies, privileges or Liens
of the Note Holders under this Indenture, each Note Holder, by its acceptance of
an Equipment Note, agrees that, except as expressly provided in this Indenture,
the Refunding Agreement or any other Operative Document, (i) the obligation to
make all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such
Trust Indenture
<PAGE> 35
- 30 -
other agreements to the contrary notwithstanding (except for any express
provisions or representations that the Trust Company is responsible for, or is
making, for which there would be personal liability of the Trust Company), no
recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means
the amount by which such payment exceeds the amount that would have been
received by a Note Holder or the Indenture Trustee if the Trust Company, the
Owner Trustee or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this
Trust Indenture
<PAGE> 36
- 31 -
Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Trust Company, the Owner Trustee or the Owner Participant under the
Refunding Agreement, this Indenture (and any exhibits or annexes hereto or
thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such
Trust Indenture
<PAGE> 37
- 32 -
funds were received after 12:00 noon, New York City time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat
the Person in whose name any Equipment Note is registered on the Register as the
absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Equipment Note (and such exclusion and withholding
shall constitute payment in respect of such Equipment Note) any and all United
States withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees to act as such withholding agent and, in connection therewith,
whenever any present or future United States taxes or similar charges are
required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts (and such withholding
shall constitute payment in respect of such Equipment Note) and timely pay the
same to the appropriate authority in the name of and on behalf of the Note
Holders, that it will file any necessary United States withholding tax returns
or statements when due, and that as promptly as possible after the payment
thereof it will deliver to each Note Holder (with a copy to the Owner Trustee
and the Lessee) appropriate receipts showing the payment thereof, together with
such additional documentary evidence as any such Note Holder, the Owner
Participant and the Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of
Trust Indenture
<PAGE> 38
- 33 -
such form prior to the date of such payment (and the Indenture Trustee has no
reason to know that any information set forth in such form is inaccurate), the
Indenture Trustee shall withhold only the amount, if any, required by law (after
taking into account any applicable exemptions claimed by the Note Holder) to be
withheld from payments hereunder or under the Equipment Notes held by such
Holder in respect of United States federal income tax (and such withholding
shall constitute payment in respect of such Equipment Note). If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form 4224 in
duplicate (or such successor certificate, form or forms as may be required by
the United States Treasury Department as necessary in order to avoid withholding
of United States federal income tax), during the calendar year in which the
payment is made (but prior to the making of such payment) or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Equipment Notes held by such Holder, no amount shall be
withheld from payments in respect of United States federal income tax. If any
Note Holder has notified the Indenture Trustee that any of the foregoing forms
or certificates is withdrawn or inaccurate, or if such Holder has not filed a
form claiming an exemption from United States withholding tax or if the Code or
the regulations thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the Equipment Notes held by such
Holder, the Indenture Trustee agrees to withhold from each payment due to the
relevant Note Holder withholding taxes at the appropriate rate under law (and
such withholding shall constitute payment in respect of such Equipment Notes)
and will, on a timely basis as more fully provided above, deposit such amounts
with an authorized depository and make such returns, statements, receipts and
other documentary evidence in connection therewith as required by applicable
law.
None of the Owner Trustee, the Owner Participant or the Lessee
shall have any liability for the failure of the Indenture Trustee to withhold
taxes in the manner provided for herein or for any false, inaccurate or untrue
evidence provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of each
Equipment Note, each payment of Principal Amount, Make-Whole
Trust Indenture
<PAGE> 39
- 34 -
Amount, if any, and interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and, to the extent permitted by law,
any overdue interest and any other overdue amounts thereunder) to the
date of such payment;
Second: to the payment of the Principal Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture
Estate. A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request
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from the registered Holder thereof for the issuance of a new Equipment Note,
specifying, in the case of a surrender for transfer, the name and address of the
new Holder or Holders. Upon surrender for registration of transfer of any
Equipment Note, 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 unpaid portion
of the Principal Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate unpaid portion of the Principal
Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture
Trustee at the Corporate Trust Office. 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 Note
Holder making the exchange is entitled to receive. All Equipment Notes issued
upon any registration of transfer or exchange of Equipment Notes (whether under
this Section 2.07 or under Section 2.08 hereof or otherwise under this
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this 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 Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder
or such Holder's attorney duly authorized in writing, and the Indenture Trustee
shall require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act and the securities laws of any applicable
state. The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Principal Amount 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 on such old Equipment Note or Equipment
Notes has been paid. Interest shall be deemed to have been paid on such new
Equipment Note to the date on which interest shall have been paid on such old
Equipment Note, and all payments of the Principal Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been made thereon.
Neither the Indenture Trustee nor the Owner Trustee shall be required to
exchange any surrendered Equipment Notes as provided above during the ten-day
period preceding the Payment Date. The Indenture Trustee will promptly notify
the Owner Trustee, the Owner Participant and Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Refunding
Agreement applicable to Note Holders, and shall be deemed to have represented
and warranted to the parties to the Refunding
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Agreement as to the matters represented and warranted by the Subordination Agent
in its capacity as the initial Holder of the Equipment Notes. Subject to
compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee
shall use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
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 Holder of such
Equipment Note, execute and the Indenture Trustee shall authenticate and deliver
in replacement thereof a new Equipment Note, payable in the same Principal
Amount dated the same date and captioned as originally issued. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee and a copy thereof shall be furnished to
the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost
or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such Person, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the
Indenture Trustee shall be accepted as satisfactory indemnity and security and
no further indemnity or security shall be required as a condition to the
execution and delivery of such new Equipment Note. Subject to compliance by the
Note Holder of the requirements set forth in this Section 2.08, the Indenture
Trustee and the Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Note Holder for any registration of
transfer or exchange of Equipment Notes, but the Indenture Trustee, as
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes; provided, however, that none of the
Lessee, the Owner Trustee,
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the Indenture Trustee or the Owner Participant shall bear costs of registration,
transfer or exchange in connection with the consummation of the Refinancing
Transaction.
(b) The Indenture Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Aircraft, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither
any redemption of any Equipment Note nor any purchase by the Owner Trustee of
any Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Equipment Notes shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Note Holder of such Equipment Notes to be
redeemed or purchased, at such Note Holder's address appearing in the Register.
All notices of redemption or purchase shall state: (1) the redemption date, (2)
the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any Person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Equipment Notes to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New
York City time, on the redemption date in
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immediately available funds the redemption price of the Equipment Notes to be
redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid, the Equipment Notes to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee, and from and after such redemption date (unless there shall
be a default in the payment of the redemption price) any such Equipment Notes
then outstanding shall cease to bear interest. Upon surrender of any such
Equipment Note for redemption or purchase in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any Equipment Note
called for redemption or purchase shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the
Owner Trustee or the Owner Participant may, upon the events and subject to the
terms and conditions and for the price set forth in this Section 2.12, purchase
all but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each
Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to, but not including, the date of purchase and all
other amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Refunding Agreement to the Holder
thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon
an Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default (and there is no
Indenture Trustee Event), the purchase price thereof shall equal the price
provided in the
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preceding sentence plus the Make-Whole Amount, if any; provided further, that
under no circumstances shall the Make-Whole Amount be payable by the Lessee.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant giving written notice of its
election of such option to the Indenture Trustee, which notice shall specify a
date for such purchase not more than 30 days or less than 15 days after the date
of such notice. The Indenture Trustee shall not exercise any of the remedies
hereunder or, without the consent of the Owner Trustee or the Owner Participant,
under the Lease, during the period from the time that a notice of exercise by
the Owner Participant of such option to purchase becomes irrevocable until the
date on which such purchase is required to occur pursuant to the terms of the
preceding sentence. Such election to purchase the Equipment Notes shall become
irrevocable upon the fifteenth day preceding the date specified in the written
notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Note Holders will comply with all
the provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Articles II and III hereof.
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(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full, (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Note Holders of Series D until the Secured Obligations in respect of Series D
Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as rent
under any Assigned Sublease shall be promptly distributed in the following order
of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments
of Principal Amount, and interest and other amounts (as well as any
interest on overdue Principal Amount, and to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts)
then due to the Note Holders under all Series A Equipment Notes shall
be distributed to the Note Holders of Series A ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then due under all Series
A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall
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be distributed to the Note Holders of Series B ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series B Equipment Note
bears to the aggregate amount of the payments then due under all Series
B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series C Equipment Notes shall be
distributed to the Note Holders of Series C ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series C Equipment Note bears
to the aggregate amount of the payments then due under all Series C
Equipment Notes;
(iv) after giving effect to clause (iii) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series D Equipment Notes shall be
distributed to the Note Holders of Series D ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series D Equipment Note bears
to the aggregate amount of the payments then due under all Series D
Equipment Notes; and
(v) after giving effect to clause (iv) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series E Equipment Notes shall be distributed to the
Note Holders of Series E ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series E Equipment Note bears to the aggregate
amount of the payments then due under all Series E Equipment Notes; and
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second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that
if an Indenture Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 3.07
hereof until whichever of the following shall first occur: (i) all
Indenture Defaults shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second", or
(ii) Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of said
Section 3.03, or (iii) the 180th day after receipt of such payment, in
which event such balance shall be distributed as provided in this
clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any payment
received by the Indenture Trustee with respect to the Airframe or the Airframe
and one or both Engines as the result of an Event of Loss thereto shall be
applied to the redemption of the Equipment Notes and to all other amounts
payable hereunder by applying such funds in the following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event
of Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other
amounts (as well as any interest on overdue Principal Amount, and to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due to the Note Holders under all Equipment
Notes, all in the order of priority specified in clause "first" of
Section 3.01 hereof, and
third, if and to the extent required to be paid to the Lessee
(or if directed by the Lessee, any Permitted Sublessee) in
reimbursement of payment of Stipulated Loss Value pursuant to Section
11(d) of the Lease, to the Lessee (or if directed by the Lessee, any
Permitted Sublessee), and otherwise as provided in clause "fourth" of
Section 3.03 hereof;
provided that, if a Replacement Airframe or a Replacement Airframe and one or
more Replacement Engines are to be substituted for the Airframe or the Airframe
and one or both Engines subject to such Event of Loss as provided in Section 11
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of the Lease and Section 5.06 hereof, any proceeds which result from such Event
of Loss and are paid to the Indenture Trustee shall be held by the Indenture
Trustee as part of the Trust Indenture Estate as security for the obligations of
the Lessee under the Operative Documents and invested in accordance with the
terms of Section 3.07 hereof and, unless theretofore applied in accordance with
the provisions of the Lease and this Indenture, such proceeds shall, to the
extent payable to the Lessee under the Lease, be released to the Lessee (or if
directed by the Lessee, any Permitted Sublessee) upon or in connection with the
replacement thereof as provided in such Sections.
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Airframe or the Airframe and one or both Engines) shall be
applied as provided in the applicable provisions of the Lease; provided,
however, that to the extent that any portion of such amounts held for account of
the Lessee are not at the time required to be paid to the Lessee (or any
Permitted Sublessee) pursuant to the applicable provisions of Section 11 or 12
of the Lease, shall be held by the Indenture Trustee as security for the
obligations of the Lessee under the Operative Documents and shall be invested in
accordance with the terms of Section 3.07 hereof and at such time as the
conditions specified in the Lease for payment of such amounts to the Lessee
shall be fulfilled, such portion, and the net proceeds of any investment
thereof, shall, unless theretofore applied in accordance with the provisions of
the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07
hereof, and notwithstanding Section 2.05 hereof, all payments received and
amounts held or realized by the Indenture Trustee after an Indenture Event of
Default shall have occurred and be continuing or after the Indenture Trustee has
given notice to the Owner Trustee and the Owner Participant pursuant to Section
4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease
or of the foreclosure of this Indenture, or after the Equipment Notes shall have
become due and payable as provided herein, and all payments or amounts then held
by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long
as such Indenture Event of Default shall be continuing, be promptly distributed
by the Indenture Trustee in the following order of priority, without
duplication:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for all amounts due to it
pursuant to Section 6.07 hereof, plus any tax,
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expense, charge or other loss (including, without limitation, all
amounts to be expended at the expense of, or charged upon the tolls,
rents, revenues, issues, products and profits of, the property included
in the Trust Indenture Estate pursuant to Section 4.05(b) hereof)
incurred by the Indenture Trustee (to the extent not previously
reimbursed) (including, without limitation, the expenses of any sale,
taking or other proceeding, 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 then existing or prior Note Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to the then existing or
prior Note 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 one over any other, in accordance with the
amount of the payment or payments made by each such then existing or
prior Note Holder pursuant to said Section 5.03 and applicable (in the
case of each such then existing Note Holder) to the Equipment Notes
held by such existing Note Holder at the time of distribution by the
Indenture Trustee;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid Principal Amount
of all Series A Equipment Notes, and the accrued but unpaid interest
and other amounts due thereon and all other Secured Obligations in
respect of the Series A Equipment Notes (other than Make-Whole Amount,
if any) to the date of distribution, shall be distributed to the Note
Holders of Series A, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series A Equipment Notes
held by each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount, if
any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
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(ii) after giving effect to paragraph (i) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series B Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series B Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series B, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series B Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series B
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series C Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series C Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series C, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series C Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series C
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution;
(iv) after giving effect to paragraph (iii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series D Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series D Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series D, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the
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other, in the proportion that the aggregate unpaid Principal Amount of
all Series D Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series D Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
(v) after giving effect to paragraph (iv) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series E Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series E Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series E, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series E Equipment Notes held by each holder plus the accrued
but unpaid interest and other amounts due hereunder and thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series E
Equipment Notes held by all such holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by
the Indenture Trustee for which provision as to the application thereof is made
in the Lease shall be applied forthwith to the purpose for which such payment
was made in accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or the
Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii)
any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity
Providers, and (v) the Pass Through Trustees, in each case whether pursuant to
Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or
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as Supplemental Rent, directly to the Person entitled thereto. Any payment
received by the Indenture Trustee under clause (b) of the fourth paragraph of
Section 2.02 shall be distributed to the Subordination Agent to be distributed
in accordance with the terms of the Intercreditor Agreement, and any payment
received by the Indenture Trustee under clause (c) of the fourth paragraph of
Section 2.02 shall be distributed directly to the Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and
3.04 hereof, any payments received by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture
shall be distributed by the Indenture Trustee, unless otherwise agreed in
writing, subject to Section 6.07 hereof (i) to the extent received or realized
at any time prior to the payment in full of all obligations to the Note Holders
secured by the Lien of this Indenture, in the order of priority specified in
Section 3.01 hereof, and (ii) to the extent received or realized at any time
after payment in full of all obligations to the Note Holders secured by the Lien
of this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause
"first" of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated to
indemnify against thereunder, in the manner provided in clause "first"
of Section 3.03 hereof, and
second, in the manner provided in clause "fourth" of Section
3.03 hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts
distributed hereunder by the Indenture Trustee to the Owner Trustee shall be
paid to the Owner Trustee by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture Trustee from time to time. The Owner Trustee hereby notifies the
Indenture Trustee that unless and until the
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Indenture Trustee receives notice to the contrary from the Owner Trustee, all
amounts to be distributed to the Owner Trustee pursuant to clause "second" of
Section 3.01 hereof shall be distributed by wire transfer of funds of the type
received by the Indenture Trustee to the Owner Participant's account as may be
specified pursuant to the Refunding Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's
rights to hold moneys for security pursuant to Section 21(h) of the Lease shall
be held in accordance with the terms of such Section; and the Indenture Trustee
hereby agrees to perform the duties of the Owner Trustee under such Section.
Except as provided in the preceding sentence, any amounts held by the Indenture
Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof,
pursuant to Section 3.02 hereof, pursuant to the second sentence of Section
3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant
to a Sublease Assignment, or pursuant to any provision of any other Operative
Document providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Owner Trustee or, in the event the
Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
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ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee.
(a) The Trust Company hereby covenants and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Lien
attributable to it in its individual capacity with respect to any of the
properties or assets of the Trust Indenture Estate and shall, at its own cost
and expense promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Trust Company will cause restitution to be made to
the Trust Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Equipment Notes and hereunder in accordance
with the terms of the Equipment Notes and this Indenture and all
amounts payable by it to the Note Holders under the Refunding Agreement
and the other Operative Documents;
(ii) the Owner Trustee will not directly or indirectly create,
incur, assume or suffer to exist any Lessor's Liens attributable to it
with respect to any of the properties or assets of the Trust Indenture
Estate, and shall, at its own cost and expense, promptly take such
action as may be necessary duly to discharge any such Lessor's Lien,
and the Owner Trustee will cause restitution to be made to the Trust
Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it;
(iii) in the event an officer with responsibility for or
familiarity with the transactions contemplated hereunder or under the
other Operative Documents (or any Vice President) in the Corporate
Trust Administration Department of the Owner Trustee shall have actual
knowledge of an Indenture Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Indenture Default or
Event of Loss to the Indenture Trustee, the Lessee and the Owner
Participant;
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(iv) 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 12(f) of the Lease, to the extent that the same
shall not have been furnished, or is not required to be furnished by
the Lessee, to the Indenture Trustee pursuant to the Lease or
otherwise;
(v) except as contemplated by the Operative Documents or with
the consent of the Indenture Trustee acting in accordance with Article
IX hereof, the Owner Trustee will not incur any indebtedness for
borrowed money; and
(vi) 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 Refunding Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing
(other than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, or interest on, any Equipment Note
(other than as a result of a Lease Default) and such failure shall have
continued unremedied for ten calendar days; or the failure of the Owner
Trustee to pay when due any other amount due and payable under any
Equipment Note or hereunder (other than as a result of a Lease Default)
and such failure shall have continued unremedied for 15 calendar days
after notice thereof being given to the Owner Trustee from the
Indenture Trustee or any Note Holder; or
(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 4.01(a) hereof or Section 13 of the
Refunding Agreement or by the Owner Trustee as the Owner Trustee
pursuant to Section 4.01(b)(ii) hereof or
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Section 13 of the Refunding Agreement or any Lessor's Lien required to
be discharged by the Owner Participant pursuant to Section 13 of the
Refunding Agreement shall remain undischarged for a period of 30
calendar days after, as the case may be, an officer with responsibility
for or familiarity with the transactions contemplated hereunder or
under the other Operative Documents (or any Vice President) in the
Corporate Trust Administration Department of the Trust Company or an
officer of the Owner Participant with responsibility for or familiarity
with the transactions contemplated hereunder and under the other
Operative Documents (or any Vice President) shall have actual knowledge
of such Lien; provided, that no Indenture Event of Default shall arise
under this Section 4.02(c) as a result of a failure by the Owner
Trustee or the Owner Participant to observe or perform any covenant
referred to in this Section 4.02(c) if the Lessee shall have discharged
all Lessor's Liens required to be discharged by the Owner Trustee or
the Owner Participant pursuant to such covenants and compensated the
Indenture Trustee and the Trust Indenture Estate for all claims, losses
and expenses arising from the failure of the Owner Trustee or the Owner
Participant, as the case may be, to observe and perform any such
covenant; or
(d) any representation or warranty made by the Owner
Participant, the Owner Trustee or the Trust Company herein or in the
Refunding Agreement or by any Person (if any) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Documents or in any related guarantee or support agreement shall prove
to have been false or incorrect when made in any respect materially
adverse to the rights and interests of the Note Holders; and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, such
misrepresentation shall not have been corrected as of a day within 30
calendar days following notice thereof being given to the Owner
Participant, the Owner Trustee, the Trust Company or such Person (if
any), as the case may be, by the Indenture Trustee or a Majority in
Interest of Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any
of its covenants or agreements in the fourth paragraph following the
Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01
hereof, or any failure by the Owner Participant or the Trust Company to
observe or perform any of its respective covenants in Section 9(b)(11),
10 or 14 of the Refunding Agreement; or
(f) except as provided in the following paragraph (j), any
failure by the Owner Trustee or the Trust Company to
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observe or perform any other covenant or obligation of the Owner
Trustee contained in this Indenture or in the Refunding Agreement or
any failure by the Owner Participant to observe or perform any other
covenant or obligation of the Owner Participant contained in the
Refunding Agreement or any failure of any Person (if any) that may
guarantee or support the obligations of an Owner Participant not
originally party to the Refunding Agreement under the Operative
Documents to observe or perform any covenant or obligation of such
Person contained in any such guarantee or support agreement, which
failure, in any case and either individually or together with other
then existing failures, shall have a material adverse effect on the
rights and interests of the Indenture Trustee or any Note Holder and is
not remedied within a period of 45 calendar days following notice being
given to the Owner Trustee, the Owner Participant or such Person, as
the case may be, by the Indenture Trustee or a Majority in Interest of
Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant
or any Person (if any) that may guarantee or support the obligations of
an Owner Participant not originally party to the Refunding Agreement
under the Operative Documents shall (i) be unable to pay its debts
generally as they become due within the meaning of the Bankruptcy Code,
(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 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 with respect thereto (and not in its
individual capacity) or the Owner Participant or any Person (if any)
that may guarantee or support the obligations of an Owner Participant
not originally party to the Refunding Agreement under the Operative
Documents, as the case may be, a custodian, receiver, trustee or other
officer with similar powers with respect to it 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
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bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or such Person, as the case may be; or
(i) any petition for any relief specified in the foregoing
paragraph (h) shall be filed against the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or any Person (if any) that may guarantee or
support the obligations of an Owner Participant not originally party to
the Refunding Agreement under the Operative Documents, as the case may
be, and such petition shall not be dismissed within 60 days; or
(j) at any time when the Aircraft shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid
and duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by
the Lessee in the payment of any installment of Basic Rent due under the Lease,
the Owner Participant may, within ten calendar days (or such longer period
ending on the second day after the expiry of the applicable grace period
specified in the Lease with respect to such default) after notice from the
Indenture Trustee or the Lessee of such default, without the consent or
concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for
application in accordance with Section 3.01 hereof, a sum equal to the amount of
all (but not less than all) of the Principal Amount and interest as shall then
(without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof)
be due and payable on the Equipment Notes. 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 Trustee
shall have been furnished by the Owner Participant with all funds necessary for
remedying such default, the Owner Participant may, within fifteen calendar days
(or such longer period ending on the second day after the expiry of any
applicable grace period specified in the Lease with respect to such default)
after notice from the Indenture Trustee or the Lessee of such default, without
the consent or concurrence of any Note Holder, instruct the Owner Trustee to
exercise the Owner Trustee's rights under Section 21(d) 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
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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 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 due and payable under
the Equipment Notes or hereunder, 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 default by the Lessee
under the Lease to the same extent that like performance by the Lessee itself
would have remedied such default (but any such payment or performance shall not
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, such Lease Event of Default shall have been remedied, then any
declaration pursuant to the Lease that the Lease is in default, and any
declaration pursuant to this Indenture that the Equipment Notes are due and
payable or that an Indenture Event of Default exists hereunder, based upon such
Lease Event of Default, shall be deemed to be rescinded, and the Owner
Participant or the Owner Trustee, as the case may be, shall (to the extent of
any such payments made by it) be subrogated to the rights of the Note Holders
hereunder to receive such payment of Rent from the Indenture Trustee (and the
payment of interest on account of such Rent being overdue), and shall be
entitled, so long as no other Indenture Default or Indenture Event of Default
shall have occurred and be continuing, to receive, subject to the terms 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 by commencing an action at
law against the Lessee and obtaining and enforcing a judgment against the Lessee
for the payment of such amount or taking appropriate action in a pending action
at law against the Lessee or by demanding Excepted Payments or Excepted Rights;
provided, however, that at no time while an Indenture 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 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 hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease (after giving effect to any applicable grace
period) as to (i) each
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of the three Basic Rent Payment Dates immediately preceding the date of
such default or (ii) in the aggregate more than six Basic Rent Payment
Dates,
(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 Lease Event of Default for the purposes of this Indenture,
if during the 12-month period immediately preceding the relevant
default by the Lessee there shall have been expended by the Owner
Participant pursuant to the second sentence of this Section 4.03 (and
shall have not been reimbursed by the Lessee or any Permitted Sublessee
themselves to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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, and if the Equipment Notes shall have been accelerated
pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the
Indenture Trustee may (subject to the rights of the Owner Participant or the
Owner Trustee to cure any such Indenture Event of Default set forth in Section
4.03 hereof and the obligations of the Indenture Trustee set forth in this
Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the
direction of a Majority in Interest of Note Holders, exercise any and all of the
remedies pursuant to Section 18 of the Lease and pursuant to any Sublease
Assignment 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 but, in the case of the Aircraft, only as permitted by Section
18 of the Lease, and may exclude the Owner Participant, the Owner Trustee and
the Lessee and all Persons claiming under any of them or wholly or partly
therefrom; provided, however, that the Indenture Trustee shall give the Owner
Trustee and the Owner Participant ten days' prior written notice of the initial
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exercise of such remedies by the Indenture Trustee under the Lease (if not
stayed or otherwise precluded by applicable law from giving such notice);
provided, further, that the Indenture Trustee shall give the Owner Trustee and
the Owner Participant twenty days' prior written notice of its intention to sell
the Aircraft. Without limiting any of the foregoing, it is understood and agreed
that the Indenture Trustee may exercise any right of sale of the Aircraft
available to it, even though it shall not have taken possession of the Aircraft
and shall not have possession thereof at the time of such sale.
Anything in this Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails to participate in such proceedings, the Owner Trustee shall have
the right (without affecting in any way any right or remedy of
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the Indenture Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the avoidance
of doubt, it is expressly understood and agreed, subject only to the immediately
preceding paragraph, that 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 otherwise exercising all of its
rights, powers and remedies under this Indenture, including without limitation
this Article IV.
(b) If an Indenture Event of Default referred to in clause
(g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment Notes
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the Equipment Notes
which by such declaration shall have become payable) shall have been duly paid
and every other Indenture Default and Indenture Event of Default with respect to
any
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covenant or provision of this Indenture shall have been cured, then and in every
such case a Majority in Interest of Note Holders may (but shall not be obligated
to), by written instrument filed with the Indenture Trustee, rescind and annul
the Indenture Trustee's declaration and its consequences; but no such rescission
or annulment shall extend to or affect any subsequent Indenture Default or
Indenture Event of Default or impair any right consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
No Make-Whole Amount shall become payable on the Equipment
Notes as a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Indenture. The Owner Trustee or
Owner Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Aircraft, etc. (a) Subject to
the rights of the Owner Trustee and the Owner Participant under Section 4.03
hereof and unless the Owner Participant shall have theretofore purchased the
Equipment Notes pursuant to Section 2.12 hereof, if an Indenture Event of
Default shall have occurred and be continuing and the Equipment Notes shall have
been accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, at the request
of the Indenture Trustee the Owner Trustee shall promptly execute and deliver to
the Indenture Trustee such instruments of title and other documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the
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Indenture Trustee may specify, to obtain possession of all or any part of the
Trust Indenture Estate; provided that the Indenture Trustee shall at the time be
entitled to obtain such possession under Section 4.04(a) and the other
applicable provisions of this Indenture. If the Owner Trustee shall for any
reason fail to execute and deliver such instruments and documents after such
request by the Indenture Trustee, the Indenture Trustee may (i) obtain a
judgment conferring on the Indenture Trustee the right to immediate possession
and requiring the Owner Trustee to execute and deliver such instruments and
documents to the Indenture Trustee, to the entry of which judgment the Owner
Trustee hereby specifically consents to the fullest extent it may lawfully do
so, and (ii) to the extent permitted by law, pursue all or part of the Trust
Indenture Estate wherever it may be found (but not in violation of Section 10.05
hereof or of the Lease) and may enter any of the premises of the Lessee wherever
such Trust Indenture Estate may be or be supposed to be and search for and take
possession of and remove the same (but not in violation of Section 10.05 hereof
or of the Lease). 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 a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that the
provisions hereof shall not be construed so as to expand the obligations of the
Lessee under the Lease, including Section 16 thereof). In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, lease,
control or manage the Trust Indenture Estate and to carry on the business
(without limiting the express provisions of Section 5.10 hereof) and to exercise
all rights and powers of the Owner Participant and the Owner Trustee relating to
the Trust Indenture Estate, as the Indenture Trustee 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 Trust Indenture Estate or any part thereof as the Indenture
Trustee may determine; and the Indenture Trustee shall be entitled to collect
and receive directly all tolls, rents (including Rent), revenues, issues,
income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder, except Excepted Payments. The Indenture Trustee shall,
pursuant to the exercise of its remedies under this
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Article IV, to the extent permitted by applicable law, be entitled to the
appointment of a receiver for all or any part of the Trust Indenture Estate,
whether such receivership be incidental to a proposed sale of the Trust
Indenture Estate or otherwise, and the Owner Trustee hereby consents to the
appointment of such receiver and will not oppose any such appointment. Such
tolls, rents (including Rent), revenues, issues, income, products and profits
shall be applied to pay the expenses of the use, operation, storage, leasing,
control, management or disposition of the Trust Indenture Estate and of
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 Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder 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 or
such Note Holder, then and in every such case the Owner Trustee, the Indenture
Trustee, the Note Holders and the Lessee shall, subject to any determination in
such proceedings,
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be restored to their former positions and rights hereunder with respect to the
Trust Indenture Estate, and all rights, remedies and powers of the Indenture
Trustee and the Note Holders shall continue as if no such proceedings had been
instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right consequent thereon; provided,
however, that in the absence of written instructions from the Holders of all
Equipment Notes then outstanding, the Indenture Trustee shall not waive any
Indenture Default (i) in the payment of the Principal Amount of or interest on
any Equipment Note then outstanding, or (ii) in respect of a covenant or
provision hereof which, under Article IX hereof, cannot be modified or amended
without the consent of each Note Holder.
SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If
the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a
time when (i) the Aircraft is registered with the Federal Aviation
Administration, (ii) 25% or more of the then unpaid Principal Amount of the
Equipment Notes is held by one or more Persons which are not a "citizen of the
United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV
as a result of the occurrence of an Indenture Event of Default which is not a
Lease Event of Default, the Indenture Trustee shall make arrangements, if any,
as may be required by law so that such exercise of remedies shall not result in
the ineligibility of the Aircraft to be registered under the Federal Aviation
Act.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the
event the Indenture Trustee shall have knowledge of an Indenture Event of
Default, or shall have knowledge of an Indenture Default arising either from a
failure to pay Rent or a Lease Default of the type referred to in the second
sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof
to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex,
telegraph or telephone (confirmed by written notice in the manner provided by
Section 10.06 hereof),
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and to each Note Holder by first-class mail. Subject to the terms of Sections
2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof and of this Section
5.01, the Indenture Trustee shall take such action, or refrain from taking such
action, with respect to any Indenture Event of Default or Indenture Default
(including with respect to the exercise of any rights or remedies hereunder) as
the Indenture Trustee shall be instructed in writing by a Majority in Interest
of Note Holders. Subject to the provisions of Section 5.03 hereof, if the
Indenture Trustee shall not have received instructions as above provided within
20 calendar days after mailing notice of such Indenture Default or Indenture
Event of Default to the Note Holders, the Indenture Trustee may, subject to
instructions thereafter received pursuant to the preceding provisions of this
Section 5.01, take such action, or refrain from taking such action, but shall be
under no duty to take or refrain from taking any action, with respect to such
Indenture Default or Indenture Event of Default as it shall determine to be
advisable and in the best interests of the Note Holders 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 its own affairs; provided that the
Indenture Trustee may not sell the Aircraft or any part thereof without the
consent of a Majority in Interest of Note Holders. In the event the Indenture
Trustee shall at any time elect to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the
case of any such party) not stayed or otherwise prohibited by applicable law,
the Owner Participant, the Note Holders, the Owner Trustee and the Lessee. For
all purposes of this Indenture, in the absence of actual knowledge on the part
of an officer in the Corporate Trust Office, in the case of the Indenture
Trustee, or its Corporate Trust Administration Department, 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 an Indenture Event of Default (except,
in the case of the Indenture Trustee, the failure of the Lessee to pay any
installment of Rent when due, if any portion of such installment was then
required to be paid to the Indenture Trustee, which failure shall constitute
knowledge of an Indenture Default for purposes of the first sentence of this
Section 5.01) unless notified in writing by the Lessee, the Owner Trustee or one
or more Note Holders or, in the case of the Owner Trustee, by the Indenture
Trustee.
SECTION 5.02. Action Upon Instructions. Subject to the terms
of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, 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,
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or give such notice, consent, waiver or approval or exercise such right, remedy
or power to take such other action hereunder or under any other Indenture
Document or in respect of any part or all of the Trust Indenture Estate as shall
be specified in such instructions; (ii) take such action with respect to, or to
preserve or protect, the Trust Indenture Estate (including the discharge of
Liens) as shall be specified in such instructions and as are 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 of 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 interest created hereunder in the
Trust Indenture Estate as may be specified from time to time in written
instructions of a Majority in Interest of Note Holders (which instructions may,
by their terms, be operative only at a future date and which shall be
accompanied by the execution form of such continuation statement so to be
filed); provided that, notwithstanding the foregoing, the Indenture Trustee may,
but shall not be obligated to, execute and file or cause to be filed any
financing statement which it from time to time deems appropriate or any
continuation statement that the Lessee, in discharge of its obligations under
Section 3(v) of the Refunding Agreement or any other Operative Document, may so
request. Notwithstanding the foregoing or anything in this Indenture to the
contrary, the Indenture Trustee may, on the advice of its counsel and without
the consent or approval of any Note Holder, approve any counsel asked to opine
on any matters under Section 11(b)(ii) of the Refunding Agreement, Section
6(a)(iii) of the Lease or under this Indenture and approve any opinion issued by
such counsel. None of the Owner Participant, the Owner Trustee or the Lessee
have any liability for the failure of the Indenture Trustee to discharge its
obligations hereunder.
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 hereof unless
the Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the
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first sentence thereof) or 5.02 or Article IV hereof, 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 of the other Indenture
Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Aircraft or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and obtain such instructions promptly so as not
unreasonably to delay the proposed action of Lessee in respect of which the
instructions are sought. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Article VII hereof or any
other Operative Document) promptly take such action as may be necessary to duly
discharge all Lenders' Liens on any part of the Trust Indenture Estate
attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding
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, or place Liens on, the Aircraft or any
other part of the Trust Indenture Estate except (i) as required or permitted by
the terms of the Lease or the Refunding Agreement, or (ii) in accordance with
the powers granted to, or the authority conferred upon, the Owner Trustee and
the Indenture Trustee pursuant to this Indenture and in accordance with the
terms hereof.
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SECTION 5.06. Replacement Airframes, Replacement Engines and
Replacement Parts. (a) If at any time and from time to time, the Airframe or
Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a),
11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s),
as the case may be, in accordance with the provisions of this Section 5.06 and
the provisions of said Sections of the Lease, the Owner Trustee shall, at such
time or times, but subject to compliance with the conditions to such replacement
set forth in the Lease, direct the Indenture Trustee to execute and deliver to
or as directed in writing by the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine(s) 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:
(1) A written request from the Owner Trustee, requesting such
release and specifically describing the Airframe and/or Engine(s) so to be
released and the Replacement Airframe and/or Replacement Engine(s).
(2) A certificate signed by a duly authorized officer of the
Lessee stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified by
manufacturer, model, FAA registration number (or other applicable
registration number) and manufacturer's serial number;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number (or other applicable
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 hold legal title to
such Replacement Airframe free and clear of all Liens except Permitted
Liens, that such Replacement Airframe will on such date be in good
operating condition, and that such Replacement Airframe has been or,
substantially concurrently with such replacement, is in the process of
being duly registered with the Owner Trustee as owner thereof under the
Federal Aviation Act or under the law then applicable to the
registration of the Aircraft and that an airworthiness certificate has
been duly issued under the Federal Aviation Act (or such other
applicable law) with respect to such Replacement Airframe, and that
such
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registration and certificate is in full force and effect, and the
Lessee or a Permitted Sublessee will have the full right and authority
to use such Replacement Airframe;
(iv) that the insurance required by Section 12 of the Lease is
in full force and effect with respect to such Replacement Airframe and
all premiums then due thereon have been paid in full;
(v) that the Replacement Airframe is of a like Airbus A320-231
model airframe with equivalent or better modification status delivered
by the Manufacturer not earlier than June 30, 1988;
(vi) that no Lease 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 a Replacement Airframe;
(vii) an appraisal prepared in accordance with the Appraisal
Procedure (as defined in the Lease) confirms that the Replacement
Airframe has a value, utility and remaining useful life at least equal
to that of the Airframe which suffered the Event of Loss assuming that
the same were maintained in accordance with the requirements of the
Lease whether or not they are in fact so maintained; and
(viii) that each of the conditions specified in Section 11(a)
and (c) of the Lease with respect to such Replacement Airframe have
been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) 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;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Engine the Owner Trustee will hold title to such
Replacement Engine free and clear of all Liens except Permitted Liens,
that such Replacement Engine will on such date be in good operating
condition, and that such Replacement Engine is the same or an improved
model as the Engine to be released;
(iv) the value, remaining useful life and utility of the
Replacement Engine as of the date of such certificate (which value,
remaining useful life and utility shall not be
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less than the then value, remaining useful life and utility of the
Engine requested to be released, assuming such Engine was in the
condition and repair required to be maintained under the Lease (but
without regard to hours and cycles until overhaul));
(v) that no Lease 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 Engine; and
(vi) that each of the conditions specified in Section 11(b) of
the Lease with respect to such Replacement Engine have been satisfied.
(3) The appropriate instrument or 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, (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 (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Airframe or Replacement Engine to the Lien of this Indenture
and subjecting to any relevant Assigned Sublease and Sublease Assignment,
including, without limitation, an Indenture Supplement.
(4) With respect to a Replacement Airframe, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee confirming
the accuracy of the information set forth in Section 5.06(a)2.A(vii) hereof.
(5) The opinion of counsel to the Lessee, satisfactory to the Indenture
Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the requirements of this
Indenture and the Lease and, upon the basis of such application, the
property so sold or disposed of may be properly released from the Lien
of this Indenture and all conditions precedent herein provided for
relating to such release have been complied with;
(ii) the Replacement Airframe and/or Replacement Engine(s)
have 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 Lien of this Indenture and the Lease, and
subjecting
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to any relevant Assigned Sublease and Sublease Assignment, as the case
may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of
the Aircraft, and no further action, filing or recording of any
document is necessary in order to establish and perfect, in the United
States and, if the Aircraft is registered outside the United States, in
the jurisdiction of registration, the legal title to such Replacement
Airframe and/or Replacement Engine and the Lien of this Indenture on
such Replacement Airframe and/or Replacement Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as 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 to the
Replacement Airframe and, if an Event of Loss with respect to the
Aircraft has occurred, the Replacement Engines to the same extent as
with respect to the Airframe and Engines then installed thereon prior
to such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Airframe or Engine as contemplated by
Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for
the benefit of the Note Holders and the Lessee, subject to fulfillment of the
conditions precedent and compliance by the Lessee with its obligations set forth
in Section 11 of the Lease, to execute and deliver the appropriate instruments
as contemplated by Section 5.06 hereof, and execute and deliver to the Lessee
(or any relevant Permitted Sublessee) an appropriate instrument releasing the
Airframe and/or Engine(s) being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or Engine as
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contemplated by Section 11 of the Lease and Section 5.06 hereof, all provisions
of this Indenture relating to the Airframe or Engine(s) being replaced shall be
applicable to such Replacement Airframe or Replacement Engine(s) with the same
force and effect as if such Replacement Airframe or Replacement Engine(s) were
the same airframe or engine(s), as the case may be, as the Airframe or Engine(s)
being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Note Holder shall affect the sufficiency of
such notice with respect to other Note Holders. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Note Holders
shall be filed with the Indenture Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this Indenture, including
the Granting Clause, but subject always to the final paragraph of this Section
5.10, the following rights shall be reserved to the Owner Trustee or Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
(a) the Owner Trustee or the Owner Participant may, without
the consent of the Indenture Trustee, demand, collect, sue for or
otherwise obtain all amounts included in Excepted Payments from the
Lessee, exercise any election or option or make any decision or
determination or give or receive any notice, consent, waiver or
approval in respect of any Excepted Payment and seek legal or equitable
remedies to require the Lessee to maintain the insurance coverage
referred to in Section 12 of the Lease (or the comparable
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provisions of any Assigned Sublease) and such specific performance of
the covenants of the Lessee under the Lease (or the comparable
provisions of any Assigned Sublease) relating to the protection,
maintenance, possession and use of the Aircraft; provided, that the
rights referred to in this clause (a) shall not be deemed to include
the exercise of any remedies provided for in Section 18 of the Lease
(or the comparable provisions of any Assigned Sublease) other than the
right to proceed by appropriate court action, either at law or in
equity, to enforce payment by the Lessee of such amounts included in
Excepted Payments or performance by the Lessee of such insurance
covenant or to recover damages for the breach thereof or for specific
performance of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent
of the Owner Trustee, enter into, execute and deliver amendments or
modifications in respect of any of the provisions of the Lease, any
Assigned Sublease or any Sublease Assignment and (ii) unless an
Indenture Event of Default and an Indenture Trustee Event shall have
occurred and be continuing, the Indenture Trustee shall not, without
the consent of the Owner Trustee, which consent shall not be withheld
if no right or interest of the Owner Trustee or the Owner Participant
shall be materially diminished or impaired thereby, (A) enter into,
execute and deliver waivers or consents in respect of any of the
provisions of the Lease, any Assigned Sublease or any Sublease
Assignment, or (B) approve any accountants, engineers, appraisers or
counsel as satisfactory to render services for or issue opinions to the
Owner Trustee pursuant to the Operative Documents; provided that,
whether or not an Indenture Event of Default has occurred and is
continuing, the Owner Trustee's consent shall be required with respect
to any waivers or consents in respect of any of the provisions of
Section 6, 12 or 16 of the Lease, or of any other Section of the Lease
to the extent such action shall affect (y) the amount or timing of, or
the right to enforce payment of any Excepted Payment or (z) the amount
or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of
the Owner Trustee) which, absent the occurrence and continuance of an
Indenture Event of Default hereunder, would be distributable to the
Owner Trustee under Article III hereof;
(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
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and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses
(a), (b) and (c) above, so long as no Indenture Event of Default has
occurred and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner Trustee and the Owner Participant under the Lease shall be
exercised by the Owner Trustee and/or the Owner Participant, as the
case may be, to the exclusion of the Indenture Trustee and any Note
Holder and without the consent of the Indenture Trustee or any Note
Holder; provided that the foregoing shall not, nor shall any other
provision of this Section 5.10, limit (A) any rights separately and
expressly granted to the Indenture Trustee or any Note Holder under the
Lease or the other Operative Documents (including, without limitation,
Section 15 of the Refunding Agreement) or (B) the right of the
Indenture Trustee or any Note Holder to receive any funds to be
delivered to the Owner Trustee under the Lease (except with respect to
Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be
in default under Section 18 thereof and (C) subject only to the provisions of
Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such
Section 18 (other than in connection with Excepted Payments) and in Article IV
hereof.
SECTION 5.11. Evidence of Action Taken by Note Holder. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Note Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such
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Note Holders in person or by agent duly appointed in writing, and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, if
expressly required herein, to the Owner Trustee. Proof of execution of any
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Sections 5.04, 5.05, 6.02 and 6.05)
conclusive in favor of the Indenture Trustee and the Owner Trustee if made in
the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far as
concerns such Equipment Note. Except as aforesaid any such action taken by the
Note Holder shall be conclusive and binding upon such Note Holder and upon all
future Note Holders and owners of such Equipment Note and of any Equipment Notes
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Equipment Note. Any action
taken by the Note Holders of the percentage in aggregate Principal Amount of the
Equipment Notes specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee in its individual capacity shall be
answerable or accountable under any circumstances, except for its own willful
misconduct or gross negligence (other than for the handling of funds, for which
the standard of accountability shall be negligence), or as provided in the
fourth sentence of Section 2.04(a) hereof and in the last sentence of Section
5.04 hereof, and except for liabilities that may result, in the case of the
Trust Company,
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from the inaccuracy of any representation or warranty of the Trust Company in
the Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or
the failure to perform any covenant of the Trust Company pursuant to Section
4.01(a) hereof or in the Trust Agreement, the Refunding Agreement, or, in the
case of the Indenture Trustee, from the inaccuracy of any representation or
warranty, or failure to perform any covenant, of the Indenture Trustee made in
its individual capacity herein, in the Refunding Agreement or in any other
document. None of the Owner Participant, the Trust Company or the Indenture
Trustee shall be liable for any action or inaction of any other one of such
parties, except, in the case of the Owner Participant, for any action or
omission of the Owner Trustee performed or omitted on the instructions of the
Owner Participant. The Owner Trustee shall not be deemed a trustee for the Note
Holders for any purpose.
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, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case
of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof
and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner
Trustee and the Indenture Trustee shall have no duty (i) to see to any
registration of the Aircraft or any recording or filing of the Lease or of this
Indenture or any other document, or to see to the maintenance of any such
registration, recording or filing, (ii) to see to any insurance on the Aircraft,
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 Trust 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 or any of the
Permitted Sublessee's covenants under any Assigned Sublease with respect to the
Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft
or Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE
TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO
HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR ANY PART THEREOF, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
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DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY
ENGINE, except that the Trust Company warrants that (i) on the Delivery Date for
the Aircraft the Owner Trustee shall have received whatever interest in the
Aircraft was conveyed to it under the Warranty Bill of Sale subject to the
rights of the parties to the Indenture Documents and (ii) the Aircraft shall be
free and clear of Lessor's Liens attributable to the Trust Company. Neither the
Trust Company nor the Indenture Trustee 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
Documents 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 in its individual capacity or as Indenture Trustee made under
this Indenture or in the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any
moneys paid to or retained by the Indenture Trustee pursuant to any provision
hereof and not then required to be distributed to any Note Holder, the Lessee or
the Owner Trustee as provided in Article III hereof need not be segregated in
any manner except to the extent required by law, 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 hereof) 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 any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of
the Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of 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
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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, but in the case of any such certificate, the
Owner Trustee and the Indenture Trustee shall be under a duty to examine the
same to determine whether or not it conforms to the requirements of this
Indenture. 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 (except in
the case of the Indenture Trustee's obligations under the third sentence of
Section 2.04(a)) through agents or attorneys and shall not be responsible for
any misconduct or negligence on the part of any such agent or attorney appointed
with due care hereunder. The Indenture Trustee may, at the expense of the Trust
Indenture Estate, consult with counsel, accountants and other skilled Persons to
be selected and retained by it, and the Owner Trustee and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by them
in accordance with the written advice or written opinion of any such counsel,
accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against any Note Holder or the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
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SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee (in its individual
capacity and as trustee) from and after the Restatement Date (whether or not
also agreed to be indemnified against by any other Person under any other
document) in any way relating to or arising out of this Indenture, the Trust
Agreement, the Equipment Notes, the other Indenture Documents or the enforcement
of any of the terms of any thereof, or in any way relating to or arising out of
the manufacture, purchase,
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acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease,
possession, use, operation, condition, sale, return or other disposition of the
Aircraft or any Engine (including, without limitation, latent and other defects,
whether or not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Indenture Trustee
hereunder, except only (i) in the case of willful misconduct or gross negligence
(or negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the
Indenture Trustee, in its individual capacity and as Indenture Trustee, and its
successors, permitted assigns, agents and servants, thereunder; provided that so
long as the Lease is in effect, the Indenture Trustee shall not make any claim
under this Section 7.01 for any amount indemnified against by the Lessee under
the Lease without first (but only to the extent not stayed or otherwise
prevented by operation of law) making demand on the Lessee for payment of such
amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee
promptly of any claim for which it may seek indemnity. The Lessee shall be
entitled to defend any claim by the Indenture Trustee to the extent provided in
Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to
indemnification from the Trust Indenture Estate for any liability, obligation,
loss, damage, penalty, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7.01 to the extent not reimbursed
by the Lessee or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same the Indenture Trustee shall
have a prior Lien on the Trust Indenture Estate. The indemnities contained in
this Section 7.01 shall survive the termination of this Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
agent or affiliate of the Trust Company or the Owner Participant (the
"Exculpated Equity Persons") shall have any obligation, duty or liability of any
kind whatsoever to the Indenture Trustee or any such Note Holder in connection
with the exercise by any Exculpated Equity Person of any rights of the Owner
Trustee or the taking of any action or the failure to take any action by any
Exculpated Equity Person in connection with any rights of the
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Owner Trustee under this Indenture or the Lease, and each such Note Holder
hereby waives and releases, to the extent permitted by applicable law, each
Exculpated Equity Person of any and all such obligations, duties or liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case
of any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Trust Company pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to the Indenture Trustee and to each Note Holder.
SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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 and
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assuming such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Indenture Trustee,
without further act, shall become vested with and bound by all the estates,
properties, rights, powers, duties and obligations of the predecessor Indenture
Trustee hereunder and under the other Indenture Documents in the trusts
hereunder applicable to it with like effect as if originally named the Indenture
Trustee herein; but nevertheless upon the written request of such successor
Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver
an instrument transferring to such successor Indenture Trustee, upon the trusts
herein expressed applicable to it, all the estates, properties, rights and
powers of such predecessor Indenture Trustee, and such predecessor Indenture
Trustee shall duly assign, transfer, deliver and pay over to such successor
Indenture Trustee all moneys or other property then held by such predecessor
Indenture Trustee hereunder, subject nevertheless to its claim provided for in
Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall
be a "citizen of the United States" within the meaning of Section 40102(a)(15)
of the Federal Aviation Act and shall also be a bank or trust company having a
combined capital and surplus of at least $200,000,000 if there be such an
institution willing, able and legally qualified to perform the duties of the
Indenture Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the foregoing,
upon the request of the Owner Trustee or the Lessee, any such successor
corporation referred to in this Section 8.02(d) shall deliver to the Owner
Trustee and the Lessee an instrument confirming its status as the Indenture
Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate may at the time be
located or in which any action of the Indenture Trustee may be required to be
performed or taken, the Indenture Trustee, by an instrument in writing signed by
it, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee, acting jointly with the Indenture
Trustee, of all or any part of
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the Trust Indenture Estate to the full extent that local law makes it necessary
for such separate trustee or separate trustees or co-trustee acting jointly with
the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust 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
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, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act, and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Indenture
Trustee;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be
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conferred or imposed and exercised or performed by the Indenture
Trustee and such additional trustee or trustees and separate trustee or
trustees jointly except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Indenture Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Indenture
Estate in any such jurisdiction) shall be exercised and performed by
such additional trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent
of, the Indenture Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.03,
the powers of any additional trustee or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures.
(a) Except as otherwise provided in Section 5.10 hereof, and except with respect
to Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or
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supplement to the Lease, or execute and deliver any written waiver or
modification of, or consent under, the terms of the Lease, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee acting on instructions of a Majority in
Interest of Note Holders. Anything to the contrary contained in this Section
9.01 notwithstanding, without the necessity of the consent of any of the Note
Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i)
any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and
Lessee may, so long as no Indenture Event of Default has occurred and is
continuing, enter into amendments of or additions to the Lease to modify
Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such
amendment would adversely affect the rights or exercise of remedies under
Section 18 of the Lease) so long as such amendments, modifications and changes
do not and would not (A) affect the time of, or reduce the amount of, Basic Rent
or Stipulated Loss Value payments until after the payment in full of all Secured
Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the
value, utility or useful life of the Aircraft or any Engine or (D) otherwise
adversely affect the Note Holders in any material respect and (iii) the Lessee
may effect the re-registration of the Aircraft in accordance with but always
subject to the terms and conditions applicable thereto specified in Section 11
of the Refunding Agreement and Section 6(e) of the Lease and the Indenture
Trustee may approve any Permitted Sublessee as provided in clause (c) of the
definition of such term set forth in the Lease and may exercise the rights of
the Indenture Trustee under Section 15 of the Refunding Agreement. For the
avoidance of doubt, nothing in this Section 9.01 shall limit in any way the
rights of the Owner Trustee and/or the Owner Participant under Section 5.10(d)
to exercise certain rights and powers under the Lease to the exclusion of the
Indenture Trustee and any Note Holder and without the consent of the Indenture
Trustee or any Note Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise, whether in its
official or individual capacity.
Any supplemental indenture authorized by the provisions of
this Section 9.01 may be executed without the consent of the
Trust Indenture
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Note Holders notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, or does not adversely affect the Note Holders in any
material respect. Upon the written request of a Majority in Interest of Note
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the Lease which would permit redemption of
Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any
of the provisions of Section 4(b) of the Lease, or modify, amend or supplement
the Lease, any Assigned Sublease or any Sublease Assignment, or consent to any
assignment of any thereof, in either case releasing the Lessee (or Permitted
Sublessee) from its obligations in respect of the payment of Basic Rent or
Stipulated Loss Value for the Aircraft or altering the absolute and
unconditional character of the obligations of Lessee to pay
Trust Indenture
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Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable
provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on
the Trust Indenture Estate or any part thereof other than Permitted Liens or
deprive any Note Holder of the benefit of the Lien of this Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely as
Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Airframe or Engines or any
Replacement Airframe or Replacement Engine; (v) to add to the covenants of the
Owner Trustee for the benefit of the Note Holders, or to surrender any rights or
powers herein conferred upon the Owner Trustee, the Owner Participant or the
Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on
the Equipment Notes any legend as may be required by law.
(d) Without the consent of the Lessee no amendment or
supplement to this Indenture or waiver or modification of the terms hereof shall
adversely affect the Lessee in any material respect or impose upon the Lessee
any additional indemnification obligations.
SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective
Trust Indenture
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rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Indenture Trustee, the Owner Trustee and the Note Holders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for all and any purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such copy
to each Note Holder), but the failure of the Owner Trustee or the Indenture
Trustee to mail such conformed copies shall not impair or affect the validity of
such document. The Indenture Trustee will furnish to each Note Holder, promptly
upon receipt thereof, duplicates or copies of
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all reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder to the extent
that the same were not required to have been furnished to such Note Holder
pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX, no
written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX 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, any Engines or other property
thereto or to release the Aircraft, any Engine or other property therefrom or to
execute and deliver an Indenture Supplement, in each case pursuant to the terms
hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge
of such Lien and the termination of such security interest in the Aircraft and
release of 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
Trustee to give effect to such discharge, termination and 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 as expressly
provided pursuant to Article X hereof or upon any sale or other final
disposition by the Indenture Trustee of all property part
Trust Indenture
<PAGE> 92
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of the Trust Indenture Estate and the final distribution by the Indenture
Trustee of all moneys or other property or proceeds constituting part of the
Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Indenture and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Note Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is
Binding. Any sale or other conveyance of the Aircraft by the Indenture Trustee
made pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the 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 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of the Aircraft, except in
accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations,
Trust Indenture
<PAGE> 93
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directions, consents, waivers or documents required or permitted by the terms of
this Indenture shall be in English and in writing, mailed by first-class
registered or certified mail, postage prepaid, or by confirmed telex or
telecopy, and (i) if to the Owner Trustee, addressed to it at its office at
Rodney Square North, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration Department (telex: 835437; answerback: WILMTR; telecopy: (302)
651-8464/8882), with a copy to the Owner Participant at its address set forth in
the Refunding Agreement, (ii) if to the Indenture Trustee, addressed to it at
its office at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate
Trust Administration (telex: 99339; answerback: CTNBHTFD; telecopy: (203)
240-7920) or (iii) if to the Owner Participant, the Lessee or any Note Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Register. Whenever any
notice in writing is required to be given by the Owner Trustee or the Indenture
Trustee or any Note Holder to any of the other of them, such notice shall be
deemed and such requirement satisfied when such notice is received. Any party
hereto may change the address to which notices to such party will be sent by
giving notice of such change to the other parties to this Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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 permitted assigns of each, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Note Holder shall bind the successors and assigns of
such Note Holder. This Indenture and the Trust
Trust Indenture
<PAGE> 94
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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. Each Note Holder by its acceptance of
an Equipment Note agrees to be bound by this Indenture and all provisions of the
Refunding Agreement applicable to a Note Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Indenture Trustee, the
Owner Trustee, the Owner Participant, any Note Holder or any bank or other
Affiliate of any of them may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Lessee or any Permitted Sublessee fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Lessee for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the
parties that the Owner Trustee, as lessor under the Lease (and the Indenture
Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled
to the benefits of Section 1110 of the Bankruptcy Code with respect to the right
to take possession of the Aircraft, Airframe, Engines and Parts as provided in
the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in
which Lessee is a debtor, and in any instance where more than one construction
is possible of the terms and conditions hereof or of any other pertinent
Operative Document, each such party agrees that a construction which would
preserve such benefits shall control over any construction which would not
preserve such benefits.
Trust Indenture
<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee
By_________________________________
Title:
FLEET NATIONAL BANK,
not in its individual capacity,
except as expressly provided
herein, but solely as Indenture
Trustee
By_________________________________
Title:
Trust Indenture
<PAGE> 96
EXHIBIT A
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-16]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1990 AWA-16]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1990 AWA-16] dated
as of September 21, 1990 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1990
AWA-16] dated as of September 21, 1990, as amended and restated as of November
26, 1996 (as so amended and restated, the "Indenture") between the Owner Trustee
and Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut, National Association, and The Connecticut National
Bank), as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof
which shall particularly describe the Aircraft (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 Trust Indenture
Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated September 28, 1990, as amended by Amendment No.
1 dated March 27, 1992, and as further amended by Amendment No. 2 dated as of
July 29, 1993, subjected to the Lien of such Original Indenture the airframe and
engines therein described, which Original Indenture and Trust Indenture
Supplement No. 1 have been duly recorded with the Federal Aviation
Administration as one document on September 28, 1990 and assigned Conveyance No.
P92334, which Amendment No. 1 has been duly recorded with the Federal Aviation
Administration on May 18, 1992 and assigned Conveyance No. EE003012 and which
Amendment No. 2 has been duly recorded with the Federal Aviation Administration
on August 4, 1993 and assigned Conveyance No. F59676.
<PAGE> 97
- 2 -
WHEREAS(1), 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(2), the Owner Trustee has, as provided in the
Indenture, heretofore executed and delivered to the Indenture Trustee [(3)]
Indenture Supplement(s) for the purpose of specifically subjecting to the Lien
of the Indenture certain airframes and/or engines therein described, which
Indenture Supplement(s) is (are) dated and has (have) been duly recorded with
the Federal Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
---- ---------------- ----------------
NOW, THEREFORE, This Supplement Witnesseth, that, to secure
the prompt payment of the Principal Amount of, interest on, Make-Whole Amount,
if any, and all other amounts due with respect to, all 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 contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt whereof is hereby acknowledged, the Owner
Trustee has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and
- --------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
(2) This recital not to be included in the first Indenture Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 98
- 3 -
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 Note Holders from time to time, in
the trust created by the Indenture, a first priority security interest in and
mortgage Lien on all estate, right, title and interest of the Owner Trustee in,
to and under the following described property:
AIRFRAME(S)
( ) airframe(s) identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------ ----- ------ -------------
together with all 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.
AIRCRAFT ENGINES
( ) aircraft engines, each such engine
having 750 or more rated takeoff horsepower
or the equivalent thereof, identified as
follows:
Manufacturer's
Manufacturer Model Serial Number
------------ ----- -------------
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engines.
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,
Form of Trust Indenture Supplement
<PAGE> 99
- 4 -
sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture
Trustee, its successors and assigns, for the security and benefit of the Note
Holders from time to time, in the trust created by the Indenture, all of the
estate, right, title and interest of the Owner Trustee in, to and under the
Lease and Lease Supplement [GPA 1990 AWA-16] No. 3 of even date herewith (other
than Excepted Payments and Excepted Rights) 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 Note Holders from time to time for the uses and purposes and
subject to the terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and shall form a part of it, and the Indenture is hereby incorporated
by reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft and/or Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 100
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this
Supplement to be duly executed by one of its officers thereunto duly authorized
on the day and year first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By____________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 101
SCHEDULE I
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-16]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- -------- ---------
<S> <C> <C> <C>
Series A $11,897,518 02-Jan-2009 6.85%
Series B $ 4,413,774 02-Jul-2005 6.93%
Series C $ 4,552,621 02-Jan-2002 6.86%
Series D $ 4,249,113 02-Jan-2002 8.16%
Series E $ 2,541,597 02-Jul-2002 10.50%
</TABLE>
<PAGE> 102
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N637AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 103
- 2 -
SERIES B
Aircraft: N637AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 104
- 3 -
SERIES C
Aircraft: N637AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 105
- 4 -
SERIES D
Aircraft: N637AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 106
- 5 -
SERIES E
Aircraft: N637AW
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 107
SCHEDULE II
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-16]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1D, dated November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1E, dated November 26, 1996.
Schedule II
<PAGE> 1
EXHIBIT 4.41
- --------------------------------------------------------------------------------
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E1]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One IAE International
Aero Engines AG V2500-A1 Engine
Manufacturer's Serial No. V0025
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
GRANTING CLAUSE.............................................................. 3
HABENDUM CLAUSE.............................................................. 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions........................................... 8
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes....................................... 21
SECTION 2.02. Issuance and Terms of Equipment Notes......................... 26
SECTION 2.03. Payments from Trust Indenture Estate
Only........................................... 29
SECTION 2.04. Method of Payment............................................. 31
SECTION 2.05. Application of Payments....................................... 33
SECTION 2.06. Termination of Interest in Trust
Indenture Estate............................... 34
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes................................ 34
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes................................ 36
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation................................... 36
SECTION 2.10. Mandatory Redemptions of Equipment
Notes.......................................... 37
SECTION 2.11. Redemptions; Notice of Redemption............................. 37
SECTION 2.12. Option to Purchase Equipment Notes............................ 38
SECTION 2.13. Subordination................................................. 39
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions.................................... 40
SECTION 3.02. Event of Loss and Replacement................................. 42
SECTION 3.03. Payment After Indenture Event of
Default, etc................................... 43
SECTION 3.04. Certain Payments.............................................. 46
SECTION 3.05. Other Payments................................................ 47
SECTION 3.06. Payments to Owner Trustee..................................... 47
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee........................................ 48
(i)
<PAGE> 3
Page
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner
Trustee........................................ 48
SECTION 4.02. Indenture Events of Default................................... 50
SECTION 4.03. Certain Rights................................................ 53
SECTION 4.04. Remedies...................................................... 55
SECTION 4.05. Return of the Engine, etc..................................... 58
SECTION 4.06. Remedies Cumulative........................................... 60
SECTION 4.07. Discontinuance of Proceedings................................. 60
SECTION 4.08. Waiver of Past Indenture Defaults............................. 60
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default.......................... 61
SECTION 5.02. Action Upon Instructions...................................... 62
SECTION 5.03. Indemnification............................................... 63
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions...................... 63
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions........... 64
SECTION 5.06. Replacement Engine............................................ 64
SECTION 5.07. Indenture Supplements for Replacements........................ 66
SECTION 5.08. Effect of Replacement......................................... 67
SECTION 5.09. Notices, etc.................................................. 67
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant.............................. 67
SECTION 5.11. Evidence of Action Taken by Note Holder....................... 70
SECTION 5.12. Right of Revocation of Action Taken........................... 70
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties............................... 70
SECTION 6.02. Absence of Duties............................................. 71
SECTION 6.03. No Representations or Warranties as to
Engine or Documents............................ 71
SECTION 6.04. No Segregation of Moneys; No Interest......................... 72
SECTION 6.05. Reliance; Agents; Advice of Counsel........................... 72
SECTION 6.06. Capacity in Which Acting...................................... 73
SECTION 6.07. Compensation.................................................. 73
(ii)
<PAGE> 4
Page
SECTION 6.08. May Become Note Holder........................................ 74
SECTION 6.09. Further Assurances; Financing Statements...................... 74
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification...................................... 74
SECTION 7.02. Exculpation and Release of Liability.......................... 75
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee............................. 76
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor.............. 76
SECTION 8.03. Appointment of Separate Trustees.............................. 77
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures..................................... 80
SECTION 9.02. Effect of Supplemental Indenture.............................. 83
SECTION 9.03. Documents to Be Given to Trustee.............................. 83
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures........................ 83
SECTION 9.05. Trustees Protected............................................ 83
SECTION 9.06. Documents Mailed to Note Holders.............................. 83
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement............. 84
SECTION 9.08. Notices to Liquidity Provider................................. 84
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture..................................... 84
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders........................ 85
SECTION 10.03. Sale of Engine by Indenture Trustee is
Binding....................................... 85
(iii)
<PAGE> 5
Page
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
Lessee and Note Holders....................... 85
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease............................... 85
SECTION 10.06. Notices...................................................... 86
SECTION 10.07. Severability................................................. 86
SECTION 10.08. No Oral Modifications or Continuing
Waivers....................................... 86
SECTION 10.09. Successors and Assigns....................................... 86
SECTION 10.10. Headings..................................................... 87
SECTION 10.11. Normal Commercial Relations.................................. 87
SECTION 10.12. Governing Law; Counterpart Form.............................. 87
SECTION 10.13. Section 1110................................................. 87
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
(iv)
<PAGE> 6
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E1]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [GPA 1991 AWA-E1] (this "First Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank
of Connecticut, Shawmut Bank Connecticut, National Association, and The
Connecticut National Bank), a national banking association, not in its
individual capacity except as otherwise specifically set forth herein, but
solely as indenture trustee hereunder (in such capacity, together with its
successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company
entered into the Trust Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991,
as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E1] No. 1 dated
March 27, 1991, and as further supplemented by Trust Agreement Supplement [GPA
1991 AWA-E1] No. 2 dated the date hereof (as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof, hereof and of
the Refunding Agreement, the "Trust Agreement"), whereby, among other things,
Wilmington Trust Company has declared a certain trust for the use and benefit of
the Owner Participant, subject, however, to the Trust Indenture Estate created
pursuant hereto for the use and benefit of (to the extent set forth herein), and
with the priority of certain payments to, the Holders of Equipment Notes issued
hereunder, and the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [GPA 1991 AWA-E1] dated
as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated
March 27, 1991, which were recorded by the Federal Aviation Administration on
March 28, 1991 as one instrument and assigned Conveyance No. 259534, as amended
by Amendment No. 1 dated March 27, 1992, recorded by the Federal
Trust Indenture
<PAGE> 7
- 2 -
Aviation Administration on April 30, 1992 and assigned Conveyance No. DD002565,
and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by
the Federal Aviation Administration on August 4, 1993 and assigned Conveyance
No. F59677 (collectively, as so amended, supplemented or otherwise modified to
the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the
Original Head Lessee entered into the Engine Lease Agreement [GPA 1991 AWA-E1]
dated as of March 15, 1991, as supplemented by Lease Supplement [GPA 1991
AWA-E1] No. 1 dated March 27, 1991, which were recorded by the Federal Aviation
Administration on March 28, 1991 as one instrument and assigned Conveyance No.
259535 (collectively, as so amended, supplemented or otherwise modified to the
date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture,
the Owner Trustee issued and sold to the Lenders (as defined in the Original
Indenture) the Original Loan Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and
restate the Original Lease pursuant to Assignment and Amendment No. 1 and
Sublease Termination Agreement [GPA 1991 AWA- E1] dated as of the date hereof
among the Original Head Lessee, as assignor and the Original Sublessee, as
assignee, the Owner Trustee and the Indenture Trustee and the Amended and
Restated Engine Lease Agreement [GPA 1991 AWA-E1] dated as of the date hereof
between the Owner Trustee and the Lessee (as so assigned, amended and restated,
the "Amended and Restated Lease" or the "Lease") and to enter into Lease
Supplement No. 2 and (ii) cause the implementation of the Refinancing
Transaction pursuant to which, among other things, the Original Loan
Certificates issued pursuant to the Original Indenture shall be prepaid and new
Equipment Notes shall be issued to the Pass Through Trustees (or their
designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's estate,
right, title and interest in and to the Engine and, except as hereinafter
expressly provided, all of the Owner Trustee's right, title and interest in, to
and under the Lease (as amended and restated to date and as the same may at any
time and from time to time be further amended, restated or otherwise modified in
accordance with the terms thereof and hereof) and all payments and other amounts
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable
Trust Indenture
<PAGE> 8
- 3 -
benefit and security of the Note Holders, subject to Section 2.13 and Article
III hereof;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner Trustee and authenticated, issued and
delivered by the Indenture Trustee hereunder, the legal, valid and binding
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this First Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment
of the Principal Amount of, interest on, Make- Whole Amount, if any, and all
other amounts due with respect to, all Equipment Notes from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions contained herein and in the
Refunding Agreement and the Equipment Notes, for the benefit of the Note
Holders, and the prompt payment of any and all amounts from time to time owing
hereunder and under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee to the Note Holders and for the uses and purposes and
subject to the terms and provisions hereof, and in consideration of the premises
and of the covenants herein contained, and of the acceptance of the 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, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture Supplement or any indenture supplemental hereto, are included within
the Trust Indenture Estate), to wit:
Trust Indenture
<PAGE> 9
- 4 -
(1) the Engine and all replacements thereof and substitutions
therefor to which the Owner Trustee shall from time to time acquire an
interest under the Lease, all as more particularly described in the
Indenture Supplement executed and delivered with respect to the Engine
or any such replacements or substitutions therefor, as provided in this
Indenture, and all records, logs and other documents to which the Owner
Trustee shall from time to time acquire an interest at any time
maintained by the Lessee with respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement (to the extent assigned by the
Purchase Agreement Warranties Assignment); the Purchase Agreement
Warranties Assignment, with the Consents and Agreements attached
thereto; and the Warranty Bill of Sale; in each case including, without
limitation, (x) all rights of the Owner Trustee to exercise any
election or option or to make any decision or determination or to give
any notice, consent, waiver or approval or to take any other action
under or in respect of any such document or to accept surrender or
redelivery of the Engine or any part thereof, as well as all the
rights, powers and remedies on the part of the Owner Trustee, whether
arising under any such document or by statute or at law or in equity,
or otherwise, arising out of any Lease Event of Default, and (y) any
right to restitution from the Lessee, the Manufacturer, or any other
Person in respect of any determination of invalidity of any such
document;
(3) each Sublease Assignment and each Assigned Sublease (to
the extent assigned under such Sublease Assignment), and including,
without limitation, all rents or other payments of any kind made under
such Assigned Sublease (to the extent assigned under such Sublease
Assignment), all collateral security or credit support (in the nature
of a guarantee, letter of credit, credit insurance, Lien on or security
interest in any property or otherwise) for the obligations of the
Permitted Sublessee thereunder (to the extent assigned under such
Sublease Assignment) and all rights of the Owner Trustee to exercise
any election or option or to give any notice, consent, waiver, or
approval under or with respect of any thereof or to accept any
surrender of the Engine or any part thereof as well as any rights,
powers or remedies on the part of the Owner Trustee (in each case to
the extent assigned to the Owner Trustee), whether arising under any
Assigned Sublease or any Sublease Assignment or by statute or at law or
in equity, or
Trust Indenture
<PAGE> 10
- 5 -
otherwise, arising out of any default under any Assigned Sublease;
(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, without limitation, all payments or
proceeds payable to the Owner Trustee after termination of the Lease
with respect to the Engine 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 requisition proceeds with respect to the Engine or any
part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Engine or any part thereof, including but not limited to the insurance
required under Section 12 of the Lease or under any comparable
provision of any Assigned Sublease (but excluding any excess insurance
maintained by the Lessee and not required under Section 12 of the Lease
or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and
all rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any other
Person in accordance with the provisions of this Agreement, AND SUBJECT TO
Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel paper original executed
counterparts of the Original Lease and Lease Supplement No. 1, certified copies
of the Purchase Agreement Warranties Assignment and the Consents and Agreements
attached thereto, and the original Warranty Bill of Sale. Concurrently with the
delivery of this Indenture, the Owner Trustee is delivering to the Indenture
Trustee the chattel paper
Trust Indenture
<PAGE> 11
- 6 -
original executed counterparts of the Amended and Restated Lease and Lease
Supplement No. 2. All property referred to in this Granting Clause, whenever
acquired by the Owner Trustee, shall secure all obligations under and with
respect to the Equipment Notes at any time outstanding. Any and all properties
referred to in this Granting Clause which are hereafter acquired by the Owner
Trustee, shall, without further conveyance, assignment or act by the Owner
Trustee or the Indenture Trustee thereby become and be subject to the security
interest hereby granted as fully and completely as though specifically described
herein.
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 Note Holders from time to time, except as set forth in
Section 2.13 and Article III hereof without any preference, distinction or
priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or otherwise) to ask, require, demand, receive
and give acquittance for any and all moneys and claims for moneys (in each case
including insurance and requisition proceeds but excluding Excepted Payments and
Excepted Rights) due and to become due to the Owner Trustee under or arising out
of the Indenture Documents and all other property which now or hereafter
constitutes part of the Trust Indenture Estate, to endorse any checks or other
instruments or orders in connection therewith and to file any
Trust Indenture
<PAGE> 12
- 7 -
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. Under the Lease,
the Lessee is directed to make all payments of Rent (other than Excepted
Payments) and all other amounts which are required to be paid to or deposited
with the Owner Trustee pursuant to the Lease (other than Excepted Payments)
directly to the Indenture Trustee at such address or addresses as the Indenture
Trustee shall specify, for application as provided in this Indenture. Pursuant
to each Sublease Assignment, each Permitted Sublessee will be directed from and
after (i) notice of the occurrence of a Lease Event of Default and (ii) notice
that the Lease is declared or deemed in default, to make all payments of rent
and all other amounts which are required to be paid to or deposited with the
Lessee pursuant to the related Assigned Sublease and which are assigned
thereunder directly to the Indenture Trustee at such address or addresses as the
Indenture Trustee shall specify, for application or to be held as provided in
this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it
will transfer to the Indenture Trustee any and all moneys from time to time
received by it constituting part of the Trust Indenture Estate, for distribution
by the Indenture Trustee pursuant to this Indenture, except (a) to the extent
the Owner Trustee is entitled to distribution of such moneys pursuant to this
Indenture and (b) that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement any amounts distributed to it by the Indenture Trustee
under this Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that it will not assign or
pledge or otherwise dispose of, so long as this Indenture shall remain in effect
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its estate, right, title or interest hereby assigned, to anyone
other than the Indenture Trustee, and that, with respect to such estate, right,
title and interest hereby assigned, subject to its rights pursuant to Section
5.10 hereof, it will not, except as provided in this Indenture (including,
without limitation, Section 9.01) and except as to Excepted Payments and
Excepted Rights, (i) accept any payment from the Lessee or any Permitted
Sublessee under any of the Indenture Documents, enter into any agreement
amending, modifying or supplementing any of the Indenture Documents, or execute
any waiver or modification of, or
Trust Indenture
<PAGE> 13
- 8 -
consent under, the terms of any of the Indenture Documents, (ii) settle or
compromise any claim arising under any of the Indenture Documents, (iii) give
any notice or exercise any right or take any action under any of the Indenture
Documents, or (iv) 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. For purposes of Section 4.02(e) hereof,
this is the fourth paragraph following the Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations
under 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 might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments and
Excepted Rights. Further, nothing in the Granting Clause or the preceding
paragraphs shall impair any of the rights of the Owner Trustee or the Owner
Participant under Section 5.10 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained
in the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments (including all annexes, appendices, exhibits,
schedules and supplements thereto) as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with, the terms thereof and of the other
Operative Documents and references to various Persons shall be deemed to be
references to and include their respective permitted successors and assigns.
Trust Indenture
<PAGE> 14
- 9 -
"Amortization Amount" means, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Principal
Amount Repayment Date on the Amortization Schedule.
"Amortization Schedule" means the amortization schedule for
the Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed
shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such
Equipment Note. "Remaining Weighted Average Life" of such Equipment
Note, at the redemption date of such Equipment Note, shall be the
number of days equal to the quotient obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then
remaining installment of principal, including the payment due on the
maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid
Principal Amount of such Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the
United States Code, 11 U.S.C. SectionSection 101 et seq., as amended.
"Business Day" means a day other than a Saturday, Sunday or a
day on which banks are required or authorized to close in either The
City of New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the
Intercreditor Agreement shall be deposited.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Consents and Agreements" means the confirmations by the
Manufacturer included in the Purchase Agreement Warranties Assignment
of the transfer of rights under the Purchase Agreement.
Trust Indenture
<PAGE> 15
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"Continuous Stay Period" has the meaning specified in
Section 4.04(a).
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee located at 777 Main Street, Hartford,
Connecticut 06115, Attention: Corporate Trust Administration, or such
other office at which the Indenture Trustee's corporate trust business
shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Lessee, the Owner Trustee and the Note
Holders.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be evidenced
by bonds, debentures, notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series
C, Series D and Series E, the rate per annum specified for such Series
under the heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means March 27, 1991.
"Dollars", "U.S. $" and "$" mean the lawful currency of
the United States of America.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of
such depository institution has a long-term unsecured debt rating from
each Rating Agency of at least A- 3 or its equivalent.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has
a long-term unsecured debt rating from each Rating Agency of at least
A-3 or its equivalent.
Trust Indenture
<PAGE> 16
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"Equipment Notes" means the Equipment Notes, in substantially
the form set out in Section 2.01 hereof, issued by the Owner Trustee
and authenticated by the Indenture Trustee pursuant to the terms of
this Indenture.
"Equity Collateral" has the meaning assigned to such
term in the definition of "Excepted Payments."
"Excepted Payments" means (i) any and all indemnity payments
and interest in respect thereof paid or payable in respect of the Owner
Participant, the Trust Company, the Owner Trustee (and not in support
of any payment obligation of the Owner Trustee under any Indenture
Document) or any of their respective successors, permitted assigns
(and, in the case of a permitted assign of the Owner Participant that
is a partnership, the partners of such partnership), directors,
officers, employees, servants, agents, subsidiaries, affiliates or
shareholders by the Lessee pursuant to the Lease (including, without
limitation, Section 13 thereof and any corresponding payment of
Supplemental Rent under the Lease), (ii) any proceeds of public
liability insurance (or government indemnities in lieu thereof) in
respect of the Engine payable as a result of insurance claims paid
respecting, or losses suffered by, the Trust Company or the Indenture
Trustee in its individual capacity or the Owner Participant, (iii) any
proceeds of insurance maintained with respect to the Engine by or for
the benefit of the Owner Participant (whether directly or through the
Owner Trustee) and not required under Section 12 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts
payable to the Owner Participant, the Trust Company, the Owner Trustee
(and not in support of any payment obligation of the Owner Trustee
under any Indenture Document), or any of their respective successors,
permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership),
directors, officers, employees, servants, agents, subsidiaries,
affiliates or shareholders under Section 10 of the Lease or by the
Lessee or the Parent Guarantor under the Tax Indemnification Agreement
or the Amended and Restated Head Lease TIA (as defined in the Refunding
Agreement), as the case may be, (v) Transaction Expenses paid or
payable by the Lessee or the Parent Guarantor to the Trust Company, the
Owner Trustee, the Indenture Trustee or the Owner Participant pursuant
to Section 21 of the Refunding Agreement or the Lease, (vi) any letter
of credit pursuant to Section 8(l) of the Lease (including, without
limitation, any replacement letter of credit (the "Equity Collateral"))
and any payment or proceeds of any such Equity Collateral to the extent
retained or applied as provided in Section 8(l) of the
Trust Indenture
<PAGE> 17
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Lease, (vii) any amount payable to the Owner Participant by any
transferee as the purchase price of the Owner Participant's interest in
the Trust Estate (or a portion thereof), (viii) any amount payable to
the Owner Trustee, the Trust Company or the Owner Participant or any of
their respective successors, permitted assigns (and, in the case of a
permitted assign of the Owner Participant that is a partnership, the
partners of such partnership), directors, officers, employees,
servants, agents, subsidiaries, affiliates or shareholders attributable
to the period prior to or on the Restatement Date or under the Original
Participation Agreement, the Original Lease, the Parent Head Lease
Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the
Amended and Restated Sublease TIA (as such terms are defined in the
Refunding Agreement) or Retained Head Lease Rights and Obligations (as
such term is defined in the Refunding Agreement), and (ix) subject to
the last sentence of Section 5.10 hereof, any and all rights of the
Owner Trustee, the Owner Participant or the Trust Company under the
Operative Documents, whether or not a Lease Event of Default, a Lease
Default, an Indenture Default or an Indenture Trustee Event has
occurred and is continuing to demand, collect, sue for, give notices,
make determinations, enforce or exercise all rights with respect to and
otherwise obtain all amounts described in clauses (i) through (viii)
above and the proceeds thereof.
"Excepted Rights" means (i) those rights of the Owner
Participant and the Owner Trustee under Section 5.10 of this Indenture,
(ii) all rights under the Equity Collateral to make a claim for,
collect and retain all amounts payable with respect to any Equity
Collateral, (iii) all rights of the Owner Participant, the Trust
Company or the Owner Trustee to compromise or waive any such right or
modify, amend or waive any provision of any Operative Document
conferring such rights with respect to Excepted Payments, and (iv) all
rights of the Owner Trustee to exercise any election or option, or to
make any decision or determination, or to give or receive any notice,
consent, waiver or approval with respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section 2.03(b)
hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and
Trust Indenture
<PAGE> 18
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undrawn amounts under such Liquidity Facility in accordance with the
provisions thereof other than a Downgrade Drawing.
"Government Obligations" means direct obligations of the
United States of America that are not callable, redeemable or payable
prior to maturity, in whole or in part, directly or indirectly, by any
Person.
"Indenture," "this Indenture," and "the Indenture" mean this
First Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented
by any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement (to the extent assigned by the Purchase
Agreement Warranties Assignment); the Purchase Agreement Warranties
Assignment and the Consents and Agreements attached thereto; and the
Warranty Bill of Sale.
"Indenture Event of Default" has the meaning set forth
in Section 4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and
Security Agreement listed on Schedule 1 to the Intercreditor Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Engine and
Replacement Engine included in the property of the Owner Trustee
covered by this Indenture, including, without limitation, Trust
Indenture Supplement No. 1 dated March 27, 1991, which was recorded as
one instrument by the FAA with the Original Indenture, and Trust
Indenture Supplement No. 2 dated November 26, 1996, which is being
filed for recordation as one instrument by the FAA with this First
Amended and Restated Indenture.
Trust Indenture
<PAGE> 19
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"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as assigned, amended and restated by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1991 AWA-E1]
dated as of the date hereof and Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E1] dated as of the date hereof and
supplemented by Lease Supplement [GPA 1991 AWA-E1] No. 2 dated November
26, 1996, which are being filed for recordation as one instrument with
the FAA contemporaneously herewith.
"Lease Default" means an event or condition that, with the
giving of notice or the lapse of time or both, would become a Lease
Event of Default.
"Lease Event of Default" means any event or condition defined
as an "Event of Default" in Section 17 of the Lease.
"Lessee" means America West Airlines, Inc., a Delaware
corporation, in its capacity as lessee under the Amended and Restated
Lease, and its successors, and to the extent permitted by the Refunding
Agreement, its assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or
claim of any kind, including any thereof arising under any conditional
sale agreement, equipment trust agreement or title retention agreement.
Trust Indenture
<PAGE> 20
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"Majority in Interest of Note Holders" means, as of a
particular date of determination and subject to Section 2.6 of the
Intercreditor Agreement, the Holders of more than 50% in aggregate
unpaid Principal Amount of all Equipment Notes outstanding as of such
date. For purposes of this definition, there shall be excluded any
Equipment Notes held by the Owner Trustee or the Owner Participant or
any interests of the Owner Participant therein by reason of subrogation
pursuant to Section 4.03 of the Indenture (unless all Equipment Notes
then outstanding shall be held by the Owner Trustee or the Owner
Participant) or any Equipment Notes held by the Lessee or any Affiliate
of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate
equal to (i) in the case of Series A Equipment Notes and Series B
Equipment Notes, the Treasury Yield and (ii) in the case of Series C
Equipment Notes, Series D Equipment Notes and Series E Equipment Notes,
the Treasury Yield plus 0.75% exceeds (b) the outstanding principal
amount of such Equipment Note plus accrued interest. For purposes of
determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Equipment Note means the interest
rate (expressed as a semiannual equivalent and as a decimal and, in the
case of United States Treasury bills, converted to a bond equivalent
yield) determined to be the per annum rate equal to the semiannual
yield to maturity for United States Treasury securities maturing on the
Average Life Date of such Equipment Note and trading in the public
securities market either as determined by interpolation between the
most recent weekly average yield to maturity for two series of United
States Treasury securities, trading in the public securities markets,
(A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Equipment Note and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Equipment
Note, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note is reported on
the most recent H.15(519), such weekly average yield to maturity as
published in such H.15(519). "H.15(519)" means the weekly statistical
release designated as such, or any successor
Trust Indenture
<PAGE> 21
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publication, published by the Board of Governors of the Federal Reserve
System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the
"most recent H.15(519)" means the H.15(519) published prior to the
close of business on the third Business Day prior to the applicable
redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person
other than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from
time to time of one or more Equipment Notes as reflected in the
Register maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and
signature of such Responsible Officer, that is delivered to the
Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such
written opinions or (ii) Latham & Watkins or other counsel designated
by the Lessee and reasonably satisfactory to the Indenture Trustee or,
in the case of legal counsel for the Owner Trustee, may be Morris,
James, Hitchens & Williams or other counsel designated by the Owner
Trustee and reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease.
"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1991 AWA-E1] dated as of March 15, 1991, as supplemented
by Trust Indenture Supplement No. 1 dated March 27, 1991, which were
recorded as one instrument by the FAA on March 28, 1991 and assigned
Conveyance No. 259534, as amended by Amendment No. 1 dated March 27,
1992, recorded by the FAA on April 30, 1992 and assigned Conveyance No.
DD002565, and as further amended by Amendment No. 2 dated as of July
29, 1993, recorded by the FAA on August 4, 1993 and assigned Conveyance
No. F59677.
"Original Loan Certificates" means the Loan Certificates
issued under and as defined in the Original Indenture.
Trust Indenture
<PAGE> 22
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"Original Sublessee" means America West Airlines, Inc.
("AWA"), a Delaware corporation, in its capacity as sublessee under the
Engine Sublease Agreement [GPA 1990 AWA-E1] dated as of December 12,
1990 between the Original Head Lessee in its capacity as sublessor
thereunder and AWA in its capacity as sublessee.
"Owner Participant" means _____________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the five Pass Through
Trusts established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through
Trust Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a national
banking association, not in its individual capacity but solely as pass
through trustee under each of the five separate Pass Through Trust
Agreements.
"Past Due Rate" means, with respect to any amount not paid
when due (whether at stated maturity, by acceleration or otherwise)
under or in respect of any Equipment Note, a rate of interest per annum
(computed on the basis of a year of 360 days comprised of twelve 30-day
months) equal to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Equipment Notes have
been paid in full.
"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with
respect to all Equipment Notes, means the aggregate stated original
principal amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on
which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement Warranties Assignment" means the
Purchase Agreement Warranties Assignment [GPA 1991 AWA-E1],
Trust Indenture
<PAGE> 23
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dated as of the Delivery Date, among the Original Head Lessee, the
Lessee and the Owner Trustee, together with the Consents and Agreements
attached thereto, as the same may be amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to
rate the Certificates issued pursuant to the Pass Through Trust
Agreements and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated
by the Refunding Agreement and the other documents entered into on and
in connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1991
AWA-E1] dated as of November 20, 1996, among the Lessee, the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through
Trustee, the Owner Participant, the Subordination Agent and the
Indenture Trustee.
"Register" has the meaning set forth in Section 2.07 hereof.
"Registrar" has the meaning set forth in Section 2.07 hereof.
"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice
president or, in the case of the Owner Trustee, an officer of the Owner
Trustee in its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date
agreed to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date
of the filing with the FAA of Trust Indenture Supplement No. 2.
"Secured Obligations" has the meaning set forth in Section
2.06 hereof.
"Securities Act" means the Securities Act of 1933, as amended.
Trust Indenture
<PAGE> 24
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"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series D."
"Series E" or "Series E Equipment Notes" means Equipment Notes
issued and designated as "Series E" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series E."
"Sublease Assignment" means a sublease assignment by the
Lessee in favor of the Owner Trustee (including the consent thereto
given by the sublessee thereunder) with respect to the assignment of a
Permitted Sublease pursuant to Section 6(a) of the Lease.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity and not as Owner
Trustee, and its successors under the Trust Agreement, in their
respective individual capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means
all estate, right, title and interest of the Owner Trustee
Trust Indenture
<PAGE> 25
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in and to the properties, rights and interests covered by the Granting
Clause of the Indenture, excluding, however, in each case, Excepted
Payments and Excepted Rights.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code (for purposes of this definition, the "United
States"), (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political
subdivision thereof or therein or (iii) any estate or trust that is
subject to United States federal income taxation regardless of the
source of its income.
"Warranty Bill of Sale" means a full warranty (as to title)
bill of sale covering the Engine (excluding all Buyer Furnished
Equipment) executed by the Original Head Lessee in favor of the Owner
Trustee dated the Delivery Date.
Trust Indenture
<PAGE> 26
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes
shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1991 AWA-E1]
DATED AS OF MARCH 15, 1991, AS AMENDED.
SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE IAE INTERNATIONAL AERO ENGINES AG
V2500-A1 ENGINE WITH MANUFACTURER'S SERIAL NUMBER V0025
No.____________ Date: [________, 1996]
$____________________
DEBT RATE MATURITY DATE
[_________] [_______,___]
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement [GPA 1991 AWA-E1], dated as of March 15,
1991, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to Fleet
National Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $_______ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semi-annual installments commencing on January 2, 1997, and
thereafter
Trust Indenture
<PAGE> 27
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on July 2 and January 2 of each year, to and including ____________, ____.
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and if
such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First
Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E1],
dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank) (the "Indenture
Trustee"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this Equipment Note and not defined herein shall
have the respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as above provided and that none of the Owner Participant, the
Owner Trustee and the
Trust Indenture
<PAGE> 28
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Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Indenture Trustee or at the office of any successor in the manner
provided in Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and
interest and other amounts due hereunder shall be payable in Dollars in
immediately available funds at the Corporate Trust Office of the Indenture
Trustee, or as otherwise provided in the Indenture. Each such payment shall be
made on the date such payment is due and without any presentment or surrender of
this Equipment Note, except that in the case of any final payment with respect
to this Equipment Note, the Equipment Note shall be surrendered promptly
thereafter to the Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note,
agrees that, except as provided in the Indenture, each payment received by it
hereunder shall be applied, first, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by law, any
overdue interest and any other overdue amounts hereunder) to the date of such
payment, second, to the payment of the portion of the Principal Amount of this
Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Indenture, and fourth, the balance,
if any, remaining thereafter, to the payment of the portion of the Principal
Amount of this Equipment Note remaining unpaid in the inverse order of its
normal maturity.
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 Trust Indenture Estate is held by
the Indenture Trustee as security, in part, for the Equipment Notes. The
provisions of this Equipment Note are subject to the Indenture. Reference is
hereby made to the Indenture and the Refunding Agreement for a complete
statement of the rights and obligations of the Holder
Trust Indenture
<PAGE> 29
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of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or
the Owner Trustee as provided in Section 2.12 of the Indenture and to
acceleration by the Indenture Trustee as provided in Section 4.04 of the
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B
Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4),
and this Equipment Note is issued subject to such provisions. The Note Holder of
this Equipment Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Indenture Trustee on his behalf
to take such action as may be necessary or appropriate to effectuate
- --------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
(4) To be inserted in the case of Series E Equipment Notes.
Trust Indenture
<PAGE> 30
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the subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.](5)
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its officer thereunto
duly authorized on the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
FLEET NATIONAL BANK,
as Indenture Trustee
By:_______________________________
Name:
Title:
- --------
(5) To be inserted in the case of a Series B, Series C, Series D or Series
E Equipment Note.
Trust Indenture
<PAGE> 31
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SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
five separate series consisting of Series A, Series B, Series C, Series D and
Series E and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass
Through Trustees (or their designee) under the Pass Through Trust Agreements set
forth in Schedule II to be attached hereto in connection therewith and (ii) the
Original Loan Certificates issued under the Original Indenture shall be
concurrently prepaid. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of each Series may be
in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity.
The Principal Amount of each Equipment Note shall be payable
on the dates and in the installments equal to the corresponding percentage of
the Principal Amount as set forth in Schedule I hereto which shall be attached
as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
Trust Indenture
<PAGE> 32
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any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
Trust Indenture
<PAGE> 33
- 28 -
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default (as defined below) under any
Equipment Note a fraction, the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E
Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net
Interest and Related Charges" means (as determined by the Subordination Agent in
consultation with the Liquidity Providers and notified to the Indenture Trustee
except that the Past Due Rate shall be determined by the Indenture Trustee and
notified to the Subordination Agent) the sum of (i) the amount, if any, by which
interest payable to any Liquidity Provider on any Interest Drawing, Final
Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an
Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the
amount which would be payable if such advances bore interest at the Designated
Interest Rate (as defined below) plus (ii) any amounts payable under Section
3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity
Facility (or similar provisions of any succeeding liquidity facility) which
result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in
this Section 2.02, "Designated Interest Rate" means the weighted average Past
Due Rate (as defined in the applicable Indentures) in respect of "Series A
Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
issued under the Indentures, except with respect to that portion of any Final
Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a
Cash Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" or "Series E Equipment Note" issued
under the Indentures which has not been cured other than solely because of
acceleration. For purposes of Section 3.04(b) hereof, this is the fourth
paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Equipment Notes
bearing the signatures of
Trust Indenture
<PAGE> 34
- 29 -
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. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Engine to the Indenture Trustee for
authentication upon original issue and such Equipment Notes shall thereupon be
authenticated and delivered by the Indenture Trustee upon the written request of
the Owner Trustee signed by a Vice President or Assistant Vice President or
other authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Equipment Notes to
be authenticated hereunder on original issue with respect to the Engine. No
Equipment Note shall be secured by or be entitled to any benefit under this
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized officers and such certificate upon any Equipment Notes shall be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a)
Without impairing any of the other rights, powers, remedies, privileges or Liens
of the Note Holders under this Indenture, each Note Holder, by its acceptance of
an Equipment Note, agrees that, except as expressly provided in this Indenture,
the Refunding Agreement or any other Operative Document, (i) the obligation to
make all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such
Trust Indenture
<PAGE> 35
- 30 -
other agreements to the contrary notwithstanding (except for any express
provisions or representations that the Trust Company is responsible for, or is
making, for which there would be personal liability of the Trust Company), no
recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means
the amount by which such payment exceeds the amount that would have been
received by a Note Holder or the Indenture Trustee if the Trust Company, the
Owner Trustee or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this
Trust Indenture
<PAGE> 36
- 31 -
Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Trust Company, the Owner Trustee or the Owner Participant under the
Refunding Agreement, this Indenture (and any exhibits or annexes hereto or
thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such
Trust Indenture
<PAGE> 37
- 32 -
funds were received after 12:00 noon, New York City time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat
the Person in whose name any Equipment Note is registered on the Register as the
absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Equipment Note (and such exclusion and withholding
shall constitute payment in respect of such Equipment Note) any and all United
States withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees to act as such withholding agent and, in connection therewith,
whenever any present or future United States taxes or similar charges are
required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts (and such withholding
shall constitute payment in respect of such Equipment Note) and timely pay the
same to the appropriate authority in the name of and on behalf of the Note
Holders, that it will file any necessary United States withholding tax returns
or statements when due, and that as promptly as possible after the payment
thereof it will deliver to each Note Holder (with a copy to the Owner Trustee
and the Lessee) appropriate receipts showing the payment thereof, together with
such additional documentary evidence as any such Note Holder, the Owner
Participant and the Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of
Trust Indenture
<PAGE> 38
- 33 -
such form prior to the date of such payment (and the Indenture Trustee has no
reason to know that any information set forth in such form is inaccurate), the
Indenture Trustee shall withhold only the amount, if any, required by law (after
taking into account any applicable exemptions claimed by the Note Holder) to be
withheld from payments hereunder or under the Equipment Notes held by such
Holder in respect of United States federal income tax (and such withholding
shall constitute payment in respect of such Equipment Note). If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form 4224 in
duplicate (or such successor certificate, form or forms as may be required by
the United States Treasury Department as necessary in order to avoid withholding
of United States federal income tax), during the calendar year in which the
payment is made (but prior to the making of such payment) or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Equipment Notes held by such Holder, no amount shall be
withheld from payments in respect of United States federal income tax. If any
Note Holder has notified the Indenture Trustee that any of the foregoing forms
or certificates is withdrawn or inaccurate, or if such Holder has not filed a
form claiming an exemption from United States withholding tax or if the Code or
the regulations thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the Equipment Notes held by such
Holder, the Indenture Trustee agrees to withhold from each payment due to the
relevant Note Holder withholding taxes at the appropriate rate under law (and
such withholding shall constitute payment in respect of such Equipment Notes)
and will, on a timely basis as more fully provided above, deposit such amounts
with an authorized depository and make such returns, statements, receipts and
other documentary evidence in connection therewith as required by applicable
law.
None of the Owner Trustee, the Owner Participant or the Lessee
shall have any liability for the failure of the Indenture Trustee to withhold
taxes in the manner provided for herein or for any false, inaccurate or untrue
evidence provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of
each Equipment Note, each payment of Principal Amount, Make-Whole
Trust Indenture
<PAGE> 39
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Amount, if any, and interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and, to the extent permitted by law,
any overdue interest and any other overdue amounts thereunder) to the
date of such payment;
Second: to the payment of the Principal Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any,
and any other amount due hereunder or under such Equipment
Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture
Estate. A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request
Trust Indenture
<PAGE> 40
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from the registered Holder thereof for the issuance of a new Equipment Note,
specifying, in the case of a surrender for transfer, the name and address of the
new Holder or Holders. Upon surrender for registration of transfer of any
Equipment Note, 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 unpaid portion
of the Principal Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate unpaid portion of the Principal
Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture
Trustee at the Corporate Trust Office. 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 Note
Holder making the exchange is entitled to receive. All Equipment Notes issued
upon any registration of transfer or exchange of Equipment Notes (whether under
this Section 2.07 or under Section 2.08 hereof or otherwise under this
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this 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 Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder
or such Holder's attorney duly authorized in writing, and the Indenture Trustee
shall require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act and the securities laws of any applicable
state. The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Principal Amount 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 on such old Equipment Note or Equipment
Notes has been paid. Interest shall be deemed to have been paid on such new
Equipment Note to the date on which interest shall have been paid on such old
Equipment Note, and all payments of the Principal Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been made thereon.
Neither the Indenture Trustee nor the Owner Trustee shall be required to
exchange any surrendered Equipment Notes as provided above during the ten-day
period preceding the Payment Date. The Indenture Trustee will promptly notify
the Owner Trustee, the Owner Participant and Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Refunding
Agreement applicable to Note Holders, and shall be deemed to have represented
and warranted to the parties to the Refunding
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Agreement as to the matters represented and warranted by the Subordination Agent
in its capacity as the initial Holder of the Equipment Notes. Subject to
compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee
shall use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
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 Holder of such
Equipment Note, execute and the Indenture Trustee shall authenticate and deliver
in replacement thereof a new Equipment Note, payable in the same Principal
Amount dated the same date and captioned as originally issued. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee and a copy thereof shall be furnished to
the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost
or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such Person, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the
Indenture Trustee shall be accepted as satisfactory indemnity and security and
no further indemnity or security shall be required as a condition to the
execution and delivery of such new Equipment Note. Subject to compliance by the
Note Holder of the requirements set forth in this Section 2.08, the Indenture
Trustee and the Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Note Holder for any registration of
transfer or exchange of Equipment Notes, but the Indenture Trustee, as
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes; provided, however, that none of the
Lessee, the Owner Trustee,
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the Indenture Trustee or the Owner Participant shall bear costs of registration,
transfer or exchange in connection with the consummation of the Refinancing
Transaction.
(b) The Indenture Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Engine, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither
any redemption of any Equipment Note nor any purchase by the Owner Trustee of
any Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Equipment Notes shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Note Holder of such Equipment Notes to be
redeemed or purchased, at such Note Holder's address appearing in the Register.
All notices of redemption or purchase shall state: (1) the redemption date, (2)
the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any Person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Equipment Notes to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New
York City time, on the redemption date in
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immediately available funds the redemption price of the Equipment Notes to be
redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid, the Equipment Notes to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee, and from and after such redemption date (unless there shall
be a default in the payment of the redemption price) any such Equipment Notes
then outstanding shall cease to bear interest. Upon surrender of any such
Equipment Note for redemption or purchase in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any Equipment Note
called for redemption or purchase shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the
Owner Trustee or the Owner Participant may, upon the events and subject to the
terms and conditions and for the price set forth in this Section 2.12, purchase
all but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each
Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to, but not including, the date of purchase and all
other amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Refunding Agreement to the Holder
thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon
an Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default (and there is no
Indenture Trustee Event), the purchase price thereof shall equal the price
provided in the
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preceding sentence plus the Make-Whole Amount, if any; provided further, that
under no circumstances shall the Make-Whole Amount be payable by the Lessee.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant giving written notice of its
election of such option to the Indenture Trustee, which notice shall specify a
date for such purchase not more than 30 days or less than 15 days after the date
of such notice. The Indenture Trustee shall not exercise any of the remedies
hereunder or, without the consent of the Owner Trustee or the Owner Participant,
under the Lease, during the period from the time that a notice of exercise by
the Owner Participant of such option to purchase becomes irrevocable until the
date on which such purchase is required to occur pursuant to the terms of the
preceding sentence. Such election to purchase the Equipment Notes shall become
irrevocable upon the fifteenth day preceding the date specified in the written
notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Note Holders will comply with all
the provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Articles II and III hereof.
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(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full, (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Note Holders of Series D until the Secured Obligations in respect of Series D
Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as rent
under any Assigned Sublease shall be promptly distributed in the following order
of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments
of Principal Amount, and interest and other amounts (as well as any
interest on overdue Principal Amount, and to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts)
then due to the Note Holders under all Series A Equipment Notes shall
be distributed to the Note Holders of Series A ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then due under all Series
A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall
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be distributed to the Note Holders of Series B ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series B Equipment Note
bears to the aggregate amount of the payments then due under all Series
B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series C Equipment Notes shall be
distributed to the Note Holders of Series C ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series C Equipment Note bears
to the aggregate amount of the payments then due under all Series C
Equipment Notes;
(iv) after giving effect to clause (iii) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series D Equipment Notes shall be
distributed to the Note Holders of Series D ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series D Equipment Note bears
to the aggregate amount of the payments then due under all Series D
Equipment Notes; and
(v) after giving effect to clause (iv) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series E Equipment Notes shall be
distributed to the Note Holders of Series E ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series E Equipment Note bears
to the aggregate amount of the payments then due under all Series E
Equipment Notes; and
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second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that
if an Indenture Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 3.07
hereof until whichever of the following shall first occur: (i) all
Indenture Defaults shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second", or
(ii) Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of said
Section 3.03, or (iii) the 180th day after receipt of such payment, in
which event such balance shall be distributed as provided in this
clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any payment
received by the Indenture Trustee with respect to the Engine as the result of an
Event of Loss thereto shall be applied to the redemption of the Equipment Notes
and to all other amounts payable hereunder by applying such funds in the
following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event
of Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other
amounts (as well as any interest on overdue Principal Amount, and to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due to the Note Holders under all Equipment
Notes, all in the order of priority specified in clause "first" of
Section 3.01 hereof, and
third, if and to the extent required to be paid to the Lessee
(or if directed by the Lessee, any Permitted Sublessee) in
reimbursement of payment of Stipulated Loss Value pursuant to Section
11(d) of the Lease, to the Lessee (or if directed by the Lessee, any
Permitted Sublessee), and otherwise as provided in clause "fourth" of
Section 3.03 hereof;
provided that, if a Replacement Engine is to be substituted for the Engine
subject to such Event of Loss as provided in Section 11 of the Lease and Section
5.06 hereof, any proceeds which result from such Event of Loss and are paid to
the Indenture
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Trustee shall be held by the Indenture Trustee as part of the Trust Indenture
Estate as security for the obligations of the Lessee under the Operative
Documents and invested in accordance with the terms of Section 3.07 hereof and,
unless theretofore applied in accordance with the provisions of the Lease and
this Indenture, such proceeds shall, to the extent payable to the Lessee under
the Lease, be released to the Lessee (or if directed by the Lessee, any
Permitted Sublessee) upon or in connection with the replacement thereof as
provided in such Sections.
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Engine) shall be applied as provided in the applicable provisions
of the Lease; provided, however, that to the extent that any portion of such
amounts held for account of the Lessee are not at the time required to be paid
to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions
of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Operative Documents and
shall be invested in accordance with the terms of Section 3.07 hereof and at
such time as the conditions specified in the Lease for payment of such amounts
to the Lessee shall be fulfilled, such portion, and the net proceeds of any
investment thereof, shall, unless theretofore applied in accordance with the
provisions of the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07
hereof, and notwithstanding Section 2.05 hereof, all payments received and
amounts held or realized by the Indenture Trustee after an Indenture Event of
Default shall have occurred and be continuing or after the Indenture Trustee has
given notice to the Owner Trustee and the Owner Participant pursuant to Section
4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease
or of the foreclosure of this Indenture, or after the Equipment Notes shall have
become due and payable as provided herein, and all payments or amounts then held
by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long
as such Indenture Event of Default shall be continuing, be promptly distributed
by the Indenture Trustee in the following order of priority, without
duplication:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for all amounts due to it
pursuant to Section 6.07 hereof, plus any tax, expense, charge or other
loss (including, without limitation, all amounts to be expended at the
expense of, or
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charged upon the tolls, rents, revenues, issues, products and profits
of, the property included in the Trust Indenture Estate pursuant to
Section 4.05(b) hereof) incurred by the Indenture Trustee (to the
extent not previously reimbursed) (including, without limitation, the
expenses of any sale, taking or other proceeding, 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 then existing or prior Note Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to the then existing or
prior Note 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 one over any other, in accordance with the
amount of the payment or payments made by each such then existing or
prior Note Holder pursuant to said Section 5.03 and applicable (in the
case of each such then existing Note Holder) to the Equipment Notes
held by such existing Note Holder at the time of distribution by the
Indenture Trustee;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid Principal Amount
of all Series A Equipment Notes, and the accrued but unpaid interest
and other amounts due thereon and all other Secured Obligations in
respect of the Series A Equipment Notes (other than Make-Whole Amount,
if any) to the date of distribution, shall be distributed to the Note
Holders of Series A, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series A Equipment Notes
held by each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount, if
any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of
such payments or amounts remaining as shall be
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required to pay in full the aggregate unpaid Principal Amount of all
Series B Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect of the
Series B Equipment Notes (other than Make-Whole Amount, if any) to the
date of distribution, shall be distributed to the Note Holders of
Series B, and in case the aggregate amount so to be distributed shall
be insufficient to pay in full as aforesaid, then ratably, without
priority of one over the other, in the proportion that the aggregate
unpaid Principal Amount of all Series B Equipment Notes held by each
Holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder (other than Make-Whole Amount, if any) to the
date of distribution, bears to the aggregate unpaid Principal Amount of
all Series B Equipment Notes held by all such Holders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution;
(iii) after giving effect to paragraph (ii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series C Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series C Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series C, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series C Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series C
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution;
(iv) after giving effect to paragraph (iii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series D Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series D Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series D, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series D Equipment Notes held by each Holder
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plus the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Principal Amount of all
Series D Equipment Notes held by all such Holders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution; and
(v) after giving effect to paragraph (iv) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series E Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series E Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series E, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series E Equipment Notes held by each holder plus the accrued
but unpaid interest and other amounts due hereunder and thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series E
Equipment Notes held by all such holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by
the Indenture Trustee for which provision as to the application thereof is made
in the Lease shall be applied forthwith to the purpose for which such payment
was made in accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or the
Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii)
any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity
Providers, and (v) the Pass Through Trustees, in each case whether pursuant to
Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as
Supplemental Rent, directly to the Person entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of
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the fourth paragraph of Section 2.02 shall be distributed to the Subordination
Agent to be distributed in accordance with the terms of the Intercreditor
Agreement, and any payment received by the Indenture Trustee under clause (c) of
the fourth paragraph of Section 2.02 shall be distributed directly to the
Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and
3.04 hereof, any payments received by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture
shall be distributed by the Indenture Trustee, unless otherwise agreed in
writing, subject to Section 6.07 hereof (i) to the extent received or realized
at any time prior to the payment in full of all obligations to the Note Holders
secured by the Lien of this Indenture, in the order of priority specified in
Section 3.01 hereof, and (ii) to the extent received or realized at any time
after payment in full of all obligations to the Note Holders secured by the Lien
of this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause
"first" of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated to
indemnify against thereunder, in the manner provided in clause "first"
of Section 3.03 hereof, and
second, in the manner provided in clause "fourth" of
Section 3.03 hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts
distributed hereunder by the Indenture Trustee to the Owner Trustee shall be
paid to the Owner Trustee by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture 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
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pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire
transfer of funds of the type received by the Indenture Trustee to the Owner
Participant's account as may be specified pursuant to the Refunding Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's
rights to hold moneys for security pursuant to Section 21(h) of the Lease shall
be held in accordance with the terms of such Section; and the Indenture Trustee
hereby agrees to perform the duties of the Owner Trustee under such Section.
Except as provided in the preceding sentence, any amounts held by the Indenture
Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof,
pursuant to Section 3.02 hereof, pursuant to the second sentence of Section
3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant
to a Sublease Assignment, or pursuant to any provision of any other Operative
Document providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Owner Trustee or, in the event the
Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee.
(a) The Trust Company hereby covenants and agrees that it will not directly or
indirectly create, incur, assume or
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suffer to exist any Lessor's Lien attributable to it in its individual capacity
with respect to any of the properties or assets of the Trust Indenture Estate
and shall, at its own cost and expense promptly take such action as may be
necessary duly to discharge any such Lessor's Lien, and the Trust Company will
cause restitution to be made to the Trust Indenture Estate in the amount of any
diminution of the value thereof as the result of any Lessor's Liens attributable
to it.
(b) The Owner Trustee hereby covenants and agrees as
follows:
(i) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Equipment Notes and hereunder in accordance
with the terms of the Equipment Notes and this Indenture and all
amounts payable by it to the Note Holders under the Refunding Agreement
and the other Operative Documents;
(ii) the Owner Trustee will not directly or indirectly
create, incur, assume or suffer to exist any Lessor's Liens
attributable to it with respect to any of the properties or assets of
the Trust Indenture Estate, and shall, at its own cost and expense,
promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Owner Trustee will cause restitution to be
made to the Trust Indenture Estate in the amount of any diminution of
the value thereof as the result of any Lessor's Liens attributable to
it;
(iii) in the event an officer with responsibility for or
familiarity with the transactions contemplated hereunder or under the
other Operative Documents (or any Vice President) in the Corporate
Trust Administration Department of the Owner Trustee shall have actual
knowledge of an Indenture Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Indenture Default or
Event of Loss to the Indenture Trustee, the Lessee and the Owner
Participant;
(iv) 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 12(f) of the Lease, to the extent that the same
shall not have been furnished, or is not required to be furnished by
the Lessee, to the Indenture Trustee pursuant to the Lease or
otherwise;
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(v) except as contemplated by the Operative Documents or with
the consent of the Indenture Trustee acting in accordance with Article
IX hereof, the Owner Trustee will not incur any indebtedness for
borrowed money; and
(vi) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Engine, the
leasing thereof to the Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Refunding Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing
(other than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, or interest on, any Equipment Note
(other than as a result of a Lease Default) and such failure shall have
continued unremedied for ten calendar days; or the failure of the Owner
Trustee to pay when due any other amount due and payable under any
Equipment Note or hereunder (other than as a result of a Lease Default)
and such failure shall have continued unremedied for 15 calendar days
after notice thereof being given to the Owner Trustee from the
Indenture Trustee or any Note Holder; or
(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 4.01(a) hereof or Section 13 of the
Refunding Agreement or by the Owner Trustee as the Owner Trustee
pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding
Agreement or any Lessor's Lien required to be discharged by the Owner
Participant pursuant to Section 13 of the Refunding Agreement shall
remain undischarged for a period of 30 calendar days after, as the case
may be, an officer with responsibility for or familiarity with the
transactions contemplated hereunder or under the other Operative
Documents (or any Vice President) in the Corporate Trust Administration
Department of the Trust Company or an officer of the Owner Participant
with responsibility for or familiarity with the transactions
contemplated hereunder and under the other Operative Docu-
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ments (or any Vice President) shall have actual knowledge of such Lien;
provided, that no Indenture Event of Default shall arise under this
Section 4.02(c) as a result of a failure by the Owner Trustee or the
Owner Participant to observe or perform any covenant referred to in
this Section 4.02(c) if the Lessee shall have discharged all Lessor's
Liens required to be discharged by the Owner Trustee or the Owner
Participant pursuant to such covenants and compensated the Indenture
Trustee and the Trust Indenture Estate for all claims, losses and
expenses arising from the failure of the Owner Trustee or the Owner
Participant, as the case may be, to observe and perform any such
covenant; or
(d) any representation or warranty made by the Owner
Participant, the Owner Trustee or the Trust Company herein or in the
Refunding Agreement or by any Person (if any) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Documents or in any related guarantee or support agreement shall prove
to have been false or incorrect when made in any respect materially
adverse to the rights and interests of the Note Holders; and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, such
misrepresentation shall not have been corrected as of a day within 30
calendar days following notice thereof being given to the Owner
Participant, the Owner Trustee, the Trust Company or such Person (if
any), as the case may be, by the Indenture Trustee or a Majority in
Interest of Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any
of its covenants or agreements in the fourth paragraph following the
Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01
hereof, or any failure by the Owner Participant or the Trust Company to
observe or perform any of its respective covenants in Section 9(b)(11),
10 or 14 of the Refunding Agreement; or
(f) except as provided in the following paragraph (j), any
failure by the Owner Trustee or the Trust Company to observe or perform
any other covenant or obligation of the Owner Trustee contained in this
Indenture or in the Refunding Agreement or any failure by the Owner
Participant to observe or perform any other covenant or obligation of
the Owner Participant contained in the Refunding Agreement or any
failure of any Person (if any) that may guarantee or support the
obligations of an Owner Participant not originally party to the
Refunding Agreement under the Operative Documents to observe or perform
any covenant or obligation of such Person contained in any such
guarantee or support agreement, which failure, in any case and either
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individually or together with other then existing failures, shall have
a material adverse effect on the rights and interests of the Indenture
Trustee or any Note Holder and is not remedied within a period of 45
calendar days following notice being given to the Owner Trustee, the
Owner Participant or such Person, as the case may be, by the Indenture
Trustee or a Majority in Interest of Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant
or any Person (if any) that may guarantee or support the obligations of
an Owner Participant not originally party to the Refunding Agreement
under the Operative Documents shall (i) be unable to pay its debts
generally as they become due within the meaning of the Bankruptcy Code,
(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 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 with respect thereto (and not in its
individual capacity) or the Owner Participant or any Person (if any)
that may guarantee or support the obligations of an Owner Participant
not originally party to the Refunding Agreement under the Operative
Documents, as the case may be, a custodian, receiver, trustee or other
officer with similar powers with respect to it 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 with respect thereto (and not in its individual capacity) or
the Owner Participant or such Person, as the case may be; or
(i) any petition for any relief specified in the foregoing
paragraph (h) shall be filed against the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or any Person (if any) that may guarantee or
support the
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obligations of an Owner Participant not originally party to the
Refunding Agreement under the Operative Documents, as the case may be,
and such petition shall not be dismissed within 60 days; or
(j) at any time when the Engine shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid
and duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by
the Lessee in the payment of any installment of Basic Rent due under the Lease,
the Owner Participant may, within ten calendar days (or such longer period
ending on the second day after the expiry of the applicable grace period
specified in the Lease with respect to such default) after notice from the
Indenture Trustee or the Lessee of such default, without the consent or
concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for
application in accordance with Section 3.01 hereof, a sum equal to the amount of
all (but not less than all) of the Principal Amount and interest as shall then
(without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof)
be due and payable on the Equipment Notes. 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 Trustee
shall have been furnished by the Owner Participant with all funds necessary for
remedying such default, the Owner Participant may, within fifteen calendar days
(or such longer period ending on the second day after the expiry of any
applicable grace period specified in the Lease with respect to such default)
after notice from the Indenture Trustee or the Lessee of such default, without
the consent or concurrence of any Note Holder, instruct the Owner Trustee to
exercise the Owner Trustee's rights under Section 21(d) 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 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 due and payable under
the Equipment Notes or hereunder, 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 default by the
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Lessee under the Lease to the same extent that like performance by the Lessee
itself would have remedied such default (but any such payment or performance
shall not 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, such Lease Event of Default shall have been remedied, then any
declaration pursuant to the Lease that the Lease is in default, and any
declaration pursuant to this Indenture that the Equipment Notes are due and
payable or that an Indenture Event of Default exists hereunder, based upon such
Lease Event of Default, shall be deemed to be rescinded, and the Owner
Participant or the Owner Trustee, as the case may be, shall (to the extent of
any such payments made by it) be subrogated to the rights of the Note Holders
hereunder to receive such payment of Rent from the Indenture Trustee (and the
payment of interest on account of such Rent being overdue), and shall be
entitled, so long as no other Indenture Default or Indenture Event of Default
shall have occurred and be continuing, to receive, subject to the terms 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 by commencing an action at
law against the Lessee and obtaining and enforcing a judgment against the Lessee
for the payment of such amount or taking appropriate action in a pending action
at law against the Lessee or by demanding Excepted Payments or Excepted Rights;
provided, however, that at no time while an Indenture 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 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 hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease (after giving effect to any applicable grace
period) as to (i) each of the three Basic Rent Payment Dates
immediately preceding the date of such default or (ii) in the aggregate
more than six Basic Rent Payment Dates,
(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 Lease Event of Default for the purposes of this Indenture,
if during the 12-month period immediately preceding the
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relevant default by the Lessee there shall have been expended by the
Owner Participant pursuant to the second sentence of this Section 4.03
(and shall have not been reimbursed by the Lessee or any Permitted
Sublessee themselves to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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, and if the Equipment Notes shall have been accelerated
pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the
Indenture Trustee may (subject to the rights of the Owner Participant or the
Owner Trustee to cure any such Indenture Event of Default set forth in Section
4.03 hereof and the obligations of the Indenture Trustee set forth in this
Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the
direction of a Majority in Interest of Note Holders, exercise any and all of the
remedies pursuant to Section 18 of the Lease and pursuant to any Sublease
Assignment 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 but, in the case of the Engine, only as permitted by Section 18
of the Lease, and may exclude the Owner Participant, the Owner Trustee and the
Lessee and all Persons claiming under any of them or wholly or partly therefrom;
provided, however, that the Indenture Trustee shall give the Owner Trustee and
the Owner Participant ten days' prior written notice of the initial exercise of
such remedies by the Indenture Trustee under the Lease (if not stayed or
otherwise precluded by applicable law from giving such notice); provided,
further, that the Indenture Trustee shall give the Owner Trustee and the Owner
Participant twenty days' prior written notice of its intention to sell the
Engine. Without limiting any of the foregoing, it is understood and agreed that
the Indenture Trustee may exercise any right of sale of the Engine available to
it, even though it shall not have taken possession of the Engine and shall not
have possession thereof at the time of such sale.
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Anything in this Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Engine; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Engine is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails to participate in such proceedings, the Owner Trustee shall have
the right (without affecting in any way any right or remedy of the Indenture
Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the avoidance
of doubt, it is expressly understood and agreed, subject only to the immediately
preceding paragraph, that the above-described inability of the Indenture Trustee
to exercise any right or remedy under the Lease shall in no event and under
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no circumstance prevent the Indenture Trustee from otherwise exercising all of
its rights, powers and remedies under this Indenture, including without
limitation this Article IV.
(b) If an Indenture Event of Default referred to in clause
(g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment Notes
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the Equipment Notes
which by such declaration shall have become payable) shall have been duly paid
and every other Indenture Default and Indenture Event of Default with respect to
any covenant or provision of this Indenture shall have been cured, then and in
every such case a Majority in Interest of Note Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall
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have cured, in accordance with Section 4.03, the Indenture Event of Default that
resulted in such acceleration.
No Make-Whole Amount shall become payable on the Equipment
Notes as a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Indenture. The Owner Trustee or
Owner Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Engine, etc. (a) Subject to the
rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof
and unless the Owner Participant shall have theretofore purchased the Equipment
Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Equipment Notes shall have been
accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, at the request of the
Indenture Trustee the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such instruments of title and other documents as the Indenture
Trustee may deem necessary or advisable to enable the Indenture Trustee or an
agent or representative designated by the Indenture Trustee, at such time or
times and place or places as the Indenture Trustee may specify, to obtain
possession of all or any part of the Trust Indenture Estate; provided that the
Indenture Trustee shall at the time be entitled to obtain such possession under
Section 4.04(a) and the other applicable provisions of this Indenture. If the
Owner Trustee shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture Trustee
may (i) obtain a judgment conferring on the Indenture Trustee the right to
immediate possession and requiring the Owner Trustee to execute and deliver such
instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents to the fullest extent it
may lawfully do so, and (ii) to the extent permitted by law, pursue
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all or part of the Trust Indenture Estate wherever it may be found (but not in
violation of Section 10.05 hereof or of the Lease) and may enter any of the
premises of the Lessee wherever such Trust Indenture Estate may be or be
supposed to be and search for and take possession of and remove the same (but
not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that the
provisions hereof shall not be construed so as to expand the obligations of the
Lessee under the Lease, including Section 16 thereof). In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, lease,
control or manage the Trust Indenture Estate and to carry on the business
(without limiting the express provisions of Section 5.10 hereof) and to exercise
all rights and powers of the Owner Participant and the Owner Trustee relating to
the Trust Indenture Estate, as the Indenture Trustee 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 Trust Indenture Estate or any part thereof as the Indenture
Trustee may determine; and the Indenture Trustee shall be entitled to collect
and receive directly all tolls, rents (including Rent), revenues, issues,
income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder, except Excepted Payments. The Indenture Trustee shall,
pursuant to the exercise of its remedies under this Article IV, to the extent
permitted by applicable law, be entitled to the appointment of a receiver for
all or any part of the Trust Indenture Estate, whether such receivership be
incidental to a proposed sale of the Trust Indenture Estate or otherwise, and
the Owner Trustee hereby consents to the appointment of such receiver and will
not oppose any such appointment. Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, leasing, control, management or disposition of the
Trust Indenture Estate and of 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
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may elect to make, if any, for taxes, assessments, insurance or other proper
charges upon the Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder 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 or
such Note Holder, then and in every such case the Owner Trustee, the Indenture
Trustee, the Note Holders and the Lessee shall, subject to any determination in
such proceedings, be restored to their former positions and rights hereunder
with respect to the Trust Indenture Estate, and all rights, remedies and powers
of the Indenture Trustee and the Note Holders shall continue as if no such
proceedings had been instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right
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consequent thereon; provided, however, that in the absence of written
instructions from the Holders of all Equipment Notes then outstanding, the
Indenture Trustee shall not waive any Indenture Default (i) in the payment of
the Principal Amount of or interest on any Equipment Note then outstanding, or
(ii) in respect of a covenant or provision hereof which, under Article IX
hereof, cannot be modified or amended without the consent of each Note Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the
event the Indenture Trustee shall have knowledge of an Indenture Event of
Default, or shall have knowledge of an Indenture Default arising either from a
failure to pay Rent or a Lease Default of the type referred to in the second
sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof
to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex,
telegraph or telephone (confirmed by written notice in the manner provided by
Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to
the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof
and of this Section 5.01, the Indenture Trustee shall take such action, or
refrain from taking such action, with respect to any Indenture Event of Default
or Indenture Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Note Holders. Subject to the provisions of Section 5.03
hereof, if the Indenture Trustee shall not have received instructions as above
provided within 20 calendar days after mailing notice of such Indenture Default
or Indenture Event of Default to the Note Holders, the Indenture Trustee may,
subject to instructions thereafter received pursuant to the preceding provisions
of this Section 5.01, take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action, with respect
to such Indenture Default or Indenture Event of Default as it shall determine to
be advisable and in the best interests of the Note Holders 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 its own affairs; provided that the
Indenture Trustee may not sell the Engine or any part thereof without the
consent of a Majority in Interest of Note Holders. In the event the Indenture
Trustee shall at any time elect to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the
case of any such party) not stayed or otherwise prohibited by applicable law,
the Owner Participant, the Note Holders, the Owner Trustee and
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the Lessee. For all purposes of this Indenture, in the absence of actual
knowledge on the part of an officer in the Corporate Trust Office, in the case
of the Indenture Trustee, or its Corporate Trust Administration Department, 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 an Indenture Event of
Default (except, in the case of the Indenture Trustee, the failure of the Lessee
to pay any installment of Rent when due, if any portion of such installment was
then required to be paid to the Indenture Trustee, which failure shall
constitute knowledge of an Indenture Default for purposes of the first sentence
of this Section 5.01) unless notified in writing by the Lessee, the Owner
Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the
Indenture Trustee.
SECTION 5.02. Action Upon Instructions. Subject to the terms
of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, 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 to
take such other action hereunder or under any other Indenture Document or in
respect of any part or all of the Trust Indenture Estate as shall be specified
in such instructions; (ii) take such action with respect to, or to preserve or
protect, the Trust Indenture Estate (including the discharge of Liens) as shall
be specified in such instructions and as are 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 of 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 interest created hereunder in the Trust Indenture Estate as may
be specified from time to time in written instructions of a Majority in Interest
of Note Holders (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may, but shall not be obligated to, execute and
file or cause to be filed any financing statement which it from time to time
deems appropriate or any continuation statement that the Lessee, in discharge of
its obligations under Section 3(v) of the Refunding Agreement or any other
Operative Document, may so request. Notwithstanding the foregoing or anything in
this Indenture to the contrary, the Indenture Trustee may, on the advice of its
counsel and without the consent or approval of any Note Holder, approve any
counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding
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Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve
any opinion issued by such counsel. None of the Owner Participant, the Owner
Trustee or the Lessee have any liability for the failure of the Indenture
Trustee to discharge its obligations hereunder.
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 hereof unless
the Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the first sentence
thereof) or 5.02 or Article IV hereof, nor shall any other provision of this
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 of the other Indenture Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Engine or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and
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obtain such instructions promptly so as not unreasonably to delay the proposed
action of Lessee in respect of which the instructions are sought. The Indenture
Trustee agrees that it will in its individual capacity and at its own cost and
expense (but without any right of indemnity in respect of any such cost or
expense under Article VII hereof or any other Operative Document) promptly take
such action as may be necessary to duly discharge all Lenders' Liens on any part
of the Trust Indenture Estate attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding
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, or place Liens on, the Engine or any
other part of the Trust Indenture Estate except (i) as required or permitted by
the terms of the Lease or the Refunding Agreement, or (ii) in accordance with
the powers granted to, or the authority conferred upon, the Owner Trustee and
the Indenture Trustee pursuant to this Indenture and in accordance with the
terms hereof.
SECTION 5.06. Replacement Engine. (a) If at any time and from
time to time, the Engine may, or may be required to, be replaced under Section
6(a) or 11(a) of the Lease by a Replacement Engine, as the case may be, in
accordance with the provisions of this Section 5.06 and the provisions of said
Sections of the Lease, the Owner Trustee shall, at such time or times, but
subject to compliance with the conditions to such replacement set forth in the
Lease, direct the Indenture Trustee to execute and deliver to or as directed in
writing by the Owner Trustee an appropriate instrument releasing the 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:
(1) A written request from the Owner Trustee, requesting such release
and specifically describing the Engine so to be released and the Replacement
Engine.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. [Intentionally reserved]
B. With respect to the replacement of the Engine:
(i) a description of the Engine which shall be identified
by manufacturer's name and serial number;
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(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) to be received as consideration
for the Engine;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Engine the Owner Trustee will hold title to the
Replacement Engine free and clear of all Liens except Permitted Liens,
that such Replacement Engine will on such date be in good operating
condition, and that the Replacement Engine is the same or an improved
model as the Engine;
(iv) the value, remaining useful life and utility of the
Replacement Engine as of the date of such certificate (which value,
remaining useful life and utility shall not be less than the then
value, remaining useful life and utility of the Engine, assuming the
Engine was in the condition and repair required to be maintained under
the Lease (but without regard to hours and cycles until overhaul));
(v) that no Lease 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 the Replacement
Engine; and
(vi) that each of the conditions specified in Section 11(b)
of the Lease with respect to the Replacement Engine have been
satisfied.
(3) The appropriate instrument or instruments (i) transferring to
the Owner Trustee title to the Replacement Engine to be received as
consideration for the Engine, (ii) assigning to the Owner Trustee the benefit of
all manufacturer's and vendor's warranties generally available with respect to
such Replacement Engine (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Engine to the Lien of this Indenture and subjecting to any
relevant Assigned Sublease and Sublease Assignment, including, without
limitation, an Indenture Supplement.
(4) [Intentionally reserved]
(5) The opinion of counsel to the Lessee, satisfactory to the
Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that 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
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of may be properly released from the Lien of this Indenture and all
conditions precedent herein provided for relating to such release have
been complied with;
(ii) the Replacement Engine has been validly subjected to the
Lien of this Indenture and covered by the Lease, the instruments
subjecting the Replacement Engine to the Lien of this Indenture and the
Lease, and subjecting to any relevant Assigned Sublease and Sublease
Assignment, as the case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act or any other law then applicable
to the perfection and the effect of perfection or non-perfection of a
security interest in the Engine or the Lien of this Indenture, and no
further action, filing or recording of any document is necessary in
order to establish and perfect, in the United States and, if the
establishment of title and perfection and the effect of perfection or
non-perfection of a security interest in such Replacement Engine or the
Lien of this Indenture are governed by the laws of a jurisdiction other
than the United States, in such jurisdiction, the legal title to such
Replacement Engine and the Lien of this Indenture on such Replacement
Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as 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 to the
Replacement Engine to the same extent as with respect to the Engine
prior to such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Engine as contemplated by Section 11
of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit
of the Note Holders and the Lessee, subject to fulfillment of the conditions
precedent and compliance by the Lessee with its obligations set
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forth in Section 11 of the Lease, to execute and deliver the appropriate
instruments as contemplated by Section 5.06 hereof, and execute and deliver to
the Lessee (or any relevant Permitted Sublessee) an appropriate instrument
releasing the Engine being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Engine as contemplated by Section 11 of the Lease
and Section 5.06 hereof, all provisions of this Indenture relating to the Engine
being replaced shall be applicable to such Replacement Engine with the same
force and effect as if such Replacement Engine was the same engine as the Engine
being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Note Holder shall affect the sufficiency of
such notice with respect to other Note Holders. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Note Holders
shall be filed with the Indenture Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this Indenture, including
the Granting Clause, but subject always to the final paragraph of this Section
5.10, the following rights shall be reserved to the Owner Trustee or Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
(a) the Owner Trustee or the Owner Participant may, without
the consent of the Indenture Trustee, demand, collect, sue for or
otherwise obtain all amounts included in
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Excepted Payments from the Lessee, exercise any election or option or
make any decision or determination or give or receive any notice,
consent, waiver or approval in respect of any Excepted Payment and seek
legal or equitable remedies to require the Lessee to maintain the
insurance coverage referred to in Section 12 of the Lease (or the
comparable provisions of any Assigned Sublease) and such specific
performance of the covenants of the Lessee under the Lease (or the
comparable provisions of any Assigned Sublease) relating to the
protection, maintenance, possession and use of the Engine; provided,
that the rights referred to in this clause (a) shall not be deemed to
include the exercise of any remedies provided for in Section 18 of the
Lease (or the comparable provisions of any Assigned Sublease) other
than the right to proceed by appropriate court action, either at law or
in equity, to enforce payment by the Lessee of such amounts included in
Excepted Payments or performance by the Lessee of such insurance
covenant or to recover damages for the breach thereof or for specific
performance of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent
of the Owner Trustee, enter into, execute and deliver amendments or
modifications in respect of any of the provisions of the Lease, any
Assigned Sublease or any Sublease Assignment and (ii) unless an
Indenture Event of Default and an Indenture Trustee Event shall have
occurred and be continuing, the Indenture Trustee shall not, without
the consent of the Owner Trustee, which consent shall not be withheld
if no right or interest of the Owner Trustee or the Owner Participant
shall be materially diminished or impaired thereby, (A) enter into,
execute and deliver waivers or consents in respect of any of the
provisions of the Lease, any Assigned Sublease or any Sublease
Assignment, or (B) approve any accountants, engineers, appraisers or
counsel as satisfactory to render services for or issue opinions to the
Owner Trustee pursuant to the Operative Documents; provided that,
whether or not an Indenture Event of Default has occurred and is
continuing, the Owner Trustee's consent shall be required with respect
to any waivers or consents in respect of any of the provisions of
Section 6, 12 or 16 of the Lease, or of any other Section of the Lease
to the extent such action shall affect (y) the amount or timing of, or
the right to enforce payment of any Excepted Payment or (z) the amount
or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of
the Owner Trustee) which, absent the occurrence and continuance of an
Indenture Event of Default hereunder, would be distributable to the
Owner Trustee under Article III hereof;
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(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses
(a), (b) and (c) above, so long as no Indenture Event of Default has
occurred and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner Trustee and the Owner Participant under the Lease shall be
exercised by the Owner Trustee and/or the Owner Participant, as the
case may be, to the exclusion of the Indenture Trustee and any Note
Holder and without the consent of the Indenture Trustee or any Note
Holder; provided that the foregoing shall not, nor shall any other
provision of this Section 5.10, limit (A) any rights separately and
expressly granted to the Indenture Trustee or any Note Holder under the
Lease or the other Operative Documents (including, without limitation,
Section 15 of the Refunding Agreement) or (B) the right of the
Indenture Trustee or any Note Holder to receive any funds to be
delivered to the Owner Trustee under the Lease (except with respect to
Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be
in default under Section 18 thereof and (C) subject only to the provisions of
Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such
Section 18 (other than in connection with Excepted Payments) and in Article IV
hereof.
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SECTION 5.11. Evidence of Action Taken by Note Holder. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Note Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Note Holders in person or by agent duly appointed in
writing, and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof
of execution of any instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Sections 5.04,
5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner
Trustee if made in the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far as
concerns such Equipment Note. Except as aforesaid any such action taken by the
Note Holder shall be conclusive and binding upon such Note Holder and upon all
future Note Holders and owners of such Equipment Note and of any Equipment Notes
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Equipment Note. Any action
taken by the Note Holders of the percentage in aggregate Principal Amount of the
Equipment Notes specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee in its individual capacity shall be
answerable or accountable under any circumstances, except for its own willful
misconduct or
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gross negligence (other than for the handling of funds, for which the standard
of accountability shall be negligence), or as provided in the fourth sentence of
Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and
except for liabilities that may result, in the case of the Trust Company, from
the inaccuracy of any representation or warranty of the Trust Company in the
Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the
failure to perform any covenant of the Trust Company pursuant to Section 4.01(a)
hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of
the Indenture Trustee, from the inaccuracy of any representation or warranty, or
failure to perform any covenant, of the Indenture Trustee made in its individual
capacity herein, in the Refunding Agreement or in any other document. None of
the Owner Participant, the Trust Company or the Indenture Trustee shall be
liable for any action or inaction of any other one of such parties, except, in
the case of the Owner Participant, for any action or omission of the Owner
Trustee performed or omitted on the instructions of the Owner Participant. The
Owner Trustee shall not be deemed a trustee for the Note Holders for any
purpose.
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, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case
of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof
and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner
Trustee and the Indenture Trustee shall have no duty (i) to see to any recording
or filing of the Lease or of this Indenture or any other document, or to see to
the maintenance of any such recording or filing, (ii) to see to any insurance on
the Engine, 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 Trust Indenture Estate, (iv) to confirm, verify
or inquire into the failure to receive any financial statements of the Lessee or
(v) to inspect the Engine at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease or
any of the Permitted Sublessee's covenants under any Assigned Sublease with
respect to the Engine.
SECTION 6.03. No Representations or Warranties as to Engine or
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE)
NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE
MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH
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SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE ENGINE 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 ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE ENGINE, except that the Trust
Company warrants that (i) on the Delivery Date for the Engine the Owner Trustee
shall have received whatever interest in the Engine was conveyed to it under the
Warranty Bill of Sale subject to the rights of the parties to the Indenture
Documents and (ii) the Engine shall be free and clear of Lessor's Liens
attributable to the Trust Company. Neither the Trust Company nor the Indenture
Trustee makes or shall be deemed to have made any representation or warranty as
to the validity, legality or enforceability of this Indenture, the Trust
Agreement, the Equipment Notes or any Indenture Documents 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 in
its individual capacity or as Indenture Trustee made under this Indenture or in
the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any
moneys paid to or retained by the Indenture Trustee pursuant to any provision
hereof and not then required to be distributed to any Note Holder, the Lessee or
the Owner Trustee as provided in Article III hereof need not be segregated in
any manner except to the extent required by law, 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 hereof) 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 any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of
the Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of Equipment Notes outstanding as of any date, the Owner
Trustee may for all purposes hereof
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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, but in the case of any such
certificate, the Owner Trustee and the Indenture Trustee shall be under a duty
to examine the same to determine whether or not it conforms to the requirements
of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third
sentence of Section 2.04(a)) through agents or attorneys and shall not be
responsible for any misconduct or negligence on the part of any such agent or
attorney appointed with due care hereunder. The Indenture Trustee may, at the
expense of the Trust Indenture Estate, consult with counsel, accountants and
other skilled Persons to be selected and retained by it, and the Owner Trustee
and the Indenture Trustee shall not be liable for anything done, suffered or
omitted in good faith by them in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no
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right against any Note Holder or the Owner Participant for any fee as
compensation for its services as trustee under this Indenture.
SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee (in its individual
capacity and as trustee) from and after the Restatement Date (whether or not
also agreed to be indemnified against by any other Person under any other
document) in any way relating
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to or arising out of this Indenture, the Trust Agreement, the Equipment Notes,
the other Indenture Documents or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease,
possession, use, operation, condition, sale, return or other disposition of the
Engine (including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust
Indenture Estate or the action or inaction of the Indenture Trustee hereunder,
except only (i) in the case of willful misconduct or gross negligence (or
negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the
Indenture Trustee, in its individual capacity and as Indenture Trustee, and its
successors, permitted assigns, agents and servants thereunder; provided that so
long as the Lease is in effect, the Indenture Trustee shall not make any claim
under this Section 7.01 for any amount indemnified against by the Lessee under
the Lease without first (but only to the extent not stayed or otherwise
prevented by operation of law) making demand on the Lessee for payment of such
amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee
promptly of any claim for which it may seek indemnity. The Lessee shall be
entitled to defend any claim by the Indenture Trustee to the extent provided in
Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to
indemnification from the Trust Indenture Estate for any liability, obligation,
loss, damage, penalty, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7.01 to the extent not reimbursed
by the Lessee or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same the Indenture Trustee shall
have a prior Lien on the Trust Indenture Estate. The indemnities contained in
this Section 7.01 shall survive the termination of this Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
agent or affiliate of the Trust Company or the Owner Participant (the
"Exculpated Equity Persons") shall have any obligation, duty or liability of any
kind whatsoever to the Indenture Trustee or
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any such Note Holder in connection with the exercise by any Exculpated Equity
Person of any rights of the Owner Trustee or the taking of any action or the
failure to take any action by any Exculpated Equity Person in connection with
any rights of the Owner Trustee under this Indenture or the Lease, and each such
Note Holder hereby waives and releases, to the extent permitted by applicable
law, each Exculpated Equity Person of any and all such obligations, duties or
liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case
of any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Trust Company pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to the Indenture Trustee and to each Note Holder.
SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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.
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(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee and to the predecessor Indenture
Trustee an instrument accepting and assuming such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Indenture Trustee, without further act, shall become vested with and
bound by all the estates, properties, rights, powers, duties and obligations of
the predecessor Indenture Trustee hereunder and under the other Indenture
Documents in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; but nevertheless upon the written
request of such successor Indenture Trustee, such predecessor Indenture Trustee
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor Indenture Trustee all moneys or other property then held by
such predecessor Indenture Trustee hereunder, subject nevertheless to its claim
provided for in Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall
be a bank or trust company having a combined capital and surplus of at least
$200,000,000 if there be such an institution willing, able and legally qualified
to perform the duties of the Indenture Trustee hereunder upon reasonable or
customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the foregoing,
upon the request of the Owner Trustee or the Lessee, any such successor
corporation referred to in this Section 8.02(d) shall deliver to the Owner
Trustee and the Lessee an instrument confirming its status as the Indenture
Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate may at the time be
located or in which any action of the Indenture Trustee may be required to be
performed or taken, the Indenture Trustee, by an instrument in writing signed by
it, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee,
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acting jointly with the Indenture Trustee, of all or any part of the Trust
Indenture Estate to the full extent that local law makes it necessary for such
separate trustee or separate trustees or co-trustee acting jointly with the
Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust 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
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, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act, and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Indenture
Trustee;
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(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed and exercised or performed by the Indenture Trustee and such
additional trustee or trustees and separate trustee or trustees jointly
except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional
trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent
of, the Indenture Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section
8.03, the powers of any additional trustee or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
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ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures.
(a) Except as otherwise provided in Section 5.10 hereof, and except with respect
to Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or supplement to the Lease, or execute and deliver any written
waiver or modification of, or consent under, the terms of the Lease, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee acting on instructions of a Majority in
Interest of Note Holders. Anything to the contrary contained in this Section
9.01 notwithstanding, without the necessity of the consent of any of the Note
Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i)
any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and
Lessee may, so long as no Indenture Event of Default has occurred and is
continuing, enter into amendments of or additions to the Lease to modify
Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such
amendment would adversely affect the rights or exercise of remedies under
Section 18 of the Lease) so long as such amendments, modifications and changes
do not and would not (A) affect the time of, or reduce the amount of, Basic Rent
or Stipulated Loss Value payments until after the payment in full of all Secured
Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the
value, utility or useful life of the Engine or (D) otherwise adversely affect
the Note Holders in any material respect, and (iii) the Indenture Trustee may
approve any Permitted Sublessee as provided in clause (c) of the definition of
such term set forth in the Lease and may exercise the rights of the Indenture
Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt,
nothing in this Section 9.01 shall limit in any way the rights of the Owner
Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain
rights and powers under the Lease to the exclusion of the Indenture Trustee and
any Note Holder and without the consent of the Indenture Trustee or any Note
Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects the Indenture
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Trustee's own rights, duties or immunities under this Indenture or otherwise,
whether in its official or individual capacity.
Any supplemental indenture authorized by the provisions of
this Section 9.01 may be executed without the consent of the Note Holders
notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, or does not adversely affect the Note Holders in any
material respect. Upon the written request of a Majority in Interest of Note
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the Lease which would permit redemption of
Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any
of the provisions of Section 4(b) of the Lease, or modify, amend or supplement
the Lease, any Assigned Sublease or any Sublease
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Assignment, or consent to any assignment of any thereof, in either case
releasing the Lessee (or Permitted Sublessee) from its obligations in respect of
the payment of Basic Rent or Stipulated Loss Value for the Engine or altering
the absolute and unconditional character of the obligations of Lessee to pay
Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable
provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on
the Trust Indenture Estate or any part thereof other than Permitted Liens or
deprive any Note Holder of the benefit of the Lien of this Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely as
Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Engine or any Replacement Engine; (v)
to add to the covenants of the Owner Trustee for the benefit of the Note
Holders, or to surrender any rights or powers herein conferred upon the Owner
Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the
Note Holders; and (vii) to include on the Equipment Notes any legend as may be
required by law.
(d) Without the consent of the Lessee no amendment or
supplement to this Indenture or waiver or modification of the terms hereof shall
adversely affect the Lessee in any material respect or impose upon the Lessee
any additional indemnification obligations.
Trust Indenture
<PAGE> 88
- 83 -
SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Indenture Trustee, the Owner Trustee
and the Note Holders shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for all and any
purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such copy
to each Note Holder), but the
Trust Indenture
<PAGE> 89
- 84 -
failure of the Owner Trustee or the Indenture Trustee to mail such conformed
copies shall not impair or affect the validity of such document. The Indenture
Trustee will furnish to each Note Holder, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates
and other instruments furnished to the Indenture Trustee under the Lease or
hereunder to the extent that the same were not required to have been furnished
to such Note Holder pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX, no
written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX 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 Engine or other property thereto or to release
the Engine or other property therefrom or to execute and deliver an Indenture
Supplement, in each case pursuant to the terms hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge
of such Lien and the termination of such security interest in the Engine and
release of 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
Trustee to give effect to such discharge, termination and release; provided,
however, that this Indenture
Trust Indenture
<PAGE> 90
- 85 -
and the trusts created hereby shall earlier terminate and this Indenture shall
be of no further force or effect as expressly provided pursuant to Article X
hereof or upon any sale or other final disposition by the Indenture Trustee of
all property part of the Trust Indenture Estate and the final distribution by
the Indenture Trustee of all moneys or other property or proceeds constituting
part of the Trust Indenture Estate in accordance with the terms hereof. Except
as aforesaid otherwise provided, this Indenture and the trusts created hereby
shall continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Note Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Engine by Indenture Trustee is Binding.
Any sale or other conveyance of the Engine by the Indenture Trustee made
pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the Engine. 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 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of
Trust Indenture
<PAGE> 91
- 86 -
the Engine, except in accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations, directions, consents,
waivers or documents required or permitted by the terms of this Indenture shall
be in English and in writing, mailed by first-class registered or certified
mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the
Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration Department (telex:
835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the
Owner Participant at its address set forth in the Refunding Agreement, (ii) if
to the Indenture Trustee, addressed to it at its office at 777 Main Street,
Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex:
99339; answerback: CTNB-HTFD; telecopy: (203) 240-7920) or (iii) if to the Owner
Participant, the Lessee or any Note Holder, addressed to such party at such
address as such party shall have furnished by notice to the Owner Trustee and
the Indenture Trustee, or, until an address is so furnished, addressed to the
address of such party (if any) set forth on the signature pages to the Refunding
Agreement or in the Register. Whenever any notice in writing is required to be
given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of
the other of them, such notice shall be deemed and such requirement satisfied
when such notice is received. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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
Trust Indenture
<PAGE> 92
- 87 -
and permitted assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Note Holder
shall bind the successors and assigns of such Note Holder. This Indenture and
the Trust Indenture Estate shall not be affected by any amendment or supplement
to the Trust Agreement or by any other action taken under or in respect of the
Trust Agreement, except that each reference in this Indenture to the Trust
Agreement shall mean the Trust Agreement as amended and supplemented from time
to time to the extent permitted hereby and thereby. Each Note Holder by its
acceptance of an Equipment Note agrees to be bound by this Indenture and all
provisions of the Refunding Agreement applicable to a Note Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Indenture Trustee, the
Owner Trustee, the Owner Participant, any Note Holder or any bank or other
Affiliate of any of them may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Lessee or any Permitted Sublessee fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Lessee for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUC- TION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the
parties that the Owner Trustee, as lessor under the Lease (and the Indenture
Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled
to the benefits of Section 1110 of the Bankruptcy Code with respect to the right
to take possession of the Engine and Parts as provided in the Lease in the event
of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor,
and in any instance where more than one construction is possible of the terms
and conditions hereof or of any other pertinent Operative Document, each such
party agrees
Trust Indenture
<PAGE> 93
- 88 -
that a construction which would preserve such benefits shall control over any
construction which would not preserve such benefits.
Trust Indenture
<PAGE> 94
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee
By____________________________________
Title:
FLEET NATIONAL BANK,
not in its individual capacity,
except as expressly provided
herein, but solely as Indenture
Trustee
By____________________________________
Title:
Trust Indenture
<PAGE> 95
EXHIBIT A
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E1]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1991 AWA-E1]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1991 AWA-E1] dated
as of March 15, 1991 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1991
AWA-E1] dated as of March 15, 1991, as amended and restated as of November 26,
1996 (as so amended and restated, the "Indenture") between the Owner Trustee and
Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut, National Association, and The Connecticut National
Bank), as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof
which shall particularly describe the Engine (such term and other defined terms
in the Indenture being herein used with the same meanings) and any Replacement
Engine included in the Trust Indenture Estate, and shall specifically mortgage
such Engine or Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1
dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July
29, 1993, subjected to the Lien of such Original Indenture the engine therein
described, which Original Indenture and Trust Indenture Supplement No. 1 have
been duly recorded with the Federal Aviation Administration as one document on
March 28, 1991 and assigned Conveyance No. 259534, which Amendment No. 1 has
been duly recorded with the Federal Aviation Administration on April 30, 1992
and assigned Conveyance No. DD002565 and which Amendment No. 2 has been duly
recorded with the Federal Aviation Administration on August 4, 1993 and assigned
Conveyance No. F59677.
<PAGE> 96
- 2 -
WHEREAS(1), the Indenture relates to the Engine 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(2), the Owner Trustee has, as provided in the
Indenture, heretofore executed and delivered to the Indenture Trustee [(3)]
Indenture Supplement(s) for the purpose of specifically subjecting to the Lien
of the Indenture one or more engines therein described, which Indenture
Supplement(s) is (are) dated and has (have) been duly recorded with the Federal
Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
---- ---------------- ----------------
NOW, THEREFORE, This Supplement Witnesseth, that, to secure
the prompt payment of the Principal Amount of, interest on, Make-Whole Amount,
if any, and all other amounts due with respect to, all 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 contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt 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,
- --------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
(2) This recital not to be included in the first Indenture
Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 97
- 3 -
transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its
successors and assigns, for the security and benefit of the Note Holders from
time to time, in the trust created by the Indenture, a first priority security
interest in and mortgage Lien on all estate, right, title and interest of the
Owner Trustee in, to and under the following described property:
AIRCRAFT ENGINE
one aircraft engine having 750 or more rated
takeoff horsepower or the equivalent thereof,
identified as follows:
Manufacturer's
Manufacturer Model Serial Number
------------ ----- -------------
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engine.
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 Note Holders from time to time, in the trust created
by the Indenture, all of the estate, right, title and interest of the Owner
Trustee in, to and under the Lease and Lease Supplement [GPA 1991 AWA-E1] No. 2
of even date herewith (other than Excepted Payments and Excepted Rights)
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 Note Holders from time to time for the uses and purposes and
subject to the terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to
the Indenture and shall form a part of it, and the Indenture is
Form of Trust Indenture Supplement
<PAGE> 98
- 4 -
hereby incorporated by reference herein and is hereby ratified,
approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Engine referred to in this Supplement and the aforesaid Lease Supplement has
been delivered to the Owner Trustee and is included in the property of the Owner
Trustee covered by all the terms and conditions of the Trust Agreement, subject
to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 99
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this
Supplement to be duly executed by one of its officers thereunto duly authorized
on the day and year first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By____________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 100
SCHEDULE I
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E1]
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- ---- ---------
Series A $1,343,995 02-Jul-2009 6.85%
Series B $ 503,996 02-Jan-2006 6.93%
Series C $ 524,996 02-Jan-2004 6.86%
Series D $ 489,995 02-Jul-2002 8.16%
Series E $1,458,204 02-Jan-2004 10.50%
<PAGE> 101
EQUIPMENT NOTES AMORTIZATION
SERIES A
Engine: V0025
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 102
- 2 -
SERIES B
Engine: V0025
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 103
- 3 -
SERIES C
Engine: V0025
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 104
- 4 -
SERIES D
Engine: V0025
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 105
- 5 -
SERIES E
Engine: V0025
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
-------------- -----------------
<PAGE> 106
SCHEDULE II
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E1]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1A, dated
November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1B, dated
November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1C, dated
November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1D, dated
November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996,
between America West Airlines, Inc., and Fleet National
Bank, as supplemented by Trust Supplement No. 1996-1E, dated
November 26, 1996.
Schedule II
<PAGE> 1
EXHIBIT 4.42
- --------------------------------------------------------------------------------
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E2]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One IAE International
Aero Engines AG V2500-A1 Engine
Manufacturer's Serial No. V0049
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
GRANTING CLAUSE............................................................. 3
HABENDUM CLAUSE............................................................. 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions.......................................... 8
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes...................................... 21
SECTION 2.02. Issuance and Terms of Equipment Notes........................ 26
SECTION 2.03. Payments from Trust Indenture Estate
Only....................................................... 29
SECTION 2.04. Method of Payment............................................ 31
SECTION 2.05. Application of Payments...................................... 33
SECTION 2.06. Termination of Interest in Trust
Indenture Estate........................................... 34
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes............................................ 34
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes............................................ 36
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation............................................... 36
SECTION 2.10. Mandatory Redemptions of Equipment
Notes...................................................... 37
SECTION 2.11. Redemptions; Notice of Redemption............................ 37
SECTION 2.12. Option to Purchase Equipment Notes........................... 38
SECTION 2.13. Subordination................................................ 39
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions................................... 40
SECTION 3.02. Event of Loss and Replacement................................ 42
SECTION 3.03. Payment After Indenture Event of
Default, etc............................................... 43
SECTION 3.04. Certain Payments............................................. 46
SECTION 3.05. Other Payments............................................... 47
SECTION 3.06. Payments to Owner Trustee.................................... 47
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee.................................................... 48
(i)
<PAGE> 3
Page
----
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner
Trustee.................................................... 48
SECTION 4.02. Indenture Events of Default.................................. 50
SECTION 4.03. Certain Rights............................................... 53
SECTION 4.04. Remedies..................................................... 55
SECTION 4.05. Return of the Engine, etc.................................... 58
SECTION 4.06. Remedies Cumulative.......................................... 60
SECTION 4.07. Discontinuance of Proceedings................................ 60
SECTION 4.08. Waiver of Past Indenture Defaults............................ 60
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default......................... 61
SECTION 5.02. Action Upon Instructions..................................... 62
SECTION 5.03. Indemnification.............................................. 63
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions.................................. 63
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions....................... 64
SECTION 5.06. Replacement Engine........................................... 64
SECTION 5.07. Indenture Supplements for Replacements....................... 66
SECTION 5.08. Effect of Replacement........................................ 67
SECTION 5.09. Notices, etc................................................. 67
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant.......................................... 67
SECTION 5.11. Evidence of Action Taken by Note Holder...................... 70
SECTION 5.12. Right of Revocation of Action Taken.......................... 70
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties.............................. 70
SECTION 6.02. Absence of Duties............................................ 71
SECTION 6.03. No Representations or Warranties as to
Engine or Documents........................................ 71
SECTION 6.04. No Segregation of Moneys; No Interest........................ 72
SECTION 6.05. Reliance; Agents; Advice of Counsel.......................... 72
SECTION 6.06. Capacity in Which Acting..................................... 73
SECTION 6.07. Compensation................................................. 73
(ii)
<PAGE> 4
Page
----
SECTION 6.08. May Become Note Holder....................................... 74
SECTION 6.09. Further Assurances; Financing
Statements................................................. 74
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification..................................... 74
SECTION 7.02. Exculpation and Release of Liability......................... 75
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee............................ 76
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor.......................... 76
SECTION 8.03. Appointment of Separate Trustees............................. 77
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures................................................. 80
SECTION 9.02. Effect of Supplemental Indenture............................. 83
SECTION 9.03. Documents to Be Given to Trustee............................. 83
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures.................................... 83
SECTION 9.05. Trustees Protected........................................... 83
SECTION 9.06. Documents Mailed to Note Holders............................. 83
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement......................... 84
SECTION 9.08. Notices to Liquidity Provider................................ 84
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture.................................... 84
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders.................................... 85
SECTION 10.03. Sale of Engine by Indenture Trustee is
Binding................................................... 85
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
(iii)
<PAGE> 5
Page
----
Lessee and Note Holders................................... 85
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease........................................... 85
SECTION 10.06. Notices..................................................... 86
SECTION 10.07. Severability................................................ 86
SECTION 10.08. No Oral Modifications or Continuing
Waivers................................................... 86
SECTION 10.09. Successors and Assigns...................................... 86
SECTION 10.10. Headings.................................................... 87
SECTION 10.11. Normal Commercial Relations................................. 87
SECTION 10.12. Governing Law; Counterpart Form............................. 87
SECTION 10.13. Section 1110................................................ 87
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
(iv)
<PAGE> 6
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E2]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [GPA 1991 AWA-E2] (this "First Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank
of Connecticut, Shawmut Bank Connecticut, National Association, and The
Connecticut National Bank), a national banking association, not in its
individual capacity except as otherwise specifically set forth herein, but
solely as indenture trustee hereunder (in such capacity, together with its
successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company
entered into the Trust Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991,
as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E2] No. 1 dated
March 27, 1991, and as further supplemented by Trust Agreement Supplement [GPA
1991 AWA-E2] No. 2 dated the date hereof (as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof, hereof and of
the Refunding Agreement, the "Trust Agreement"), whereby, among other things,
Wilmington Trust Company has declared a certain trust for the use and benefit of
the Owner Participant, subject, however, to the Trust Indenture Estate created
pursuant hereto for the use and benefit of (to the extent set forth herein), and
with the priority of certain payments to, the Holders of Equipment Notes issued
hereunder, and the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [GPA 1991 AWA-E2] dated
as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated
March 27, 1991, which were recorded by the Federal Aviation Administration on
March 28, 1991 as one instrument and assigned Conveyance No. L62815, as amended
by Amendment No. 1 dated March 27, 1992, recorded by the Federal
Trust Indenture
<PAGE> 7
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Aviation Administration on April 29, 1992 and assigned Conveyance No. DD002563,
and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by
the Federal Aviation Administration on August 6, 1993 and assigned Conveyance
No. F59679 (collectively, as so amended, supplemented or otherwise modified to
the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the
Original Head Lessee entered into the Engine Lease Agreement [GPA 1991 AWA-E2]
dated as of March 15, 1991, as supplemented by Lease Supplement [GPA 1991
AWA-E2] No. 1 dated March 27, 1991, which were recorded by the Federal Aviation
Administration on March 28, 1991 as one instrument and assigned Conveyance No.
L62816 (collectively, as so amended, supplemented or otherwise modified to the
date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture,
the Owner Trustee issued and sold to the Lenders (as defined in the Original
Indenture) the Original Loan Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and
restate the Original Lease pursuant to Assignment and Amendment No. 1 and
Sublease Termination Agreement [GPA 1991 AWA-E2] dated as of the date hereof
among the Original Head Lessee, as assignor and the Original Sublessee, as
assignee, the Owner Trustee and the Indenture Trustee and the Amended and
Restated Engine Lease Agreement [GPA 1991 AWA-E2] dated as of the date hereof
between the Owner Trustee and the Lessee (as so assigned, amended and restated,
the "Amended and Restated Lease" or the "Lease") and to enter into Lease
Supplement No. 2 and (ii) cause the implementation of the Refinancing
Transaction pursuant to which, among other things, the Original Loan
Certificates issued pursuant to the Original Indenture shall be prepaid and new
Equipment Notes shall be issued to the Pass Through Trustees (or their
designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's estate,
right, title and interest in and to the Engine and, except as hereinafter
expressly provided, all of the Owner Trustee's right, title and interest in, to
and under the Lease (as amended and restated to date and as the same may at any
time and from time to time be further amended, restated or otherwise modified in
accordance with the terms thereof and hereof) and all payments and other amounts
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable
Trust Indenture
<PAGE> 8
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benefit and security of the Note Holders, subject to Section 2.13
and Article III hereof;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner Trustee and authenticated, issued and
delivered by the Indenture Trustee hereunder, the legal, valid and binding
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this First Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment
of the Principal Amount of, interest on, Make-Whole Amount, if any, and all
other amounts due with respect to, all Equipment Notes from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions contained herein and in the
Refunding Agreement and the Equipment Notes, for the benefit of the Note
Holders, and the prompt payment of any and all amounts from time to time owing
hereunder and under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee to the Note Holders and for the uses and purposes and
subject to the terms and provisions hereof, and in consideration of the premises
and of the covenants herein contained, and of the acceptance of the 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, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture Supplement or any indenture supplemental hereto, are included within
the Trust Indenture Estate), to wit:
Trust Indenture
<PAGE> 9
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(1) the Engine and all replacements thereof and substitutions
therefor to which the Owner Trustee shall from time to time acquire an
interest under the Lease, all as more particularly described in the
Indenture Supplement executed and delivered with respect to the Engine
or any such replacements or substitutions therefor, as provided in this
Indenture, and all records, logs and other documents to which the Owner
Trustee shall from time to time acquire an interest at any time
maintained by the Lessee with respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement (to the extent assigned by the
Purchase Agreement Warranties Assignment); the Purchase Agreement
Warranties Assignment, with the Consents and Agreements attached
thereto; and the Warranty Bill of Sale; in each case including, without
limitation, (x) all rights of the Owner Trustee to exercise any
election or option or to make any decision or determination or to give
any notice, consent, waiver or approval or to take any other action
under or in respect of any such document or to accept surrender or
redelivery of the Engine or any part thereof, as well as all the
rights, powers and remedies on the part of the Owner Trustee, whether
arising under any such document or by statute or at law or in equity,
or otherwise, arising out of any Lease Event of Default, and (y) any
right to restitution from the Lessee, the Manufacturer, or any other
Person in respect of any determination of invalidity of any such
document;
(3) each Sublease Assignment and each Assigned Sublease (to
the extent assigned under such Sublease Assignment), and including,
without limitation, all rents or other payments of any kind made under
such Assigned Sublease (to the extent assigned under such Sublease
Assignment), all collateral security or credit support (in the nature
of a guarantee, letter of credit, credit insurance, Lien on or security
interest in any property or otherwise) for the obligations of the
Permitted Sublessee thereunder (to the extent assigned under such
Sublease Assignment) and all rights of the Owner Trustee to exercise
any election or option or to give any notice, consent, waiver, or
approval under or with respect of any thereof or to accept any
surrender of the Engine or any part thereof as well as any rights,
powers or remedies on the part of the Owner Trustee (in each case to
the extent assigned to the Owner Trustee), whether arising under any
Assigned Sublease or any Sublease Assignment or by statute or at law or
in equity, or
Trust Indenture
<PAGE> 10
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otherwise, arising out of any default under any Assigned
Sublease;
(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, without limitation, all payments or
proceeds payable to the Owner Trustee after termination of the Lease
with respect to the Engine 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 requisition proceeds with respect to the Engine or any
part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Engine or any part thereof, including but not limited to the insurance
required under Section 12 of the Lease or under any comparable
provision of any Assigned Sublease (but excluding any excess insurance
maintained by the Lessee and not required under Section 12 of the Lease
or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and
all rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any other
Person in accordance with the provisions of this Agreement, AND SUBJECT TO
Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel paper original executed
counterparts of the Original Lease and Lease Supplement No. 1, certified copies
of the Purchase Agreement Warranties Assignment and the Consents and Agreements
attached thereto, and the original Warranty Bill of Sale. Concurrently with the
delivery of this Indenture, the Owner Trustee is delivering to the Indenture
Trustee the chattel paper
Trust Indenture
<PAGE> 11
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original executed counterparts of the Amended and Restated Lease and Lease
Supplement No. 2. All property referred to in this Granting Clause, whenever
acquired by the Owner Trustee, shall secure all obligations under and with
respect to the Equipment Notes at any time outstanding. Any and all properties
referred to in this Granting Clause which are hereafter acquired by the Owner
Trustee, shall, without further conveyance, assignment or act by the Owner
Trustee or the Indenture Trustee thereby become and be subject to the security
interest hereby granted as fully and completely as though specifically described
herein.
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 Note Holders from time to time, except as set forth in
Section 2.13 and Article III hereof without any preference, distinction or
priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or otherwise) to ask, require, demand, receive
and give acquittance for any and all moneys and claims for moneys (in each case
including insurance and requisition proceeds but excluding Excepted Payments and
Excepted Rights) due and to become due to the Owner Trustee under or arising out
of the Indenture Documents and all other property which now or hereafter
constitutes part of the Trust Indenture Estate, to endorse any checks or other
instruments or orders in connection therewith and to file any
Trust Indenture
<PAGE> 12
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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. Under the Lease,
the Lessee is directed to make all payments of Rent (other than Excepted
Payments) and all other amounts which are required to be paid to or deposited
with the Owner Trustee pursuant to the Lease (other than Excepted Payments)
directly to the Indenture Trustee at such address or addresses as the Indenture
Trustee shall specify, for application as provided in this Indenture. Pursuant
to each Sublease Assignment, each Permitted Sublessee will be directed from and
after (i) notice of the occurrence of a Lease Event of Default and (ii) notice
that the Lease is declared or deemed in default, to make all payments of rent
and all other amounts which are required to be paid to or deposited with the
Lessee pursuant to the related Assigned Sublease and which are assigned
thereunder directly to the Indenture Trustee at such address or addresses as the
Indenture Trustee shall specify, for application or to be held as provided in
this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it
will transfer to the Indenture Trustee any and all moneys from time to time
received by it constituting part of the Trust Indenture Estate, for distribution
by the Indenture Trustee pursuant to this Indenture, except (a) to the extent
the Owner Trustee is entitled to distribution of such moneys pursuant to this
Indenture and (b) that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement any amounts distributed to it by the Indenture Trustee
under this Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that it will not assign or
pledge or otherwise dispose of, so long as this Indenture shall remain in effect
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its estate, right, title or interest hereby assigned, to anyone
other than the Indenture Trustee, and that, with respect to such estate, right,
title and interest hereby assigned, subject to its rights pursuant to Section
5.10 hereof, it will not, except as provided in this Indenture (including,
without limitation, Section 9.01) and except as to Excepted Payments and
Excepted Rights, (i) accept any payment from the Lessee or any Permitted
Sublessee under any of the Indenture Documents, enter into any agreement
amending, modifying or supplementing any of the Indenture Documents, or execute
any waiver or modification of, or
Trust Indenture
<PAGE> 13
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consent under, the terms of any of the Indenture Documents, (ii) settle or
compromise any claim arising under any of the Indenture Documents, (iii) give
any notice or exercise any right or take any action under any of the Indenture
Documents, or (iv) 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. For purposes of Section 4.02(e) hereof,
this is the fourth paragraph following the Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations
under 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 might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments and
Excepted Rights. Further, nothing in the Granting Clause or the preceding
paragraphs shall impair any of the rights of the Owner Trustee or the Owner
Participant under Section 5.10 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained
in the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments (including all annexes, appendices, exhibits,
schedules and supplements thereto) as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with, the terms thereof and of the other
Operative Documents and references to various Persons shall be deemed to be
references to and include their respective permitted successors and assigns.
Trust Indenture
<PAGE> 14
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"Amortization Amount" means, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Principal
Amount Repayment Date on the Amortization Schedule.
"Amortization Schedule" means the amortization schedule for
the Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed
shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such
Equipment Note. "Remaining Weighted Average Life" of such Equipment
Note, at the redemption date of such Equipment Note, shall be the
number of days equal to the quotient obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then
remaining installment of principal, including the payment due on the
maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid
Principal Amount of such Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq., as amended.
"Business Day" means a day other than a Saturday, Sunday or a
day on which banks are required or authorized to close in either The
City of New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the
Intercreditor Agreement shall be deposited.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consents and Agreements" means the confirmations by the
Manufacturer included in the Purchase Agreement Warranties Assignment
of the transfer of rights under the Purchase Agreement.
Trust Indenture
<PAGE> 15
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"Continuous Stay Period" has the meaning specified in Section
4.04(a).
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee located at 777 Main Street, Hartford,
Connecticut 06115, Attention: Corporate Trust Administration, or such
other office at which the Indenture Trustee's corporate trust business
shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Lessee, the Owner Trustee and the Note
Holders.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be evidenced
by bonds, debentures, notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series
C, Series D and Series E, the rate per annum specified for such Series
under the heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means March 27, 1991.
"Dollars", "U.S. $" and "$" mean the lawful currency of the
United States of America.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of
such depository institution has a long-term unsecured debt rating from
each Rating Agency of at least A-3 or its equivalent.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has
a long-term unsecured debt rating from each Rating Agency of at least
A-3 or its equivalent.
Trust Indenture
<PAGE> 16
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"Equipment Notes" means the Equipment Notes, in substantially
the form set out in Section 2.01 hereof, issued by the Owner Trustee
and authenticated by the Indenture Trustee pursuant to the terms of
this Indenture.
"Equity Collateral" has the meaning assigned to such term in
the definition of "Excepted Payments."
"Excepted Payments" means (i) any and all indemnity payments
and interest in respect thereof paid or payable in respect of the Owner
Participant, the Trust Company, the Owner Trustee (and not in support
of any payment obligation of the Owner Trustee under any Indenture
Document) or any of their respective successors, permitted assigns
(and, in the case of a permitted assign of the Owner Participant that
is a partnership, the partners of such partnership), directors,
officers, employees, servants, agents, subsidiaries, affiliates or
shareholders by the Lessee pursuant to the Lease (including, without
limitation, Section 13 thereof and any corresponding payment of
Supplemental Rent under the Lease), (ii) any proceeds of public
liability insurance (or government indemnities in lieu thereof) in
respect of the Engine payable as a result of insurance claims paid
respecting, or losses suffered by, the Trust Company or the Indenture
Trustee in its individual capacity or the Owner Participant, (iii) any
proceeds of insurance maintained with respect to the Engine by or for
the benefit of the Owner Participant (whether directly or through the
Owner Trustee) and not required under Section 12 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts
payable to the Owner Participant, the Trust Company, the Owner Trustee
(and not in support of any payment obligation of the Owner Trustee
under any Indenture Document), or any of their respective successors,
permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership),
directors, officers, employees, servants, agents, subsidiaries,
affiliates or shareholders under Section 10 of the Lease or by the
Lessee or the Parent Guarantor under the Tax Indemnification Agreement
or the Amended and Restated Head Lease TIA (as defined in the Refunding
Agreement), as the case may be, (v) Transaction Expenses paid or
payable by the Lessee or the Parent Guarantor to the Trust Company, the
Owner Trustee, the Indenture Trustee or the Owner Participant pursuant
to Section 21 of the Refunding Agreement or the Lease, (vi) any letter
of credit pursuant to Section 8(l) of the Lease (including, without
limitation, any replacement letter of credit (the "Equity Collateral"))
and any payment or proceeds of any such Equity Collateral to the extent
retained or applied as provided in Section 8(l) of the
Trust Indenture
<PAGE> 17
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Lease, (vii) any amount payable to the Owner Participant by any
transferee as the purchase price of the Owner Participant's interest in
the Trust Estate (or a portion thereof), (viii) any amount payable to
the Owner Trustee, the Trust Company or the Owner Participant or any of
their respective successors, permitted assigns (and, in the case of a
permitted assign of the Owner Participant that is a partnership, the
partners of such partnership), directors, officers, employees,
servants, agents, subsidiaries, affiliates or shareholders attributable
to the period prior to or on the Restatement Date or under the Original
Participation Agreement, the Original Lease, the Parent Head Lease
Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the
Amended and Restated Sublease TIA (as such terms are defined in the
Refunding Agreement) or Retained Head Lease Rights and Obligations (as
such term is defined in the Refunding Agreement), and (ix) subject to
the last sentence of Section 5.10 hereof, any and all rights of the
Owner Trustee, the Owner Participant or the Trust Company under the
Operative Documents, whether or not a Lease Event of Default, a Lease
Default, an Indenture Default or an Indenture Trustee Event has
occurred and is continuing to demand, collect, sue for, give notices,
make determinations, enforce or exercise all rights with respect to and
otherwise obtain all amounts described in clauses (i) through (viii)
above and the proceeds thereof.
"Excepted Rights" means (i) those rights of the Owner
Participant and the Owner Trustee under Section 5.10 of this Indenture,
(ii) all rights under the Equity Collateral to make a claim for,
collect and retain all amounts payable with respect to any Equity
Collateral, (iii) all rights of the Owner Participant, the Trust
Company or the Owner Trustee to compromise or waive any such right or
modify, amend or waive any provision of any Operative Document
conferring such rights with respect to Excepted Payments, and (iv) all
rights of the Owner Trustee to exercise any election or option, or to
make any decision or determination, or to give or receive any notice,
consent, waiver or approval with respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section 2.03(b)
hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and
Trust Indenture
<PAGE> 18
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undrawn amounts under such Liquidity Facility in accordance with the
provisions thereof other than a Downgrade Drawing.
"Government Obligations" means direct obligations of the
United States of America that are not callable, redeemable or payable
prior to maturity, in whole or in part, directly or indirectly, by any
Person.
"Indenture," "this Indenture," and "the Indenture" mean this
First Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented
by any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement (to the extent assigned by the Purchase
Agreement Warranties Assignment); the Purchase Agreement Warranties
Assignment and the Consents and Agreements attached thereto; and the
Warranty Bill of Sale.
"Indenture Event of Default" has the meaning set forth in
Section 4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and
Security Agreement listed on Schedule 1 to the Intercreditor Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Engine and
Replacement Engine included in the property of the Owner Trustee
covered by this Indenture, including, without limitation, Trust
Indenture Supplement No. 1 dated March 27, 1991, which was recorded as
one instrument by the FAA with the Original Indenture, and Trust
Indenture Supplement No. 2 dated November 26, 1996, which is being
filed for recordation as one instrument by the FAA with this First
Amended and Restated Indenture.
Trust Indenture
<PAGE> 19
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"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as assigned, amended and restated by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1991 AWA-E2]
dated as of the date hereof and Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E2] dated as of the date hereof and
supplemented by Lease Supplement [GPA 1991 AWA-E2] No. 2 dated November
26, 1996, which are being filed for recordation as one instrument with
the FAA contemporaneously herewith.
"Lease Default" means an event or condition that, with the
giving of notice or the lapse of time or both, would become a Lease
Event of Default.
"Lease Event of Default" means any event or condition defined
as an "Event of Default" in Section 17 of the Lease.
"Lessee" means America West Airlines, Inc., a Delaware
corporation, in its capacity as lessee under the Amended and Restated
Lease, and its successors, and to the extent permitted by the Refunding
Agreement, its assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or
claim of any kind, including any thereof arising under any conditional
sale agreement, equipment trust agreement or title retention agreement.
Trust Indenture
<PAGE> 20
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"Majority in Interest of Note Holders" means, as of a
particular date of determination and subject to Section 2.6 of the
Intercreditor Agreement, the Holders of more than 50% in aggregate
unpaid Principal Amount of all Equipment Notes outstanding as of such
date. For purposes of this definition, there shall be excluded any
Equipment Notes held by the Owner Trustee or the Owner Participant or
any interests of the Owner Participant therein by reason of subrogation
pursuant to Section 4.03 of the Indenture (unless all Equipment Notes
then outstanding shall be held by the Owner Trustee or the Owner
Participant) or any Equipment Notes held by the Lessee or any Affiliate
of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate
equal to (i) in the case of Series A Equipment Notes and Series B
Equipment Notes, the Treasury Yield and (ii) in the case of Series C
Equipment Notes, Series D Equipment Notes and Series E Equipment Notes,
the Treasury Yield plus 0.75% exceeds (b) the outstanding principal
amount of such Equipment Note plus accrued interest. For purposes of
determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Equipment Note means the interest
rate (expressed as a semiannual equivalent and as a decimal and, in the
case of United States Treasury bills, converted to a bond equivalent
yield) determined to be the per annum rate equal to the semiannual
yield to maturity for United States Treasury securities maturing on the
Average Life Date of such Equipment Note and trading in the public
securities market either as determined by interpolation between the
most recent weekly average yield to maturity for two series of United
States Treasury securities, trading in the public securities markets,
(A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Equipment Note and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Equipment
Note, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note is reported on
the most recent H.15(519), such weekly average yield to maturity as
published in such H.15(519). "H.15(519)" means the weekly statistical
release designated as such, or any successor
Trust Indenture
<PAGE> 21
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publication, published by the Board of Governors of the Federal Reserve
System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the
"most recent H.15(519)" means the H.15(519) published prior to the
close of business on the third Business Day prior to the applicable
redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person other
than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from
time to time of one or more Equipment Notes as reflected in the
Register maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and
signature of such Responsible Officer, that is delivered to the
Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such
written opinions or (ii) Latham & Watkins or other counsel designated
by the Lessee and reasonably satisfactory to the Indenture Trustee or,
in the case of legal counsel for the Owner Trustee, may be Morris,
James, Hitchens & Williams or other counsel designated by the Owner
Trustee and reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease.
"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1991 AWA-E2] dated as of March 15, 1991, as supplemented
by Trust Indenture Supplement No. 1 dated March 27, 1991, which were
recorded as one instrument by the FAA on March 28, 1991 and assigned
Conveyance No. L62815, as amended by Amendment No. 1 dated March 27,
1992, recorded by the FAA on April 29, 1992 and assigned Conveyance No.
DD002563, and as further amended by Amendment No. 2 dated as of July
29, 1993, recorded by the FAA on August 6, 1993 and assigned Conveyance
No. F59679.
"Original Loan Certificates" means the Loan Certificates
issued under and as defined in the Original Indenture.
Trust Indenture
<PAGE> 22
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"Original Sublessee" means America West Airlines, Inc.
("AWA"), a Delaware corporation, in its capacity as sublessee under the
Engine Sublease Agreement [GPA 1990 AWA-E2] dated as of December 12,
1990 between the Original Head Lessee in its capacity as sublessor
thereunder and AWA in its capacity as sublessee.
"Owner Participant" means ______________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the five Pass Through
Trusts established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through Trust
Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a national
banking association, not in its individual capacity but solely as pass
through trustee under each of the five separate Pass Through Trust
Agreements.
"Past Due Rate" means, with respect to any amount not paid
when due (whether at stated maturity, by acceleration or otherwise)
under or in respect of any Equipment Note, a rate of interest per annum
(computed on the basis of a year of 360 days comprised of twelve 30-day
months) equal to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Equipment Notes have
been paid in full.
"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with
respect to all Equipment Notes, means the aggregate stated original
principal amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on
which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement Warranties Assignment" means the
Purchase Agreement Warranties Assignment [GPA 1991 AWA-E2],
Trust Indenture
<PAGE> 23
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dated as of the Delivery Date, among the Original Head Lessee, the
Lessee and the Owner Trustee, together with the Consents and Agreements
attached thereto, as the same may be amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to
rate the Certificates issued pursuant to the Pass Through Trust
Agreements and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated
by the Refunding Agreement and the other documents entered into on and
in connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1991
AWA-E2] dated as of November 20, 1996, among the Lessee, the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through
Trustee, the Owner Participant, the Subordination Agent and the
Indenture Trustee.
"Register" has the meaning set forth in Section 2.07 hereof.
"Registrar" has the meaning set forth in Section 2.07 hereof.
"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice
president or, in the case of the Owner Trustee, an officer of the Owner
Trustee in its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date
agreed to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date
of the filing with the FAA of Trust Indenture Supplement No. 2.
"Secured Obligations" has the meaning set forth in Section
2.06 hereof.
"Securities Act" means the Securities Act of 1933, as amended.
Trust Indenture
<PAGE> 24
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"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series D."
"Series E" or "Series E Equipment Notes" means Equipment Notes
issued and designated as "Series E" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series E."
"Sublease Assignment" means a sublease assignment by the
Lessee in favor of the Owner Trustee (including the consent thereto
given by the sublessee thereunder) with respect to the assignment of a
Permitted Sublease pursuant to Section 6(a) of the Lease.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity and not as Owner
Trustee, and its successors under the Trust Agreement, in their
respective individual capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means all
estate, right, title and interest of the Owner Trustee
Trust Indenture
<PAGE> 25
- 20 -
in and to the properties, rights and interests covered by the Granting
Clause of the Indenture, excluding, however, in each case, Excepted
Payments and Excepted Rights.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code (for purposes of this definition, the "United
States"), (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political
subdivision thereof or therein or (iii) any estate or trust that is
subject to United States federal income taxation regardless of the
source of its income.
"Warranty Bill of Sale" means a full warranty (as to title)
bill of sale covering the Engine (excluding all Buyer Furnished
Equipment) executed by the Original Head Lessee in favor of the Owner
Trustee dated the Delivery Date.
Trust Indenture
<PAGE> 26
- 21 -
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes
shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1991 AWA-E2]
DATED AS OF MARCH 15, 1991, AS AMENDED.
SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE IAE INTERNATIONAL AERO ENGINES AG
V2500-A1 ENGINE WITH MANUFACTURER'S SERIAL NUMBER V0049
No.____________ Date: [________,1996]
$_______________________
DEBT RATE MATURITY DATE
[________] [_______,___]
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement [GPA 1991 AWA-E2], dated as of March 15,
1991, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to Fleet
National Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $_______ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semi-annual installments commencing on January 2, 1997, and
thereafter
Trust Indenture
<PAGE> 27
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on July 2 and January 2 of each year, to and including ___________,_____.
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and if
such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First
Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E2],
dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank) (the "Indenture
Trustee"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this Equipment Note and not defined herein shall
have the respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as above provided and that none of the Owner Participant, the
Owner Trustee and the
Trust Indenture
<PAGE> 28
- 23 -
Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Indenture Trustee or at the office of any successor in the manner
provided in Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and
interest and other amounts due hereunder shall be payable in Dollars in
immediately available funds at the Corporate Trust Office of the Indenture
Trustee, or as otherwise provided in the Indenture. Each such payment shall be
made on the date such payment is due and without any presentment or surrender of
this Equipment Note, except that in the case of any final payment with respect
to this Equipment Note, the Equipment Note shall be surrendered promptly
thereafter to the Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note,
agrees that, except as provided in the Indenture, each payment received by it
hereunder shall be applied, first, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by law, any
overdue interest and any other overdue amounts hereunder) to the date of such
payment, second, to the payment of the portion of the Principal Amount of this
Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Indenture, and fourth, the balance,
if any, remaining thereafter, to the payment of the portion of the Principal
Amount of this Equipment Note remaining unpaid in the inverse order of its
normal maturity.
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 Trust Indenture Estate is held by
the Indenture Trustee as security, in part, for the Equipment Notes. The
provisions of this Equipment Note are subject to the Indenture. Reference is
hereby made to the Indenture and the Refunding Agreement for a complete
statement of the rights and obligations of the Holder
Trust Indenture
<PAGE> 29
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of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or
the Owner Trustee as provided in Section 2.12 of the Indenture and to
acceleration by the Indenture Trustee as provided in Section 4.04 of the
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B
Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4),
and this Equipment Note is issued subject to such provisions. The Note Holder of
this Equipment Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Indenture Trustee on his behalf
to take such action as may be necessary or appropriate to effectuate
- ----------
1 To be inserted in the case of Series B Equipment Notes.
2 To be inserted in the case of Series C Equipment Notes.
3 To be inserted in the case of Series D Equipment Notes.
4 To be inserted in the case of Series E Equipment Notes.
Trust Indenture
<PAGE> 30
- 25 -
the subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.](5)
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its officer thereunto
duly authorized on the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
FLEET NATIONAL BANK,
as Indenture Trustee
By:_______________________________
Name:
Title:
- ----------
5 To be inserted in the case of a Series B, Series C, Series D or Series
E Equipment Note.
Trust Indenture
<PAGE> 31
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SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
five separate series consisting of Series A, Series B, Series C, Series D and
Series E and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass
Through Trustees (or their designee) under the Pass Through Trust Agreements set
forth in Schedule II to be attached hereto in connection therewith and (ii) the
Original Loan Certificates issued under the Original Indenture shall be
concurrently prepaid. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of each Series may be
in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity.
The Principal Amount of each Equipment Note shall be payable
on the dates and in the installments equal to the corresponding percentage of
the Principal Amount as set forth in Schedule I hereto which shall be attached
as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
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any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
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(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default (as defined below) under any
Equipment Note a fraction, the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E
Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net
Interest and Related Charges" means (as determined by the Subordination Agent in
consultation with the Liquidity Providers and notified to the Indenture Trustee
except that the Past Due Rate shall be determined by the Indenture Trustee and
notified to the Subordination Agent) the sum of (i) the amount, if any, by which
interest payable to any Liquidity Provider on any Interest Drawing, Final
Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an
Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the
amount which would be payable if such advances bore interest at the Designated
Interest Rate (as defined below) plus (ii) any amounts payable under Section
3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity
Facility (or similar provisions of any succeeding liquidity facility) which
result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in
this Section 2.02, "Designated Interest Rate" means the weighted average Past
Due Rate (as defined in the applicable Indentures) in respect of "Series A
Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
issued under the Indentures, except with respect to that portion of any Final
Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a
Cash Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" or "Series E Equipment Note" issued
under the Indentures which has not been cured other than solely because of
acceleration. For purposes of Section 3.04(b) hereof, this is the fourth
paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Equipment Notes
bearing the signatures of
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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. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Engine to the Indenture Trustee for
authentication upon original issue and such Equipment Notes shall thereupon be
authenticated and delivered by the Indenture Trustee upon the written request of
the Owner Trustee signed by a Vice President or Assistant Vice President or
other authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Equipment Notes to
be authenticated hereunder on original issue with respect to the Engine. No
Equipment Note shall be secured by or be entitled to any benefit under this
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized officers and such certificate upon any Equipment Notes shall be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a)
Without impairing any of the other rights, powers, remedies, privileges or Liens
of the Note Holders under this Indenture, each Note Holder, by its acceptance of
an Equipment Note, agrees that, except as expressly provided in this Indenture,
the Refunding Agreement or any other Operative Document, (i) the obligation to
make all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such
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other agreements to the contrary notwithstanding (except for any express
provisions or representations that the Trust Company is responsible for, or is
making, for which there would be personal liability of the Trust Company), no
recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means
the amount by which such payment exceeds the amount that would have been
received by a Note Holder or the Indenture Trustee if the Trust Company, the
Owner Trustee or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this
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Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Trust Company, the Owner Trustee or the Owner Participant under the
Refunding Agreement, this Indenture (and any exhibits or annexes hereto or
thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such
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funds were received after 12:00 noon, New York City time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat
the Person in whose name any Equipment Note is registered on the Register as the
absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Equipment Note (and such exclusion and withholding
shall constitute payment in respect of such Equipment Note) any and all United
States withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees to act as such withholding agent and, in connection therewith,
whenever any present or future United States taxes or similar charges are
required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts (and such withholding
shall constitute payment in respect of such Equipment Note) and timely pay the
same to the appropriate authority in the name of and on behalf of the Note
Holders, that it will file any necessary United States withholding tax returns
or statements when due, and that as promptly as possible after the payment
thereof it will deliver to each Note Holder (with a copy to the Owner Trustee
and the Lessee) appropriate receipts showing the payment thereof, together with
such additional documentary evidence as any such Note Holder, the Owner
Participant and the Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of
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such form prior to the date of such payment (and the Indenture Trustee has no
reason to know that any information set forth in such form is inaccurate), the
Indenture Trustee shall withhold only the amount, if any, required by law (after
taking into account any applicable exemptions claimed by the Note Holder) to be
withheld from payments hereunder or under the Equipment Notes held by such
Holder in respect of United States federal income tax (and such withholding
shall constitute payment in respect of such Equipment Note). If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form 4224 in
duplicate (or such successor certificate, form or forms as may be required by
the United States Treasury Department as necessary in order to avoid withholding
of United States federal income tax), during the calendar year in which the
payment is made (but prior to the making of such payment) or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Equipment Notes held by such Holder, no amount shall be
withheld from payments in respect of United States federal income tax. If any
Note Holder has notified the Indenture Trustee that any of the foregoing forms
or certificates is withdrawn or inaccurate, or if such Holder has not filed a
form claiming an exemption from United States withholding tax or if the Code or
the regulations thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the Equipment Notes held by such
Holder, the Indenture Trustee agrees to withhold from each payment due to the
relevant Note Holder withholding taxes at the appropriate rate under law (and
such withholding shall constitute payment in respect of such Equipment Notes)
and will, on a timely basis as more fully provided above, deposit such amounts
with an authorized depository and make such returns, statements, receipts and
other documentary evidence in connection therewith as required by applicable
law.
None of the Owner Trustee, the Owner Participant or the Lessee
shall have any liability for the failure of the Indenture Trustee to withhold
taxes in the manner provided for herein or for any false, inaccurate or untrue
evidence provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of
each Equipment Note, each payment of Principal Amount, Make-Whole
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Amount, if any, and interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and, to the extent permitted by law,
any overdue interest and any other overdue amounts thereunder) to the
date of such payment;
Second: to the payment of the Principal Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture
Estate. A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request
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from the registered Holder thereof for the issuance of a new Equipment Note,
specifying, in the case of a surrender for transfer, the name and address of the
new Holder or Holders. Upon surrender for registration of transfer of any
Equipment Note, 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 unpaid portion
of the Principal Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate unpaid portion of the Principal
Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture
Trustee at the Corporate Trust Office. 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 Note
Holder making the exchange is entitled to receive. All Equipment Notes issued
upon any registration of transfer or exchange of Equipment Notes (whether under
this Section 2.07 or under Section 2.08 hereof or otherwise under this
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this 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 Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder
or such Holder's attorney duly authorized in writing, and the Indenture Trustee
shall require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act and the securities laws of any applicable
state. The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Principal Amount 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 on such old Equipment Note or Equipment
Notes has been paid. Interest shall be deemed to have been paid on such new
Equipment Note to the date on which interest shall have been paid on such old
Equipment Note, and all payments of the Principal Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been made thereon.
Neither the Indenture Trustee nor the Owner Trustee shall be required to
exchange any surrendered Equipment Notes as provided above during the ten-day
period preceding the Payment Date. The Indenture Trustee will promptly notify
the Owner Trustee, the Owner Participant and Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Refunding
Agreement applicable to Note Holders, and shall be deemed to have represented
and warranted to the parties to the Refunding
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Agreement as to the matters represented and warranted by the Subordination Agent
in its capacity as the initial Holder of the Equipment Notes. Subject to
compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee
shall use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
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 Holder of such
Equipment Note, execute and the Indenture Trustee shall authenticate and deliver
in replacement thereof a new Equipment Note, payable in the same Principal
Amount dated the same date and captioned as originally issued. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee and a copy thereof shall be furnished to
the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost
or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such Person, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the
Indenture Trustee shall be accepted as satisfactory indemnity and security and
no further indemnity or security shall be required as a condition to the
execution and delivery of such new Equipment Note. Subject to compliance by the
Note Holder of the requirements set forth in this Section 2.08, the Indenture
Trustee and the Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Note Holder for any registration of
transfer or exchange of Equipment Notes, but the Indenture Trustee, as
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes; provided, however, that none of the
Lessee, the Owner Trustee,
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the Indenture Trustee or the Owner Participant shall bear costs of registration,
transfer or exchange in connection with the consummation of the Refinancing
Transaction.
(b) The Indenture Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Engine, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither
any redemption of any Equipment Note nor any purchase by the Owner Trustee of
any Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Equipment Notes shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Note Holder of such Equipment Notes to be
redeemed or purchased, at such Note Holder's address appearing in the Register.
All notices of redemption or purchase shall state: (1) the redemption date, (2)
the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any Person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Equipment Notes to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New
York City time, on the redemption date in
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immediately available funds the redemption price of the Equipment Notes to be
redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid, the Equipment Notes to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee, and from and after such redemption date (unless there shall
be a default in the payment of the redemption price) any such Equipment Notes
then outstanding shall cease to bear interest. Upon surrender of any such
Equipment Note for redemption or purchase in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any Equipment Note
called for redemption or purchase shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the
Owner Trustee or the Owner Participant may, upon the events and subject to the
terms and conditions and for the price set forth in this Section 2.12, purchase
all but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each
Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to, but not including, the date of purchase and all
other amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Refunding Agreement to the Holder
thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon
an Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default (and there is no
Indenture Trustee Event), the purchase price thereof shall equal the price
provided in the
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preceding sentence plus the Make-Whole Amount, if any; provided further, that
under no circumstances shall the Make-Whole Amount be payable by the Lessee.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant giving written notice of its
election of such option to the Indenture Trustee, which notice shall specify a
date for such purchase not more than 30 days or less than 15 days after the date
of such notice. The Indenture Trustee shall not exercise any of the remedies
hereunder or, without the consent of the Owner Trustee or the Owner Participant,
under the Lease, during the period from the time that a notice of exercise by
the Owner Participant of such option to purchase becomes irrevocable until the
date on which such purchase is required to occur pursuant to the terms of the
preceding sentence. Such election to purchase the Equipment Notes shall become
irrevocable upon the fifteenth day preceding the date specified in the written
notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Note Holders will comply with all
the provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Articles II and III hereof.
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(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full, (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Note Holders of Series D until the Secured Obligations in respect of Series D
Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as rent
under any Assigned Sublease shall be promptly distributed in the following order
of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments
of Principal Amount, and interest and other amounts (as well as any
interest on overdue Principal Amount, and to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts)
then due to the Note Holders under all Series A Equipment Notes shall
be distributed to the Note Holders of Series A ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then due under all Series
A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall
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be distributed to the Note Holders of Series B ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series B Equipment Note
bears to the aggregate amount of the payments then due under all Series
B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series C Equipment Notes shall be distributed to the
Note Holders of Series C ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series C Equipment Note bears to the aggregate
amount of the payments then due under all Series C Equipment Notes;
(iv) after giving effect to clause (iii) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series D Equipment Notes shall be distributed to the
Note Holders of Series D ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series D Equipment Note bears to the aggregate
amount of the payments then due under all Series D Equipment Notes; and
(v) after giving effect to clause (iv) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series E Equipment Notes shall be distributed to the
Note Holders of Series E ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series E Equipment Note bears to the aggregate
amount of the payments then due under all Series E Equipment Notes; and
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second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that
if an Indenture Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 3.07
hereof until whichever of the following shall first occur: (i) all
Indenture Defaults shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second", or
(ii) Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of said
Section 3.03, or (iii) the 180th day after receipt of such payment, in
which event such balance shall be distributed as provided in this
clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any payment
received by the Indenture Trustee with respect to the Engine as the result of an
Event of Loss thereto shall be applied to the redemption of the Equipment Notes
and to all other amounts payable hereunder by applying such funds in the
following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event
of Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other
amounts (as well as any interest on overdue Principal Amount, and to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due to the Note Holders under all Equipment
Notes, all in the order of priority specified in clause "first" of
Section 3.01 hereof, and
third, if and to the extent required to be paid to the Lessee
(or if directed by the Lessee, any Permitted Sublessee) in
reimbursement of payment of Stipulated Loss Value pursuant to Section
11(d) of the Lease, to the Lessee (or if directed by the Lessee, any
Permitted Sublessee), and otherwise as provided in clause "fourth" of
Section 3.03 hereof;
provided that, if a Replacement Engine is to be substituted for the Engine
subject to such Event of Loss as provided in Section 11 of the Lease and Section
5.06 hereof, any proceeds which result from such Event of Loss and are paid to
the Indenture
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Trustee shall be held by the Indenture Trustee as part of the Trust Indenture
Estate as security for the obligations of the Lessee under the Operative
Documents and invested in accordance with the terms of Section 3.07 hereof and,
unless theretofore applied in accordance with the provisions of the Lease and
this Indenture, such proceeds shall, to the extent payable to the Lessee under
the Lease, be released to the Lessee (or if directed by the Lessee, any
Permitted Sublessee) upon or in connection with the replacement thereof as
provided in such Sections.
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Engine) shall be applied as provided in the applicable provisions
of the Lease; provided, however, that to the extent that any portion of such
amounts held for account of the Lessee are not at the time required to be paid
to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions
of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Operative Documents and
shall be invested in accordance with the terms of Section 3.07 hereof and at
such time as the conditions specified in the Lease for payment of such amounts
to the Lessee shall be fulfilled, such portion, and the net proceeds of any
investment thereof, shall, unless theretofore applied in accordance with the
provisions of the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07
hereof, and notwithstanding Section 2.05 hereof, all payments received and
amounts held or realized by the Indenture Trustee after an Indenture Event of
Default shall have occurred and be continuing or after the Indenture Trustee has
given notice to the Owner Trustee and the Owner Participant pursuant to Section
4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease
or of the foreclosure of this Indenture, or after the Equipment Notes shall have
become due and payable as provided herein, and all payments or amounts then held
by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long
as such Indenture Event of Default shall be continuing, be promptly distributed
by the Indenture Trustee in the following order of priority, without
duplication:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for all amounts due to it
pursuant to Section 6.07 hereof, plus any tax, expense, charge or other
loss (including, without limitation, all amounts to be expended at the
expense of, or
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charged upon the tolls, rents, revenues, issues, products and profits
of, the property included in the Trust Indenture Estate pursuant to
Section 4.05(b) hereof) incurred by the Indenture Trustee (to the
extent not previously reimbursed) (including, without limitation, the
expenses of any sale, taking or other proceeding, 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 then existing or prior Note Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to the then existing or
prior Note 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 one over any other, in accordance with the
amount of the payment or payments made by each such then existing or
prior Note Holder pursuant to said Section 5.03 and applicable (in the
case of each such then existing Note Holder) to the Equipment Notes
held by such existing Note Holder at the time of distribution by the
Indenture Trustee;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid Principal Amount
of all Series A Equipment Notes, and the accrued but unpaid interest
and other amounts due thereon and all other Secured Obligations in
respect of the Series A Equipment Notes (other than Make-Whole Amount,
if any) to the date of distribution, shall be distributed to the Note
Holders of Series A, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series A Equipment Notes
held by each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount, if
any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of
such payments or amounts remaining as shall be
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required to pay in full the aggregate unpaid Principal Amount of all
Series B Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect of the
Series B Equipment Notes (other than Make-Whole Amount, if any) to the
date of distribution, shall be distributed to the Note Holders of
Series B, and in case the aggregate amount so to be distributed shall
be insufficient to pay in full as aforesaid, then ratably, without
priority of one over the other, in the proportion that the aggregate
unpaid Principal Amount of all Series B Equipment Notes held by each
Holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder (other than Make-Whole Amount, if any) to the
date of distribution, bears to the aggregate unpaid Principal Amount of
all Series B Equipment Notes held by all such Holders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution;
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series C Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series C Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series C, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series C Equipment Notes held by each Holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series C Equipment Notes
held by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution;
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series D Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series D Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series D, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series D Equipment Notes held by each Holder
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plus the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Principal Amount of all
Series D Equipment Notes held by all such Holders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution; and
(v) after giving effect to paragraph (iv) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series E Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series E Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series E, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid Principal Amount of
all Series E Equipment Notes held by each holder plus the accrued but
unpaid interest and other amounts due hereunder and thereunder (other
than Make-Whole Amount, if any) to the date of distribution, bears to
the aggregate unpaid Principal Amount of all Series E Equipment Notes
held by all such holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by
the Indenture Trustee for which provision as to the application thereof is made
in the Lease shall be applied forthwith to the purpose for which such payment
was made in accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or the
Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii)
any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity
Providers, and (v) the Pass Through Trustees, in each case whether pursuant to
Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as
Supplemental Rent, directly to the Person entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of
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the fourth paragraph of Section 2.02 shall be distributed to the Subordination
Agent to be distributed in accordance with the terms of the Intercreditor
Agreement, and any payment received by the Indenture Trustee under clause (c) of
the fourth paragraph of Section 2.02 shall be distributed directly to the
Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and
3.04 hereof, any payments received by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture
shall be distributed by the Indenture Trustee, unless otherwise agreed in
writing, subject to Section 6.07 hereof (i) to the extent received or realized
at any time prior to the payment in full of all obligations to the Note Holders
secured by the Lien of this Indenture, in the order of priority specified in
Section 3.01 hereof, and (ii) to the extent received or realized at any time
after payment in full of all obligations to the Note Holders secured by the Lien
of this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause
"first" of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated to
indemnify against thereunder, in the manner provided in clause "first"
of Section 3.03 hereof, and
second, in the manner provided in clause "fourth" of
Section 3.03 hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts
distributed hereunder by the Indenture Trustee to the Owner Trustee shall be
paid to the Owner Trustee by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture 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
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pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire
transfer of funds of the type received by the Indenture Trustee to the Owner
Participant's account as may be specified pursuant to the Refunding Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's
rights to hold moneys for security pursuant to Section 21(h) of the Lease shall
be held in accordance with the terms of such Section; and the Indenture Trustee
hereby agrees to perform the duties of the Owner Trustee under such Section.
Except as provided in the preceding sentence, any amounts held by the Indenture
Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof,
pursuant to Section 3.02 hereof, pursuant to the second sentence of Section
3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant
to a Sublease Assignment, or pursuant to any provision of any other Operative
Document providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Owner Trustee or, in the event the
Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner Trustee.
(a) The Trust Company hereby covenants and agrees that it will not directly or
indirectly create, incur, assume or
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suffer to exist any Lessor's Lien attributable to it in its individual capacity
with respect to any of the properties or assets of the Trust Indenture Estate
and shall, at its own cost and expense promptly take such action as may be
necessary duly to discharge any such Lessor's Lien, and the Trust Company will
cause restitution to be made to the Trust Indenture Estate in the amount of any
diminution of the value thereof as the result of any Lessor's Liens attributable
to it.
(b) The Owner Trustee hereby covenants and agrees as
follows:
(i) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Equipment Notes and hereunder in accordance
with the terms of the Equipment Notes and this Indenture and all
amounts payable by it to the Note Holders under the Refunding Agreement
and the other Operative Documents;
(ii) the Owner Trustee will not directly or indirectly create,
incur, assume or suffer to exist any Lessor's Liens attributable to it
with respect to any of the properties or assets of the Trust Indenture
Estate, and shall, at its own cost and expense, promptly take such
action as may be necessary duly to discharge any such Lessor's Lien,
and the Owner Trustee will cause restitution to be made to the Trust
Indenture Estate in the amount of any diminution of the value thereof
as the result of any Lessor's Liens attributable to it;
(iii) in the event an officer with responsibility for or
familiarity with the transactions contemplated hereunder or under the
other Operative Documents (or any Vice President) in the Corporate
Trust Administration Department of the Owner Trustee shall have actual
knowledge of an Indenture Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Indenture Default or
Event of Loss to the Indenture Trustee, the Lessee and the Owner
Participant;
(iv) 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 12(f) of the Lease, to the extent that the same
shall not have been furnished, or is not required to be furnished by
the Lessee, to the Indenture Trustee pursuant to the Lease or
otherwise;
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(v) except as contemplated by the Operative Documents or with
the consent of the Indenture Trustee acting in accordance with Article
IX hereof, the Owner Trustee will not incur any indebtedness for
borrowed money; and
(vi) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Engine, the
leasing thereof to the Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Refunding Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing
(other than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, or interest on, any Equipment Note
(other than as a result of a Lease Default) and such failure shall have
continued unremedied for ten calendar days; or the failure of the Owner
Trustee to pay when due any other amount due and payable under any
Equipment Note or hereunder (other than as a result of a Lease Default)
and such failure shall have continued unremedied for 15 calendar days
after notice thereof being given to the Owner Trustee from the
Indenture Trustee or any Note Holder; or
(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 4.01(a) hereof or Section 13 of the
Refunding Agreement or by the Owner Trustee as the Owner Trustee
pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding
Agreement or any Lessor's Lien required to be discharged by the Owner
Participant pursuant to Section 13 of the Refunding Agreement shall
remain undischarged for a period of 30 calendar days after, as the case
may be, an officer with responsibility for or familiarity with the
transactions contemplated hereunder or under the other Operative
Documents (or any Vice President) in the Corporate Trust Administration
Department of the Trust Company or an officer of the Owner Participant
with responsibility for or familiarity with the transactions
contemplated hereunder and under the other Operative Docu-
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ments (or any Vice President) shall have actual knowledge of such Lien;
provided, that no Indenture Event of Default shall arise under this
Section 4.02(c) as a result of a failure by the Owner Trustee or the
Owner Participant to observe or perform any covenant referred to in
this Section 4.02(c) if the Lessee shall have discharged all Lessor's
Liens required to be discharged by the Owner Trustee or the Owner
Participant pursuant to such covenants and compensated the Indenture
Trustee and the Trust Indenture Estate for all claims, losses and
expenses arising from the failure of the Owner Trustee or the Owner
Participant, as the case may be, to observe and perform any such
covenant; or
(d) any representation or warranty made by the Owner
Participant, the Owner Trustee or the Trust Company herein or in the
Refunding Agreement or by any Person (if any) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Documents or in any related guarantee or support agreement shall prove
to have been false or incorrect when made in any respect materially
adverse to the rights and interests of the Note Holders; and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, such
misrepresentation shall not have been corrected as of a day within 30
calendar days following notice thereof being given to the Owner
Participant, the Owner Trustee, the Trust Company or such Person (if
any), as the case may be, by the Indenture Trustee or a Majority in
Interest of Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any
of its covenants or agreements in the fourth paragraph following the
Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01
hereof, or any failure by the Owner Participant or the Trust Company to
observe or perform any of its respective covenants in Section 9(b)(11),
10 or 14 of the Refunding Agreement; or
(f) except as provided in the following paragraph (j), any
failure by the Owner Trustee or the Trust Company to observe or perform
any other covenant or obligation of the Owner Trustee contained in this
Indenture or in the Refunding Agreement or any failure by the Owner
Participant to observe or perform any other covenant or obligation of
the Owner Participant contained in the Refunding Agreement or any
failure of any Person (if any) that may guarantee or support the
obligations of an Owner Participant not originally party to the
Refunding Agreement under the Operative Documents to observe or perform
any covenant or obligation of such Person contained in any such
guarantee or support agreement, which failure, in any case and either
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individually or together with other then existing failures, shall have
a material adverse effect on the rights and interests of the Indenture
Trustee or any Note Holder and is not remedied within a period of 45
calendar days following notice being given to the Owner Trustee, the
Owner Participant or such Person, as the case may be, by the Indenture
Trustee or a Majority in Interest of Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant
or any Person (if any) that may guarantee or support the obligations of
an Owner Participant not originally party to the Refunding Agreement
under the Operative Documents shall (i) be unable to pay its debts
generally as they become due within the meaning of the Bankruptcy Code,
(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 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 with respect thereto (and not in its
individual capacity) or the Owner Participant or any Person (if any)
that may guarantee or support the obligations of an Owner Participant
not originally party to the Refunding Agreement under the Operative
Documents, as the case may be, a custodian, receiver, trustee or other
officer with similar powers with respect to it 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 with respect thereto (and not in its individual capacity) or
the Owner Participant or such Person, as the case may be; or
(i) any petition for any relief specified in the foregoing
paragraph (h) shall be filed against the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or any Person (if any) that may guarantee or
support the
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obligations of an Owner Participant not originally party to the
Refunding Agreement under the Operative Documents, as the case may be,
and such petition shall not be dismissed within 60 days; or
(j) at any time when the Engine shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid
and duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by
the Lessee in the payment of any installment of Basic Rent due under the Lease,
the Owner Participant may, within ten calendar days (or such longer period
ending on the second day after the expiry of the applicable grace period
specified in the Lease with respect to such default) after notice from the
Indenture Trustee or the Lessee of such default, without the consent or
concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for
application in accordance with Section 3.01 hereof, a sum equal to the amount of
all (but not less than all) of the Principal Amount and interest as shall then
(without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof)
be due and payable on the Equipment Notes. 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 Trustee
shall have been furnished by the Owner Participant with all funds necessary for
remedying such default, the Owner Participant may, within fifteen calendar days
(or such longer period ending on the second day after the expiry of any
applicable grace period specified in the Lease with respect to such default)
after notice from the Indenture Trustee or the Lessee of such default, without
the consent or concurrence of any Note Holder, instruct the Owner Trustee to
exercise the Owner Trustee's rights under Section 21(d) 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 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 due and payable under
the Equipment Notes or hereunder, 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 default by the
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Lessee under the Lease to the same extent that like performance by the Lessee
itself would have remedied such default (but any such payment or performance
shall not 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, such Lease Event of Default shall have been remedied, then any
declaration pursuant to the Lease that the Lease is in default, and any
declaration pursuant to this Indenture that the Equipment Notes are due and
payable or that an Indenture Event of Default exists hereunder, based upon such
Lease Event of Default, shall be deemed to be rescinded, and the Owner
Participant or the Owner Trustee, as the case may be, shall (to the extent of
any such payments made by it) be subrogated to the rights of the Note Holders
hereunder to receive such payment of Rent from the Indenture Trustee (and the
payment of interest on account of such Rent being overdue), and shall be
entitled, so long as no other Indenture Default or Indenture Event of Default
shall have occurred and be continuing, to receive, subject to the terms 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 by commencing an action at
law against the Lessee and obtaining and enforcing a judgment against the Lessee
for the payment of such amount or taking appropriate action in a pending action
at law against the Lessee or by demanding Excepted Payments or Excepted Rights;
provided, however, that at no time while an Indenture 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 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 hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease (after giving effect to any applicable grace
period) as to (i) each of the three Basic Rent Payment Dates
immediately preceding the date of such default or (ii) in the aggregate
more than six Basic Rent Payment Dates,
(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 Lease Event of Default for the purposes of this Indenture,
if during the 12-month period immediately preceding the
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relevant default by the Lessee there shall have been expended by the
Owner Participant pursuant to the second sentence of this Section 4.03
(and shall have not been reimbursed by the Lessee or any Permitted
Sublessee themselves to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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, and if the Equipment Notes shall have been accelerated
pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the
Indenture Trustee may (subject to the rights of the Owner Participant or the
Owner Trustee to cure any such Indenture Event of Default set forth in Section
4.03 hereof and the obligations of the Indenture Trustee set forth in this
Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the
direction of a Majority in Interest of Note Holders, exercise any and all of the
remedies pursuant to Section 18 of the Lease and pursuant to any Sublease
Assignment 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 but, in the case of the Engine, only as permitted by Section 18
of the Lease, and may exclude the Owner Participant, the Owner Trustee and the
Lessee and all Persons claiming under any of them or wholly or partly therefrom;
provided, however, that the Indenture Trustee shall give the Owner Trustee and
the Owner Participant ten days' prior written notice of the initial exercise of
such remedies by the Indenture Trustee under the Lease (if not stayed or
otherwise precluded by applicable law from giving such notice); provided,
further, that the Indenture Trustee shall give the Owner Trustee and the Owner
Participant twenty days' prior written notice of its intention to sell the
Engine. Without limiting any of the foregoing, it is understood and agreed that
the Indenture Trustee may exercise any right of sale of the Engine available to
it, even though it shall not have taken possession of the Engine and shall not
have possession thereof at the time of such sale.
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Anything in this Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Engine; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Engine is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails to participate in such proceedings, the Owner Trustee shall have
the right (without affecting in any way any right or remedy of the Indenture
Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the avoidance
of doubt, it is expressly understood and agreed, subject only to the immediately
preceding paragraph, that the above-described inability of the Indenture Trustee
to exercise any right or remedy under the Lease shall in no event and under
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no circumstance prevent the Indenture Trustee from otherwise exercising all of
its rights, powers and remedies under this Indenture, including without
limitation this Article IV.
(b) If an Indenture Event of Default referred to in clause
(g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment Notes
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the Equipment Notes
which by such declaration shall have become payable) shall have been duly paid
and every other Indenture Default and Indenture Event of Default with respect to
any covenant or provision of this Indenture shall have been cured, then and in
every such case a Majority in Interest of Note Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall
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have cured, in accordance with Section 4.03, the Indenture Event of Default that
resulted in such acceleration.
No Make-Whole Amount shall become payable on the Equipment
Notes as a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Indenture. The Owner Trustee or
Owner Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Engine, etc. (a) Subject to the
rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof
and unless the Owner Participant shall have theretofore purchased the Equipment
Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Equipment Notes shall have been
accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, at the request of the
Indenture Trustee the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such instruments of title and other documents as the Indenture
Trustee may deem necessary or advisable to enable the Indenture Trustee or an
agent or representative designated by the Indenture Trustee, at such time or
times and place or places as the Indenture Trustee may specify, to obtain
possession of all or any part of the Trust Indenture Estate; provided that the
Indenture Trustee shall at the time be entitled to obtain such possession under
Section 4.04(a) and the other applicable provisions of this Indenture. If the
Owner Trustee shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture Trustee
may (i) obtain a judgment conferring on the Indenture Trustee the right to
immediate possession and requiring the Owner Trustee to execute and deliver such
instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents to the fullest extent it
may lawfully do so, and (ii) to the extent permitted by law, pursue
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all or part of the Trust Indenture Estate wherever it may be found (but not in
violation of Section 10.05 hereof or of the Lease) and may enter any of the
premises of the Lessee wherever such Trust Indenture Estate may be or be
supposed to be and search for and take possession of and remove the same (but
not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that the
provisions hereof shall not be construed so as to expand the obligations of the
Lessee under the Lease, including Section 16 thereof). In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, lease,
control or manage the Trust Indenture Estate and to carry on the business
(without limiting the express provisions of Section 5.10 hereof) and to exercise
all rights and powers of the Owner Participant and the Owner Trustee relating to
the Trust Indenture Estate, as the Indenture Trustee 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 Trust Indenture Estate or any part thereof as the Indenture
Trustee may determine; and the Indenture Trustee shall be entitled to collect
and receive directly all tolls, rents (including Rent), revenues, issues,
income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder, except Excepted Payments. The Indenture Trustee shall,
pursuant to the exercise of its remedies under this Article IV, to the extent
permitted by applicable law, be entitled to the appointment of a receiver for
all or any part of the Trust Indenture Estate, whether such receivership be
incidental to a proposed sale of the Trust Indenture Estate or otherwise, and
the Owner Trustee hereby consents to the appointment of such receiver and will
not oppose any such appointment. Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, leasing, control, management or disposition of the
Trust Indenture Estate and of 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
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may elect to make, if any, for taxes, assessments, insurance or other proper
charges upon the Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder 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 or
such Note Holder, then and in every such case the Owner Trustee, the Indenture
Trustee, the Note Holders and the Lessee shall, subject to any determination in
such proceedings, be restored to their former positions and rights hereunder
with respect to the Trust Indenture Estate, and all rights, remedies and powers
of the Indenture Trustee and the Note Holders shall continue as if no such
proceedings had been instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right
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consequent thereon; provided, however, that in the absence of written
instructions from the Holders of all Equipment Notes then outstanding, the
Indenture Trustee shall not waive any Indenture Default (i) in the payment of
the Principal Amount of or interest on any Equipment Note then outstanding, or
(ii) in respect of a covenant or provision hereof which, under Article IX
hereof, cannot be modified or amended without the consent of each Note Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the
event the Indenture Trustee shall have knowledge of an Indenture Event of
Default, or shall have knowledge of an Indenture Default arising either from a
failure to pay Rent or a Lease Default of the type referred to in the second
sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof
to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex,
telegraph or telephone (confirmed by written notice in the manner provided by
Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to
the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof
and of this Section 5.01, the Indenture Trustee shall take such action, or
refrain from taking such action, with respect to any Indenture Event of Default
or Indenture Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Note Holders. Subject to the provisions of Section 5.03
hereof, if the Indenture Trustee shall not have received instructions as above
provided within 20 calendar days after mailing notice of such Indenture Default
or Indenture Event of Default to the Note Holders, the Indenture Trustee may,
subject to instructions thereafter received pursuant to the preceding provisions
of this Section 5.01, take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action, with respect
to such Indenture Default or Indenture Event of Default as it shall determine to
be advisable and in the best interests of the Note Holders 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 its own affairs; provided that the
Indenture Trustee may not sell the Engine or any part thereof without the
consent of a Majority in Interest of Note Holders. In the event the Indenture
Trustee shall at any time elect to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the
case of any such party) not stayed or otherwise prohibited by applicable law,
the Owner Participant, the Note Holders, the Owner Trustee and
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the Lessee. For all purposes of this Indenture, in the absence of actual
knowledge on the part of an officer in the Corporate Trust Office, in the case
of the Indenture Trustee, or its Corporate Trust Administration Department, 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 an Indenture Event of
Default (except, in the case of the Indenture Trustee, the failure of the Lessee
to pay any installment of Rent when due, if any portion of such installment was
then required to be paid to the Indenture Trustee, which failure shall
constitute knowledge of an Indenture Default for purposes of the first sentence
of this Section 5.01) unless notified in writing by the Lessee, the Owner
Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the
Indenture Trustee.
SECTION 5.02. Action Upon Instructions. Subject to the terms
of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, 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 to
take such other action hereunder or under any other Indenture Document or in
respect of any part or all of the Trust Indenture Estate as shall be specified
in such instructions; (ii) take such action with respect to, or to preserve or
protect, the Trust Indenture Estate (including the discharge of Liens) as shall
be specified in such instructions and as are 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 of 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 interest created hereunder in the Trust Indenture Estate as may
be specified from time to time in written instructions of a Majority in Interest
of Note Holders (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may, but shall not be obligated to, execute and
file or cause to be filed any financing statement which it from time to time
deems appropriate or any continuation statement that the Lessee, in discharge of
its obligations under Section 3(v) of the Refunding Agreement or any other
Operative Document, may so request. Notwithstanding the foregoing or anything in
this Indenture to the contrary, the Indenture Trustee may, on the advice of its
counsel and without the consent or approval of any Note Holder, approve any
counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding
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Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve
any opinion issued by such counsel. None of the Owner Participant, the Owner
Trustee or the Lessee have any liability for the failure of the Indenture
Trustee to discharge its obligations hereunder.
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 hereof unless
the Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the first sentence
thereof) or 5.02 or Article IV hereof, nor shall any other provision of this
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 of the other Indenture Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Engine or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and
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obtain such instructions promptly so as not unreasonably to delay the proposed
action of Lessee in respect of which the instructions are sought. . The
Indenture Trustee agrees that it will in its individual capacity and at its own
cost and expense (but without any right of indemnity in respect of any such cost
or expense under Article VII hereof or any other Operative Document) promptly
take such action as may be necessary to duly discharge all Lenders' Liens on any
part of the Trust Indenture Estate attributable to it in its individual
capacity.
SECTION 5.05. No Action Except Under Lease, Refunding
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, or place Liens on, the Engine or any
other part of the Trust Indenture Estate except (i) as required or permitted by
the terms of the Lease or the Refunding Agreement, or (ii) in accordance with
the powers granted to, or the authority conferred upon, the Owner Trustee and
the Indenture Trustee pursuant to this Indenture and in accordance with the
terms hereof.
SECTION 5.06. Replacement Engine. (a) If at any time and from
time to time, the Engine may, or may be required to, be replaced under Section
6(a) or 11(a) of the Lease by a Replacement Engine, as the case may be, in
accordance with the provisions of this Section 5.06 and the provisions of said
Sections of the Lease, the Owner Trustee shall, at such time or times, but
subject to compliance with the conditions to such replacement set forth in the
Lease, direct the Indenture Trustee to execute and deliver to or as directed in
writing by the Owner Trustee an appropriate instrument releasing the 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:
(1) A written request from the Owner Trustee, requesting such release
and specifically describing the Engine so to be released and the Replacement
Engine.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. [Intentionally reserved]
B. With respect to the replacement of the Engine:
(i) a description of the Engine which shall be identified
by manufacturer's name and serial number;
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(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) to be received as consideration
for the Engine;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Engine the Owner Trustee will hold title to the
Replacement Engine free and clear of all Liens except Permitted Liens,
that such Replacement Engine will on such date be in good operating
condition, and that the Replacement Engine is the same or an improved
model as the Engine;
(iv) the value, remaining useful life and utility of the
Replacement Engine as of the date of such certificate (which value,
remaining useful life and utility shall not be less than the then
value, remaining useful life and utility of the Engine, assuming the
Engine was in the condition and repair required to be maintained under
the Lease (but without regard to hours and cycles until overhaul));
(v) that no Lease 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 the Replacement Engine; and
(vi) that each of the conditions specified in Section 11(b)
of the Lease with respect to the Replacement Engine have been
satisfied.
(3) The appropriate instrument or instruments (i) transferring to the
Owner Trustee title to the Replacement Engine to be received as consideration
for the Engine, (ii) assigning to the Owner Trustee the benefit of all
manufacturer's and vendor's warranties generally available with respect to such
Replacement Engine (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Engine to the Lien of this Indenture and subjecting to any
relevant Assigned Sublease and Sublease Assignment, including, without
limitation, an Indenture Supplement.
(4) [Intentionally reserved]
(5) The opinion of counsel to the Lessee, satisfactory to the
Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that 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
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of may be properly released from the Lien of this Indenture and all
conditions precedent herein provided for relating to such release have
been complied with;
(ii) the Replacement Engine has been validly subjected to the
Lien of this Indenture and covered by the Lease, the instruments
subjecting the Replacement Engine to the Lien of this Indenture and the
Lease, and subjecting to any relevant Assigned Sublease and Sublease
Assignment, as the case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act or any other law then applicable
to the perfection and the effect of perfection or non-perfection of a
security interest in the Engine or the Lien of this Indenture, and no
further action, filing or recording of any document is necessary in
order to establish and perfect, in the United States and, if the
establishment of title and perfection and the effect of perfection or
non-perfection of a security interest in such Replacement Engine or the
Lien of this Indenture are governed by the laws of a jurisdiction other
than the United States, in such jurisdiction, the legal title to such
Replacement Engine and the Lien of this Indenture on such Replacement
Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as 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 to the
Replacement Engine to the same extent as with respect to the Engine
prior to such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Engine as contemplated by Section 11
of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit
of the Note Holders and the Lessee, subject to fulfillment of the conditions
precedent and compliance by the Lessee with its obligations set
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forth in Section 11 of the Lease, to execute and deliver the appropriate
instruments as contemplated by Section 5.06 hereof, and execute and deliver to
the Lessee (or any relevant Permitted Sublessee) an appropriate instrument
releasing the Engine being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Engine as contemplated by Section 11 of the Lease
and Section 5.06 hereof, all provisions of this Indenture relating to the Engine
being replaced shall be applicable to such Replacement Engine with the same
force and effect as if such Replacement Engine was the same engine as the Engine
being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Note Holder shall affect the sufficiency of
such notice with respect to other Note Holders. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Note Holders
shall be filed with the Indenture Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this Indenture, including
the Granting Clause, but subject always to the final paragraph of this Section
5.10, the following rights shall be reserved to the Owner Trustee or Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
(a) the Owner Trustee or the Owner Participant may, without
the consent of the Indenture Trustee, demand, collect, sue for or
otherwise obtain all amounts included in
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Excepted Payments from the Lessee, exercise any election or option or
make any decision or determination or give or receive any notice,
consent, waiver or approval in respect of any Excepted Payment and seek
legal or equitable remedies to require the Lessee to maintain the
insurance coverage referred to in Section 12 of the Lease (or the
comparable provisions of any Assigned Sublease) and such specific
performance of the covenants of the Lessee under the Lease (or the
comparable provisions of any Assigned Sublease) relating to the
protection, maintenance, possession and use of the Engine; provided,
that the rights referred to in this clause (a) shall not be deemed to
include the exercise of any remedies provided for in Section 18 of the
Lease (or the comparable provisions of any Assigned Sublease) other
than the right to proceed by appropriate court action, either at law or
in equity, to enforce payment by the Lessee of such amounts included in
Excepted Payments or performance by the Lessee of such insurance
covenant or to recover damages for the breach thereof or for specific
performance of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent
of the Owner Trustee, enter into, execute and deliver amendments or
modifications in respect of any of the provisions of the Lease, any
Assigned Sublease or any Sublease Assignment and (ii) unless an
Indenture Event of Default and an Indenture Trustee Event shall have
occurred and be continuing, the Indenture Trustee shall not, without
the consent of the Owner Trustee, which consent shall not be withheld
if no right or interest of the Owner Trustee or the Owner Participant
shall be materially diminished or impaired thereby, (A) enter into,
execute and deliver waivers or consents in respect of any of the
provisions of the Lease, any Assigned Sublease or any Sublease
Assignment, or (B) approve any accountants, engineers, appraisers or
counsel as satisfactory to render services for or issue opinions to the
Owner Trustee pursuant to the Operative Documents; provided that,
whether or not an Indenture Event of Default has occurred and is
continuing, the Owner Trustee's consent shall be required with respect
to any waivers or consents in respect of any of the provisions of
Section 6, 12 or 16 of the Lease, or of any other Section of the Lease
to the extent such action shall affect (y) the amount or timing of, or
the right to enforce payment of any Excepted Payment or (z) the amount
or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of
the Owner Trustee) which, absent the occurrence and continuance of an
Indenture Event of Default hereunder, would be distributable to the
Owner Trustee under Article III hereof;
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(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses
(a), (b) and (c) above, so long as no Indenture Event of Default has
occurred and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner Trustee and the Owner Participant under the Lease shall be
exercised by the Owner Trustee and/or the Owner Participant, as the
case may be, to the exclusion of the Indenture Trustee and any Note
Holder and without the consent of the Indenture Trustee or any Note
Holder; provided that the foregoing shall not, nor shall any other
provision of this Section 5.10, limit (A) any rights separately and
expressly granted to the Indenture Trustee or any Note Holder under the
Lease or the other Operative Documents (including, without limitation,
Section 15 of the Refunding Agreement) or (B) the right of the
Indenture Trustee or any Note Holder to receive any funds to be
delivered to the Owner Trustee under the Lease (except with respect to
Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be
in default under Section 18 thereof and (C) subject only to the provisions of
Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such
Section 18 (other than in connection with Excepted Payments) and in Article IV
hereof.
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SECTION 5.11. Evidence of Action Taken by Note Holder. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Note Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Note Holders in person or by agent duly appointed in
writing, and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof
of execution of any instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Sections 5.04,
5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner
Trustee if made in the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far as
concerns such Equipment Note. Except as aforesaid any such action taken by the
Note Holder shall be conclusive and binding upon such Note Holder and upon all
future Note Holders and owners of such Equipment Note and of any Equipment Notes
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Equipment Note. Any action
taken by the Note Holders of the percentage in aggregate Principal Amount of the
Equipment Notes specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee in its individual capacity shall be
answerable or accountable under any circumstances, except for its own willful
misconduct or
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gross negligence (other than for the handling of funds, for which the standard
of accountability shall be negligence), or as provided in the fourth sentence of
Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and
except for liabilities that may result, in the case of the Trust Company, from
the inaccuracy of any representation or warranty of the Trust Company in the
Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the
failure to perform any covenant of the Trust Company pursuant to Section 4.01(a)
hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of
the Indenture Trustee, from the inaccuracy of any representation or warranty, or
failure to perform any covenant, of the Indenture Trustee made in its individual
capacity herein, in the Refunding Agreement or in any other document. None of
the Owner Participant, the Trust Company or the Indenture Trustee shall be
liable for any action or inaction of any other one of such parties, except, in
the case of the Owner Participant, for any action or omission of the Owner
Trustee performed or omitted on the instructions of the Owner Participant. The
Owner Trustee shall not be deemed a trustee for the Note Holders for any
purpose.
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, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case
of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof
and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner
Trustee and the Indenture Trustee shall have no duty (i) to see to any recording
or filing of the Lease or of this Indenture or any other document, or to see to
the maintenance of any such recording or filing, (ii) to see to any insurance on
the Engine, 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 Trust Indenture Estate, (iv) to confirm, verify
or inquire into the failure to receive any financial statements of the Lessee or
(v) to inspect the Engine at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease or
any of the Permitted Sublessee's covenants under any Assigned Sublease with
respect to the Engine.
SECTION 6.03. No Representations or Warranties as to Engine or
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE)
NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE
MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH
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SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE ENGINE 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 ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE ENGINE, except that the Trust
Company warrants that (i) on the Delivery Date for the Engine the Owner Trustee
shall have received whatever interest in the Engine was conveyed to it under the
Warranty Bill of Sale subject to the rights of the parties to the Indenture
Documents and (ii) the Engine shall be free and clear of Lessor's Liens
attributable to the Trust Company. Neither the Trust Company nor the Indenture
Trustee makes or shall be deemed to have made any representation or warranty as
to the validity, legality or enforceability of this Indenture, the Trust
Agreement, the Equipment Notes or any Indenture Documents 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 in
its individual capacity or as Indenture Trustee made under this Indenture or in
the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any
moneys paid to or retained by the Indenture Trustee pursuant to any provision
hereof and not then required to be distributed to any Note Holder, the Lessee or
the Owner Trustee as provided in Article III hereof need not be segregated in
any manner except to the extent required by law, 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 hereof) 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 any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of
the Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of Equipment Notes outstanding as of any date, the Owner
Trustee may for all purposes hereof
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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, but in the case of any such
certificate, the Owner Trustee and the Indenture Trustee shall be under a duty
to examine the same to determine whether or not it conforms to the requirements
of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third
sentence of Section 2.04(a)) through agents or attorneys and shall not be
responsible for any misconduct or negligence on the part of any such agent or
attorney appointed with due care hereunder. The Indenture Trustee may, at the
expense of the Trust Indenture Estate, consult with counsel, accountants and
other skilled Persons to be selected and retained by it, and the Owner Trustee
and the Indenture Trustee shall not be liable for anything done, suffered or
omitted in good faith by them in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no
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right against any Note Holder or the Owner Participant for any fee as
compensation for its services as trustee under this Indenture.
SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee (in its individual
capacity and as trustee) from and after the Restatement Date (whether or not
also agreed to be indemnified against by any other Person under any other
document) in any way relating
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to or arising out of this Indenture, the Trust Agreement, the Equipment Notes,
the other Indenture Documents or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease,
possession, use, operation, condition, sale, return or other disposition of the
Engine (including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust
Indenture Estate or the action or inaction of the Indenture Trustee hereunder,
except only (i) in the case of willful misconduct or gross negligence (or
negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the
Indenture Trustee, in its individual capacity and as Indenture Trustee, and its
successors, permitted assigns, agents and servants thereunder; provided that so
long as the Lease is in effect, the Indenture Trustee shall not make any claim
under this Section 7.01 for any amount indemnified against by the Lessee under
the Lease without first (but only to the extent not stayed or otherwise
prevented by operation of law) making demand on the Lessee for payment of such
amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee
promptly of any claim for which it may seek indemnity. The Lessee shall be
entitled to defend any claim by the Indenture Trustee to the extent provided in
Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to
indemnification from the Trust Indenture Estate for any liability, obligation,
loss, damage, penalty, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7.01 to the extent not reimbursed
by the Lessee or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same the Indenture Trustee shall
have a prior Lien on the Trust Indenture Estate. The indemnities contained in
this Section 7.01 shall survive the termination of this Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
agent or affiliate of the Trust Company or the Owner Participant (the
"Exculpated Equity Persons") shall have any obligation, duty or liability of any
kind whatsoever to the Indenture Trustee or
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any such Note Holder in connection with the exercise by any Exculpated Equity
Person of any rights of the Owner Trustee or the taking of any action or the
failure to take any action by any Exculpated Equity Person in connection with
any rights of the Owner Trustee under this Indenture or the Lease, and each such
Note Holder hereby waives and releases, to the extent permitted by applicable
law, each Exculpated Equity Person of any and all such obligations, duties or
liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case
of any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Trust Company pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to the Indenture Trustee and to each Note Holder.
SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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.
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(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee and to the predecessor Indenture
Trustee an instrument accepting and assuming such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Indenture Trustee, without further act, shall become vested with and
bound by all the estates, properties, rights, powers, duties and obligations of
the predecessor Indenture Trustee hereunder and under the other Indenture
Documents in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; but nevertheless upon the written
request of such successor Indenture Trustee, such predecessor Indenture Trustee
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor Indenture Trustee all moneys or other property then held by
such predecessor Indenture Trustee hereunder, subject nevertheless to its claim
provided for in Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall
be a bank or trust company having a combined capital and surplus of at least
$200,000,000 if there be such an institution willing, able and legally qualified
to perform the duties of the Indenture Trustee hereunder upon reasonable or
customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the foregoing,
upon the request of the Owner Trustee or the Lessee, any such successor
corporation referred to in this Section 8.02(d) shall deliver to the Owner
Trustee and the Lessee an instrument confirming its status as the Indenture
Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate may at the time be
located or in which any action of the Indenture Trustee may be required to be
performed or taken, the Indenture Trustee, by an instrument in writing signed by
it, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee,
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acting jointly with the Indenture Trustee, of all or any part of the Trust
Indenture Estate to the full extent that local law makes it necessary for such
separate trustee or separate trustees or co-trustee acting jointly with the
Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust 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
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, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act, and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Indenture
Trustee;
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(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional
trustee or trustees and separate trustee or trustees jointly except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Indenture Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the
holding of title to the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional
trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent
of, the Indenture Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.03,
the powers of any additional trustee or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
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ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures.
(a) Except as otherwise provided in Section 5.10 hereof, and except with respect
to Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or supplement to the Lease, or execute and deliver any written
waiver or modification of, or consent under, the terms of the Lease, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee acting on instructions of a Majority in
Interest of Note Holders. Anything to the contrary contained in this Section
9.01 notwithstanding, without the necessity of the consent of any of the Note
Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i)
any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and
Lessee may, so long as no Indenture Event of Default has occurred and is
continuing, enter into amendments of or additions to the Lease to modify
Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such
amendment would adversely affect the rights or exercise of remedies under
Section 18 of the Lease) so long as such amendments, modifications and changes
do not and would not (A) affect the time of, or reduce the amount of, Basic Rent
or Stipulated Loss Value payments until after the payment in full of all Secured
Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the
value, utility or useful life of the Engine or (D) otherwise adversely affect
the Note Holders in any material respect, and (iii) the Indenture Trustee may
approve any Permitted Sublessee as provided in clause (c) of the definition of
such term set forth in the Lease and may exercise the rights of the Indenture
Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt,
nothing in this Section 9.01 shall limit in any way the rights of the Owner
Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain
rights and powers under the Lease to the exclusion of the Indenture Trustee and
any Note Holder and without the consent of the Indenture Trustee or any Note
Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects the Indenture
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Trustee's own rights, duties or immunities under this Indenture or otherwise,
whether in its official or individual capacity.
Any supplemental indenture authorized by the provisions of
this Section 9.01 may be executed without the consent of the Note Holders
notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, or does not adversely affect the Note Holders in any
material respect. Upon the written request of a Majority in Interest of Note
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the Lease which would permit redemption of
Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any
of the provisions of Section 4(b) of the Lease, or modify, amend or supplement
the Lease, any Assigned Sublease or any Sublease
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Assignment, or consent to any assignment of any thereof, in either case
releasing the Lessee (or Permitted Sublessee) from its obligations in respect of
the payment of Basic Rent or Stipulated Loss Value for the Engine or altering
the absolute and unconditional character of the obligations of Lessee to pay
Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable
provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on
the Trust Indenture Estate or any part thereof other than Permitted Liens or
deprive any Note Holder of the benefit of the Lien of this Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely as
Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Engine or any Replacement Engine; (v)
to add to the covenants of the Owner Trustee for the benefit of the Note
Holders, or to surrender any rights or powers herein conferred upon the Owner
Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the
Note Holders; and (vii) to include on the Equipment Notes any legend as may be
required by law.
(d) Without the consent of the Lessee no amendment or
supplement to this Indenture or waiver or modification of the terms hereof shall
adversely affect the Lessee in any material respect or impose upon the Lessee
any additional indemnification obligations.
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SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Indenture Trustee, the Owner Trustee
and the Note Holders shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for all and any
purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such copy
to each Note Holder), but the
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failure of the Owner Trustee or the Indenture Trustee to mail such conformed
copies shall not impair or affect the validity of such document. The Indenture
Trustee will furnish to each Note Holder, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates
and other instruments furnished to the Indenture Trustee under the Lease or
hereunder to the extent that the same were not required to have been furnished
to such Note Holder pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX, no
written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX 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 Engine or other property thereto or to release
the Engine or other property therefrom or to execute and deliver an Indenture
Supplement, in each case pursuant to the terms hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge
of such Lien and the termination of such security interest in the Engine and
release of 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
Trustee to give effect to such discharge, termination and release; provided,
however, that this Indenture
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and the trusts created hereby shall earlier terminate and this Indenture shall
be of no further force or effect as expressly provided pursuant to Article X
hereof or upon any sale or other final disposition by the Indenture Trustee of
all property part of the Trust Indenture Estate and the final distribution by
the Indenture Trustee of all moneys or other property or proceeds constituting
part of the Trust Indenture Estate in accordance with the terms hereof. Except
as aforesaid otherwise provided, this Indenture and the trusts created hereby
shall continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Note Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Engine by Indenture Trustee is Binding.
Any sale or other conveyance of the Engine by the Indenture Trustee made
pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the Engine. 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 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of
Trust Indenture
<PAGE> 91
- 86 -
the Engine, except in accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations, directions, consents,
waivers or documents required or permitted by the terms of this Indenture shall
be in English and in writing, mailed by first-class registered or certified
mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the
Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration Department (telex:
835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the
Owner Participant at its address set forth in the Refunding Agreement, (ii) if
to the Indenture Trustee, addressed to it at its office at 777 Main Street,
Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex:
99339; answerback: CTNB-HTFD; telecopy: (203) 240-7920) or (iii) if to the Owner
Participant, the Lessee or any Note Holder, addressed to such party at such
address as such party shall have furnished by notice to the Owner Trustee and
the Indenture Trustee, or, until an address is so furnished, addressed to the
address of such party (if any) set forth on the signature pages to the Refunding
Agreement or in the Register. Whenever any notice in writing is required to be
given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of
the other of them, such notice shall be deemed and such requirement satisfied
when such notice is received. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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
Trust Indenture
<PAGE> 92
- 87 -
and permitted assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Note Holder
shall bind the successors and assigns of such Note Holder. This Indenture and
the Trust Indenture Estate shall not be affected by any amendment or supplement
to the Trust Agreement or by any other action taken under or in respect of the
Trust Agreement, except that each reference in this Indenture to the Trust
Agreement shall mean the Trust Agreement as amended and supplemented from time
to time to the extent permitted hereby and thereby. Each Note Holder by its
acceptance of an Equipment Note agrees to be bound by this Indenture and all
provisions of the Refunding Agreement applicable to a Note Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Indenture Trustee, the
Owner Trustee, the Owner Participant, any Note Holder or any bank or other
Affiliate of any of them may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Lessee or any Permitted Sublessee fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Lessee for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the
parties that the Owner Trustee, as lessor under the Lease (and the Indenture
Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled
to the benefits of Section 1110 of the Bankruptcy Code with respect to the right
to take possession of the Engine and Parts as provided in the Lease in the event
of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor,
and in any instance where more than one construction is possible of the terms
and conditions hereof or of any other pertinent Operative Document, each such
party agrees
Trust Indenture
<PAGE> 93
- 88 -
that a construction which would preserve such benefits shall control over any
construction which would not preserve such benefits.
Trust Indenture
<PAGE> 94
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee
By_______________________________________
Title:
FLEET NATIONAL BANK,
not in its individual capacity,
except as expressly provided
herein, but solely as Indenture
Trustee
By_______________________________________
Title:
Trust Indenture
<PAGE> 95
EXHIBIT A
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E2]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1991 AWA-E2]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1991 AWA-E2] dated
as of March 15, 1991 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1991
AWA-E2] dated as of March 15, 1991, as amended and restated as of November 26,
1996 (as so amended and restated, the "Indenture") between the Owner Trustee and
Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut, National Association, and The Connecticut National
Bank), as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof
which shall particularly describe the Engine (such term and other defined terms
in the Indenture being herein used with the same meanings) and any Replacement
Engine included in the Trust Indenture Estate, and shall specifically mortgage
such Engine or Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1
dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July
29, 1993, subjected to the Lien of such Original Indenture the engine therein
described, which Original Indenture and Trust Indenture Supplement No. 1 have
been duly recorded with the Federal Aviation Administration as one document on
March 28, 1991 and assigned Conveyance No. L62815, which Amendment No. 1 has
been duly recorded with the Federal Aviation Administration on April 29, 1992
and assigned Conveyance No. DD002563 and which Amendment No. 2 has been duly
recorded with the Federal Aviation Administration on August 6, 1993 and assigned
Conveyance No. F59679.
<PAGE> 96
- 2 -
WHEREAS(1), the Indenture relates to the Engine 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(2), the Owner Trustee has, as provided in the
Indenture, heretofore executed and delivered to the Indenture Trustee [(3)]
Indenture Supplement(s) for the purpose of specifically subjecting to the Lien
of the Indenture one or more engines therein described, which Indenture
Supplement(s) is (are) dated and has (have) been duly recorded with the Federal
Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
NOW, THEREFORE, This Supplement Witnesseth, that, to secure
the prompt payment of the Principal Amount of, interest on, Make-Whole Amount,
if any, and all other amounts due with respect to, all 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 contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt 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,
- --------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
(2) This recital not to be included in the first Indenture
Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 97
- 3 -
transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its
successors and assigns, for the security and benefit of the Note Holders from
time to time, in the trust created by the Indenture, a first priority security
interest in and mortgage Lien on all estate, right, title and interest of the
Owner Trustee in, to and under the following described property:
AIRCRAFT ENGINE
one aircraft engine having 750 or more rated
takeoff horsepower or the equivalent thereof,
identified as follows:
Manufacturer's
Manufacturer Model Serial Number
------------ ----- --------------
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engine.
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 Note Holders from time to time, in the trust created
by the Indenture, all of the estate, right, title and interest of the Owner
Trustee in, to and under the Lease and Lease Supplement [GPA 1991 AWA-E2] No. 2
of even date herewith (other than Excepted Payments and Excepted Rights)
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 Note Holders from time to time for the uses and purposes and
subject to the terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and shall form a part of it, and the Indenture is
Form of Trust Indenture Supplement
<PAGE> 98
- 4 -
hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Engine referred to in this Supplement and the aforesaid Lease Supplement has
been delivered to the Owner Trustee and is included in the property of the Owner
Trustee covered by all the terms and conditions of the Trust Agreement, subject
to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 99
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this
Supplement to be duly executed by one of its officers thereunto duly authorized
on the day and year first above written.
WILMINGTON TRUSTCOMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely
as Owner Trustee
By____________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 100
SCHEDULE I
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E2]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- -------- ---------
<S> <C> <C> <C>
Series A $1,343,995 02-Jul-2009 6.85%
Series B $ 503,996 02-Jan-2006 6.93%
Series C $ 524,996 02-Jan-2004 6.86%
Series D $ 489,995 02-Jul-2002 8.16%
Series E $1,458,204 02-Jan-2004 10.50%
</TABLE>
<PAGE> 101
EQUIPMENT NOTES AMORTIZATION
SERIES A
Engine: V0049
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 102
- 2 -
SERIES B
Engine: V0049
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 103
- 3 -
SERIES C
Engine: V0049
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 104
- 4 -
SERIES D
Engine: V0049
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 105
- 5 -
SERIES E
Engine: V0049
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 106
SCHEDULE II
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E2]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1D, dated November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1E, dated November 26, 1996.
Schedule II
<PAGE> 1
EXHIBIT 4.43
- --------------------------------------------------------------------------------
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E3]
Dated as of November 26, 1996
between
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
and
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One IAE International
Aero Engines AG V2500-A1 Engine
Manufacturer's Serial No. V0019
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
GRANTING CLAUSE.............................................................. 3
HABENDUM CLAUSE.............................................................. 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions........................................... 8
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes....................................... 21
SECTION 2.02. Issuance and Terms of Equipment Notes......................... 26
SECTION 2.03. Payments from Trust Indenture Estate
Only........................................... 29
SECTION 2.04. Method of Payment............................................. 31
SECTION 2.05. Application of Payments....................................... 33
SECTION 2.06. Termination of Interest in Trust
Indenture Estate............................... 34
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes................................ 34
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes................................ 36
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation................................... 36
SECTION 2.10. Mandatory Redemptions of Equipment
Notes.......................................... 37
SECTION 2.11. Redemptions; Notice of Redemption............................. 37
SECTION 2.12. Option to Purchase Equipment Notes............................ 38
SECTION 2.13. Subordination................................................. 39
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions.................................... 40
SECTION 3.02. Event of Loss and Replacement................................. 42
SECTION 3.03. Payment After Indenture Event of
Default, etc................................... 43
SECTION 3.04. Certain Payments.............................................. 46
SECTION 3.05. Other Payments................................................ 47
SECTION 3.06. Payments to Owner Trustee..................................... 47
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee........................................ 48
(i)
<PAGE> 3
Page
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner
Trustee........................................ 48
SECTION 4.02. Indenture Events of Default................................... 50
SECTION 4.03. Certain Rights................................................ 53
SECTION 4.04. Remedies...................................................... 55
SECTION 4.05. Return of the Engine, etc..................................... 58
SECTION 4.06. Remedies Cumulative........................................... 60
SECTION 4.07. Discontinuance of Proceedings................................. 60
SECTION 4.08. Waiver of Past Indenture Defaults............................. 60
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default.......................... 61
SECTION 5.02. Action Upon Instructions...................................... 62
SECTION 5.03. Indemnification............................................... 63
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions...................... 63
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions........... 64
SECTION 5.06. Replacement Engine............................................ 64
SECTION 5.07. Indenture Supplements for Replacements........................ 66
SECTION 5.08. Effect of Replacement......................................... 67
SECTION 5.09. Notices, etc.................................................. 67
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant.............................. 67
SECTION 5.11. Evidence of Action Taken by Note Holder....................... 70
SECTION 5.12. Right of Revocation of Action Taken........................... 70
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties............................... 70
SECTION 6.02. Absence of Duties............................................. 71
SECTION 6.03. No Representations or Warranties as to
Engine or Documents............................ 71
SECTION 6.04. No Segregation of Moneys; No Interest......................... 72
SECTION 6.05. Reliance; Agents; Advice of Counsel........................... 72
SECTION 6.06. Capacity in Which Acting...................................... 73
SECTION 6.07. Compensation.................................................. 73
(ii)
<PAGE> 4
Page
SECTION 6.08. May Become Note Holder........................................ 74
SECTION 6.09. Further Assurances; Financing
Statements..................................... 74
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification...................................... 74
SECTION 7.02. Exculpation and Release of Liability.......................... 75
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee............................. 76
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor.............. 76
SECTION 8.03. Appointment of Separate Trustees.............................. 77
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures..................................... 80
SECTION 9.02. Effect of Supplemental Indenture.............................. 83
SECTION 9.03. Documents to Be Given to Trustee.............................. 83
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures........................ 83
SECTION 9.05. Trustees Protected............................................ 83
SECTION 9.06. Documents Mailed to Note Holders.............................. 83
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement............. 84
SECTION 9.08. Notices to Liquidity Provider................................. 84
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture..................................... 84
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders........................ 85
SECTION 10.03. Sale of Engine by Indenture Trustee is
Binding....................................... 85
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
(iii)
<PAGE> 5
Page
Lessee and Note Holders....................... 85
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease............................... 85
SECTION 10.06. Notices...................................................... 86
SECTION 10.07. Severability................................................. 86
SECTION 10.08. No Oral Modifications or Continuing
Waivers....................................... 86
SECTION 10.09. Successors and Assigns....................................... 86
SECTION 10.10. Headings..................................................... 87
SECTION 10.11. Normal Commercial Relations.................................. 87
SECTION 10.12. Governing Law; Counterpart Form.............................. 87
SECTION 10.13. Section 1110................................................. 87
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
(iv)
<PAGE> 6
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E3]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY
AGREEMENT [GPA 1991 AWA-E3] (this "First Amended and Restated Indenture" or this
"Indenture") dated as of November 26, 1996, between WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity except as otherwise
specifically set forth herein, but solely as owner trustee under the Trust
Agreement referred to below (in such capacity, together with its successors, the
"Owner Trustee"), and FLEET NATIONAL BANK (formerly known as Fleet National Bank
of Connecticut, Shawmut Bank Connecticut, National Association, and The
Connecticut National Bank), a national banking association, not in its
individual capacity except as otherwise specifically set forth herein, but
solely as indenture trustee hereunder (in such capacity, together with its
successors, the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Wilmington Trust Company
entered into the Trust Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991,
as supplemented by Trust Agreement Supplement [GPA 1991 AWA-E3] No. 1 dated
March 27, 1991, and as further supplemented by Trust Agreement Supplement [GPA
1991 AWA-E3] No. 2 dated the date hereof (as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof, hereof and of
the Refunding Agreement, the "Trust Agreement"), whereby, among other things,
Wilmington Trust Company has declared a certain trust for the use and benefit of
the Owner Participant, subject, however, to the Trust Indenture Estate created
pursuant hereto for the use and benefit of (to the extent set forth herein), and
with the priority of certain payments to, the Holders of Equipment Notes issued
hereunder, and the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, (i) the Owner Trustee and the Indenture Trustee
entered into the Trust Indenture and Security Agreement [GPA 1991 AWA-E3] dated
as of March 15, 1991, as supplemented by Trust Indenture Supplement No. 1 dated
March 27, 1991, which were recorded by the Federal Aviation Administration on
March 28, 1991 as one instrument and assigned Conveyance No. M25990, as amended
by Amendment No. 1 dated March 27, 1992, recorded by the Federal
Trust Indenture
<PAGE> 7
- 2 -
Aviation Administration on April 30, 1992 and assigned Conveyance No. DD002564,
and as further amended by Amendment No. 2 dated as of July 29, 1993, recorded by
the Federal Aviation Administration on August 11, 1993 and assigned Conveyance
No. F59684 (collectively, as so amended, supplemented or otherwise modified to
the date hereof, the "Original Indenture"), (ii) the Owner Trustee and the
Original Head Lessee entered into the Engine Lease Agreement [GPA 1991 AWA-E3]
dated as of March 15, 1991, as supplemented by Lease Supplement [GPA 1991
AWA-E3] No. 1 dated March 27, 1991, which were recorded by the Federal Aviation
Administration on March 28, 1991 as one instrument and assigned Conveyance No.
M25991 (collectively, as so amended, supplemented or otherwise modified to the
date hereof, the "Original Lease") and (iii) pursuant to the Original Indenture,
the Owner Trustee issued and sold to the Lenders (as defined in the Original
Indenture) the Original Loan Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and
restate the Original Lease pursuant to Assignment and Amendment No. 1 and
Sublease Termination Agreement [GPA 1991 AWA-E3] dated as of the date hereof
among the Original Head Lessee, as assignor and the Original Sublessee, as
assignee, the Owner Trustee and the Indenture Trustee and the Amended and
Restated Engine Lease Agreement [GPA 1991 AWA-E3] dated as of the date hereof
between the Owner Trustee and the Lessee (as so assigned, amended and restated,
the "Amended and Restated Lease" or the "Lease") and to enter into Lease
Supplement No. 2 and (ii) cause the implementation of the Refinancing
Transaction pursuant to which, among other things, the Original Loan
Certificates issued pursuant to the Original Indenture shall be prepaid and new
Equipment Notes shall be issued to the Pass Through Trustees (or their
designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (iii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture
Estate hereunder, among other things, of certain of the Owner Trustee's estate,
right, title and interest in and to the Engine and, except as hereinafter
expressly provided, all of the Owner Trustee's right, title and interest in, to
and under the Lease (as amended and restated to date and as the same may at any
time and from time to time be further amended, restated or otherwise modified in
accordance with the terms thereof and hereof) and all payments and other amounts
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable
Trust Indenture
<PAGE> 8
- 3 -
benefit and security of the Note Holders, subject to Section 2.13
and Article III hereof;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Owner Trustee and authenticated, issued and
delivered by the Indenture Trustee hereunder, the legal, valid and binding
obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this First Amended and
Restated Indenture the legal, valid and binding obligation of the Owner Trustee,
for the uses and purposes herein set forth, in accordance with its terms, have
been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST
INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment
of the Principal Amount of, interest on, Make-Whole Amount, if any, and all
other amounts due with respect to, all Equipment Notes from time to time
outstanding hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions contained herein and in the
Refunding Agreement and the Equipment Notes, for the benefit of the Note
Holders, and the prompt payment of any and all amounts from time to time owing
hereunder and under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee to the Note Holders and for the uses and purposes and
subject to the terms and provisions hereof, and in consideration of the premises
and of the covenants herein contained, and of the acceptance of the 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, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture Supplement or any indenture supplemental hereto, are included within
the Trust Indenture Estate), to wit:
Trust Indenture
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(1) the Engine and all replacements thereof and substitutions
therefor to which the Owner Trustee shall from time to time acquire an
interest under the Lease, all as more particularly described in the
Indenture Supplement executed and delivered with respect to the Engine
or any such replacements or substitutions therefor, as provided in this
Indenture, and all records, logs and other documents to which the Owner
Trustee shall from time to time acquire an interest at any time
maintained by the Lessee with respect to the foregoing property;
(2) the Lease (including each Lease Supplement) and all Rent
thereunder, including, without limitation, all amounts of Basic Rent,
Supplemental Rent and payments of any kind thereunder; the Refunding
Agreement; the Purchase Agreement (to the extent assigned by the
Purchase Agreement Warranties Assignment); the Purchase Agreement
Warranties Assignment, with the Consents and Agreements attached
thereto; and the Warranty Bill of Sale; in each case including, without
limitation, (x) all rights of the Owner Trustee to exercise any
election or option or to make any decision or determination or to give
any notice, consent, waiver or approval or to take any other action
under or in respect of any such document or to accept surrender or
redelivery of the Engine or any part thereof, as well as all the
rights, powers and remedies on the part of the Owner Trustee, whether
arising under any such document or by statute or at law or in equity,
or otherwise, arising out of any Lease Event of Default, and (y) any
right to restitution from the Lessee, the Manufacturer, or any other
Person in respect of any determination of invalidity of any such
document;
(3) each Sublease Assignment and each Assigned Sublease (to
the extent assigned under such Sublease Assignment), and including,
without limitation, all rents or other payments of any kind made under
such Assigned Sublease (to the extent assigned under such Sublease
Assignment), all collateral security or credit support (in the nature
of a guarantee, letter of credit, credit insurance, Lien on or security
interest in any property or otherwise) for the obligations of the
Permitted Sublessee thereunder (to the extent assigned under such
Sublease Assignment) and all rights of the Owner Trustee to exercise
any election or option or to give any notice, consent, waiver, or
approval under or with respect of any thereof or to accept any
surrender of the Engine or any part thereof as well as any rights,
powers or remedies on the part of the Owner Trustee (in each case to
the extent assigned to the Owner Trustee), whether arising under any
Assigned Sublease or any Sublease Assignment or by statute or at law or
in equity, or
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otherwise, arising out of any default under any Assigned
Sublease;
(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, without limitation, all payments or
proceeds payable to the Owner Trustee after termination of the Lease
with respect to the Engine 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 requisition proceeds with respect to the Engine or any
part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Engine or any part thereof, including but not limited to the insurance
required under Section 12 of the Lease or under any comparable
provision of any Assigned Sublease (but excluding any excess insurance
maintained by the Lessee and not required under Section 12 of the Lease
or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and
all rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any other
Person in accordance with the provisions of this Agreement, AND SUBJECT TO
Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel paper original executed
counterparts of the Original Lease and Lease Supplement No. 1, certified copies
of the Purchase Agreement Warranties Assignment and the Consents and Agreements
attached thereto, and the original Warranty Bill of Sale. Concurrently with the
delivery of this Indenture, the Owner Trustee is delivering to the Indenture
Trustee the chattel paper
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original executed counterparts of the Amended and Restated Lease and Lease
Supplement No. 2. All property referred to in this Granting Clause, whenever
acquired by the Owner Trustee, shall secure all obligations under and with
respect to the Equipment Notes at any time outstanding. Any and all properties
referred to in this Granting Clause which are hereafter acquired by the Owner
Trustee, shall, without further conveyance, assignment or act by the Owner
Trustee or the Indenture Trustee thereby become and be subject to the security
interest hereby granted as fully and completely as though specifically described
herein.
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 Note Holders from time to time, except as set forth in
Section 2.13 and Article III hereof without any preference, distinction or
priority of any one Equipment Note over any other regardless of when issued, 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 Note Holders 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 Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee under or
pursuant to any of the Indenture Documents, or except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or otherwise) to ask, require, demand, receive
and give acquittance for any and all moneys and claims for moneys (in each case
including insurance and requisition proceeds but excluding Excepted Payments and
Excepted Rights) due and to become due to the Owner Trustee under or arising out
of the Indenture Documents and all other property which now or hereafter
constitutes part of the Trust Indenture Estate, to endorse any checks or other
instruments or orders in connection therewith and to file any
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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. Under the Lease,
the Lessee is directed to make all payments of Rent (other than Excepted
Payments) and all other amounts which are required to be paid to or deposited
with the Owner Trustee pursuant to the Lease (other than Excepted Payments)
directly to the Indenture Trustee at such address or addresses as the Indenture
Trustee shall specify, for application as provided in this Indenture. Pursuant
to each Sublease Assignment, each Permitted Sublessee will be directed from and
after (i) notice of the occurrence of a Lease Event of Default and (ii) notice
that the Lease is declared or deemed in default, to make all payments of rent
and all other amounts which are required to be paid to or deposited with the
Lessee pursuant to the related Assigned Sublease and which are assigned
thereunder directly to the Indenture Trustee at such address or addresses as the
Indenture Trustee shall specify, for application or to be held as provided in
this Indenture. The Owner Trustee agrees that promptly on receipt thereof, it
will transfer to the Indenture Trustee any and all moneys from time to time
received by it constituting part of the Trust Indenture Estate, for distribution
by the Indenture Trustee pursuant to this Indenture, except (a) to the extent
the Owner Trustee is entitled to distribution of such moneys pursuant to this
Indenture and (b) that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement any amounts distributed to it by the Indenture Trustee
under this Indenture.
The Owner Trustee agrees that at any time and from time to
time, upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that it will not assign or
pledge or otherwise dispose of, so long as this Indenture shall remain in effect
and the Lien hereof shall not have been released pursuant to Section 10.01
hereof, any of its estate, right, title or interest hereby assigned, to anyone
other than the Indenture Trustee, and that, with respect to such estate, right,
title and interest hereby assigned, subject to its rights pursuant to Section
5.10 hereof, it will not, except as provided in this Indenture (including,
without limitation, Section 9.01) and except as to Excepted Payments and
Excepted Rights, (i) accept any payment from the Lessee or any Permitted
Sublessee under any of the Indenture Documents, enter into any agreement
amending, modifying or supplementing any of the Indenture Documents, or execute
any waiver or modification of, or
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<PAGE> 13
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consent under, the terms of any of the Indenture Documents, (ii) settle or
compromise any claim arising under any of the Indenture Documents, (iii) give
any notice or exercise any right or take any action under any of the Indenture
Documents, or (iv) 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. For purposes of Section 4.02(e) hereof,
this is the fourth paragraph following the Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations
under 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 might 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments and
Excepted Rights. Further, nothing in the Granting Clause or the preceding
paragraphs shall impair any of the rights of the Owner Trustee or the Owner
Participant under Section 5.10 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained
in the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments (including all annexes, appendices, exhibits,
schedules and supplements thereto) as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with, the terms thereof and of the other
Operative Documents and references to various Persons shall be deemed to be
references to and include their respective permitted successors and assigns.
Trust Indenture
<PAGE> 14
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"Amortization Amount" means, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Principal
Amount Repayment Date on the Amortization Schedule.
"Amortization Schedule" means the amortization schedule for
the Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed
shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life at the redemption date of such
Equipment Note. "Remaining Weighted Average Life" of such Equipment
Note, at the redemption date of such Equipment Note, shall be the
number of days equal to the quotient obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then
remaining installment of principal, including the payment due on the
maturity date of such Equipment Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled
payment date of such principal installment; by (b) the then unpaid
Principal Amount of such Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq., as amended.
"Business Day" means a day other than a Saturday, Sunday or a
day on which banks are required or authorized to close in either The
City of New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the
Intercreditor Agreement shall be deposited.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Consents and Agreements" means the confirmations by the
Manufacturer included in the Purchase Agreement Warranties Assignment
of the transfer of rights under the Purchase Agreement.
Trust Indenture
<PAGE> 15
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"Continuous Stay Period" has the meaning specified in
Section 4.04(a).
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee located at 777 Main Street, Hartford,
Connecticut 06115, Attention: Corporate Trust Administration, or such
other office at which the Indenture Trustee's corporate trust business
shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Lessee, the Owner Trustee and the Note
Holders.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be evidenced
by bonds, debentures, notes or other similar instruments.
"Debt Rate" means, with respect to Series A, Series B, Series
C, Series D and Series E, the rate per annum specified for such Series
under the heading "Debt Rate" in Schedule I to this Indenture.
"Delivery Date" means March 27, 1991.
"Dollars", "U.S. $" and "$" mean the lawful currency of
the United States of America.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c) of the Intercreditor Agreement.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of
such depository institution has a long-term unsecured debt rating from
each Rating Agency of at least A-3 or its equivalent.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has
a long-term unsecured debt rating from each Rating Agency of at least
A-3 or its equivalent.
Trust Indenture
<PAGE> 16
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"Equipment Notes" means the Equipment Notes, in substantially
the form set out in Section 2.01 hereof, issued by the Owner Trustee
and authenticated by the Indenture Trustee pursuant to the terms of
this Indenture.
"Equity Collateral" has the meaning assigned to such
term in the definition of "Excepted Payments."
"Excepted Payments" means (i) any and all indemnity payments
and interest in respect thereof paid or payable in respect of the Owner
Participant, the Trust Company, the Owner Trustee (and not in support
of any payment obligation of the Owner Trustee under any Indenture
Document) or any of their respective successors, permitted assigns
(and, in the case of a permitted assign of the Owner Participant that
is a partnership, the partners of such partnership), directors,
officers, employees, servants, agents, subsidiaries, affiliates or
shareholders by the Lessee pursuant to the Lease (including, without
limitation, Section 13 thereof and any corresponding payment of
Supplemental Rent under the Lease), (ii) any proceeds of public
liability insurance (or government indemnities in lieu thereof) in
respect of the Engine payable as a result of insurance claims paid
respecting, or losses suffered by, the Trust Company or the Indenture
Trustee in its individual capacity or the Owner Participant, (iii) any
proceeds of insurance maintained with respect to the Engine by or for
the benefit of the Owner Participant (whether directly or through the
Owner Trustee) and not required under Section 12 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts
payable to the Owner Participant, the Trust Company, the Owner Trustee
(and not in support of any payment obligation of the Owner Trustee
under any Indenture Document), or any of their respective successors,
permitted assigns (and, in the case of a permitted assign of the Owner
Participant that is a partnership, the partners of such partnership),
directors, officers, employees, servants, agents, subsidiaries,
affiliates or shareholders under Section 10 of the Lease or by the
Lessee or the Parent Guarantor under the Tax Indemnification Agreement
or the Amended and Restated Head Lease TIA (as defined in the Refunding
Agreement), as the case may be, (v) Transaction Expenses paid or
payable by the Lessee or the Parent Guarantor to the Trust Company, the
Owner Trustee, the Indenture Trustee or the Owner Participant pursuant
to Section 21 of the Refunding Agreement or the Lease, (vi) any letter
of credit pursuant to Section 8(l) of the Lease (including, without
limitation, any replacement letter of credit (the "Equity Collateral"))
and any payment or proceeds of any such Equity Collateral to the extent
retained or applied as provided in Section 8(l) of the
Trust Indenture
<PAGE> 17
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Lease, (vii) any amount payable to the Owner Participant by any
transferee as the purchase price of the Owner Participant's interest in
the Trust Estate (or a portion thereof), (viii) any amount payable to
the Owner Trustee, the Trust Company or the Owner Participant or any of
their respective successors, permitted assigns (and, in the case of a
permitted assign of the Owner Participant that is a partnership, the
partners of such partnership), directors, officers, employees,
servants, agents, subsidiaries, affiliates or shareholders attributable
to the period prior to or on the Restatement Date or under the Original
Participation Agreement, the Original Lease, the Parent Head Lease
Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the
Amended and Restated Sublease TIA (as such terms are defined in the
Refunding Agreement) or Retained Head Lease Rights and Obligations (as
such term is defined in the Refunding Agreement), and (ix) subject to
the last sentence of Section 5.10 hereof, any and all rights of the
Owner Trustee, the Owner Participant or the Trust Company under the
Operative Documents, whether or not a Lease Event of Default, a Lease
Default, an Indenture Default or an Indenture Trustee Event has
occurred and is continuing to demand, collect, sue for, give notices,
make determinations, enforce or exercise all rights with respect to and
otherwise obtain all amounts described in clauses (i) through (viii)
above and the proceeds thereof.
"Excepted Rights" means (i) those rights of the Owner
Participant and the Owner Trustee under Section 5.10 of this Indenture,
(ii) all rights under the Equity Collateral to make a claim for,
collect and retain all amounts payable with respect to any Equity
Collateral, (iii) all rights of the Owner Participant, the Trust
Company or the Owner Trustee to compromise or waive any such right or
modify, amend or waive any provision of any Operative Document
conferring such rights with respect to Excepted Payments, and (iv) all
rights of the Owner Trustee to exercise any election or option, or to
make any decision or determination, or to give or receive any notice,
consent, waiver or approval with respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section
2.03(b) hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity
Facility, a borrowing or drawing of all available and
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undrawn amounts under such Liquidity Facility in accordance with the
provisions thereof other than a Downgrade Drawing.
"Government Obligations" means direct obligations of the
United States of America that are not callable, redeemable or payable
prior to maturity, in whole or in part, directly or indirectly, by any
Person.
"Indenture," "this Indenture," and "the Indenture" mean this
First Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented
by any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement (to the extent assigned by the Purchase
Agreement Warranties Assignment); the Purchase Agreement Warranties
Assignment and the Consents and Agreements attached thereto; and the
Warranty Bill of Sale.
"Indenture Event of Default" has the meaning set forth
in Section 4.02 hereof.
"Indentures" means, collectively, each Trust Indenture and
Security Agreement listed on Schedule 1 to the Intercreditor Agreement,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Indenture Supplement" or "Trust Indenture Supplement" means a
supplement to this Indenture, in substantially the form of Exhibit A to
this Indenture, which shall particularly describe the Engine and
Replacement Engine included in the property of the Owner Trustee
covered by this Indenture, including, without limitation, Trust
Indenture Supplement No. 1 dated March 27, 1991, which was recorded as
one instrument by the FAA with the Original Indenture, and Trust
Indenture Supplement No. 2 dated November 26, 1996, which is being
filed for recordation as one instrument by the FAA with this First
Amended and Restated Indenture.
Trust Indenture
<PAGE> 19
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"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as assigned, amended and restated by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1991 AWA-E3]
dated as of the date hereof and Amended and Restated Engine Lease
Agreement [GPA 1991 AWA-E3] dated as of the date hereof and
supplemented by Lease Supplement [GPA 1991 AWA-E3] No. 2 dated November
26, 1996, which are being filed for recordation as one instrument with
the FAA contemporaneously herewith.
"Lease Default" means an event or condition that, with the
giving of notice or the lapse of time or both, would become a Lease
Event of Default.
"Lease Event of Default" means any event or condition defined
as an "Event of Default" in Section 17 of the Lease.
"Lessee" means America West Airlines, Inc., a Delaware
corporation, in its capacity as lessee under the Amended and Restated
Lease, and its successors, and to the extent permitted by the Refunding
Agreement, its assigns thereunder.
"Lien" means any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest,
lease in the nature of a security interest, statutory right in rem, or
claim of any kind, including any thereof arising under any conditional
sale agreement, equipment trust agreement or title retention agreement.
Trust Indenture
<PAGE> 20
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"Majority in Interest of Note Holders" means, as of a
particular date of determination and subject to Section 2.6 of the
Intercreditor Agreement, the Holders of more than 50% in aggregate
unpaid Principal Amount of all Equipment Notes outstanding as of such
date. For purposes of this definition, there shall be excluded any
Equipment Notes held by the Owner Trustee or the Owner Participant or
any interests of the Owner Participant therein by reason of subrogation
pursuant to Section 4.03 of the Indenture (unless all Equipment Notes
then outstanding shall be held by the Owner Trustee or the Owner
Participant) or any Equipment Notes held by the Lessee or any Affiliate
of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date
to maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate
equal to (i) in the case of Series A Equipment Notes and Series B
Equipment Notes, the Treasury Yield and (ii) in the case of Series C
Equipment Notes, Series D Equipment Notes and Series E Equipment Notes,
the Treasury Yield plus 0.75% exceeds (b) the outstanding principal
amount of such Equipment Note plus accrued interest. For purposes of
determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Equipment Note means the interest
rate (expressed as a semiannual equivalent and as a decimal and, in the
case of United States Treasury bills, converted to a bond equivalent
yield) determined to be the per annum rate equal to the semiannual
yield to maturity for United States Treasury securities maturing on the
Average Life Date of such Equipment Note and trading in the public
securities market either as determined by interpolation between the
most recent weekly average yield to maturity for two series of United
States Treasury securities, trading in the public securities markets,
(A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Equipment Note and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Equipment
Note, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note is reported on
the most recent H.15(519), such weekly average yield to maturity as
published in such H.15(519). "H.15(519)" means the weekly statistical
release designated as such, or any successor
Trust Indenture
<PAGE> 21
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publication, published by the Board of Governors of the Federal Reserve
System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the
"most recent H.15(519)" means the H.15(519) published prior to the
close of business on the third Business Day prior to the applicable
redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person
other than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from
time to time of one or more Equipment Notes as reflected in the
Register maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and
signature of such Responsible Officer, that is delivered to the
Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such
written opinions or (ii) Latham & Watkins or other counsel designated
by the Lessee and reasonably satisfactory to the Indenture Trustee or,
in the case of legal counsel for the Owner Trustee, may be Morris,
James, Hitchens & Williams or other counsel designated by the Owner
Trustee and reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease.
"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1991 AWA-E3] dated as of March 15, 1991, as supplemented
by Trust Indenture Supplement No. 1 dated March 27, 1991, which were
recorded as one instrument by the FAA on March 28, 1991 and assigned
Conveyance No. M25990, as amended by Amendment No. 1 dated March 27,
1992, recorded by the FAA on April 30, 1992 and assigned Conveyance No.
DD002564, and as further amended by Amendment No. 2 dated as of July
29, 1993, recorded by the FAA on August 11, 1993 and assigned
Conveyance No. F59684.
"Original Loan Certificates" means the Loan Certificates
issued under and as defined in the Original Indenture.
Trust Indenture
<PAGE> 22
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"Original Sublessee" means America West Airlines, Inc.
("AWA"), a Delaware corporation, in its capacity as sublessee under the
Engine Sublease Agreement [GPA 1990 AWA-E3] dated as of December 12,
1990 between the Original Head Lessee in its capacity as sublessor
thereunder and AWA in its capacity as sublessee.
"Owner Participant" means __________________, a Delaware
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
"Parent Guarantor" means GPA Group plc, a public limited
company organized and existing under the laws of Ireland.
"Pass Through Trust" means each of the five Pass Through
Trusts established under the relevant Pass Through Trust Agreement.
"Pass Through Trust Agreement" means the Pass Through
Trust Agreements set forth on Schedule II hereto.
"Pass Through Trustee" means Fleet National Bank, a national
banking association, not in its individual capacity but solely as pass
through trustee under each of the five separate Pass Through Trust
Agreements.
"Past Due Rate" means, with respect to any amount not paid
when due (whether at stated maturity, by acceleration or otherwise)
under or in respect of any Equipment Note, a rate of interest per annum
(computed on the basis of a year of 360 days comprised of twelve 30-day
months) equal to 1% in excess of the Debt Rate for such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on
January 2, 1997 (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Equipment Notes have
been paid in full.
"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment Note and, with
respect to all Equipment Notes, means the aggregate stated original
principal amounts of all Equipment Notes.
"Principal Amount Repayment Date" means each Payment Date on
which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement Warranties Assignment" means the
Purchase Agreement Warranties Assignment [GPA 1991 AWA-E3],
Trust Indenture
<PAGE> 23
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dated as of the Delivery Date, among the Original Head Lessee, the
Lessee and the Owner Trustee, together with the Consents and Agreements
attached thereto, as the same may be amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency which shall have been requested to
rate the Certificates issued pursuant to the Pass Through Trust
Agreements and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
"Refinancing Transaction" means the transactions contemplated
by the Refunding Agreement and the other documents entered into on and
in connection with the Refunding Agreement on the Restatement Date.
"Refunding Agreement" means the Refunding Agreement [GPA 1991
AWA-E3] dated as of November 20, 1996, among the Lessee, the Original
Head Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through
Trustee, the Owner Participant, the Subordination Agent and the
Indenture Trustee.
"Register" has the meaning set forth in Section 2.07
hereof.
"Registrar" has the meaning set forth in Section 2.07
hereof.
"Responsible Officer" means, in the case of the Lessee, the
president or any other officer with authority of at least a vice
president or, in the case of the Owner Trustee, an officer of the Owner
Trustee in its Corporate Trust Administration Department.
"Restatement Date" means November 26, 1996 or such other date
agreed to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date
of the filing with the FAA of Trust Indenture Supplement No. 2.
"Secured Obligations" has the meaning set forth in
Section 2.06 hereof.
"Securities Act" means the Securities Act of 1933, as
amended.
Trust Indenture
<PAGE> 24
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"Series A" or "Series A Equipment Notes" means Equipment Notes
issued and designated as "Series A" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment Notes
issued and designated as "Series B" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes
issued and designated as "Series C" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes
issued and designated as "Series D" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series D."
"Series E" or "Series E Equipment Notes" means Equipment Notes
issued and designated as "Series E" hereunder, in the Principal Amount
and maturities and bearing interest as specified in Section 2.02 and
Schedule I hereto under the heading "Series E."
"Sublease Assignment" means a sublease assignment by the
Lessee in favor of the Owner Trustee (including the consent thereto
given by the sublessee thereunder) with respect to the assignment of a
Permitted Sublease pursuant to Section 6(a) of the Lease.
"Transaction Expenses" means the costs, fees, expenses and
disbursements set forth in Section 21 of the Refunding Agreement.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a) of the Intercreditor Agreement.
"Trust Company" means Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity and not as Owner
Trustee, and its successors under the Trust Agreement, in their
respective individual capacities and not as Owner Trustee.
"Trust Indenture Estate" or "Indenture Estate" means
all estate, right, title and interest of the Owner Trustee
Trust Indenture
<PAGE> 25
- 20 -
in and to the properties, rights and interests covered by the Granting
Clause of the Indenture, excluding, however, in each case, Excepted
Payments and Excepted Rights.
"U.S. Holder" or "U.S. Person" means any Person that is (i) a
citizen or resident of the United States, as defined in Section
7701(a)(9) of the Code (for purposes of this definition, the "United
States"), (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political
subdivision thereof or therein or (iii) any estate or trust that is
subject to United States federal income taxation regardless of the
source of its income.
"Warranty Bill of Sale" means a full warranty (as to title)
bill of sale covering the Engine (excluding all Buyer Furnished
Equipment) executed by the Original Head Lessee in favor of the Owner
Trustee dated the Delivery Date.
Trust Indenture
<PAGE> 26
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes. The Equipment Notes
shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT [GPA 1991 AWA-E3]
DATED AS OF MARCH 15, 1991, AS AMENDED.
SERIES [A/B/C/D/E] NON-RECOURSE EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH ONE IAE INTERNATIONAL AERO ENGINES AG
V2500-A1 ENGINE WITH MANUFACTURER'S SERIAL NUMBER V0019
No.____________ Date: [________,1996]
$___________________
DEBT RATE MATURITY DATE
[___________] [_______,___]
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement [GPA 1991 AWA-E3], dated as of March 15,
1991, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to Fleet
National Bank, as Subordination Agent under the Intercreditor Agreement, or the
registered assignee thereof, the principal sum of $_______ (the "Principal
Amount"), together with interest on the Principal Amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days comprised of twelve
30-day months) from the date hereof until paid in full at a rate per annum equal
to the Debt Rate indicated above. The Principal Amount of this Equipment Note
shall be payable in installments on the dates set forth in Schedule I hereto
equal to the corresponding percentage of the Principal Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due
and payable in semi-annual installments commencing on January 2, 1997, and
thereafter
Trust Indenture
<PAGE> 27
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on July 2 and January 2 of each year, to and including
______________, ____.
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and if
such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First
Amended and Restated Trust Indenture and Security Agreement [GPA 1991 AWA-E3],
dated as of November 26, 1996, between the Owner Trustee and Fleet National Bank
(formerly known as Fleet National Bank of Connecticut, Shawmut Bank Connecticut,
National Association, and The Connecticut National Bank) (the "Indenture
Trustee"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this Equipment Note and not defined herein shall
have the respective meanings assigned in the Indenture.
This Equipment Note shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
All payments of all or any portion of the Principal Amount,
interest, Make-Whole Amount, if any, and other amounts, if any, to be made by
the Owner Trustee hereunder and under the Indenture or the Refunding Agreement
shall be payable only from the income and proceeds from the Trust Estate to the
extent included in the Trust Indenture Estate and only to the extent that the
Owner Trustee shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the Indenture
Trustee to make such payments in accordance with the terms of Section 2.03 and
Article III of the Indenture, and each Holder hereof, by its acceptance of this
Equipment Note, agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as above provided and that none of the Owner Participant, the
Owner Trustee and the
Trust Indenture
<PAGE> 28
- 23 -
Indenture Trustee is personally liable or liable in any manner, including,
without limitation, extending to any assets other than the Trust Indenture
Estate to the Holder hereof for any amounts payable or any liability under this
Equipment Note or, except as provided in the Indenture or in the Refunding
Agreement, for any liability under the Indenture or the Refunding Agreement;
provided, however, that nothing herein contained shall limit, restrict or impair
any and all rights or remedies of the Indenture Trustee hereunder, subject
always to the terms and provisions of the Indenture.
There shall be maintained a Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Indenture Trustee or at the office of any successor in the manner
provided in Section 2.07 of the Indenture.
Any payment of any portion of the Principal Amount and
interest and other amounts due hereunder shall be payable in Dollars in
immediately available funds at the Corporate Trust Office of the Indenture
Trustee, or as otherwise provided in the Indenture. Each such payment shall be
made on the date such payment is due and without any presentment or surrender of
this Equipment Note, except that in the case of any final payment with respect
to this Equipment Note, the Equipment Note shall be surrendered promptly
thereafter to the Indenture Trustee for cancellation.
The Holder hereof, by its acceptance of this Equipment Note,
agrees that, except as provided in the Indenture, each payment received by it
hereunder shall be applied, first, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by law, any
overdue interest and any other overdue amounts hereunder) to the date of such
payment, second, to the payment of the portion of the Principal Amount of this
Equipment Note then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Indenture, and fourth, the balance,
if any, remaining thereafter, to the payment of the portion of the Principal
Amount of this Equipment Note remaining unpaid in the inverse order of its
normal maturity.
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 Trust Indenture Estate is held by
the Indenture Trustee as security, in part, for the Equipment Notes. The
provisions of this Equipment Note are subject to the Indenture. Reference is
hereby made to the Indenture and the Refunding Agreement for a complete
statement of the rights and obligations of the Holder
Trust Indenture
<PAGE> 29
- 24 -
of, and the nature and extent of the security for, this Equipment Note and the
rights and obligations of the Holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, 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 the Refunding Agreement each Holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate unpaid portion of the Principal Amount of Equipment Notes of different
authorized denominations, as requested by the Holder surrendering the same.
Prior to due presentment for registration of transfer of this
Equipment Note, the Owner Trustee and the Indenture Trustee shall treat the
Person in whose name this Equipment Note is registered as the owner hereof for
all purposes whether or not this Equipment Note be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture, to purchase by the Owner Participant or
the Owner Trustee as provided in Section 2.12 of the Indenture and to
acceleration by the Indenture Trustee as provided in Section 4.04 of the
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series A Equipment Notes](1) [Series B
Equipment Notes](2) [Series C Equipment Notes](3) [Series D Equipment Notes](4),
and this Equipment Note is issued subject to such provisions. The Note Holder of
this Equipment Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Indenture Trustee on his behalf
to take such action as may be necessary or appropriate to effectuate
- --------
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
(3) To be inserted in the case of Series D Equipment Notes.
(4) To be inserted in the case of Series E Equipment Notes.
Trust Indenture
<PAGE> 30
- 25 -
the subordination as provided in the Indenture and (c) appoints
the Indenture Trustee his attorney-in-fact for such purpose.](5)
Unless the certificate of authentication hereon has been
executed by or on behalf of the Indenture Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
THIS EQUIPMENT NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its officer thereunto
duly authorized on the date hereof.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
FLEET NATIONAL BANK,
as Indenture Trustee
By:_______________________________
Name:
Title:
- --------
(5) To be inserted in the case of a Series B, Series C, Series D or Series
E Equipment Note.
Trust Indenture
<PAGE> 31
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SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
five separate series consisting of Series A, Series B, Series C, Series D and
Series E and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass
Through Trustees (or their designee) under the Pass Through Trust Agreements set
forth in Schedule II to be attached hereto in connection therewith and (ii) the
Original Loan Certificates issued under the Original Indenture shall be
concurrently prepaid. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of each Series may be
in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1997, and on each July 2 and January 2
thereafter until maturity.
The Principal Amount of each Equipment Note shall be payable
on the dates and in the installments equal to the corresponding percentage of
the Principal Amount as set forth in Schedule I hereto which shall be attached
as Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid portion of the Principal Amount and all accrued and
unpaid interest on, and any other amounts due under, such Equipment Note. Each
Equipment Note shall bear interest at the Past Due Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on
Trust Indenture
<PAGE> 32
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any part of the Principal Amount, Make-Whole Amount, if any, and, to the extent
permitted by applicable law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts shall be overdue if not paid
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under any Equipment Note becomes due and payable is not a Business Day
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the Liquidity
Providers by the Subordination Agent under each Liquidity Facility (as
determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
Trust Indenture
<PAGE> 33
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(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default (as defined below) under any
Equipment Note a fraction, the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures under which there exists a Payment Default or (y) at all
other times, zero;
provided, however, neither the numerator nor the denominator of the fractions in
paragraphs (A) or (B) shall include any "Series D Equipment Notes" or "Series E
Equipment Notes" issued under the Indentures. As used in this Section 2.02, "Net
Interest and Related Charges" means (as determined by the Subordination Agent in
consultation with the Liquidity Providers and notified to the Indenture Trustee
except that the Past Due Rate shall be determined by the Indenture Trustee and
notified to the Subordination Agent) the sum of (i) the amount, if any, by which
interest payable to any Liquidity Provider on any Interest Drawing, Final
Drawing and/or Downgrade Drawing (other than a Downgrade Drawing that is not an
Applied Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the
amount which would be payable if such advances bore interest at the Designated
Interest Rate (as defined below) plus (ii) any amounts payable under Section
3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity
Facility (or similar provisions of any succeeding liquidity facility) which
result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used in
this Section 2.02, "Designated Interest Rate" means the weighted average Past
Due Rate (as defined in the applicable Indentures) in respect of "Series A
Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
issued under the Indentures, except with respect to that portion of any Final
Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a
Cash Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal or
interest on a "Series D Equipment Note" or "Series E Equipment Note" issued
under the Indentures which has not been cured other than solely because of
acceleration. For purposes of Section 3.04(b) hereof, this is the fourth
paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Equipment Notes
bearing the signatures of
Trust Indenture
<PAGE> 34
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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. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Engine to the Indenture Trustee for
authentication upon original issue and such Equipment Notes shall thereupon be
authenticated and delivered by the Indenture Trustee upon the written request of
the Owner Trustee signed by a Vice President or Assistant Vice President or
other authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Principal Amount of all Equipment Notes to
be authenticated hereunder on original issue with respect to the Engine. No
Equipment Note shall be secured by or be entitled to any benefit under this
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized officers and such certificate upon any Equipment Notes shall be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
SECTION 2.03. Payments from Trust Indenture Estate Only. (a)
Without impairing any of the other rights, powers, remedies, privileges or Liens
of the Note Holders under this Indenture, each Note Holder, by its acceptance of
an Equipment Note, agrees that, except as expressly provided in this Indenture,
the Refunding Agreement or any other Operative Document, (i) the obligation to
make all payments of all or any portion of the Principal Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Indenture and in the Refunding Agreement or any of
the other Operative Documents, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such payments in
accordance with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Indenture and any other Operative Document
other than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Indenture or such
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other agreements to the contrary notwithstanding (except for any express
provisions or representations that the Trust Company is responsible for, or is
making, for which there would be personal liability of the Trust Company), no
recourse shall be had with respect to this Indenture or such other agreements
against the Trust Company or against any institution or Person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Trust Company, the Owner Participant, the Indenture Trustee and
any officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Refunding Agreement or any of the other Operative Documents or under the
Equipment Notes except as expressly provided herein (in the case of the Owner
Trustee and the Indenture Trustee) or therein; provided, however, nothing
contained in this Section 2.03(a) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Indenture or such other
agreements of rights and remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Trustee or Owner Participant becomes, a debtor subject
to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Trust Company, the Owner Trustee or the Owner Participant is required, by reason
of the Trust Company, the Owner Trustee or the Owner Participant being held to
have recourse liability to any Note Holder or the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Trust Company, the Owner
Trustee or the Owner Participant under the Operative Documents), to make payment
on account of any amount payable as Principal Amount, Make-Whole Amount, if any,
interest or other amounts on the Equipment Notes or under this Indenture and
(iii) any Note Holder or the Indenture Trustee actually receives any Excess
Amount (as hereinafter defined) which reflects any payment by the Trust Company,
the Owner Trustee or the Owner Participant on account of clause (ii) above
(other than aforesaid), then such Note Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Trust Company, the Owner Trustee or
the Owner Participant (whichever shall have made such payment) such Excess
Amount.
For purposes of this Section 2.03(b), "Excess Amount" means
the amount by which such payment exceeds the amount that would have been
received by a Note Holder or the Indenture Trustee if the Trust Company, the
Owner Trustee or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this
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Section 2.03(b) shall prevent a Note Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Trust Company, the Owner Trustee or the Owner Participant under the
Refunding Agreement, this Indenture (and any exhibits or annexes hereto or
thereto) or any other Operative Document.
SECTION 2.04. Method of Payment. (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Equipment Note or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York City time, on
the due date of payment to the Indenture Trustee at the Corporate Trust Office
for distribution among the Note Holders in the manner provided herein. After
transferring (or causing the transfer of) the above amounts to the Indenture
Trustee, the Owner Trustee shall not have any responsibility for the
distribution of such payment to any Note Holder. Notwithstanding the foregoing
or any provision in any Equipment Note to the contrary, the Indenture Trustee
will use reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee), all amounts paid
by the Owner Trustee hereunder and under such Holder's Equipment Note or
Equipment Notes to such Holder or a nominee therefor (including all amounts
distributed pursuant to Article III of this Indenture) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to
an account maintained by such Holder with a bank located in the continental
United States the amount to be distributed to such Holder, for credit to the
account of such Holder maintained at such bank. If the Indenture Trustee shall
fail to make any such payment as provided in the immediately preceding sentence
after its receipt of funds at the place and prior to the time specified above,
the Indenture Trustee, in its individual capacity and not as trustee and without
indemnification or right of reimbursement under any Operative Document, agrees
to compensate such Holders for loss of use of funds in accordance with industry
standards for this type of transaction until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until
such payment is made. Any payment made hereunder shall be made free and clear of
and without reduction for or on account of all wire and like charges and without
any presentment or surrender of any Equipment Note, except that, in the case of
the final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so if such
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funds were received after 12:00 noon, New York City time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Indenture Trustee shall deem and treat
the Person in whose name any Equipment Note is registered on the Register as the
absolute owner and Holder 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, and neither the Owner Trustee nor the Indenture Trustee shall be
affected by any notice to the contrary, unless and until such change is
reflected in the Register. So long as any signatory to the Refunding Agreement
or nominee thereof shall be a registered Note Holder, all payments to it shall
be made to the account of such Note Holder specified in Schedule III thereto and
otherwise in the manner provided in or pursuant to the Refunding Agreement
unless it shall have specified some other account or manner of payment by notice
to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each payment of
Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts
due hereunder or under each Equipment Note (and such exclusion and withholding
shall constitute payment in respect of such Equipment Note) any and all United
States withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees to act as such withholding agent and, in connection therewith,
whenever any present or future United States taxes or similar charges are
required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts (and such withholding
shall constitute payment in respect of such Equipment Note) and timely pay the
same to the appropriate authority in the name of and on behalf of the Note
Holders, that it will file any necessary United States withholding tax returns
or statements when due, and that as promptly as possible after the payment
thereof it will deliver to each Note Holder (with a copy to the Owner Trustee
and the Lessee) appropriate receipts showing the payment thereof, together with
such additional documentary evidence as any such Note Holder, the Owner
Participant and the Owner Trustee may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such Holder
is made (but prior to the making of such payment) or in either of the two
preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of
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such form prior to the date of such payment (and the Indenture Trustee has no
reason to know that any information set forth in such form is inaccurate), the
Indenture Trustee shall withhold only the amount, if any, required by law (after
taking into account any applicable exemptions claimed by the Note Holder) to be
withheld from payments hereunder or under the Equipment Notes held by such
Holder in respect of United States federal income tax (and such withholding
shall constitute payment in respect of such Equipment Note). If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form 4224 in
duplicate (or such successor certificate, form or forms as may be required by
the United States Treasury Department as necessary in order to avoid withholding
of United States federal income tax), during the calendar year in which the
payment is made (but prior to the making of such payment) or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Equipment Notes held by such Holder, no amount shall be
withheld from payments in respect of United States federal income tax. If any
Note Holder has notified the Indenture Trustee that any of the foregoing forms
or certificates is withdrawn or inaccurate, or if such Holder has not filed a
form claiming an exemption from United States withholding tax or if the Code or
the regulations thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the Equipment Notes held by such
Holder, the Indenture Trustee agrees to withhold from each payment due to the
relevant Note Holder withholding taxes at the appropriate rate under law (and
such withholding shall constitute payment in respect of such Equipment Notes)
and will, on a timely basis as more fully provided above, deposit such amounts
with an authorized depository and make such returns, statements, receipts and
other documentary evidence in connection therewith as required by applicable
law.
None of the Owner Trustee, the Owner Participant or the Lessee
shall have any liability for the failure of the Indenture Trustee to withhold
taxes in the manner provided for herein or for any false, inaccurate or untrue
evidence provided by a Holder hereunder.
SECTION 2.05. Application of Payments. In the case of
each Equipment Note, each payment of Principal Amount, Make-Whole
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Amount, if any, and interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and, to the extent permitted by law,
any overdue interest and any other overdue amounts thereunder) to the
date of such payment;
Second: to the payment of the Principal Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any,
and any other amount due hereunder or under such Equipment
Note; and
Fourth: the balance, if any, remaining thereafter, to the
payment of the Principal Amount of such Equipment Note remaining unpaid
(provided that such Equipment Note shall not be subject to redemption
except as provided in Sections 2.10 and 2.11 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture
Estate. A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Indenture Estate when the Principal Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under all
Equipment Notes held by such Note Holder and all other sums then payable to such
Note Holder hereunder and under the Lease and the Refunding Agreement by the
Lessee, the Owner Participant and the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Equipment
Notes. The Indenture Trustee shall keep a register (the "Register") in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the
registration of transfers of Equipment Notes. No such transfer shall be given
effect unless and until registration hereunder shall have occurred. The Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein provided. A Holder of
any Equipment Note intending to exchange such Equipment Note shall surrender
such Equipment Note to the Indenture Trustee at the Corporate Trust Office,
together with a written request
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from the registered Holder thereof for the issuance of a new Equipment Note,
specifying, in the case of a surrender for transfer, the name and address of the
new Holder or Holders. Upon surrender for registration of transfer of any
Equipment Note, 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 unpaid portion
of the Principal Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate unpaid portion of the Principal
Amount, upon surrender of the Equipment Notes to be exchanged to the Indenture
Trustee at the Corporate Trust Office. 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 Note
Holder making the exchange is entitled to receive. All Equipment Notes issued
upon any registration of transfer or exchange of Equipment Notes (whether under
this Section 2.07 or under Section 2.08 hereof or otherwise under this
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this 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 Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder
or such Holder's attorney duly authorized in writing, and the Indenture Trustee
shall require evidence satisfactory to it as to the compliance of any such
transfer with the Securities Act and the securities laws of any applicable
state. The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Principal Amount 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 on such old Equipment Note or Equipment
Notes has been paid. Interest shall be deemed to have been paid on such new
Equipment Note to the date on which interest shall have been paid on such old
Equipment Note, and all payments of the Principal Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been made thereon.
Neither the Indenture Trustee nor the Owner Trustee shall be required to
exchange any surrendered Equipment Notes as provided above during the ten-day
period preceding the Payment Date. The Indenture Trustee will promptly notify
the Owner Trustee, the Owner Participant and Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Refunding
Agreement applicable to Note Holders, and shall be deemed to have represented
and warranted to the parties to the Refunding
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Agreement as to the matters represented and warranted by the Subordination Agent
in its capacity as the initial Holder of the Equipment Notes. Subject to
compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee
shall use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
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 Holder of such
Equipment Note, execute and the Indenture Trustee shall authenticate and deliver
in replacement thereof a new Equipment Note, payable in the same Principal
Amount dated the same date and captioned as originally issued. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Indenture Trustee and a copy thereof shall be furnished to
the Owner Trustee. If the Equipment Note being replaced has been destroyed, lost
or stolen, the Holder of such Equipment Note shall furnish to the Lessee, the
Owner Trustee, the Owner Participant and the Indenture Trustee such security or
indemnity as may be reasonably required by them to save the Lessee, the Owner
Trustee, the Owner Participant and the Indenture Trustee harmless and evidence
satisfactory to the Lessee, the Owner Trustee, the Owner Participant and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and
of the ownership thereof. If a bank or trust company with a net worth of
$200,000,000 or more is the Holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such Person, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Lessee, the Owner Participant, the Owner Trustee and the
Indenture Trustee shall be accepted as satisfactory indemnity and security and
no further indemnity or security shall be required as a condition to the
execution and delivery of such new Equipment Note. Subject to compliance by the
Note Holder of the requirements set forth in this Section 2.08, the Indenture
Trustee and the Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Note Holder for any registration of
transfer or exchange of Equipment Notes, but the Indenture Trustee, as
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes; provided, however, that none of the
Lessee, the Owner Trustee,
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the Indenture Trustee or the Owner Participant shall bear costs of registration,
transfer or exchange in connection with the consummation of the Refinancing
Transaction.
(b) The Indenture Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes. The
Equipment Notes are subject to redemption as provided in this Section 2.10 and
Section 2.11 and purchase as provided in Section 2.12. On the date on which
Lessee is required pursuant to Section 11(a) of the Lease to make payment for an
Event of Loss with respect to the Engine, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Principal
Amount thereof, together with all accrued interest thereon to, but not
including, the date of redemption and all other amounts payable hereunder or
under the Refunding Agreement to the Note Holders but without Make-Whole Amount,
all in the order of priority specified in Section 3.02 hereof.
SECTION 2.11. Redemptions; Notice of Redemption. (a) Neither
any redemption of any Equipment Note nor any purchase by the Owner Trustee of
any Equipment Note may be made except to the extent and in the manner expressly
permitted by this Indenture. No purchase of any Equipment Note may be made by
the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the
Equipment Notes shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Note Holder of such Equipment Notes to be
redeemed or purchased, at such Note Holder's address appearing in the Register.
All notices of redemption or purchase shall state: (1) the redemption date, (2)
the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that interest on such Equipment Notes shall cease to accrue
on and after such redemption date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or
any Person on behalf of the Owner Trustee) shall, to the extent an amount equal
to the redemption price for the Equipment Notes to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon, New
York City time, on the redemption date in
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immediately available funds the redemption price of the Equipment
Notes to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as
aforesaid, the Equipment Notes to be redeemed or purchased shall, on the
redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee, and from and after such redemption date (unless there shall
be a default in the payment of the redemption price) any such Equipment Notes
then outstanding shall cease to bear interest. Upon surrender of any such
Equipment Note for redemption or purchase in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any Equipment Note
called for redemption or purchase shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.12. Option to Purchase Equipment Notes. Either the
Owner Trustee or the Owner Participant may, upon the events and subject to the
terms and conditions and for the price set forth in this Section 2.12, purchase
all but not less than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to such terms and
conditions and upon receipt of such price, sell, assign, transfer and convey to
such purchaser or its nominee (without recourse or warranty of any kind except
as to its title to the Equipment Notes and except against Liens on such
Equipment Notes arising by, through or under such Holder), all of the right,
title and interest of such Note Holder in and to the Trust Indenture Estate,
this Indenture and the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such Holder's obligations under the Refunding
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each
Equipment Note the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to, but not including, the date of purchase and all
other amounts (other than the Make-Whole Amount, except as provided in the next
sentence) then payable hereunder or under the Refunding Agreement to the Holder
thereof. Such option to purchase the Equipment Notes may be exercised: (i) upon
an Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default (and there is no
Indenture Trustee Event), the purchase price thereof shall equal the price
provided in the
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preceding sentence plus the Make-Whole Amount, if any; provided further, that
under no circumstances shall the Make-Whole Amount be payable by the Lessee.
Such option to purchase the Equipment Notes may be exercised
by the Owner Trustee or the Owner Participant giving written notice of its
election of such option to the Indenture Trustee, which notice shall specify a
date for such purchase not more than 30 days or less than 15 days after the date
of such notice. The Indenture Trustee shall not exercise any of the remedies
hereunder or, without the consent of the Owner Trustee or the Owner Participant,
under the Lease, during the period from the time that a notice of exercise by
the Owner Participant of such option to purchase becomes irrevocable until the
date on which such purchase is required to occur pursuant to the terms of the
preceding sentence. Such election to purchase the Equipment Notes shall become
irrevocable upon the fifteenth day preceding the date specified in the written
notice described in the first sentence of this paragraph.
If the Owner Trustee or the Owner Participant on or before the
date of such purchase shall so request, the Note Holders will comply with all
the provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes and charges
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied as
provided in Articles II and III hereof.
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(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full, (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Note Holders of Series D until the Secured Obligations in respect of Series D
Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02 or 3.03 hereof, each installment of Basic Rent, any
payment of Supplemental Rent, any payment received by the Indenture Trustee as
contemplated by the first sentence of Section 4.03 hereof, and any payment
received by the Indenture Trustee pursuant to any Sublease Assignment as rent
under any Assigned Sublease shall be promptly distributed in the following order
of priority:
first, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments
of Principal Amount, and interest and other amounts (as well as any
interest on overdue Principal Amount, and to the extent permitted by
applicable law, on any overdue interest and any other overdue amounts)
then due to the Note Holders under all Series A Equipment Notes shall
be distributed to the Note Holders of Series A ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then due under all Series
A Equipment Notes;
(ii) after giving effect to clause (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Principal Amount and
interest and other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by applicable law, on any
overdue interest and any other overdue amounts) then due to the Note
Holders under all Series B Equipment Notes shall
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be distributed to the Note Holders of Series B ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series B Equipment Note
bears to the aggregate amount of the payments then due under all Series
B Equipment Notes;
(iii) after giving effect to clause (ii) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series C Equipment Notes shall be
distributed to the Note Holders of Series C ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series C Equipment Note bears
to the aggregate amount of the payments then due under all Series C
Equipment Notes;
(iv) after giving effect to clause (iii) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series D Equipment Notes shall be
distributed to the Note Holders of Series D ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series D Equipment Note bears
to the aggregate amount of the payments then due under all Series D
Equipment Notes; and
(v) after giving effect to clause (iv) above, so much of
such installment or payment remaining as shall be required to pay in
full the aggregate amount of the payment or payments of Principal
Amount and interest and other amounts (as well as any interest on any
overdue Principal Amount and, to the extent permitted by applicable
law, on any overdue interest and any other overdue amounts) then due to
the Note Holders under all Series E Equipment Notes shall be
distributed to the Note Holders of Series E ratably, without priority
of one over the other, in the proportion that the amount of such
payment or payments then due under each Series E Equipment Note bears
to the aggregate amount of the payments then due under all Series E
Equipment Notes; and
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second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement; provided, however, that
if an Indenture Default shall have occurred and be continuing, then
such balance shall not be distributed as provided in this clause
"second" but shall be held by the Indenture Trustee as part of the
Trust Indenture Estate and invested in accordance with Section 3.07
hereof until whichever of the following shall first occur: (i) all
Indenture Defaults shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second", or
(ii) Section 3.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of said
Section 3.03, or (iii) the 180th day after receipt of such payment, in
which event such balance shall be distributed as provided in this
clause "second" without reference to this proviso.
SECTION 3.02. Event of Loss and Replacement. (a) Any payment
received by the Indenture Trustee with respect to the Engine as the result of an
Event of Loss thereto shall be applied to the redemption of the Equipment Notes
and to all other amounts payable hereunder by applying such funds in the
following order of priority:
first, to reimburse the Indenture Trustee for any reasonable
out-of-pocket costs or expenses incurred in connection with such Event
of Loss,
second, to pay in full the aggregate amount of the payment or
payments of unpaid Principal Amount, and unpaid interest and other
amounts (as well as any interest on overdue Principal Amount, and to
the extent permitted by applicable law, on any overdue interest and any
other overdue amounts) then due to the Note Holders under all Equipment
Notes, all in the order of priority specified in clause "first" of
Section 3.01 hereof, and
third, if and to the extent required to be paid to the Lessee
(or if directed by the Lessee, any Permitted Sublessee) in
reimbursement of payment of Stipulated Loss Value pursuant to Section
11(d) of the Lease, to the Lessee (or if directed by the Lessee, any
Permitted Sublessee), and otherwise as provided in clause "fourth" of
Section 3.03 hereof;
provided that, if a Replacement Engine is to be substituted for the Engine
subject to such Event of Loss as provided in Section 11 of the Lease and Section
5.06 hereof, any proceeds which result from such Event of Loss and are paid to
the Indenture
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Trustee shall be held by the Indenture Trustee as part of the Trust Indenture
Estate as security for the obligations of the Lessee under the Operative
Documents and invested in accordance with the terms of Section 3.07 hereof and,
unless theretofore applied in accordance with the provisions of the Lease and
this Indenture, such proceeds shall, to the extent payable to the Lessee under
the Lease, be released to the Lessee (or if directed by the Lessee, any
Permitted Sublessee) upon or in connection with the replacement thereof as
provided in such Sections.
(b) Any amounts received directly or indirectly from any
governmental authority or insurer or other party pursuant to any provision of
Section 11 or 12 of the Lease (other than as the result of an Event of Loss with
respect to the Engine) shall be applied as provided in the applicable provisions
of the Lease; provided, however, that to the extent that any portion of such
amounts held for account of the Lessee are not at the time required to be paid
to the Lessee (or any Permitted Sublessee) pursuant to the applicable provisions
of Section 11 or 12 of the Lease, shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Operative Documents and
shall be invested in accordance with the terms of Section 3.07 hereof and at
such time as the conditions specified in the Lease for payment of such amounts
to the Lessee shall be fulfilled, such portion, and the net proceeds of any
investment thereof, shall, unless theretofore applied in accordance with the
provisions of the Lease and this Indenture, 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 2.13, 3.02, 3.04(a) and (c) and 6.07
hereof, and notwithstanding Section 2.05 hereof, all payments received and
amounts held or realized by the Indenture Trustee after an Indenture Event of
Default shall have occurred and be continuing or after the Indenture Trustee has
given notice to the Owner Trustee and the Owner Participant pursuant to Section
4.04(a) hereof regarding its exercise of remedies under Section 18 of the Lease
or of the foreclosure of this Indenture, or after the Equipment Notes shall have
become due and payable as provided herein, and all payments or amounts then held
by the Indenture Trustee as part of the Trust Indenture Estate, shall, so long
as such Indenture Event of Default shall be continuing, be promptly distributed
by the Indenture Trustee in the following order of priority, without
duplication:
first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustee for all amounts due to it
pursuant to Section 6.07 hereof, plus any tax, expense, charge or other
loss (including, without limitation, all amounts to be expended at the
expense of, or
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charged upon the tolls, rents, revenues, issues, products and profits
of, the property included in the Trust Indenture Estate pursuant to
Section 4.05(b) hereof) incurred by the Indenture Trustee (to the
extent not previously reimbursed) (including, without limitation, the
expenses of any sale, taking or other proceeding, 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 then existing or prior Note Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to the then existing or
prior Note 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 one over any other, in accordance with the
amount of the payment or payments made by each such then existing or
prior Note Holder pursuant to said Section 5.03 and applicable (in the
case of each such then existing Note Holder) to the Equipment Notes
held by such existing Note Holder at the time of distribution by the
Indenture Trustee;
third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid Principal Amount
of all Series A Equipment Notes, and the accrued but unpaid interest
and other amounts due thereon and all other Secured Obligations in
respect of the Series A Equipment Notes (other than Make-Whole Amount,
if any) to the date of distribution, shall be distributed to the Note
Holders of Series A, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series A Equipment Notes
held by each Holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole Amount, if
any) to the date of distribution, bears to the aggregate unpaid
Principal Amount of all Series A Equipment Notes held by all such
Holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of
such payments or amounts remaining as shall be
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required to pay in full the aggregate unpaid Principal Amount of all
Series B Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect of the
Series B Equipment Notes (other than Make-Whole Amount, if any) to the
date of distribution, shall be distributed to the Note Holders of
Series B, and in case the aggregate amount so to be distributed shall
be insufficient to pay in full as aforesaid, then ratably, without
priority of one over the other, in the proportion that the aggregate
unpaid Principal Amount of all Series B Equipment Notes held by each
Holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder (other than Make-Whole Amount, if any) to the
date of distribution, bears to the aggregate unpaid Principal Amount of
all Series B Equipment Notes held by all such Holders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution;
(iii) after giving effect to paragraph (ii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series C Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series C Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series C, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series C Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series C
Equipment Notes held by all such Holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution;
(iv) after giving effect to paragraph (iii) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series D Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series D Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series D, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series D Equipment Notes held by each Holder
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plus the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Principal Amount of all
Series D Equipment Notes held by all such Holders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution; and
(v) after giving effect to paragraph (iv) above, so much of
such payments or amounts remaining as shall be required to pay in full
the aggregate unpaid Principal Amount of all Series E Equipment Notes,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series E Equipment
Notes (other than Make-Whole Amount, if any) to the date of
distribution, shall be distributed to the Note Holders of Series E, and
in case the aggregate amount so to be distributed shall be insufficient
to pay in full as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid Principal Amount
of all Series E Equipment Notes held by each holder plus the accrued
but unpaid interest and other amounts due hereunder and thereunder
(other than Make-Whole Amount, if any) to the date of distribution,
bears to the aggregate unpaid Principal Amount of all Series E
Equipment Notes held by all such holders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
SECTION 3.04. Certain Payments. (a) Any payments received by
the Indenture Trustee for which provision as to the application thereof is made
in the Lease shall be applied forthwith to the purpose for which such payment
was made in accordance with or as otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner Trustee or the
Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii)
any Pass Through Trust, (iii) the Subordination Agent, (iv) the Liquidity
Providers, and (v) the Pass Through Trustees, in each case whether pursuant to
Section 10 or 13 of the Lease or Section 21 of the Refunding Agreement or as
Supplemental Rent, directly to the Person entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of
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the fourth paragraph of Section 2.02 shall be distributed to the Subordination
Agent to be distributed in accordance with the terms of the Intercreditor
Agreement, and any payment received by the Indenture Trustee under clause (c) of
the fourth paragraph of Section 2.02 shall be distributed directly to the
Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute Excepted
Payments shall be distributed promptly upon receipt by the Indenture Trustee
directly to the Person or Persons entitled thereto. Further, and notwithstanding
anything herein to the contrary, any sums received by the Indenture Trustee
under the Lease or any Sublease Assignment as security for the obligations of
the Lessee or the relevant Permitted Sublessee under the Operative Documents
shall be applied only to such obligations or as otherwise provided in the Lease.
SECTION 3.05. Other Payments. Subject to Sections 3.03 and
3.04 hereof, any payments received by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture
shall be distributed by the Indenture Trustee, unless otherwise agreed in
writing, subject to Section 6.07 hereof (i) to the extent received or realized
at any time prior to the payment in full of all obligations to the Note Holders
secured by the Lien of this Indenture, in the order of priority specified in
Section 3.01 hereof, and (ii) to the extent received or realized at any time
after payment in full of all obligations to the Note Holders secured by the Lien
of this Indenture, in the following order of priority:
first, to the extent payments or amounts described in clause
"first" of Section 3.03 hereof are otherwise obligations of Lessee
under the Operative Documents or for which Lessee is obligated to
indemnify against thereunder, in the manner provided in clause "first"
of Section 3.03 hereof, and
second, in the manner provided in clause "fourth" of
Section 3.03 hereof.
SECTION 3.06. Payments to Owner Trustee. Any amounts
distributed hereunder by the Indenture Trustee to the Owner Trustee shall be
paid to the Owner Trustee by wire transfer of funds of the type received by the
Indenture Trustee at such office and to such account or accounts of such entity
or entities as shall be designated by notice from the Owner Trustee to the
Indenture 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
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pursuant to clause "second" of Section 3.01 hereof shall be distributed by wire
transfer of funds of the type received by the Indenture Trustee to the Owner
Participant's account as may be specified pursuant to the Refunding Agreement.
SECTION 3.07. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's
rights to hold moneys for security pursuant to Section 21(h) of the Lease shall
be held in accordance with the terms of such Section; and the Indenture Trustee
hereby agrees to perform the duties of the Owner Trustee under such Section.
Except as provided in the preceding sentence, any amounts held by the Indenture
Trustee pursuant to the proviso to clause "second" of Section 3.01 hereof,
pursuant to Section 3.02 hereof, pursuant to the second sentence of Section
3.04(c) hereof, pursuant to the fourth sentence of Section 4.03 hereof, pursuant
to a Sublease Assignment, or pursuant to any provision of any other Operative
Document providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Specified Investments
selected in writing in a timely manner by the Owner Trustee or, in the event the
Owner Trustee shall so specify, by the Lessee. Unless otherwise expressly
provided in this Indenture or the Lease, any income realized as a result of any
such investment and any payments by or on behalf of the Lessee pursuant to the
Lease in respect of any losses or expenses, 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, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of Trust Company and Owner
Trustee. (a) The Trust Company hereby covenants and agrees that
it will not directly or indirectly create, incur, assume or
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suffer to exist any Lessor's Lien attributable to it in its individual capacity
with respect to any of the properties or assets of the Trust Indenture Estate
and shall, at its own cost and expense promptly take such action as may be
necessary duly to discharge any such Lessor's Lien, and the Trust Company will
cause restitution to be made to the Trust Indenture Estate in the amount of any
diminution of the value thereof as the result of any Lessor's Liens attributable
to it.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) the Owner Trustee will duly and punctually pay the
Principal Amount of, Make-Whole Amount, if any, and interest on and
other amounts due under the Equipment Notes and hereunder in accordance
with the terms of the Equipment Notes and this Indenture and all
amounts payable by it to the Note Holders under the Refunding Agreement
and the other Operative Documents;
(ii) the Owner Trustee will not directly or indirectly
create, incur, assume or suffer to exist any Lessor's Liens
attributable to it with respect to any of the properties or assets of
the Trust Indenture Estate, and shall, at its own cost and expense,
promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, and the Owner Trustee will cause restitution to be
made to the Trust Indenture Estate in the amount of any diminution of
the value thereof as the result of any Lessor's Liens attributable to
it;
(iii) in the event an officer with responsibility for or
familiarity with the transactions contemplated hereunder or under the
other Operative Documents (or any Vice President) in the Corporate
Trust Administration Department of the Owner Trustee shall have actual
knowledge of an Indenture Default or an Event of Loss, the Owner
Trustee will give prompt written notice of such Indenture Default or
Event of Loss to the Indenture Trustee, the Lessee and the Owner
Participant;
(iv) 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 12(f) of the Lease, to the extent that the same
shall not have been furnished, or is not required to be furnished by
the Lessee, to the Indenture Trustee pursuant to the Lease or
otherwise;
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(v) except as contemplated by the Operative Documents or with
the consent of the Indenture Trustee acting in accordance with Article
IX hereof, the Owner Trustee will not incur any indebtedness for
borrowed money; and
(vi) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Engine, the
leasing thereof to the Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Refunding Agreement, the
Trust Agreement and the other Operative Documents.
SECTION 4.02. Indenture Events 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 administrative or governmental body):
(a) any Lease Event of Default shall occur and be continuing
(other than a failure to pay when due any amount in respect of Excepted
Payments); or
(b) the failure of the Owner Trustee to pay when due any
payment of Principal Amount of, or interest on, any Equipment Note
(other than as a result of a Lease Default) and such failure shall have
continued unremedied for ten calendar days; or the failure of the Owner
Trustee to pay when due any other amount due and payable under any
Equipment Note or hereunder (other than as a result of a Lease Default)
and such failure shall have continued unremedied for 15 calendar days
after notice thereof being given to the Owner Trustee from the
Indenture Trustee or any Note Holder; or
(c) any Lessor's Lien required to be discharged by the Trust
Company pursuant to Section 4.01(a) hereof or Section 13 of the
Refunding Agreement or by the Owner Trustee as the Owner Trustee
pursuant to Section 4.01(b)(ii) hereof or Section 13 of the Refunding
Agreement or any Lessor's Lien required to be discharged by the Owner
Participant pursuant to Section 13 of the Refunding Agreement shall
remain undischarged for a period of 30 calendar days after, as the case
may be, an officer with responsibility for or familiarity with the
transactions contemplated hereunder or under the other Operative
Documents (or any Vice President) in the Corporate Trust Administration
Department of the Trust Company or an officer of the Owner Participant
with responsibility for or familiarity with the transactions
contemplated hereunder and under the other Operative Docu-
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ments (or any Vice President) shall have actual knowledge of such Lien;
provided, that no Indenture Event of Default shall arise under this
Section 4.02(c) as a result of a failure by the Owner Trustee or the
Owner Participant to observe or perform any covenant referred to in
this Section 4.02(c) if the Lessee shall have discharged all Lessor's
Liens required to be discharged by the Owner Trustee or the Owner
Participant pursuant to such covenants and compensated the Indenture
Trustee and the Trust Indenture Estate for all claims, losses and
expenses arising from the failure of the Owner Trustee or the Owner
Participant, as the case may be, to observe and perform any such
covenant; or
(d) any representation or warranty made by the Owner
Participant, the Owner Trustee or the Trust Company herein or in the
Refunding Agreement or by any Person (if any) guaranteeing or
supporting the obligations of the Owner Participant under the Operative
Documents or in any related guarantee or support agreement shall prove
to have been false or incorrect when made in any respect materially
adverse to the rights and interests of the Note Holders; and if such
misrepresentation is capable of being corrected as of a subsequent date
and if such correction is being sought diligently, such
misrepresentation shall not have been corrected as of a day within 30
calendar days following notice thereof being given to the Owner
Participant, the Owner Trustee, the Trust Company or such Person (if
any), as the case may be, by the Indenture Trustee or a Majority in
Interest of Note Holders; or
(e) any failure of the Owner Trustee to observe or perform any
of its covenants or agreements in the fourth paragraph following the
Habendum Clause hereof or in clauses (b)(v) and (b)(vi) of Section 4.01
hereof, or any failure by the Owner Participant or the Trust Company to
observe or perform any of its respective covenants in Section 9(b)(11),
10 or 14 of the Refunding Agreement; or
(f) except as provided in the following paragraph (j), any
failure by the Owner Trustee or the Trust Company to observe or perform
any other covenant or obligation of the Owner Trustee contained in this
Indenture or in the Refunding Agreement or any failure by the Owner
Participant to observe or perform any other covenant or obligation of
the Owner Participant contained in the Refunding Agreement or any
failure of any Person (if any) that may guarantee or support the
obligations of an Owner Participant not originally party to the
Refunding Agreement under the Operative Documents to observe or perform
any covenant or obligation of such Person contained in any such
guarantee or support agreement, which failure, in any case and either
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individually or together with other then existing failures, shall have
a material adverse effect on the rights and interests of the Indenture
Trustee or any Note Holder and is not remedied within a period of 45
calendar days following notice being given to the Owner Trustee, the
Owner Participant or such Person, as the case may be, by the Indenture
Trustee or a Majority in Interest of Note Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant
or any Person (if any) that may guarantee or support the obligations of
an Owner Participant not originally party to the Refunding Agreement
under the Operative Documents shall (i) be unable to pay its debts
generally as they become due within the meaning of the Bankruptcy Code,
(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 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 with respect thereto (and not in its
individual capacity) or the Owner Participant or any Person (if any)
that may guarantee or support the obligations of an Owner Participant
not originally party to the Refunding Agreement under the Operative
Documents, as the case may be, a custodian, receiver, trustee or other
officer with similar powers with respect to it 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 with respect thereto (and not in its individual capacity) or
the Owner Participant or such Person, as the case may be; or
(i) any petition for any relief specified in the foregoing
paragraph (h) shall be filed against the Trust Estate or the Owner
Trustee with respect thereto (and not in its individual capacity) or
the Owner Participant or any Person (if any) that may guarantee or
support the
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obligations of an Owner Participant not originally party to the
Refunding Agreement under the Operative Documents, as the case may be,
and such petition shall not be dismissed within 60 days; or
(j) at any time when the Engine shall be registered in a
jurisdiction outside the United States, the Owner Trustee, the Trust
Company or the Owner Participant shall breach any covenant as may be
agreed upon pursuant to Section 11 of the Refunding Agreement as the
result of which the Lien of this Indenture shall cease to be a valid
and duly perfected Lien on the Trust Indenture Estate.
SECTION 4.03. Certain Rights. In the event of any default by
the Lessee in the payment of any installment of Basic Rent due under the Lease,
the Owner Participant may, within ten calendar days (or such longer period
ending on the second day after the expiry of the applicable grace period
specified in the Lease with respect to such default) after notice from the
Indenture Trustee or the Lessee of such default, without the consent or
concurrence of any Note Holder, pay, as provided in Section 2.04 hereof, for
application in accordance with Section 3.01 hereof, a sum equal to the amount of
all (but not less than all) of the Principal Amount and interest as shall then
(without regard to any acceleration pursuant to Section 4.04(b) or (c) hereof)
be due and payable on the Equipment Notes. 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 Trustee
shall have been furnished by the Owner Participant with all funds necessary for
remedying such default, the Owner Participant may, within fifteen calendar days
(or such longer period ending on the second day after the expiry of any
applicable grace period specified in the Lease with respect to such default)
after notice from the Indenture Trustee or the Lessee of such default, without
the consent or concurrence of any Note Holder, instruct the Owner Trustee to
exercise the Owner Trustee's rights under Section 21(d) 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 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 due and payable under
the Equipment Notes or hereunder, 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 default by the
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Lessee under the Lease to the same extent that like performance by the Lessee
itself would have remedied such default (but any such payment or performance
shall not 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, such Lease Event of Default shall have been remedied, then any
declaration pursuant to the Lease that the Lease is in default, and any
declaration pursuant to this Indenture that the Equipment Notes are due and
payable or that an Indenture Event of Default exists hereunder, based upon such
Lease Event of Default, shall be deemed to be rescinded, and the Owner
Participant or the Owner Trustee, as the case may be, shall (to the extent of
any such payments made by it) be subrogated to the rights of the Note Holders
hereunder to receive such payment of Rent from the Indenture Trustee (and the
payment of interest on account of such Rent being overdue), and shall be
entitled, so long as no other Indenture Default or Indenture Event of Default
shall have occurred and be continuing, to receive, subject to the terms 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 by commencing an action at
law against the Lessee and obtaining and enforcing a judgment against the Lessee
for the payment of such amount or taking appropriate action in a pending action
at law against the Lessee or by demanding Excepted Payments or Excepted Rights;
provided, however, that at no time while an Indenture 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 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 hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease (after giving effect to any applicable grace
period) as to (i) each of the three Basic Rent Payment Dates
immediately preceding the date of such default or (ii) in the aggregate
more than six Basic Rent Payment Dates,
(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 Lease Event of Default for the purposes of this Indenture,
if during the 12-month period immediately preceding the
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relevant default by the Lessee there shall have been expended by the
Owner Participant pursuant to the second sentence of this Section 4.03
(and shall have not been reimbursed by the Lessee or any Permitted
Sublessee themselves to the Owner Trustee for distribution to the Owner
Participant) an amount in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
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, and if the Equipment Notes shall have been accelerated
pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the
Indenture Trustee may (subject to the rights of the Owner Participant or the
Owner Trustee to cure any such Indenture Event of Default set forth in Section
4.03 hereof and the obligations of the Indenture Trustee set forth in this
Section 4.04(a) and subject to Section 10.05 hereof) 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 hereof, the Indenture Trustee may (subject as aforesaid), at the
direction of a Majority in Interest of Note Holders, exercise any and all of the
remedies pursuant to Section 18 of the Lease and pursuant to any Sublease
Assignment 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 but, in the case of the Engine, only as permitted by Section 18
of the Lease, and may exclude the Owner Participant, the Owner Trustee and the
Lessee and all Persons claiming under any of them or wholly or partly therefrom;
provided, however, that the Indenture Trustee shall give the Owner Trustee and
the Owner Participant ten days' prior written notice of the initial exercise of
such remedies by the Indenture Trustee under the Lease (if not stayed or
otherwise precluded by applicable law from giving such notice); provided,
further, that the Indenture Trustee shall give the Owner Trustee and the Owner
Participant twenty days' prior written notice of its intention to sell the
Engine. Without limiting any of the foregoing, it is understood and agreed that
the Indenture Trustee may exercise any right of sale of the Engine available to
it, even though it shall not have taken possession of the Engine and shall not
have possession thereof at the time of such sale.
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Anything in this Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or more
of the remedies provided for in Section 18 of the Lease to terminate the Lease
or take possession and/or sell the Engine; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent to
the expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Engine is
being contested by the Lessee in judicial proceedings, so long as the Indenture
Trustee fails to participate in such proceedings, the Owner Trustee shall have
the right (without affecting in any way any right or remedy of the Indenture
Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the avoidance
of doubt, it is expressly understood and agreed, subject only to the immediately
preceding paragraph, that the above-described inability of the Indenture Trustee
to exercise any right or remedy under the Lease shall in no event and under
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no circumstance prevent the Indenture Trustee from otherwise exercising all of
its rights, powers and remedies under this Indenture, including without
limitation this Article IV.
(b) If an Indenture Event of Default referred to in clause
(g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment Notes
shall have become so due and payable, and before any judgment or decree for the
payment of the money so due, or any thereof, shall be entered, all overdue
payments of interest upon the Equipment Notes and all other amounts payable
under the Equipment Notes (except the Principal Amount of the Equipment Notes
which by such declaration shall have become payable) shall have been duly paid
and every other Indenture Default and Indenture Event of Default with respect to
any covenant or provision of this Indenture shall have been cured, then and in
every such case a Majority in Interest of Note Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall
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have cured, in accordance with Section 4.03, the Indenture Event of Default that
resulted in such acceleration.
No Make-Whole Amount shall become payable on the Equipment
Notes as a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Indenture. The Owner Trustee or
Owner Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any property in the Trust Indenture
Estate or take any action with respect to any property in the Trust Indenture
Estate so acquired by it if such acquisition or action would cause any trust
created pursuant to the Trust Agreement to fail to qualify as a "grantor trust"
for federal income tax purposes.
SECTION 4.05. Return of the Engine, etc. (a) Subject to the
rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof
and unless the Owner Participant shall have theretofore purchased the Equipment
Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Equipment Notes shall have been
accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, at the request of the
Indenture Trustee the Owner Trustee shall promptly execute and deliver to the
Indenture Trustee such instruments of title and other documents as the Indenture
Trustee may deem necessary or advisable to enable the Indenture Trustee or an
agent or representative designated by the Indenture Trustee, at such time or
times and place or places as the Indenture Trustee may specify, to obtain
possession of all or any part of the Trust Indenture Estate; provided that the
Indenture Trustee shall at the time be entitled to obtain such possession under
Section 4.04(a) and the other applicable provisions of this Indenture. If the
Owner Trustee shall for any reason fail to execute and deliver such instruments
and documents after such request by the Indenture Trustee, the Indenture Trustee
may (i) obtain a judgment conferring on the Indenture Trustee the right to
immediate possession and requiring the Owner Trustee to execute and deliver such
instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents to the fullest extent it
may lawfully do so, and (ii) to the extent permitted by law, pursue
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all or part of the Trust Indenture Estate wherever it may be found (but not in
violation of Section 10.05 hereof or of the Lease) and may enter any of the
premises of the Lessee wherever such Trust Indenture Estate may be or be
supposed to be and search for and take possession of and remove the same (but
not in violation of Section 10.05 hereof or of the Lease). 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 a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that the
provisions hereof shall not be construed so as to expand the obligations of the
Lessee under the Lease, including Section 16 thereof). In each such case, the
Indenture Trustee shall have the right to maintain, use, operate, store, lease,
control or manage the Trust Indenture Estate and to carry on the business
(without limiting the express provisions of Section 5.10 hereof) and to exercise
all rights and powers of the Owner Participant and the Owner Trustee relating to
the Trust Indenture Estate, as the Indenture Trustee 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 Trust Indenture Estate or any part thereof as the Indenture
Trustee may determine; and the Indenture Trustee shall be entitled to collect
and receive directly all tolls, rents (including Rent), revenues, issues,
income, products and profits of the Trust Indenture Estate and every part
thereof, except Excepted Payments, without prejudice, however, to the right of
the Indenture Trustee under any provision of this Indenture to collect and
receive all cash held by, or required to be deposited with, the Indenture
Trustee hereunder, except Excepted Payments. The Indenture Trustee shall,
pursuant to the exercise of its remedies under this Article IV, to the extent
permitted by applicable law, be entitled to the appointment of a receiver for
all or any part of the Trust Indenture Estate, whether such receivership be
incidental to a proposed sale of the Trust Indenture Estate or otherwise, and
the Owner Trustee hereby consents to the appointment of such receiver and will
not oppose any such appointment. Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, leasing, control, management or disposition of the
Trust Indenture Estate and of 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
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may elect to make, if any, for taxes, assessments, insurance or other proper
charges upon the Trust 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 that 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. 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
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder 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 or
such Note Holder, then and in every such case the Owner Trustee, the Indenture
Trustee, the Note Holders and the Lessee shall, subject to any determination in
such proceedings, be restored to their former positions and rights hereunder
with respect to the Trust Indenture Estate, and all rights, remedies and powers
of the Indenture Trustee and the Note Holders shall continue as if no such
proceedings had been instituted.
SECTION 4.08. Waiver of Past Indenture Defaults. Upon written
instructions from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Indenture Default hereunder and its consequences and upon
any such waiver such Indenture Default shall cease to exist and any Indenture
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or impair any right
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consequent thereon; provided, however, that in the absence of written
instructions from the Holders of all Equipment Notes then outstanding, the
Indenture Trustee shall not waive any Indenture Default (i) in the payment of
the Principal Amount of or interest on any Equipment Note then outstanding, or
(ii) in respect of a covenant or provision hereof which, under Article IX
hereof, cannot be modified or amended without the consent of each Note Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the
event the Indenture Trustee shall have knowledge of an Indenture Event of
Default, or shall have knowledge of an Indenture Default arising either from a
failure to pay Rent or a Lease Default of the type referred to in the second
sentence of Section 4.03, the Indenture Trustee shall give prompt notice thereof
to the Owner Trustee, the Owner Participant and the Lessee by facsimile, telex,
telegraph or telephone (confirmed by written notice in the manner provided by
Section 10.06 hereof), and to each Note Holder by first-class mail. Subject to
the terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and 10.05 hereof
and of this Section 5.01, the Indenture Trustee shall take such action, or
refrain from taking such action, with respect to any Indenture Event of Default
or Indenture Default (including with respect to the exercise of any rights or
remedies hereunder) as the Indenture Trustee shall be instructed in writing by a
Majority in Interest of Note Holders. Subject to the provisions of Section 5.03
hereof, if the Indenture Trustee shall not have received instructions as above
provided within 20 calendar days after mailing notice of such Indenture Default
or Indenture Event of Default to the Note Holders, the Indenture Trustee may,
subject to instructions thereafter received pursuant to the preceding provisions
of this Section 5.01, take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action, with respect
to such Indenture Default or Indenture Event of Default as it shall determine to
be advisable and in the best interests of the Note Holders 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 its own affairs; provided that the
Indenture Trustee may not sell the Engine or any part thereof without the
consent of a Majority in Interest of Note Holders. In the event the Indenture
Trustee shall at any time elect to foreclose or otherwise enforce this
Indenture, the Indenture Trustee shall forthwith notify, to the extent (in the
case of any such party) not stayed or otherwise prohibited by applicable law,
the Owner Participant, the Note Holders, the Owner Trustee and
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the Lessee. For all purposes of this Indenture, in the absence of actual
knowledge on the part of an officer in the Corporate Trust Office, in the case
of the Indenture Trustee, or its Corporate Trust Administration Department, 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 an Indenture Event of
Default (except, in the case of the Indenture Trustee, the failure of the Lessee
to pay any installment of Rent when due, if any portion of such installment was
then required to be paid to the Indenture Trustee, which failure shall
constitute knowledge of an Indenture Default for purposes of the first sentence
of this Section 5.01) unless notified in writing by the Lessee, the Owner
Trustee or one or more Note Holders or, in the case of the Owner Trustee, by the
Indenture Trustee.
SECTION 5.02. Action Upon Instructions. Subject to the terms
of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.01, 5.03, 5.10, 9.01 and 10.05
hereof, upon the written instructions at any time and from time to time of a
Majority in Interest of Note Holders, 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 to
take such other action hereunder or under any other Indenture Document or in
respect of any part or all of the Trust Indenture Estate as shall be specified
in such instructions; (ii) take such action with respect to, or to preserve or
protect, the Trust Indenture Estate (including the discharge of Liens) as shall
be specified in such instructions and as are 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 of 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 interest created hereunder in the Trust Indenture Estate as may
be specified from time to time in written instructions of a Majority in Interest
of Note Holders (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may, but shall not be obligated to, execute and
file or cause to be filed any financing statement which it from time to time
deems appropriate or any continuation statement that the Lessee, in discharge of
its obligations under Section 3(v) of the Refunding Agreement or any other
Operative Document, may so request. Notwithstanding the foregoing or anything in
this Indenture to the contrary, the Indenture Trustee may, on the advice of its
counsel and without the consent or approval of any Note Holder, approve any
counsel asked to opine on any matters under Section 11(b)(ii) of the Refunding
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Agreement, Section 6(a)(iii) of the Lease or under this Indenture and approve
any opinion issued by such counsel. None of the Owner Participant, the Owner
Trustee or the Lessee have any liability for the failure of the Indenture
Trustee to discharge its obligations hereunder.
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 hereof unless
the Indenture Trustee shall have been indemnified against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith.
The Indenture Trustee shall not be under any obligation to take any action under
this Indenture and nothing in this Indenture contained 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. The Indenture Trustee shall not be
required to take any action under Section 5.01 (other than the first sentence
thereof) or 5.02 or Article IV hereof, nor shall any other provision of this
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 of the other Indenture Documents 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
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Engine or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if the Indenture Trustee
shall request written instructions pursuant to this Section 5.04, it will use
reasonable efforts to seek and
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obtain such instructions promptly so as not unreasonably to delay the proposed
action of Lessee in respect of which the instructions are sought. The Indenture
Trustee agrees that it will in its individual capacity and at its own cost and
expense (but without any right of indemnity in respect of any such cost or
expense under Article VII hereof or any other Operative Document) promptly take
such action as may be necessary to duly discharge all Lenders' Liens on any part
of the Trust Indenture Estate attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding
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, or place Liens on, the Engine or any
other part of the Trust Indenture Estate except (i) as required or permitted by
the terms of the Lease or the Refunding Agreement, or (ii) in accordance with
the powers granted to, or the authority conferred upon, the Owner Trustee and
the Indenture Trustee pursuant to this Indenture and in accordance with the
terms hereof.
SECTION 5.06. Replacement Engine. (a) If at any time and from
time to time, the Engine may, or may be required to, be replaced under Section
6(a) or 11(a) of the Lease by a Replacement Engine, as the case may be, in
accordance with the provisions of this Section 5.06 and the provisions of said
Sections of the Lease, the Owner Trustee shall, at such time or times, but
subject to compliance with the conditions to such replacement set forth in the
Lease, direct the Indenture Trustee to execute and deliver to or as directed in
writing by the Owner Trustee an appropriate instrument releasing the 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:
(1) A written request from the Owner Trustee, requesting such
release and specifically describing the Engine so to be released and the
Replacement Engine.
(2) A certificate signed by a duly authorized officer of the
Lessee stating the following:
A. [Intentionally reserved]
B. With respect to the replacement of the Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
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(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) to be received as consideration
for the Engine;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Engine the Owner Trustee will hold title to the
Replacement Engine free and clear of all Liens except Permitted Liens,
that such Replacement Engine will on such date be in good operating
condition, and that the Replacement Engine is the same or an improved
model as the Engine;
(iv) the value, remaining useful life and utility of the
Replacement Engine as of the date of such certificate (which value,
remaining useful life and utility shall not be less than the then
value, remaining useful life and utility of the Engine, assuming the
Engine was in the condition and repair required to be maintained under
the Lease (but without regard to hours and cycles until overhaul));
(v) that no Lease 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 the Replacement Engine; and
(vi) that each of the conditions specified in Section 11(b) of
the Lease with respect to the Replacement Engine have been satisfied.
(3) The appropriate instrument or instruments (i) transferring to
the Owner Trustee title to the Replacement Engine to be received as
consideration for the Engine, (ii) assigning to the Owner Trustee the benefit of
all manufacturer's and vendor's warranties generally available with respect to
such Replacement Engine (if any) (which warranties may be assigned by the Owner
Trustee to Lessee pursuant to Section 5(d) of the Lease), and (iii) subjecting
such Replacement Engine to the Lien of this Indenture and subjecting to any
relevant Assigned Sublease and Sublease Assignment, including, without
limitation, an Indenture Supplement.
(4) [Intentionally reserved]
(5) The opinion of counsel to the Lessee, satisfactory to the
Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that 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
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of may be properly released from the Lien of this Indenture and all
conditions precedent herein provided for relating to such release have
been complied with;
(ii) the Replacement Engine has been validly subjected to the
Lien of this Indenture and covered by the Lease, the instruments
subjecting the Replacement Engine to the Lien of this Indenture and the
Lease, and subjecting to any relevant Assigned Sublease and Sublease
Assignment, as the case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act or any other law then applicable
to the perfection and the effect of perfection or non-perfection of a
security interest in the Engine or the Lien of this Indenture, and no
further action, filing or recording of any document is necessary in
order to establish and perfect, in the United States and, if the
establishment of title and perfection and the effect of perfection or
non-perfection of a security interest in such Replacement Engine or the
Lien of this Indenture are governed by the laws of a jurisdiction other
than the United States, in such jurisdiction, the legal title to such
Replacement Engine and the Lien of this Indenture on such Replacement
Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as 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 to the
Replacement Engine to the same extent as with respect to the Engine
prior to such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at the
request of the Lessee execute an appropriate written instrument or instruments
to confirm the release of any Part from the Lien of this Indenture as provided
in this Section 5.06(b), but only upon receipt by the Indenture Trustee of an
Officers' Certificate of Lessee confirming such release is authorized by the
terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Engine as contemplated by Section 11
of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit
of the Note Holders and the Lessee, subject to fulfillment of the conditions
precedent and compliance by the Lessee with its obligations set
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forth in Section 11 of the Lease, to execute and deliver the appropriate
instruments as contemplated by Section 5.06 hereof, and execute and deliver to
the Lessee (or any relevant Permitted Sublessee) an appropriate instrument
releasing the Engine being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Engine as contemplated by Section 11 of the Lease
and Section 5.06 hereof, all provisions of this Indenture relating to the Engine
being replaced shall be applicable to such Replacement Engine with the same
force and effect as if such Replacement Engine was the same engine as the Engine
being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Note Holder shall affect the sufficiency of
such notice with respect to other Note Holders. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Note Holders
shall be filed with the Indenture Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this Indenture, including
the Granting Clause, but subject always to the final paragraph of this Section
5.10, the following rights shall be reserved to the Owner Trustee or Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
(a) the Owner Trustee or the Owner Participant may, without
the consent of the Indenture Trustee, demand, collect, sue for or
otherwise obtain all amounts included in
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Excepted Payments from the Lessee, exercise any election or option or
make any decision or determination or give or receive any notice,
consent, waiver or approval in respect of any Excepted Payment and seek
legal or equitable remedies to require the Lessee to maintain the
insurance coverage referred to in Section 12 of the Lease (or the
comparable provisions of any Assigned Sublease) and such specific
performance of the covenants of the Lessee under the Lease (or the
comparable provisions of any Assigned Sublease) relating to the
protection, maintenance, possession and use of the Engine; provided,
that the rights referred to in this clause (a) shall not be deemed to
include the exercise of any remedies provided for in Section 18 of the
Lease (or the comparable provisions of any Assigned Sublease) other
than the right to proceed by appropriate court action, either at law or
in equity, to enforce payment by the Lessee of such amounts included in
Excepted Payments or performance by the Lessee of such insurance
covenant or to recover damages for the breach thereof or for specific
performance of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent
of the Owner Trustee, enter into, execute and deliver amendments or
modifications in respect of any of the provisions of the Lease, any
Assigned Sublease or any Sublease Assignment and (ii) unless an
Indenture Event of Default and an Indenture Trustee Event shall have
occurred and be continuing, the Indenture Trustee shall not, without
the consent of the Owner Trustee, which consent shall not be withheld
if no right or interest of the Owner Trustee or the Owner Participant
shall be materially diminished or impaired thereby, (A) enter into,
execute and deliver waivers or consents in respect of any of the
provisions of the Lease, any Assigned Sublease or any Sublease
Assignment, or (B) approve any accountants, engineers, appraisers or
counsel as satisfactory to render services for or issue opinions to the
Owner Trustee pursuant to the Operative Documents; provided that,
whether or not an Indenture Event of Default has occurred and is
continuing, the Owner Trustee's consent shall be required with respect
to any waivers or consents in respect of any of the provisions of
Section 6, 12 or 16 of the Lease, or of any other Section of the Lease
to the extent such action shall affect (y) the amount or timing of, or
the right to enforce payment of any Excepted Payment or (z) the amount
or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of
the Owner Trustee) which, absent the occurrence and continuance of an
Indenture Event of Default hereunder, would be distributable to the
Owner Trustee under Article III hereof;
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(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses
(a), (b) and (c) above, so long as no Indenture Event of Default has
occurred and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner Trustee and the Owner Participant under the Lease shall be
exercised by the Owner Trustee and/or the Owner Participant, as the
case may be, to the exclusion of the Indenture Trustee and any Note
Holder and without the consent of the Indenture Trustee or any Note
Holder; provided that the foregoing shall not, nor shall any other
provision of this Section 5.10, limit (A) any rights separately and
expressly granted to the Indenture Trustee or any Note Holder under the
Lease or the other Operative Documents (including, without limitation,
Section 15 of the Refunding Agreement) or (B) the right of the
Indenture Trustee or any Note Holder to receive any funds to be
delivered to the Owner Trustee under the Lease (except with respect to
Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment or Excepted Right), (B) declare the Lease to be
in default under Section 18 thereof and (C) subject only to the provisions of
Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such
Section 18 (other than in connection with Excepted Payments) and in Article IV
hereof.
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SECTION 5.11. Evidence of Action Taken by Note Holder. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Note Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Note Holders in person or by agent duly appointed in
writing, and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof
of execution of any instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Sections 5.04,
5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner
Trustee if made in the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far as
concerns such Equipment Note. Except as aforesaid any such action taken by the
Note Holder shall be conclusive and binding upon such Note Holder and upon all
future Note Holders and owners of such Equipment Note and of any Equipment Notes
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon any such Equipment Note. Any action
taken by the Note Holders of the percentage in aggregate Principal Amount of the
Equipment Notes specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee in its individual capacity shall be
answerable or accountable under any circumstances, except for its own willful
misconduct or
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gross negligence (other than for the handling of funds, for which the standard
of accountability shall be negligence), or as provided in the fourth sentence of
Section 2.04(a) hereof and in the last sentence of Section 5.04 hereof, and
except for liabilities that may result, in the case of the Trust Company, from
the inaccuracy of any representation or warranty of the Trust Company in the
Refunding Agreement or in the Trust Agreement or in Section 6.03 hereof or the
failure to perform any covenant of the Trust Company pursuant to Section 4.01(a)
hereof or in the Trust Agreement, the Refunding Agreement, or, in the case of
the Indenture Trustee, from the inaccuracy of any representation or warranty, or
failure to perform any covenant, of the Indenture Trustee made in its individual
capacity herein, in the Refunding Agreement or in any other document. None of
the Owner Participant, the Trust Company or the Indenture Trustee shall be
liable for any action or inaction of any other one of such parties, except, in
the case of the Owner Participant, for any action or omission of the Owner
Trustee performed or omitted on the instructions of the Owner Participant. The
Owner Trustee shall not be deemed a trustee for the Note Holders for any
purpose.
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, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the case
of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01 hereof
and in the Trust Agreement, the Lease and the Refunding Agreement, the Owner
Trustee and the Indenture Trustee shall have no duty (i) to see to any recording
or filing of the Lease or of this Indenture or any other document, or to see to
the maintenance of any such recording or filing, (ii) to see to any insurance on
the Engine, 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 Trust Indenture Estate, (iv) to confirm, verify
or inquire into the failure to receive any financial statements of the Lessee or
(v) to inspect the Engine at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease or
any of the Permitted Sublessee's covenants under any Assigned Sublease with
respect to the Engine.
SECTION 6.03. No Representations or Warranties as to Engine or
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE TRUSTEE)
NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED TO HAVE
MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION 5(a) OF THE
LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH
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SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE ENGINE 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 ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE ENGINE, except that the Trust
Company warrants that (i) on the Delivery Date for the Engine the Owner Trustee
shall have received whatever interest in the Engine was conveyed to it under the
Warranty Bill of Sale subject to the rights of the parties to the Indenture
Documents and (ii) the Engine shall be free and clear of Lessor's Liens
attributable to the Trust Company. Neither the Trust Company nor the Indenture
Trustee makes or shall be deemed to have made any representation or warranty as
to the validity, legality or enforceability of this Indenture, the Trust
Agreement, the Equipment Notes or any Indenture Documents 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 in
its individual capacity or as Indenture Trustee made under this Indenture or in
the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any
moneys paid to or retained by the Indenture Trustee pursuant to any provision
hereof and not then required to be distributed to any Note Holder, the Lessee or
the Owner Trustee as provided in Article III hereof need not be segregated in
any manner except to the extent required by law, 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 hereof) 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 any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of
the Board of Directors of any party to the Refunding Agreement, certified by the
Secretary or an Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the aggregate unpaid
Principal Amount of Equipment Notes outstanding as of any date, the Owner
Trustee may for all purposes hereof
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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, but in the case of any such
certificate, the Owner Trustee and the Indenture Trustee shall be under a duty
to examine the same to determine whether or not it conforms to the requirements
of this Indenture. 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 (except in the case of the Indenture Trustee's obligations under the third
sentence of Section 2.04(a)) through agents or attorneys and shall not be
responsible for any misconduct or negligence on the part of any such agent or
attorney appointed with due care hereunder. The Indenture Trustee may, at the
expense of the Trust Indenture Estate, consult with counsel, accountants and
other skilled Persons to be selected and retained by it, and the Owner Trustee
and the Indenture Trustee shall not be liable for anything done, suffered or
omitted in good faith by them in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the extent
permitted by applicable law) be limited by any provision of law in regard to the
compensation of a trustee of an express trust), including expenses, advances and
disbursements, for all services rendered hereunder, and shall have a first
priority claim (prior to the Note Holders) on the Trust Indenture Estate for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Lessee, and shall have the right to use or apply any moneys held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no
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right against any Note Holder or the Owner Participant for any fee as
compensation for its services as trustee under this Indenture.
SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note Holder
and have all rights and benefits of a Note Holder 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.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as Indenture
Trustee, and its successors, permitted assigns, agents and servants solely from
the Trust Estate, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee
on or measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, and reasonable
out-of-pocket costs, expenses or disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustee (in its individual
capacity and as trustee) from and after the Restatement Date (whether or not
also agreed to be indemnified against by any other Person under any other
document) in any way relating
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to or arising out of this Indenture, the Trust Agreement, the Equipment Notes,
the other Indenture Documents or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, nonacceptance, rejection, ownership, delivery, lease, sublease,
possession, use, operation, condition, sale, return or other disposition of the
Engine (including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust
Indenture Estate or the action or inaction of the Indenture Trustee hereunder,
except only (i) in the case of willful misconduct or gross negligence (or
negligence in the case of handling of funds) of the Indenture Trustee in the
performance of its duties hereunder, (ii) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee made in the Refunding
Agreement, (iii) as otherwise provided in Section 2.04(a) hereof or in the last
sentence of Section 5.04 hereof or (iv) as otherwise excluded by the terms of
Sections 10(b) and 13 of the Lease from the Lessee's indemnities to the
Indenture Trustee, in its individual capacity and as Indenture Trustee, and its
successors, permitted assigns, agents and servants thereunder; provided that so
long as the Lease is in effect, the Indenture Trustee shall not make any claim
under this Section 7.01 for any amount indemnified against by the Lessee under
the Lease without first (but only to the extent not stayed or otherwise
prevented by operation of law) making demand on the Lessee for payment of such
amount. The Indenture Trustee shall notify the Owner Trustee and the Lessee
promptly of any claim for which it may seek indemnity. The Lessee shall be
entitled to defend any claim by the Indenture Trustee to the extent provided in
Section 10 or 13 of the Lease. The Indenture Trustee shall be entitled to
indemnification from the Trust Indenture Estate for any liability, obligation,
loss, damage, penalty, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7.01 to the extent not reimbursed
by the Lessee or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same the Indenture Trustee shall
have a prior Lien on the Trust Indenture Estate. The indemnities contained in
this Section 7.01 shall survive the termination of this Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
agent or affiliate of the Trust Company or the Owner Participant (the
"Exculpated Equity Persons") shall have any obligation, duty or liability of any
kind whatsoever to the Indenture Trustee or
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any such Note Holder in connection with the exercise by any Exculpated Equity
Person of any rights of the Owner Trustee or the taking of any action or the
failure to take any action by any Exculpated Equity Person in connection with
any rights of the Owner Trustee under this Indenture or the Lease, and each such
Note Holder hereby waives and releases, to the extent permitted by applicable
law, each Exculpated Equity Person of any and all such obligations, duties or
liabilities.
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case
of any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Trust Company pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to the Indenture Trustee and to each Note Holder.
SECTION 8.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto may
resign at any time without cause by giving at least 30 calendar days' prior
written notice to the Owner Trustee, the Owner Participant, each Note Holder and
the Lessee, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, a Majority in
Interest of Note Holders may at any time remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner Trustee, the Lessee and
the Indenture Trustee, and the Indenture Trustee shall promptly notify each Note
Holder thereof in writing, such removal to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint, with the consent of the Lessee, a successor Indenture Trustee by an
instrument signed by such Holders (whose fees shall be reasonably acceptable to
the Lessee). If a successor Indenture Trustee shall not have been appointed
within 30 calendar days after such notice of resignation or removal, the
Indenture Trustee, any Note Holder, the Owner Trustee, the Lessee or the Owner
Participant 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.
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(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee and to the predecessor Indenture
Trustee an instrument accepting and assuming such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Indenture Trustee, without further act, shall become vested with and
bound by all the estates, properties, rights, powers, duties and obligations of
the predecessor Indenture Trustee hereunder and under the other Indenture
Documents in the trusts hereunder applicable to it with like effect as if
originally named the Indenture Trustee herein; but nevertheless upon the written
request of such successor Indenture Trustee, such predecessor Indenture Trustee
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor Indenture Trustee all moneys or other property then held by
such predecessor Indenture Trustee hereunder, subject nevertheless to its claim
provided for in Section 6.07 hereof.
(c) Any successor Indenture Trustee, however appointed, shall
be a bank or trust company having a combined capital and surplus of at least
$200,000,000 if there be such an institution willing, able and legally qualified
to perform the duties of the Indenture Trustee hereunder upon reasonable or
customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the foregoing,
upon the request of the Owner Trustee or the Lessee, any such successor
corporation referred to in this Section 8.02(d) shall deliver to the Owner
Trustee and the Lessee an instrument confirming its status as the Indenture
Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. 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 Trust Indenture Estate may at the time be
located or in which any action of the Indenture Trustee may be required to be
performed or taken, the Indenture Trustee, by an instrument in writing signed by
it, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee,
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acting jointly with the Indenture Trustee, of all or any part of the Trust
Indenture Estate to the full extent that local law makes it necessary for such
separate trustee or separate trustees or co-trustee acting jointly with the
Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee, it,
he, she or they shall be vested with such title to the Trust 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
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, his or her attorney-in-fact and agent with
full power and authority to do all acts and things and to exercise all
discretion on its, his or her behalf and in its, his or her name. In case any
such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, 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 8.03,
including without limitation Article VII hereof.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act, and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Indenture
Trustee;
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(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed and exercised or performed by the Indenture Trustee and such
additional trustee or trustees and separate trustee or trustees jointly
except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional
trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is
hereby provided may be exercised by, any such additional trustee or
separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent
of, the Indenture Trustee; and
(iv) no trustee hereunder shall be 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, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the
Indenture Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.03,
the powers of any additional trustee or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
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ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental Indentures.
(a) Except as otherwise provided in Section 5.10 hereof, and except with respect
to Excepted Payments, the Owner Trustee agrees that it shall not enter into any
amendment of or supplement to the Lease, or execute and deliver any written
waiver or modification of, or consent under, the terms of the Lease, unless such
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee acting on instructions of a Majority in
Interest of Note Holders. Anything to the contrary contained in this Section
9.01 notwithstanding, without the necessity of the consent of any of the Note
Holders or (as respects clauses (i) and (ii) below) the Indenture Trustee, (i)
any Excepted Rights or Excepted Payments payable to the Owner Trustee or Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee, (ii) the Owner Trustee and
Lessee may, so long as no Indenture Event of Default has occurred and is
continuing, enter into amendments of or additions to the Lease to modify
Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent that such
amendment would adversely affect the rights or exercise of remedies under
Section 18 of the Lease) so long as such amendments, modifications and changes
do not and would not (A) affect the time of, or reduce the amount of, Basic Rent
or Stipulated Loss Value payments until after the payment in full of all Secured
Obligations, (B) impair the Lien of this Indenture, (C) adversely affect the
value, utility or useful life of the Engine or (D) otherwise adversely affect
the Note Holders in any material respect, and (iii) the Indenture Trustee may
approve any Permitted Sublessee as provided in clause (c) of the definition of
such term set forth in the Lease and may exercise the rights of the Indenture
Trustee under Section 15 of the Refunding Agreement. For the avoidance of doubt,
nothing in this Section 9.01 shall limit in any way the rights of the Owner
Trustee and/or the Owner Participant under Section 5.10(d) to exercise certain
rights and powers under the Lease to the exclusion of the Indenture Trustee and
any Note Holder and without the consent of the Indenture Trustee or any Note
Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture which adversely affects the Indenture
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Trustee's own rights, duties or immunities under this Indenture or otherwise,
whether in its official or individual capacity.
Any supplemental indenture authorized by the provisions of
this Section 9.01 may be executed without the consent of the Note Holders
notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee agrees
with the Note Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, or does not adversely affect the Note Holders in any
material respect. Upon the written request of a Majority in Interest of Note
Holders, the Indenture Trustee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner Trustee and Lessee or, as may be appropriate,
the Manufacturer; provided, however, that, without the consent of each Holder of
an affected Equipment Note then outstanding and of each Liquidity Provider, no
such amendment of or supplement to this Indenture, the Lease, the Refunding
Agreement or any other Indenture Document or waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 9.01, or of Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10
hereof, Section 17 (except to add a Lease Event of Default) of the Lease, the
definitions of "Indenture Event of Default", "Indenture Default", "Indenture
Trustee Event", "Lease Event of Default", "Lease Default", "Majority in Interest
of Note Holders", "Make-Whole Amount" or "Note Holder", or the percentage of
Note Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method of calculation of any amount, of
Principal Amount, Make-Whole Amount, if any, or interest with respect to any
Equipment Note, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Note Holders, the Owner Trustee and the Lessee, (iii) reduce,
modify or amend any indemnities in favor of the Note Holders, (iv) consent to
any change in this Indenture or the Lease which would permit redemption of
Equipment Notes earlier than permitted under Section 2.10 hereof, (v) modify any
of the provisions of Section 4(b) of the Lease, or modify, amend or supplement
the Lease, any Assigned Sublease or any Sublease
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Assignment, or consent to any assignment of any thereof, in either case
releasing the Lessee (or Permitted Sublessee) from its obligations in respect of
the payment of Basic Rent or Stipulated Loss Value for the Engine or altering
the absolute and unconditional character of the obligations of Lessee to pay
Rent as set forth in Sections 4(b) and 4(d) of the Lease (or comparable
provisions in any Assigned Sublease) or (vi) permit the creation of any Lien on
the Trust Indenture Estate or any part thereof other than Permitted Liens or
deprive any Note Holder of the benefit of the Lien of this Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely as
Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Engine or any Replacement Engine; (v)
to add to the covenants of the Owner Trustee for the benefit of the Note
Holders, or to surrender any rights or powers herein conferred upon the Owner
Trustee, the Owner Participant or the Lessee; (vi) to add to the rights of the
Note Holders; and (vii) to include on the Equipment Notes any legend as may be
required by law.
(d) Without the consent of the Lessee no amendment or
supplement to this Indenture or waiver or modification of the terms hereof shall
adversely affect the Lessee in any material respect or impose upon the Lessee
any additional indemnification obligations.
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SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Indenture Trustee, the Owner Trustee
and the Note Holders shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for all and any
purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the institution
acting as Indenture Trustee hereunder, any document required to be executed by
it pursuant to the terms of this Article IX affects adversely any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such copy
to each Note Holder), but the
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failure of the Owner Trustee or the Indenture Trustee to mail such conformed
copies shall not impair or affect the validity of such document. The Indenture
Trustee will furnish to each Note Holder, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates
and other instruments furnished to the Indenture Trustee under the Lease or
hereunder to the extent that the same were not required to have been furnished
to such Note Holder pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX, no
written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX 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 Engine or other property thereto or to release
the Engine or other property therefrom or to execute and deliver an Indenture
Supplement, in each case pursuant to the terms hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and 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 evidencing the discharge
of such Lien and the termination of such security interest in the Engine and
release of 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
Trustee to give effect to such discharge, termination and release; provided,
however, that this Indenture
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and the trusts created hereby shall earlier terminate and this Indenture shall
be of no further force or effect as expressly provided pursuant to Article X
hereof or upon any sale or other final disposition by the Indenture Trustee of
all property part of the Trust Indenture Estate and the final distribution by
the Indenture Trustee of all moneys or other property or proceeds constituting
part of the Trust Indenture Estate in accordance with the terms hereof. Except
as aforesaid otherwise provided, this Indenture and the trusts created hereby
shall continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Note Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Engine by Indenture Trustee is Binding.
Any sale or other conveyance of the Engine by the Indenture Trustee made
pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the Engine. 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 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. 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, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take any
action contrary to the Lessee's rights under the Lease, including the right of
the Lessee to possession and use and quiet enjoyment of
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the Engine, except in accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations, directions, consents,
waivers or documents required or permitted by the terms of this Indenture shall
be in English and in writing, mailed by first-class registered or certified
mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the
Owner Trustee, addressed to it at its office at Rodney Square North, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration Department (telex:
835437; answerback: WILMTR; telecopy: (302) 651-8464/8882), with a copy to the
Owner Participant at its address set forth in the Refunding Agreement, (ii) if
to the Indenture Trustee, addressed to it at its office at 777 Main Street,
Hartford, Connecticut 06115, Attention: Corporate Trust Administration (telex:
99339; answerback: CTNB-HTFD; telecopy: (203) 240-7920) or (iii) if to the Owner
Participant, the Lessee or any Note Holder, addressed to such party at such
address as such party shall have furnished by notice to the Owner Trustee and
the Indenture Trustee, or, until an address is so furnished, addressed to the
address of such party (if any) set forth on the signature pages to the Refunding
Agreement or in the Register. Whenever any notice in writing is required to be
given by the Owner Trustee or the Indenture Trustee or any Note Holder to any of
the other of them, such notice shall be deemed and such requirement satisfied
when such notice is received. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Indenture.
SECTION 10.07. 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 10.08. 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 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 10.09. 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
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and permitted assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Note Holder
shall bind the successors and assigns of such Note Holder. This Indenture and
the Trust Indenture Estate shall not be affected by any amendment or supplement
to the Trust Agreement or by any other action taken under or in respect of the
Trust Agreement, except that each reference in this Indenture to the Trust
Agreement shall mean the Trust Agreement as amended and supplemented from time
to time to the extent permitted hereby and thereby. Each Note Holder by its
acceptance of an Equipment Note agrees to be bound by this Indenture and all
provisions of the Refunding Agreement applicable to a Note Holder.
SECTION 10.10. 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 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Indenture Trustee, the
Owner Trustee, the Owner Participant, any Note Holder or any bank or other
Affiliate of any of them may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Lessee or any Permitted Sublessee fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Lessee for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the
parties that the Owner Trustee, as lessor under the Lease (and the Indenture
Trustee as assignee of the Owner Trustee's rights hereunder), shall be entitled
to the benefits of Section 1110 of the Bankruptcy Code with respect to the right
to take possession of the Engine and Parts as provided in the Lease in the event
of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor,
and in any instance where more than one construction is possible of the terms
and conditions hereof or of any other pertinent Operative Document, each such
party agrees
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that a construction which would preserve such benefits shall control over any
construction which would not preserve such benefits.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee
By____________________________
Title:
FLEET NATIONAL BANK,
not in its individual capacity,
except as expressly provided
herein, but solely as Indenture
Trustee
By____________________________
Title:
Trust Indenture
<PAGE> 95
EXHIBIT A
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E3]
TRUST INDENTURE SUPPLEMENT NO. _____
[GPA 1991 AWA-E3]
TRUST INDENTURE SUPPLEMENT NO. _____ dated __________, ___ of
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") under the Trust Agreement [GPA 1991 AWA-E3] dated
as of March 15, 1991 (as amended, the "Trust Agreement") between Wilmington
Trust Company and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1991
AWA-E3] dated as of March 15, 1991, as amended and restated as of November 26,
1996 (as so amended and restated, the "Indenture") between the Owner Trustee and
Fleet National Bank (formerly known as Fleet National Bank of Connecticut,
Shawmut Bank Connecticut, National Association, and The Connecticut National
Bank), as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof
which shall particularly describe the Engine (such term and other defined terms
in the Indenture being herein used with the same meanings) and any Replacement
Engine included in the Trust Indenture Estate, and shall specifically mortgage
such Engine or Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated March 27, 1991, as amended by Amendment No. 1
dated March 27, 1992, and as further amended by Amendment No. 2 dated as of July
29, 1993, subjected to the Lien of such Original Indenture the engine therein
described, which Original Indenture and Trust Indenture Supplement No. 1 have
been duly recorded with the Federal Aviation Administration as one document on
March 28, 1991 and assigned Conveyance No. M25990, which Amendment No. 1 has
been duly recorded with the Federal Aviation Administration on April 30, 1992
and assigned Conveyance No. DD002564 and which Amendment No. 2 has been duly
recorded with the Federal Aviation Administration on August 11, 1993 and
assigned Conveyance No. F59684.
<PAGE> 96
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WHEREAS(1), the Indenture relates to the Engine 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(2), the Owner Trustee has, as provided in the
Indenture, heretofore executed and delivered to the Indenture Trustee [(3)]
Indenture Supplement(s) for the purpose of specifically subjecting to the Lien
of the Indenture one or more engines therein described, which Indenture
Supplement(s) is (are) dated and has (have) been duly recorded with the Federal
Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
---- ---------------- ----------------
NOW, THEREFORE, This Supplement Witnesseth, that, to secure
the prompt payment of the Principal Amount of, interest on, Make-Whole Amount,
if any, and all other amounts due with respect to, all 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 contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the Owner
Participant and the Lessee in each case to the Note Holders 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 Holders thereof, and of the
sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the
delivery of the Indenture, the receipt 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,
- --------
(1) This recital is to be included only in the first Indenture Supplement
(including the first Indenture Supplement filed with respect to the
Indenture).
(2) This recital not to be included in the first Indenture Supplement.
(3) Insert appropriate number.
Form of Trust Indenture Supplement
<PAGE> 97
- 3 -
transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its
successors and assigns, for the security and benefit of the Note Holders from
time to time, in the trust created by the Indenture, a first priority security
interest in and mortgage Lien on all estate, right, title and interest of the
Owner Trustee in, to and under the following described property:
AIRCRAFT ENGINE
one aircraft engine having 750 or more
rated takeoff horsepower or the equivalent
thereof, identified as follows:
Manufacturer's
Manufacturer Model Serial Number
------------ ----- -------------
together with all equipment and accessories thereto belonging, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to said
aircraft engine.
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 Note Holders from time to time, in the trust created
by the Indenture, all of the estate, right, title and interest of the Owner
Trustee in, to and under the Lease and Lease Supplement [GPA 1991 AWA-E3] No. 2
of even date herewith (other than Excepted Payments and Excepted Rights)
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 Note Holders from time to time for the uses and purposes and
subject to the terms and provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and shall form a part of it, and the Indenture is
Form of Trust Indenture Supplement
<PAGE> 98
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hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Engine referred to in this Supplement and the aforesaid Lease Supplement has
been delivered to the Owner Trustee and is included in the property of the Owner
Trustee covered by all the terms and conditions of the Trust Agreement, subject
to the pledge and mortgage thereof under the Indenture.
Form of Trust Indenture Supplement
<PAGE> 99
- 5 -
IN WITNESS WHEREOF, the Owner Trustee has caused this
Supplement to be duly executed by one of its officers thereunto duly authorized
on the day and year first above written.
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Owner Trustee
By____________________________
Title:
Form of Trust Indenture Supplement
<PAGE> 100
SCHEDULE I
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E3]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- -------- ---------
<S> <C> <C> <C>
Series A $ 1,343,995 02-Jul-2009 6.85%
Series B $ 503,996 02-Jan-2006 6.93%
Series C $ 524,996 02-Jan-2004 6.86%
Series D $ 489,995 02-Jul-2002 8.16%
Series E $ 1,458,204 02-Jan-2004 10.50%
</TABLE>
<PAGE> 101
EQUIPMENT NOTES AMORTIZATION
SERIES A
Engine: V0019
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 102
- 2 -
SERIES B
Engine: V0019
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 103
- 3 -
SERIES C
Engine: V0019
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 104
- 4 -
SERIES D
Engine: V0019
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 105
- 5 -
SERIES E
Engine: V0019
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<PAGE> 106
SCHEDULE II
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E3]
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1A, dated November 26, 1996.
2. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1B, dated November 26, 1996.
3. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1C, dated November 26, 1996.
4. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1D, dated November 26, 1996.
5. Pass Through Trust Agreement, dated as of November 26, 1996, between
America West Airlines, Inc., and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1E, dated November 26, 1996.
Schedule II
